It’s a new year, but the same old stone-throwing has begun.
No sooner did 2014 roll in than Airbus and Boeing were back to accusing each other of taking subsidies.
Airbus president Fabrice Brégier lashed out at Boeing, criticizing its rival for receiving subsidies for the Boeing 777X program despite a previous World Trade Organization (WTO) ruling.
Boeing retorted that Airbus benefitted from similar incentives from Alabama and other states. Airbus selected Mobile, Ala. for its new A320 family manufacturing facility, where it plans to begin assembling narrowbodies in 2015.
Brégier declared that Alabama’s financial support is legal, while Washington state’s is not WTO approved and that Alabama’s funding is around $100 million compared with $9 billion of support from Washington state. Boeing counter-claimed that, according to the WTO ruling, Airbus has received $18 billion in illegal subsidies, not including billions in new subsidies for the A350 under WTO review. And the Seattle manufacturer argued that 777X incentives were structured to fully comply with the WTO ruling.
For years, the large civil aircraft dispute has swung back and forth, with the European Union alleging that Boeing benefits from illegal state subsidies and the US lodging similar claims against Airbus. Each side talks about leveling the playing field, legal versus illegal, millions versus billions.
This all misses the point.
Neither side can claim the moral high ground if each is willing to accept financial subsidies. There’s no such thing as a “little bit bad” subsidy; it’s either right or it’s wrong and manufacturer leadership can always opt out of financial support on principle.
Also, neither Airbus nor Boeing is a threat to each other on the subsidy issue. They have a duopoly on the world’s large commercial aircraft market, which is in boom time with record orders and backlogs being logged in Toulouse and Seattle. Airlines are going to ensure that their new fleet choices take into account maintaining the balance of power between these two OEM giants regardless of subsidies. And the profitability of both manufacturers stands high above that of even their most financially successful airline customers.
Given the new aircraft types that are in development on both sides of the Atlantic and all-time high production rates, Airbus and Boeing would better serve their customers by concentrating on delivery rather than engaging in yet another public fracas on subsidies.
Of course, both manufacturers do deliver excellent products and customer service.
If there is a genuine concern regarding unfair aircraft manufacturer subsidies that could skew the market, then it lies neither in Europe nor the US. Instead, look to Russia and, in particular, China. Some behind the scenes, cohesive work to ensure fair standards are met by those who are eager to get new aircraft products established would be wise.
But please, less of the public tit-for-tatting on very old ground.