A 17-Year-Old Dispute Comes to an End against a Common Rival
The feud over Airbus and Boeing is one of the longest-running battles in WTO(World Trade Organisation) history.
It took a common threat for the US and Europe to finally put an end to their dispute this past week, as the two sides signed a five-year truce suspending tit-for-tat tariffs.
While the United States and Europe waged a 17-year trade battle over subsidies to Boeing and Airbus, China poured money into its own commercial aircraft to take on the Western aviation duopoly.
What exactly is the Airbus-Boeing dispute all about?
The European Union and the United States claim that each other’s airplane manufacturer is unfairly subsidized.
It was the US that first filed a case with the World Trade Organization (WTO) in 2004 claiming that Airbus, which is jointly owned by Germany, France, Spain, and Britain’s BAE Systems, had received $22 billion (€19.4 billion) in illegal subsidies. US officials estimated that the subsidies had resulted in an economic benefit of more than $200 billion.
The EU retaliated with a countercase, alleging that Boeing had received $23 billion in “trade-distorting” subsidies in the US mainly for its research and development projects.
What has the WTO found?
Over the years, the WTO has ruled that both sides unfairly subsidized their aircraft makers.
In 2018, the WTO ruling held that the EU had supported Airbus with subsidized loans for the development of new aircraft — the A380 superjumbo and the A350 twin-aisle jet. The world body also found that the loans, which were repayable on delivery, amounted to illegal assistance.
Last year, the WTO handed the EU a victory in its counter case saying America’s favorable contract terms and tax breaks to Boeing had hurt Airbus sales. Interestingly, both the US and the EU claimed victory on hearing the decisions.
Ruling on the US sanctions request, the WTO in October 2019 allowed the US to impose tariffs on up to $7.5 billion worth of EU goods, the largest award in the trade body’s history but well below the US request. The US trade office had estimated the harm from the EU subsidies to Airbus at $11 billion in trade each year.
Now a year later, the WTO has allowed the EU to impose tariffs worth $4 billion on US goods. That figure falls short of EU estimate of $12 billion in damages caused to Airbus by US support of Boeing.
The Aerospace Giants finally sign a truce
The EU and US finally agreed to end a 17-year dispute over aircraft subsidies, lifting the threat of billions of dollars in punitive tariffs on their economies in a boost to transatlantic relations.
Two days of intensive negotiations in Brussels led to a draft deal on how to handle subsidies for Airbus and Boeing, with the breakthrough finalized on June 15 2021 at US president Joe Biden’s first EU-US summit meeting in Brussels.
US President Joe Biden made it clear during his visit to Brussels on Tuesday: Washington and Brussels must “work together to challenge and counter China’s non-market practices in this sector that give China’s companies an unfair advantage”
With this agreement, we are grounding the Airbus-Boeing dispute -EU trade commissioner Valdis Dombrovskis
For the past four years, state-run manufacturer Commercial Aircraft Corporation of China (COMAC) has run test flights for its 168-seat, narrow-bodied C919 airplane, a potential rival to Airbus’s A320 and Boeing’s B737.
COMAC expects to obtain airworthiness certification from Chinese air traffic regulators this year, coinciding with the 100th anniversary of the Chinese Communist Party.
The very real problem is that China is manipulating the market in playing Airbus and Boeing against each other and demanding technology transfers as a condition for orders – Said Richard Aboulafia, aviation expert at Teal Group, a market analysis firm based in Virginia.
From Duopoly to Triopoly
The COMAC is slowly racking up customers.
The company says it has 815 orders from 28 clients, mostly from Chinese airlines – though few are confirmed orders.
China Eastern Airlines was the first company to make a firm order in March for five aircraft.
Regardless of whether COMAC is successful or not, it will definitely be cheaper than its rivals and create an “ABC pattern” in China, with Airbus, Boeing, and COMAC operating in the country.
We will grow probably from a duopoly to a ‘triopoly’ by the end of the decade for single-aisle aircraft – Said Airbus chief executive Guillaume Faury
- COVER: wita.org
Airbus Struggles in Q1 2023, Deliveries Fall 9% Compared to Last Year
Airbus is off to a challenging start in 2023, with its Q1 aircraft deliveries down 9% compared to the same period last year. Despite setting a goal of 720 aircraft deliveries for the year, Airbus managed to deliver only 127 in the first quarter. The European manufacturer released its March Orders and Deliveries Report, highlighting 20 orders and 61 deliveries in the month, distributed among 37 customers. The March deliveries included five A220-300s, 26 A320neos, 25 A321neos, three A330-900s, and two A350-900s.
Growing Monthly Production Rate
Airbus has seen a gradual increase in its monthly production rate, with January witnessing 20 aircraft deliveries, followed by 46 in February. In Q1, the company delivered 10 A220-300s, two A319neos, 45 A320neos, 59 A321neos, one A330-200, five A330-900s, and five A350-900s.
However, the widebody segment remains a concern, with only 11 aircraft delivered in Q1, shared between the A330 and A350 models. The sole A330-200 went to Airbus Defence and Space for the NATO fleet. A330neos went to airlines such as Virgin Atlantic (via Air Lease Corporation), Delta Air Lines, and Condor (one via CIT Leasing). A350-900s were received by Singapore Airlines, China Eastern Airlines, Turkish Airlines, and Starlux Airlines (one via Air Lease Corporation and another directly from Airbus).
Net Orders and the Road Ahead
Airbus secured net orders for 142 aircraft in Q1, with a total of 156 aircraft orders before accounting for 14 cancellations. In the Q1 book are orders from Qatar Airways for 50 A321neos and 23 A350-1000s, representing just over half of the net orders for the quarter. Lufthansa is another significant widebody customer this year, with orders for five A350-900s and 10 A350-1000s. There are also four A350F freighters on order from an undisclosed customer.
Before accounting for cancellations, Airbus received 114 single-aisle aircraft orders in Q1. Of those, 17 are listed as Private or Undisclosed customers, with the identified airlines including Delta Air Lines, Azerbaijan Airlines, Uzbekistan Airways, Qatar Airways, and British Airways.
Despite the backlog of 7,254 aircraft, Airbus will need to ramp up production capacity quickly to meet its 2023 delivery targets. With 6,604 single-aisle A220 and A320 Family aircraft, 209 A330s, and 441 A350s in backlog, the company has its work cut out for them. The backlog includes 2,293 A320neos, 3,682 A321neos, and 529 A220s.
To help meet this target, Airbus CEO Guillaume Faury recently signed a deal to establish a second A320 Final Assembly Line in Tianjin, China. Since the Tianjin line opened in 2008, more than 600 A320 family aircraft have been assembled there, including the first A321neo in March. Airbus aims to reach a monthly production rate of 75 aircraft by 2026 with four A320 final assembly locations in Hamburg (Germany), Mobile (USA), Toulouse (France), and Tianjin (China).
Challenges Ahead for Airbus
Despite the growing monthly production rate and the expansion of assembly lines in China, Airbus must overcome various challenges to achieve its ambitious 2023 delivery target of 720 aircraft. This includes addressing supply chain bottlenecks and managing disruptions caused by the ongoing global situation. In addition, Airbus must ensure that the quality of aircraft production is not compromised in the race to meet its delivery goals.
Overall, while the Q1 2023 figures indicate a slow start for Airbus, the company has shown its determination to ramp up production and meet its delivery targets. The coming months will be crucial in determining whether Airbus can overcome its current challenges and deliver on its promises to customers and stakeholders.
What are your thoughts on Airbus’s chances of meeting its delivery goals this year? Let us know in the comments below!
The Story of the A220, how it Came About and How it’s Becoming Popular
Aside from the fact that the Airbus A220 is the only airbus aircraft to not have a 3 in its name, the A220 is special from the fact that it isn’t fully made by Airbus, but instead a joint venture between them and Bombardier. This is all because of what some might call a mistake made by Boeing, causing Airbus to acquire a 50.01% stake in the company. In this article I explore its controversial creation, and why it’s needed.
The Airbus A220 was first named the “CSeries” by Bombardier, and was meant to cater to the demand of small aircraft in between their current-sized fleet and those larger already made by Airbus and Boeing. The particular area where it was expected to boom were the US markets, given there is always demand to be flying from small airports as there is no lack of them in the large country. At first, things were running smoothly and it was expected to enter commercial service in 2014, just one year after its first flight. However, things turned out not to go as planned, and the CSeries encountered issues on one of its test flights, causing it to miss the Farnborough air show, the largest in the industry, and delay its release. This was not good for the aircraft, nearly causing the project and the company to go bust, until financial aid was provided by the Canadian government.
Boeing’s crucial mistake
Eventually, these problems were fixed, and the first CSeries was delivered to SWISS on June 26, 2016. Eventually, more orders began to come for the new aircraft, including the critical ones in the US. In fact, Bombardier was offering Delta 75 of the aircraft at $20 million a piece, a price which was even lower than the cost to build them, and a cost which was just too good to refuse. However, this was contested and was seen to be Dumping, when a manufacturer essentially gives away its aircraft as sort-of “Samples”, and is illegal in the US and other countries. Boeing was quick to take action, claiming that it was stealing the market from its 737s, despite the fact that Delta had explicitly said that they weren’t looking to purchase the variants that Boeing were claiming to be losing out. It was then decided that, given Bombardier was a foreign company, the US government would impose a 300% import tariff, something near-destructible for the company.
Airbus saves the day
However, Airbus decided to step in and acquire a 50% stake in the company, something beneficial for both parties concerned. This was good for Bombardier, as Airbus has its final assembly station situated in Alabama in the US, meaning that seen as the aircraft technically wasn’t foreign, the import tariff wouldn’t be imposed on it. This would also help Airbus, as it would mean that the company would now profit off of an aircraft which had no competitors at the time. This allowed the aircraft to be reintroduced to the US market, allowing it to thrive.
Where it is now
Now, the CSeries has been re-branded to be the Airbus A220, a move which has knocked it out of the park for the world’s largest aircraft manufacturer. This has allowed airbus to spend absolutely no money on development, and come away with an excellent aircraft, which is dominating its playing field. As of April 2023, 251 aircraft have been delivered, with another 785 firm orders. The airlines operating the aircraft include Delta, JetBlue, SWISS and airBaltic, who operate a fleet solely made up of the A220. When Aviation for Aviators asked their CEO, Martin Gauss, about the aircraft, he said that “The aircraft has performed beyond the company’s expectations, delivering better overall performance, fuel efficiency, and convenience for both passengers and the staff.”
- Wendover Productions
- Simple Flying
Airbus Announces Plans to Develop Hybrid Electric Aircraft
Airbus and Boeing have been locked in a fierce competition in the aviation industry for many years. Recently, Airbus announced its plans to develop a new hybrid-electric aircraft that could potentially revolutionize the industry.
The new aircraft, called the Airbus E-Fan X, is a hybrid-electric plane that uses both electric and conventional engines. The plane is expected to be capable of carrying up to 100 passengers and will have a range of around 1,000 nautical miles.
The development of the E-Fan X is part of Airbus’ commitment to developing cleaner and more sustainable aviation technologies. By using electric engines, the plane will emit less carbon dioxide and other harmful pollutants, helping to reduce the environmental impact of air travel.
The E-Fan X is also expected to be quieter than conventional aircraft, which could reduce noise pollution around airports and in surrounding communities. This is an important consideration as many airports around the world are located in densely populated areas.
The development of the E-Fan X is still in its early stages, with the first flight expected to take place soon. However, Airbus has already secured partnerships with companies such as Rolls-Royce, Siemens, and Safran to work on the development of the hybrid-electric propulsion system.
The announcement of the E-Fan X is a significant development in the aviation industry and could potentially change the way we travel by air. By developing cleaner and more sustainable aviation technologies, Airbus is leading the way in addressing the environmental impact of air travel and ensuring that the industry remains sustainable for years to come.
Overall, the Airbus E-Fan X is an exciting development in the aviation industry, and it will be interesting to see how it evolves over the coming years.
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