George Will

The A380 has received $3.8 billion in cheap loans and other ongoing government subsidies misleadingly called ``launch aid.'' This amounts to seminationalization, giving the governments involved an incentive to regard one another as rivals. Boeing wants the World Trade Organization to compel European governments to stop their subsidies. McNerney, however, acknowledges that some people think Boeing should allow Airbus to break WTO rules -- and continue to be plagued by political decisions trumping economic rationality. Airbus is illustrating what happens when governments treat commercial enterprises as jobs programs and instruments of national glory.

McNerney says that what ocean shipping did for Hong Kong, jet aircraft can do for, say, Dubai, which is becoming a world trading center. He believes that over the next 30 years the growth rate for cargo aircraft could be significantly larger than for passenger aircraft. Fred Smith, founder and CEO of FedEx, says that 98 percent of the weight of international commerce is shipped by sea, but the 2 percent moved by air constitutes 40 percent of the economic value.

Boeing exported $14 billion worth of commercial aircraft in 2005 and expects to prosper as China and India do. Boeing projects that, in addition to the 367 orders yet to be delivered to the two countries, China over the next 20 years will need 2,900 new passenger and freight aircraft costing $280 billion, and India will need 856, worth $72 billion. For the last four years, close to 20 percent of Boeing's orders have been from China, which since 1972 has bought 678 Boeing planes worth $37 billion.

Assuming that Boeing manages the supply chain -- with ten subcontractors on four continents -- for a plane with 4 million parts, the 787 might solidify Boeing's supremacy. An Airbus CEO recently said he hoped his company could catch up ``in 15 years.'' Then he resigned. Boeing's successes -- 600,000 people fly in its planes daily -- have so filled its manufacturing capacity that it has limited Boeing's ability to further exploit Airbus' problems. For McNerney, such a problem is a blessing.


George Will

George F. Will is a 1976 Pulitzer Prize winner whose columns are syndicated in more than 400 magazines and newspapers worldwide.
 
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