COMMENT
ightglobal.com 22-28 May 2018 | Flight International | 5
few profitable investments, so vast sums are pouring
into super-high-risk ventures like spaceflight, artifical
intelligence and genetic engineering. What money is
left over – a lot – might as well be spent on private jets.
But for those slightly down the chain – who aspire to
private air travel – wealth is relative and feels fragile. It
is widely expected that the next financial crisis is com-
ing, and that it might be a really big one. The Middle
East looks increasingly like war ready to happen. An
Asian arms race rings alarm bells.
The take-away? Enjoy an upturn, but do not compare
sales and backlog figures to the high times pre-2008 –
that was not a boom but a bubble. Normal is now. ■F
inally, it seems, some good news in business jets; a
decade on from the financial crisis, sales look to be
firming up. It is of course no surprise that the most se-
vere economic downturn since the Great Depression
should have wiped out a nascent air taxi industry. Nor
is it any real surprise that the sales slump did not spare
larger aircraft models – volume is small and it did not
take many distressed sales to flood the market with too-
good-to-miss second-hand deals.
But now, conditions look very good. A generation of
global capitalism has generated a huge pool of stun-
ningly wealthy individuals. Years of central bank quan-
titative easing – that is, money-printing – have given
them mountains of cash. And, today’s economy offers See EBACE preview PAnd now, back to normal
Start talking
For Europe and the USA – and their respective aerospace champions – the latest WTO ruling
should be a catalyst to agree changes on the trade in civil aircraft. Sadly, this will not happenfrom the Washington state government that the WTO
has also consistently opposed. Accept the ill-gotten
benefits accrued by the A350 and 777X as sunk costs,
and let the industry move on to more important matters.
Of course, no such lunch meeting is going to
happen. No “grand bargain” on Airbus launch aid will
ever be discussed by the two sides.
With the rise of the Trump administration, Boeing’s
quest to make Airbus pay a financial penalty for past
launch aid infractions has gained a friendly and power-
ful ear. Canada and Bombardier have already felt the
brunt of US trade aggression, with a subsidy complaint
last year ultimately gifting the CSeries to Airbus.
Meanwhile, the game of trade policy brinkmanship
between Washington DC and Beijing could lead to
full-scale economic war, with Boeing at risk of signifi-
cant financial injury. In this new reality, Boeing now
has much more to lose from its government’s aggres-
sive trade stance than any Airbus below-market inter-
est rate loan. ■I
n an increasingly imaginary ideal world filled with
rational attorneys, reasonable industry leaders and
responsible politicians, the entire dispute between Air-
bus and Boeing at the World Trade Organization that
has dragged on for 14 years and now threatens to fur-
ther expand a growing rift between the EU and USA
could be resolved with a handshake over a nice lunch.
Okay, maybe a few lunches.
The original point of this entire dispute – now bur-
ied beneath an A380-sized mountain of legal docu-
ments and absurdly contradictory press releases from
both sides – really is not that complicated.
The EU provided below-market interest rates on re-
payable loans that Airbus used to help finance the
A380 and A350, and Boeing, with the support of three
successive US administrations, wants that to stop.
Strip away all of the legal technicalities and political
grandstanding, and that forms the specific cause of
Boeing’s 2004 decision to urge the US government to
file a trade case at the WTO.If all of the secondary issues and retaliatory com-
plaints are set aside, the record shows that the WTO
fundamentally agrees with Boeing’s position.
So set up a lunch meeting: the EU has said already
that it is willing to negotiate a solution to this dispute.
Have the EU and Airbus agree to set market rates as the
benchmark for financing any future commercial aircraft
development. Tell Boeing to drop the lesser subsidies See This Week PProtectionist measureREX/ShutterstockThe record shows that the WTO
fundamentally agrees with
Boeing’s position on launch aid
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