RichardAboulafia.com 

:: June 2003 Letter ::

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Dear Fellow Citizens Of The Aviation World,

While growing up, my view of the world was shaped by Dr. Seuss. Books like Oh, The Places You’ll Go! told me the world was filled with people who were different, but friendly; happy Eskimos ice-fishing outside igloos, oasis-dwelling Arabs offering me dried dates, cheerful striped-shirt-wearing French people welcoming me to their cafes. Sad to say, this happy wonderland, waiting to be explored, isn’t really like today’s reality. Much of the world seems to want to burn our embassies, boycott our hamburgers, or deny our geared turbine powerplants a home on their new military transports. Meanwhile, the Bush administration’s attitude towards the rest of the world is dismissive, at best. These guys vacation in Wyoming and Texas, not Tuscany.

International animosity, even among allies, is a great shame for many reasons. And it is starting to impact aviation markets in a big way, triggering an excuse for me to write about it. Most immediately, there is the Paris Air Show. Due to Congressional pressure and SecDef Rumsfeld’s impulses, General officers (and civilian equivalents) are not allowed to go, and planes aren’t being sent. So, General Tome Walters, the gifted head of DSCA and one of the best fighter salesmen of all time, can’t go and meet with potential customers/allies on neutral turf. This raises the awkward question of whether the Congressmen behind the Paris boycott are paid by Dassault or Eurofighter.

And for what? Presumably, the US Government thinks this boycott will get French policy to change. Hands up, anyone who thinks the French government will ever change their policies as a result of outside pressure. Their next foreign minister will be just as combative as de Villepin.

Meanwhile, US aerospace companies parrot the government line: “Reduced Le Bourget Presence For US Industry,” scream the headlines. Yet the reality is different, in a hypocritical way. Sure, fewer people are being sent, but most of these folks would have been used to maintain and display the planes that aren’t being sent. The middle- and high-ranking executives? No one’s eager to advertise the fact, but you can bet they’ll all be there. If you can find a US aerospace company that isn’t sending its key people to Paris, sell their shares. Like General Walters, it’s their job to get out and sell things, right? The US Government is alone in wanting to shoot itself in the foot.

As comic relief in all of this, Rep. Jim Saxton, one of the hard working Eurofighter employees behind the US Le Bourget boycott, added $1 million to the House Defense Authorization Bill to support a major new US air show. That’s One Million Dollars. The guy sounds like Dr. Evil in that Austin Powers movie, holding the world hostage for $1 million because he comes from the pre-inflationary ‘60s. That amount wouldn’t buy the wheel chocks to hold the planes in place.

Now, over, inevitably, to the A400M. Sure, the Euros are right about the US military market being largely closed to non-UK players. But that whole Pratt Canada embrace/rejection thing was a pointless and stupid hand grenade in the machinery of internationalization. And the A400M itself? Thanks to Europe’s sudden go-it-alone defense impulses, they might now actually build this long-undead plane, rather than relying on US lifters or USAF lift. Yet this renewed European fondness for self-sufficiency is foolishly selective. Continental Europe is incredibly short of smart munitions, warfighting readiness is near an all-time low, Eurofighter and other key programs are hanging by a shred, and these guys are spending $20 billion to reinvent the wheel? This is the opposite of transformation. Of course, the US helped goad them into it by constantly criticizing their lackadaisical defense posture.

The US reaction to the A400M engine decision is still uncertain, but likely to be unpleasant. It will make EADS’s job that much harder in the US, and could even jeopardize the key Coast Guard CN-235 deal. It certainly skews the presidential helicopter buy heavily towards Sikorsky—ironically, Pratt Canada’s sister company had done its best to globalize the S-92, was rewarded with closed borders, and now has to rely on a nationalist message to get the program moving. Good deeds seldom go unpunished.

But the short-term beneficiary might just be Boeing’s 767 tanker lease. It finally got signed, probably to send a message that the US supports its industry. And you can bet that the remaining 300-400 plane requirement will be filled by Boeings too. The deal came at a pivotal moment—the 767 program is running on fumes. Over the last decade, US military contracts have served as production line guarantees for the F-15, F-16, C-130J, and other planes, helping to secure export contracts. The 767 deal extends that tactic to Boeing’s commercial work.

The 767 tanker lease leads to another worrying next step—creeping nationalism looks set to creep its way over to commercial markets. For years, the civil aviation market has been making slow progress. Air carriers are hopelessly mired behind closed borders, but at least commercial offset agreements have been almost abolished. Politicians still pressure international customers to buy Airbus or Boeing, but domestic markets have gotten freer—Air France likes the 777, Northwest likes the A319. But in another sign of the times, Rep. John Mica has proposed that US air carriers be obligated to tell passengers who made their plane. Why stop there? If it’s a Delta 777 and the body came from Japan and the engines were made in Britain, why not force them to reveal that too? This situation could easily keep taking a turn for the ugly. And what the hell is wrong with these congressmen? Wasn’t that Freedom Fries nonsense enough?

What to make of all of this? On the civil side, it’s a tragic affront to what remains of the idealism in this industry—aviation is supposed to be a noble affair, immune from nationalism and petty politics. On the military side, nationalist impulses are short-sighted. Despite their differences, the Western Democracies still have a great deal in common. In the long run, neither the US nor Europe can go it alone in a dangerous world. And open defense markets, on both sides of the Atlantic, would create the additional competition needed to keep quality high and prices low.

Sermonizing won’t change any of this. But remember: in tough economic times, the easiest thing for politicians to do is blame foreigners and raise borders. This thinking prevailed in the 1930s; it also led to the hysterically successful 1940s.

Once again, back to my day job. June’s Aircraft Book update includes the Trainer overview, plus the A340, 757, AMX, Tornado, PC-9/T-6, UH-1/412, and India’s LCA and ALH. If you’re going, I hope to see you at Paris.

Yours, ‘til French Waiters Actually Like Us,
Richard Aboulafia
(703) 385-1992 ext. 103
raboulafia@tealgroup.com

 

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