Airbus’s Lesson
for Young Socialists
Its A380 debacle
shows how hard it is for state planners to outguess markets.
I underestimated the duration of its products. The Boeing
747 first flew in 1969 and a freighter version will continue to be built near
Seattle at least through 2022. The Boeing 737, which first flew in 1967, faces
an order backlog that extends through 2027. An all-new replacement for the
commuter workhorse is unlikely to appear until the 2030s.
Which makes all the more anomalous Airbus’s decision to end
production of its impressive and giant A380, which has been flying only since
2005.
Socialism is currently in vogue. If the word means anything
in today’s context, it means projects of unusual government ambition, built on
our globally shared capitalist technological and commercial base. The A380 was
exactly such a project. Underwritten by massive European government subsidies,
the plane was an engineering sensation. Passengers loved the roomy jet. Yet now
it’s kaput. What went wrong? Or to phrase the question more usefully, what
technological and commercial realities would its sponsors have had to overrule
to assure its success?
The list is not a short one. They would have had to overrule
the desire of passengers to fly direct, bypassing the crowded hub airports
(like London’s Heathrow) for which the A380 was built.
They would have had to overrule the preference of business
travelers for frequent departures. With 535 seats to fill, the superjumbo was
hopelessly matched against operators offering more convenient schedules by
using smaller planes.
Most of all, they would have had to overrule the public’s
appetite for lower fares. On a per-seat basis, a new generation of
super-efficient twin-engine planes such as the Boeing 787 proved cheaper to
operate even though the four-engine A380 could accommodate twice as many
customers.
In the end, enough socialism could be mobilized to get the
plane built, but not enough to make it commercially viable. Europe’s governments
would have needed to extend their dominion beyond their own taxpayers who
financed it. They would have needed to dictate to the world’s airlines and
travelers and even the aerospace industry’s global supplier base, which proved
unwilling to develop a new fuel-efficient engine for a plane with a doubtful
future.
This should guide us in our thinking about what kind of
“socialism” is possible today. Governments can tax their own people until they
rebel at the ballot box, refuse to pay, or emigrate. They have no power, in our
world, to dictate what kinds of goods and services and technologies (green or
otherwise) the global marketplace will accept.
When the end came, it came because the A380’s last dedicated
customer, the government-backed Emirates Airline of Dubai, gave up on the
superjumbo. Planes in pristine condition were lingering unsold on the
used-plane market. A 10-year-old jet was recently retired by Singapore Airlines .
Now it’s being broken up for scrap, proving once again socialism’s knack for
making grown men cry.
Boeing’s management was vilified at the time for declining
to compete with Airbus to replace its own fabulously successful 747 jumbo jet.
But Boeing treated its business like a business. Its forecasts showed the
market was likely to evolve in ways unfavorable to another very large passenger
plane.
French and German politicians ignored such considerations.
They were more interested in making a showy statement about Europe’s
technological prowess. Boeing chafed for decades at the subsidies they poured
into Airbus. Airbus, for its part, was not above portraying the money U.S.
taxpayers spent defending the free world as a backdoor handout to Boeing
through its defense business. This debate is likely now to get an ugly second
wind if U.S. negotiators insist that Airbus pay back the estimated $20 billion
in “launch aid” the A380 failed to recoup (the answer will certainly be no).
The parallel to California’s bullet train hardly needs to be
drawn. Gov. Gavin Newsom seems already to be walking back his apparent
cancellation of the grossly over-budget project. He may hope that Green New
Deal dollars from Washington will become available after 2020 to replace the
funds California isn’t willing to provide.
But California voters have already gotten the right message:
Billions were poured into the project so former Gov. Jerry Brown wouldn’t have
to admit a mistake.
The same consideration for years deterred Airbus from
blowing the whistle on the A380, but let’s end on a positive note. Today the
socialist miscalculations of our infallible leaders are measured mainly in
dollars. This represents a great leap forward over the socialist failures that
characterized the last century.
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