Re: ATR-72's and Airbuses

Date:         13 Dec 96 04:26:02 
From:         Chuanga@cris.com (H Andrew Chuang)
Organization: Concentric Internet Services
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In article <airliners.1996.2821@ohare.Chicago.COM> Alan Wong (Alan.Wong@anu.edu.au) wrote:
> H Andrew Chuang wrote:
>
> As mentioned before, R&D costs are the largest and they are universally
> expensive.  Hence expensive Europe may not necessarily produce relatively
> expensive planes.

I am in the area of R&D, and I believe R&D in Europe is more expensive.
Nevertheless, I don't have hard number, so I won't dwell on these points
too much.

> > In addition, because of Airbus's structure, Airbus divides
> > all the workload amongst its partners and doesn't look for the most
> > cost-effective subcontractors.  Both Boeing and McD had gone through massive
> > resturcturing to reduce cost a few years earlier, but not all Airbus's
> > partners did.  Then, can you explain why Airbus's pricing has been so
> > competitive?  Especially considering the fact that Airbus does not have a
> > lucrative B747 production line to "subsidize" its products.
>
> Consider the consequences if Airbus wasn't around. Boeing would easily
> have a monopoly and the prices of planes would skyrocket. Furthermore,
> there would be no B777 or B747-500/600 or B737-600/700/800. R&D would
> stagnate leaving us with planes whose designs are decades old.

This is a very poor assumption.  During the past 25 years, Boeing's
market share has not changed significantly.  McD is the big loser (IMHO,
Airbus is a major cause, but McD has to take some blames themselves).
Without Airbus, McD could have launched other projects and offered a
complete family of planes to compete with Boeing.  Without Airbus, even
Lockheed might have decided to stay in the competition.  Although, Boeing
has the monopoly in the B747 market, the cost per seat of the B747 is
no more than the cost per seat of the A340.  As long as there are more
than one supplier, the cost of an airplane will be driven by the market
not by the supplier.

As I have said many times, I highly regard Airbus's vision of building
widebody twins.  Without Airbus, the B767 and B777 would probably have
been trijets.

> > P.S. FWIW, I'm an Asian with a US e-mail address.  Am I pro-Boeing and
> >      anti-Airbus?  I don't think I am.  Otherwise, would I have posted
> >      Seattle Times' articles on the B737?  No doubt that there are quite
> >      a few die-hard Boeing fans.  Nevertheless, IMHO, many of those
> >      criticisms on Airbus are very valid ones.
>
> I suppose the Seattle Times' articles gives you an alibi ;-)  Seriously,
> the criticisms are valid and Airbus can do better. But I say that even if
> Airbus gets no help at some stage in the future (the sooner the better),
> there will still be people knocking it because of the help it has once
> received. Now that sort of criticism wouldn't be fair, would it?

Nevertheless, it seems Airbus still needs government loans to build the
A3XX.  Airbus predicted around 1,500 sales of the over-500-seat market
to justify the launch of the A3XX, while others (Boeing, BAe, DASA, Rolls,
GE, P&W, etc.) forecasted a need of 500-800 planes only.  The following
is an example illustrating how bad some market forecasts can be: in 1991,
right before the launch of the B777, Airbus predicted that there would be:

858 A330s,
342 A340s,
550 B777s, and
450 MD-11s

delivered between 1990 and 2009.  I think we can leave the MD-11 alone.
The B777 (~300) is more than half way there.  The A340 (~180) is about
half way there; but, it seems Airbus will need some miracles to reach its
A330 (~180) goal.

If Airbus's prediction of 1,500 sales is indeed way off (similar to
their A330 forecast), then Boeing, along with Airbus, will have to
suffer big losses, and we, as consumers, will have nothing to gain,
either.