AirBust

AirBust

The most recent symbol of Old Europe's inability to compete in the 21st century economy is the announcement that AirBus will not be able to meet the delivery deadline on its new model jet. One airline has cancelled its contract altogether and even the delays to those who haven't will cost EADS "billions" according to news reports.

EADS is the ambitious multi-national European consortium formed in 1970 to put Europe in competition with and to beat U.S. companies in the lucrative and prestigious jet building industry. EADS inception was propitious. Weakened by fierce competition among themselves, Boeing, Lockheed, and McDonnell-Douglas were vulnerable to a new well-capitalized player and AirBus was that, and government subsidized in addition.

And AirBus did compete. Odds are anyone in the U.S. who has flown even once or twice in the last year has flown on an AirBus jet. And poised for victory AirBus was. Boeing shook out as the American manufacturer from the earlier competition and AirBus has Boeing wounded and bleeding.

In this competition, as in so many others, there is one pivotal moment, the metaphorical fork in the road. A year or two ago both manufacturers at the same time faced the end of their current models lifespan and had to plan for the next generation and each chose a completely different vision of the future of air travel. Boeing's corporate life depends on selling its vision to the air industry.

Boeing chose to work within the current hub-and-spoke paradigm and to build a fleet of faster, more agile, cheaper and more fuel efficient jets. AirBus boldly bet against the paradigm and predicted the (lucrative anyway) future lay in long-haul travel. It therefore planned a fleet of super-huge jets, much larger than the 747, double-decker behemoths with immense passenger capacity designed to traverse intercontinental distances, and the longer the better such as Asia to America.

AirBus' vision was bold, but risky. Its jets were expensive to build and not as fuel-efficient and therefore expensive to operate. Who wants to bet on lower or even stable oil prices over the next generation? Also its planes were so big that expensive changes would have to be made to world airports. Runways would have to be reinforced against the added weight of the jets. Gates would have to be modified to accommodate the height of the new jets passenger doorway. And the last pan-European air travel Grand Vision, the Concorde, had literally and figuratively crashed and burned in France.

AirBus had buyers into its vision however and the showdown with Boeing moved from the drawing board to the assembly plant. But the one thing that any highly competitive industry cannot have is delays. Time is money and delays cost money. Corporate plans go out the window, Plan B's have to be gone to, and trust is compromised. If you're going to buy into a corporation's vision you have to trust.

Additionally, AirBus' delays were caused by a problem ancient to Old Europe and one it cannot shake to this day. EADS charter requires that one of the company's two chief positions go to a Frenchman and the other to a German. Groan. And the present debacle was created because the Frenchman and the German are at each other's throats. Double groan. As Dave Barry would say, I am not making this up.

The delivery delay is not fatal to AirBus but it could be the moment when it all began to fall apart. All Boeing might have to do is obey the lawyer's adage, "don't interrupt your opponent when he is making a fool of himself."

-Benjamin Harris