18 May 2006

Plane wars

Picture: Airbus A350

In October 2004, European Union and USA filed law suits against each other in the World Trade Organisation accusing both that the governments give their domestic aircraft manufacturers illegal subsidies. The case is the largest the WTO has handled and is expected to last several years.

The two giant aircraft builders are battling to dominate the market of commercial airplanes. Boeing has been the historical leader but Airbus has hit back and last year passed its rival in number of aircraft in its order books.

Last year the Bush administration ended a significant tax break that has sustained Boeing’s dominance and the Americans were hoping that that would end the dispute, but that did not happen.

Airbus is now planning to ask more aid from the European governments in order to redesign its troublesome A350 –project, which is falling behind Boeing's 787 Dreamliner. Expected delivery dates for A350 are in 2010, Boeing will start delivering 787s already in 2008. A350 may be delayed further due to major redesign of the cockpit due to customer requests.

Picture: Boeing 787 Dreamliner

This week Ms. Neena Moorjani (spokeswoman for the U.S. Trade Representative's Office) warned the European governments:

Increasing the amount of launch aid already committed to the A350 only makes
the problem worse.

The spokeswoman also said that the US still prefers a negotiated solution, but will litigate the World Trade Organisation case until completed, if necessary.

The war continues.

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