Sir - While I generally find Flight International to be accurate, I was surprised to read "Dollar distress" (Flight International, 31 May-6 June) concerning the impact of recent worldwide currency movements on the aircraft industry. Your suggestion that aviation companies should "price in a wider mix of yen, deutschmarks or even ECUs" is unrealistic.
Despite popular myth, an unstable yen or deutschmark, rooted in structural economic dislocations in those countries, is as much of a problem as an unstable US dollar. One must be realistic in recognising that many of the world's currencies are linked to the US dollar, including those areas of greatest expected aviation growth into the next century.
Various European (other than Airbus Industrie) and Japanese airframe manufacturers have been pricing aircraft and parts in their own currencies for some time.
Airbus may have a 50% share of new-airliner sales within ten years, but it is certain that the same will not be true of other industry segments - smaller aircraft, components and avionics - which are still likely to be dominated by US manufacturers. This has nothing to do with dollar, but rather is because US industry is years ahead of its European and Japanese counterparts in corporate restructuring.
In an age of international co-production, currency issues are muted and a cheaper dollar should benefit manufacturers and consumers worldwide. Before the early 1970s, the dollar was often overvalued in comparison with other world currencies. Despite this inherent cost advantage, companies such as Aerospatiale, Daimler-Benz Aerospace, Fuji and Mitsubishi failed dismally in their attempts to develop commercially successful aircraft, despite extensive technological licensing from US firms, Government subsidies and domestic industry protection in those countries.
The problem then, as now, was ham-fisted Government industrial policies, bloated organisational costs and no economies of scale. The solution then, as now, is in better technical, manufacturing and marketing skills - and not further Government subsidies in the form of currency guarantees.
As for the FS-X, the YS-X and the loss-making Boeing subcontractors, if the Japanese would buy off-the-shelf, instead of pursuing grandiose dreams of domestic-aircraft development, almost everyone (but especially US President Bill Clinton and this Japanese tax payer) would be much happier in the long run.
MARK ARONEY
Tokyo, Japan
Source: Flight International
