Date: 13 Dec 96 04:26:02
From: tschell@s.psych.uiuc.edu (Terry Schell)
Organization: University of Illinois at Urbana
References: 1 2 3
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Alan Wong <Alan.Wong@anu.edu.au> writes:
<snip>
>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?
I, too, am very happy that Airbus exists (and I believe that they
build very good planes... with possibly one exception). Boeing really
does need the competition.
Having said that, it is entirely fair to knock Airbus for the aid that
they have received in the past. If it were unsubsidized Airbus would
have to raise its current prices substantially to repay the debt
previously incurred. Even if they become de-subsidized in the future...
they will always have that advantage. For the most part Boeing has
had to pay market interest (or opportunity costs) on its development
expenditures, and these costs must be passed along to the consumer in
the form of increased prices on future aircraft.
This is clearly a case where the consumer has benefited from serious
tinkering with free market economics. By allowing Airbus to operate
at below market costs, the European governents prevented Boeing from
becoming a monopoly... a move that benefits everyone except Boeing
stockholders.
Terry Schell
