It's time once again to upgrade airline and aerospace industry filing systems, as extra cupboards and stronger shelving are pressed into service. Yes, the forecast season is with us again. Every day, a new volume arrives, to be scanned before being filed away to gather dust until data is required for another management presentation.
The controversy generated by these forecasts can be almost unbearable. Boeing now predicts average annual traffic growth of 4.9 per cent over the next 20 years. Airbus is more bullish, with a forecast growth figure of - wait for it - 5.2 per cent a year.
A growth difference of 0.3 percentage points may be equivalent to the annual traffic of a carrier like Aéromexico, but there is really little disagreement between Airbus and Boeing over the broad trend. The differences in perception come with the minutiae, such as what sized aircraft people will fly in.
The arguments are well rehearsed. In the 'A' corner: A doubling of traffic can only be accommodated by flying larger aircraft, particularly in Asia, where the growth in demand is strongest and airport infrastructure is most constrained. In the 'B' corner: Given deregulated markets, airlines prefer to accommodate growth by adding more city pairs and increasing frequencies rather than through larger aircraft.
Both arguments are logical, and both are self-serving - Airbus is aiming to convince airlines, its partners and the financial community that its A3XX project is viable, whereas Boeing aims to scupper the A3XX and build the 747-400 for as long as possible.
Each side is clutching at every straw blowing in the wind. Here are a few:
Many new Asian airports are planned. Advantage, Boeing.
Capacity at airports like Heathrow, JFK and Narita, will become more constrained. Advantage, Airbus.
US/Asian open skies deals will improve airlines' ability to open up new routes and increase frequencies. Advantage, Boeing.
Talks between the US and Japan remain in stalemate. Advantage, Airbus.
Smaller aircraft are becoming capable of flying longer range, point-to-point routes. Advantage, Boeing.
A few airlines are demanding larger aircraft as soon as possible. Advantage, Airbus.
The issue could be decided by a few discrete events. If those three recalcitrant Japanese farmers can be persuaded to allow Narita's second runway to be built, Boeing will be very pleased. If Japan scraps its bilateral with the US, the Airbus argument could benefit. Progress with major Asian airport projects is crucial to the debate. So is the timing of the next recession.
However the forecasts are interpreted, there seems little doubt that Airbus will launch the A3XX, since it has to offer a complete family of aircraft. Boeing will respond by stretching the 747 or, more likely, with a new model. If both projects come to fruition, it is to be hoped that the Airbus version of the future is correct.
A new sort of open skies?The transatlantic brain drain of US airline executives seems to be turning into a flood. The decisions by both Lufthansa and Swissair to hire Americans to run their passenger airlines beg a serious question: do Europeans have what it takes to run an airline in a deregulated environment?
Fred Reid and Jeffrey Katz are the first US citizens to head major European airlines, but there are precedents. Air France hired Stephen Wolf as a consultant and Rakesh Gangwal as a senior executive, and the latter is given particular credit for turning Charles de Gaulle into a proper hub. Jonathan Ornstein is running Virgin Express and Franco Mancassola started Debonair. Sir Colin Marshall is British, but brought experience of US management practices with him to British Airways.
Now that airline competition in Europe is hotting up, it should be no surprise that European airlines are looking to the US rather than hiring or promoting executives who are accustomed to the cloistered environment of a cosy, cartel-like market.
European airlines now need their senior executives to combine customer focus with fast thinking, fast talking, fast action and ruthlessness, instead of the civil service mentality which is still prevalent in many of their head offices.
The market for airline chiefs is now global. Most countries outside the US do not have a large pool of potential airline chiefs simply because they have few large carriers. No doubt some people will resent other nationalities coming to run their airlines. But there is little time for nationalistic sentiment these days: senior appointments have to be based purely on merit.
Source: Airline Business
