Europe's big gambit: gigantic jets

Thumbing its nose at industry skeptics, the European aircraftmaker Airbus this week announced the first firm orders for its controversial new jetliner, the world's largest passenger plane.

At the Farnborough Airshow in England this week, Airbus officials hope to firm up enough sales of the giant A3XX to launch production next year. And as more and more airlines voice interest, the stage is set for the European group to go head to head with Boeing Corp. in the industry's most lucrative and prestigious niche - jumbos.

The leviathan on Airbus drawing boards in Toulouse, France, will be a triple-decker aircraft, carrying up to 656 passengers. The first version to be built will fill two full-length decks with 555 seats - one-third more than the most capacious Boeing 747 - and have room in the hold for any

thing from a bowling alley to a restaurant or boutiques.

A cruise liner for the skies, first-class passengers could be given proper bunks to sleep in, and plenty of room to wander around. "This new airliner offers a level of comfort and space never seen before in the airline industry" said Sheik Ahmed Bin Saeed al Makhtoum, chairman of Emirates Airline, as he signed an order for seven of the super jumbos on July 24. Air France also pledged to buy 10 of the planes.

But most industry analysts remain to be persuaded that there is a big enough market to justify the plane's $10.2 billion development costs. Some call it a folie de grandeur - a foolish expression of European pride. Airbus describes it as the "flagship" passenger jet of the next century that will give the company victory over its archrival, Boeing.

"It is probably a good aircraft, but it is still a very risky venture," says Harald Hendrikse, an aerospace analyst with Credit Suisse First Boston in London. "It remains to be seen just how many airlines will want to operate this plane."

The A3XX is due to make its maiden flight in 2004, and enter service a year later. It is designed for long-haul flights to and from major hubs such as Los Angeles, Tokyo, or London, and Airbus is building the plane on the expectation that airlines will need some 1,500 super jumbos over the next 20 years.

Passenger traffic is expected to nearly triple over that period, and Airbus sees megaplanes as the best solution to increasing congestion at airports. But Boeing's analysts have reached very different conclusions about how passengers will fly in the future, predicting that more of them will travel in smaller planes directly to and from smaller cities.

"The market isn't there" for a super jumbo, argues Aaron Gellman, director of the Transportation Center at Northwestern University in Chicago. "The trend is towards overflying hubs, not concentrating hubs."

In a way, however, Airbus has no choice but to develop a plane at the top end of the market to compete with Boeing's 747 jumbo, which has enjoyed a monopoly of the very large aircraft market since it was introduced in 1969.

Boeing has made so much money from the 747 that it can afford to offer hefty discounts on smaller aircraft, analysts say. If Airbus can cut into Boeing's share of the jumbo-and-up market, the US company will not have the same room for maneuver.

"Boeing has always been able to use its position with the 747, where it owns the sector, to help its position overall," explains Nick Cunningham, an analyst with Salomon Smith Barney in London. "Airbus wants to make sure its competitors never have that advantage again.

"Airbus has to [build the A3XX] because it has to cover the whole market if it wants to compete," he adds.

The new plane represents "the biggest threat to Boeing's commercial-airline interests," says Professor Gellman, because the more money airlines spend on the A3XX - whose sticker price is $220 million - the less they will have to spend in Seattle, and "if they kill the 747 as a cash cow, Boeing will have less money for research and development."

Despite its forecast of only a small market for super jumbos, Boeing is planning to offer a stretch version of its 747, carrying up to 525 passengers. And Boeing executives are focusing their fire on the soft loans that European governments have offered Airbus to help launch the A3XX, calling them illegal under international trade rules.

If the plane goes into production as planned, the technical aspects of one of Europe's most ambitious industrial undertakings will prove at least as challenging as the marketing problems.

Airbus is a consortium - now transforming itself into a corporation - owned by Daimler-Chrysler Aerospace (Dasa) of Germany, Aerospatiale Matra of France, Casa of Spain, and BAE Systems (formerly British Aerospace) of Britain.

The A3XX fuselage will be built in France, it will be fitted out in Germany, the wings will be constructed in Britain, and the tail section in Spain.

Getting the large parts back to Airbus headquarters in Toulouse, France, to be put together, may call for an earlier style of air-travel, company officials say. Under consideration: harking back to the days of Count von Zeppelin, and using airships.

(c) Copyright 2000. The Christian Science Publishing Society

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