Boeing vs. Airbus

Boeing and Airbus have, for the past two decades, ran the world of commercial airliners.  The success of both companies is a result of beneficial mergers and a decline in the economy, which would push any other would be competitors out of the picture.  This left Boeing, an American-based company, and Airbus, based out of Europe.  Both companies have fighting like cats and dogs for the top spot, developing aircraft to out-do the other.  The current competition between Airbus and Boeing is between the Boeing 787 and the Airbus A350.  Recent issues with the batteries in the 787 has grounded the fleet due to fires.  While the A350 has not seen issues like this, it does not mean that they are currently taking over the market.  In sales, both Boeing and Airbus delivered around 600 aircraft; the issue lies in the over 4000 jets that are currently backlogged.  Politics and government relations is important to both companies, as made apparent by both having made numerous attempts to outbid each other for government contracts.  In 2011, Boeing beat out Airbus for a contract worth $35 Billion dollars to produce tankers for the United States Air Force.  Some politicians were not happy with the decision to go with Boeing.  “I’m disappointed but not surprised.  Only Chicago politics could tip the scales in favor of Boeing’s inferior plane. EADS clearly offers the more capable aircraft. If this decision stands, our warfighters will not get the superior equipment they deserve.” said Senator Richard Shelby.  On the other end of the spectrum, Senator Patty Murray said it was “a major victory for the American workers, the American aerospace industry and America’s military.”  Politics do play a large role in who gets what and not everyone has to be happy about it.

There are a number of factors that make companies such as Boeing and Airbus successful.  The first is obviously the manufacturing aspect.  Without a solid product, neither could be successful.  About 15 years ago, Boeing switched their manufacturing philosophy to a more lean approach.  In the actual aircraft, Boeing primarily uses hydraulically operated systems.  Airbus took a different approach; they made the plane it self more efficient and pilot-friendly.  Airbus' approach is known as the fly-by-wire, a concept that they came up with in the 1980s and never looked back from.

Boeing currently employees over 170,000 people in the United States and 70 other countries.  In comparison, Airbus has 59,000 employees internationally.  Both companies have their strong hold in the market right now, but it's only a matter of time before another manufacturer comes out with the bigger, better, and safer aircraft that unseats one or both from the "duopoly."

References

Airbus. Fly-by-wire.  Retrieved from: http://www.airbus.com/innovation/proven-concepts/in-design/fly-by-wire/

Altmeyer, C, Hepher, T.  (17 January, 2013).  Boeing overtakes airbus in annual sales race.  Retrieved from: http://www.reuters.com/article/2013/01/17/us-airbus-orders-idUSBRE90G0CF20130117

Bloomberg.  (3, June, 2001).  Boeing goes lean.  Retrieved from: http://www.businessweek.com/stories/2001-06-03/boeing-goes-lean

Drew, C.  (24 February, 2011).  Boeing wins contract to build air force tanker.  Retrieved from: http://www.nytimes.com/2011/02/25/business/25tanker.html?_r=0

Thompson, M.  (17 January, 2013).  Boeing overtakes airbus as clouds gather.  Retrieved from: http://money.cnn.com/2013/01/17/news/companies/boeing-airbus/index.html

European Union ETS

What is the European Union's ETS?  Many people don't understand how it works or how exactly it is governed.  Simply put, the Emission Trading System is based off a "cap and trade" system where companies are held accountable and limited in the amount of greenhouse gases emitted that they are permitted to emit into the atmosphere.  This system encompasses a number of industries, including powerplants, factories, and aviation.  There are numerous countries, the US included, that are opposed to this participation in the system, specifically because of its charges that could be applied to aviation.  The EU saw China order their fleet of European-bound aircraft not to participate and then ordered a freeze on the purchases of additional Airbus aircraft because of the EU ETS.  India had a similar reaction to the ETS, refusing to report their emissions to the EU.

The United States is currently opposed to the ETS scheme as well.  In preparation, the United States has already drafted legislation making it illegal to pay the proposed tariff.  With all the pressure ensuing from all angles, the European Union was forced to announce the postponement of the law.  Britain, France, and Germany were pushing for the elimination of aviation inclusion all together.  

ICAO is now responsible for developing a plan to make a global solution by the Fall of 2013.  This will be a hard task, considering all the parties that must be included in the talks.  The US's initial issue with the EU's plan was the fact that the emission amount for inbound/outbound flights included the entire flight, not just the portion over European airspace.  In my opinion, in order to make the fees fair and justified, fees should be assessed and paid according to where the flight takes place.  There is so much technology tracking flights, flight time, fuel rates, and even emissions, that a formula could be made to fairly divide monetary reimbursement to the countries affected.  With the ICAO's funding and access to research and information, there is no reason why something like this couldn't be accomplished.  By doing a formulated, evidence based calculation of fees, companies will know what kind of fees they will incur.

References

DeVore, J, Hayes, J, & Labrousse, F.  (26 February, 2013).  Aviation and the EU ETS: what's next?.  Retrieved from: http://www.mondaq.com/unitedstates/x/223598/Aviation/Aviation+and+the+EU+ETS+Whats+Next

Lewis, B, & Volcovici, V.  (10 December, 2012).  Insight: US, China turned EU powers against airline pollution law.  Retrieved from: http://www.reuters.com/article/2012/12/10/us-eu-airlines-climate-idUSBRE8B801H20121210

European Commission.  (25 February, 2013).  Reducing emissions from the aviation sector.  Retrieved from: http://ec.europa.eu/clima/policies/transport/aviation/index_en.htm

European Commission.  (4 January, 2013).  The EU emissions trading system (EU ETS).  Retrieved from: http://ec.europa.eu/clima/policies/ets/index_en.htm

General Aviation in China

China: a country with potential that seems to be limitless and an economy that seems to be booming.  In General Aviation terms, Chinese companies are taking a strong interest in improving and growing the industry, not only within their borders, but internationally.

There are numerous companies throughout the United States that have been around for years, established themselves, and, due to economy hardships or an eye for growth, have decided to team up with Chinese companies.  Hawker Beechcraft, which seems to have been under the spotlight for bankruptcy and then the proposed purchase by a Chinese firm, is not the first to have ties to China.  According to a number of sources, the Beechcraft deal did not go through because terms could not be met to satisfy the needs of both parties.  Cessna is a prime example of a company that decided to expand.  In March of 2012, Cessna agreed to team up with Chinese investors to build business jets that would meet Chinese standards.  Cessna saw this as beneficial to their company because, not only was Cessna able to keep all the employees that it had prior to the deal, the deal expanded their company internationally and opened more opportunities for employment.  In addition to Cessna, Cirrus Industries, Inc., which is the parent company of Cirrus Aircraft, was purchased by a Chinese company.  Cirrus did not see a cut in any employees but was immediately granted $150 million in order to finish the development of the Vision jet project, a light jet in which production had been slowed for years do to finances.

There are a number of reasons for the rapid growth of General Aviation in China.  The most notable and important in my opinion is the 2010 announcement by the government of China that would open up low-altitude airspace specifically for General Aviation.  Prior to this announcement, General Aviation in China was very limited and as few as 150 GA-purpose airports.  By 2020, they hope to have an additional 100 airports built.

In the big picture, by GA manufacturers from the United States branching out, introducing product in China, and building relationships abroad, this benefits everyone.  As made very clear by companies that have already made those bonds, Americans will not loose their jobs; if anything, job growth and potential may improve throughout the industry.  Cessna is a great example of this; they are still producing all their aircraft stateside and then shipping the aircraft so that China can finish the product in accordance with their standards and requirements.  While many Americans hate seeing businesses go this route, I don't believe that it will harm General Aviation in the United States.

References

Associated Press.  (18 October, 2012).  Hawker beechcraft sale to Chinese firm collapses.  Retrieved from: http://www.cbsnews.com/8301-34227_162-57535483/hawker-beechcraft-sale-to-chinese-firm-collapses/

Clyde & Co. (September, 2012). Update: general aviation in China.  Retrieved from: http://www.clydeco.com/uploads/Files/Publications/2012/General_Aviation_in_China_19.09.12.pdf

Hegeman, R.  (16 July, 2012).  U.S. plane makers teaming up with Chinese firm.  Retrieved from: http://www.manufacturing.net/news/2012/07/us-plane-makers-teaming-with-chinese-firms

Niles, R.  (28 February, 2011).  Cirrus acquired by Chinese company.  Retrieved from: http://www.avweb.com/avwebflash/news/Cirrus_Acquired_By_Chinese_Company_204192-1.html

3) What is the relationship between these U.S. general aviation manufacturers with ties to China, and the growth in the Chinese general aviation industry?

4) Most importantly, what does all of the above mean for career opportunities in the U.S. general aviation sector?

Sequestration and the Aviation Community

Over the last couple years, there have been a number of problems with the economy throughout the United States.  With all of the financial woes and our debt ceiling crushing down on us, a number of people have tried to find ways to correct this uncorrectable situation we see ourselves in.  More recently, we have seen the word "sequestration" being thrown around.  To be honest, before everything really hit the fan, I probably couldn't have defined the word.  Now, it seems like every can, or knows some sort of definition variation on the topic.

Sequestration is described as the "practice of using mandatory spending cuts in the federal budget if the cost of running the government exceeds either an arbitrary amount or the the gross revenue it brings during the fiscal year." (Murse)  Basically, what it boils down to is that money can and will be saved by any means necessary, whether it be through mandatory furloughs of employees or cuts in government programs.

Originally, the idea of sequestration was, just that, an idea.  Sequestration was proposed as an incentive for the government to act on the problem and come up with some sort of solution, ultimately an agreement, that would prevent the need for sequestration.  According to President Obama, the sequestration can be halted, but it is the responsibility of the Senate to come to terms on a compromise. (Spetalnick, 2013)

This could potentially have a huge impact on a number of government-funded projects and grants, including those related to the aviation community. The FAA currently has some of the most cutting edge programs in the world on the table and those are now being threatened.  NexGen, the top of the line air traffic management system is now being put on the back burner, where over the past year it has been a top priority installation.  Funds have been slashed so that repairs to navigational aids are done only when deemed necessary. In addition to this, the FAA has been forced to furlough employees, just as other agencies have had to do.

Another one of the most notable impacts that is already being noted is the closing of numerous air traffic control towers across the United States.  There are 173 towers, located in small- and medium-sized airports, that will now become unmanned. (Bennett, 2013)  While these control tower cuts do not eliminate FAA-held jobs, as a majority of these are run by contract, the concern is the safety around the towers for incoming and outgoing traffic.  While pilots do train for unmanned towers, the concern is that those medium-sized airports that have a heavy traffic flow may be at risk for more incidents both on the ground and in the air. 

The sequestration currently in place affects all angles of aviation, whether it be commercial airlines or the guy who is taking private lessons.  Ultimately, you have to look at the safety aspect of what the cuts are forcing the FAA to do.  As the sequestration presses on without some sort of proposition that can be agreed upon, I believe the aviation community will continue to see cuts.  Programs like NexGen that have been made to improve efficiency, safety, and air traffic management will suffer, which in turn will cost airlines money.  Airports that do not get the funding necessary to maintain their runways or facilities or that are denied funds to develop and expand airports through procurement of surrounding land will suffer and, in turn, economies surrounding those airports can suffer.  General Aviation will only see a fraction of the hit on the aviation community, but see that affect nonetheless.  

Bennett, D.  (6 March, 2013).  FAA to close air traffic control towers due to sequester.  Retrieved from: http://www.theatlanticwire.com/national/2013/03/faa-close-air-traffic-control-towers-sequester/62802/

Murse, T.  What is sequestration?.  Retrieved from: http://uspolitics.about.com/od/thefederalbudget/a/What-Is-Sequestration.htm

Namowitz, D.  (27 February, 2013).  Top officials offer glimpse of a post-sequester FAA.  Retrieved from: http://www.aopa.org/advocacy/articles/2013/130227top-officials-offer-glimpse-post-sequester.html

Spetalnick, M.  (2 March, 2013).  Obama: sequestration crisis will 'inflict pain,' congress should help with compromise.  Retrieved from: http://www.huffingtonpost.com/2013/03/02/obama-sequestration-_n_2795749.html