Re: Boeing cancels 747-500X/600X?

Date:         18 Mar 97 03:14:52 
From:         Malcolm Weir <malc@mci2000.com>
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Terry Schell wrote:
> I was aware that some of these countries have national airlines that
> have purchased Boeing products and it looks like they will
> be buying more. That does not mean that there are not exstensive
> political pressures to buy Airbus products. Perhaps "captive market"
> is hyperbole... but I can site numerous industry sources that point
> to historical pressures to buy Airbus products.

Of course there IS extensive political pressure exerted whenever
products this valuable are procured, and the US government is not immune
from this behaviour (especially when military aircraft are involved,
even if the aircraft are not strategic in nature).

The reason is obvious: if someone is going to spend millions, all
politicians want it spent in their own backyard, to improve their tax
and industrial base.  Local politicians have more clout with local
airlines (i.e. the opinions of the Congressman from Seattle are unlikely
to be very important to Sabena, for example).

A secondary reason is to help defray the cost of government
procurements: if a government is going to buy a tonne of stuff (e.g.
EF2000's), they'd rather  not be the only customer of the supplier(s).
So they lean on anyone they can, and they can lean harder on their local
companies than on foreigners.

This is why the US Government has only ever procured four (I think)
aircraft types from foreign sources: Harrier, Canberra, Dauphin, and
Falcon: every dollar spent in the US economy costs them less than a buck
('cos they get taxes back on it).

> The central claim that you need to focues on *new* orders when you
> work out the viability of a new product is unchanged.  I contend that
> the bulk of the customers who have expressed interest in the 3XX are
> currently 330/340 customers; the orders of 3XX's will be reducing the
> orders of 330/340.  The role that politics has played in aquiring the
> 330/340 fleets is not important... just the fact that 3XX customers
> look to be the airlines that are currently invested in 330/340's.  This
> reduced the long-term financial benefits of building 3XX's.

Hmmm.  The largest operator of A330/A340s is Cathay Pacific, btw.

I disagree with the conclusion that an A3XX order would reduce an
A330/A340 order, and suspect Airbus would, too.  In fact, any cockpit
commonality (which is likely based on Airbus' track record) would tend
to suggest MORE A330/A340 orders.  On the other hand, 747-600X orders
WOULD tend to reduce 747-400 orders...

> Terry "I-could-be-wrong" Schell

Malc.