Leeham News and Analysis
There's more to real news than a news release.
China’s closed airspace hasn’t changed much in 20 years
China’s military continues to so control–and close airspace–in China that delays are rampant, this AP story reports. We’re reminded on the era when we were doing business in China, going there nine times in a 4 1/2 year period from December 1988-mid 1993.
Visiting a number of airlines there, one of which was operated by the military, along with CAAC, CASC and the McDonnell Douglas Shanghai factory, we were struck by the low aircraft utilization: only six or seven hours. Western standards were 10 or more. Even then, we were told, the military control of the skies was a key factor. The low utilization rate then clearly contributed to the need to buy more airplanes to meet traffic growth than was necessary. We haven’t seen any data on today’s utilization rate, but we have to believe this nexus remains.
Flying Chinese carriers then was pretty alarming at times. A ramp worker smoked while refueling a plane, with the refueling connection spraying fuel on the ramp. Carry-on baggage was in the aisle on take off. A person was in the lav on take off. We’ve read some stories in recent years that suggest not much has changed.
Back then, getting into China had limited options. We flew to Tokyo and pretty much had to take Air China into Beijing. A direct air route would go over Korea. We couldn’t go through North Korean air space and apparently flying over South Korean to China was then forbidden, so we had to route south around the Korean peninsula, adding a great deal of time to the flight.
The McDonnell Douglas Shanghai factory was primitive even by standards of the day then, well before robotics and moving production lines. The factory was producing one MD-80 a month and the planes were essentially hand-built. This antecedent might be why the MD-80-looking ARJ21 is having such difficulty. The factory drew so much power that parts of Shanghai went brown-out or black-out during the day, an issue presumably long-since overcome in the Shanghai power grid.
The MD-80 plant was supposed to be MDC’s “in” to gain market share. While selling something like 40 MD-80s/90s (if memory serves) to China via this plant, the venture clearly was a failure and the Chinese used the operation to learn a bit about commercial aviation. Embraer had an ERJ plant in China for the same purpose, and likewise came up short of its goal while the Chinese benefited more. The Airbus plant in Tianjin seems to have been more successful, but we don’t think it’s coincidence that the COMAC C919 looks a lot like the A320.
Odds and Ends: Boeing’s secret 777X plan; Airbus wins big with British Airways parent
Secret 777X Plan: The Seattle Times reports that Boeing has some secret planning underway for assembly options for the 777X. This involves increasing the automation on the assembly (and thereby reducing manpower) and increasing the production rate to 10 or 12 a month, according to Dominic Gates’ story. This rate is still below the ultimate target of 13/mo Airbus has in mind for the A350, up from the announced 10/mo. And Airbus is considering yet a second assembly line for the A350, though it is unclear if Line 2 would be for the incremental 3/mo to 13 or more than 13.
The increased automation described by The Times, and the manpower-automation trade off, sounds very similar conceptually to the robotic process Boeing uses to paint 777 wings. In pre-Paris Air Show briefings, Boeing addressed the manpower issue. What jobs were lost to painting were shifted elsewhere as production of the 777 ramped up to the current 8.3/mo. According to The Times article, increased production of the entire 777X line would offset jobs lost to automation.
IAG goes with Airbus: In another huge order, assuming all options are exercised, Airbus scored a big win with the parent of British Airways, Iberia and Spain’s Vueling (an LCC), IAG, for up to 220 A320ceo/neos. Bloomberg has the details.
Odds and Ends: SuperJet 100; cell phones on airplanes; 787 real-time monitoring; Crikey
SuperJet 100: This airplane, which is basically the old Dornier 728 jet design, was supposed to be Russia’s leap to western standards. It hasn’t worked out that way, according to this article.
Cell Phones on Airplanes: There continues a debate over whether cell phones really have to be turned off for take-off and landing. This finally explains the technical issues of the cell phone and other electronic devices.
787 Real Time Monitoring: NPR (the national public radio in the US) has this report about Boeing’s real-time monitoring of the worldwide 787 operations.
Crikey: The ever-direct (and cranky) Ben Sandilands weighs in on the Airbus-Boeing advertising tiff.
Boeing: ExIm needed so we can do R&D, not finance planes; how about dropping stock buybacks instead?
The Puget Sound Business Journal reports that a Boeing exec says the US Export-Import Bank is necessary to help finance Boeing aircraft so free cash flow can go toward R&D rather than financing customer orders.
Hmm. We think all the billions of dollars going to stock buybacks to pump “shareholder value” (aka the McDonnell Family and Harry Stonecipher) might be better spent on R&D.
Sarcasm aside, we agree with Boeing that the ExIm is needed. Republicans (who claim to be for business) continue to target ExIm funding as corporate welfare. True, ExIm is often characterized as “Boeing’s bank” since most funds support Boeing airplanes. But as we have opined several times before, the European Credit Agencies fund Airbus and if the ExIm is shut down, then Airbus gains a major advantage.
Odds and Ends: The risk on airborne fires; C919 delays; A380 v 747-8I
The Risk of Fire: FlightGlobal has this story about the risk of fires on board (free registration required). The news article is alarming about the risks of lithium-ion batteries, combined with the new composite technology.
The page for the original report is here.
The 70-page report is here.
Among the findings FlightGlobal reports is what we wrote about early this year: if you have a fire on the airplane, you have to get on the ground in a short period of time (15 minutes, according to an Airbus study, 18 minutes according to this new one).
The interaction between the batteries and composites is a concern.
COMAC C919: The Wall Street Journal has an article talking about the anticipated delays of the COMAC C919. This is via Google News, so it should be accessible to Readers. Here is also a short news item from China Daily and one from Bloomberg.
Airbus loses advertising complaint: Remember those Boeing ads promoting its 747-8 as 26% more economical than the A380? Airbus filed a complaint with a UK watchdog agency, which denied the complaint Tuesday. Aviation Week has this article. One of the things that strikes us from the regulator’s decision is its conclusion that customers would, essentially, see past Boeing’s claims.
Boeing’s use of seats counts–notably 467 for the 747-8–supports the math of the advertisement. But Airbus is right that in true airline configuration, the count would be 405 seats, which dramatically alters the Boeing claims.
Regardless, we have previously opined that the comparison is ridiculous. Given the large differences in the size of the airplanes, comparing the 748 with the A380 is like comparing the 737-700 with the A321. Boeing is cheeky to make the comparison and Airbus fell for it. This debate is hardly worthy of two world-class companies,
Rather than engaging in a debate over seat-based economics, Airbus has a clear upper hand in these numbers: airlines have purchased 262 A380s and only 40 747-8Is. These are the only numbers that count and with these, Airbus clearly has the better advertisement.
Update: AirInsight has some statistics to look at.
Right-to-Work, Creepy and Right-to-Worse in Washington State
No column we’ve written has gotten more attention outside the blogosphere than the one in which we concluded that if Washington State is to truly become competitive with the South, it needs to become a Right-to-Work state.
Gov. Jay Inslee responded indirectly to the suggestion, via The Puget Sound Business Journal (it ain’t gonna happen). A leader of the engineer’s union for Boeing, Stan Sorscher of SPEEA, wrote an Op-Ed column in which he linked our column and in the next sentence said it was “creepy.” We exchanged emails with Sorscher, and he said he didn’t mean we are creepy—just the idea. The president of IAM 751, the local for Boeing, Tom Wroblewski, niftily called the idea Right-to-Worse. Several labor websites and newsletters reprinted the Sorscher and Wroblewski columns.
We occupy an interesting position in our role as an observer and pontificator in aerospace, and in Washington State, where we live. We’re not beholden to any company or special interest here, nor are we any longer on the Board of Directors of any trade group (thus we now can say what we really think). Our only interest is the growth of the aerospace sector here. We consulted to the state Department of Commerce for 18 months, until budget cuts in 2011, recommending strategies and policies. “Beyond Boeing” and seeking a suppliers fair with Airbus for our state’s aerospace businesses were among the recommendations we made.
We watched as the SPEEA and IAM 751 members essentially bailed out Boeing (“saved Boeing’s ass” is how we put it to the Puget Sound Business Journal) during the 787 and 747-8 design and production debacles. We watched while IAM 751 struck Boeing for 58 days in 2008 and SPEEA worked to defeat Boeing’s contract offer this year.
We’ve watched as Boeing placed 787 line 2 in South Carolina (our view is that this was retaliation for the 2008 IAM strike, which Boeing steadfastly denies—and which we don’t believe for an instant). We’ve watched as Boeing cut jobs in Information Technology and with engineers, outsourcing these to non-union states. We firmly believe Boeing Chicago is waging war on the unions, with the weaker SPEEA union firmly in its sights first.
In this totality and context, we came to the conclusion that Washington State needs to make some major revisions in its approach to labor—if it wants to be competitive with non-union states. Boeing has made it abundantly clear it will move jobs from unionized Washington State—the fourth-most unionized state in the nation, IAM 751 boasted in advance of its 2008 strike.
Unions would rather have no jobs than non-union jobs. Our basic view is that nobody should be forced to join any group in order to have a job. If a work force in any company votes to organize, fine. But anyone who wants to work should be free to work. Here in the Seattle area, unions are working against two projects valued at close to $1bn because they fear non-union jobs will be attached to the businesses or construction. We think this is just nuts. This is another reason Washington State needs to become Right-to-Work. These economic-drivers will create direct and indirect jobs (some of which will almost certainly be union, since at the least garbage collectors are unionized). To actively lobby against these projects and deny jobs to those who want them and positive economic impact for the Seattle area is simply an eye-rolling moment.
Aerospace jobs are moving out of the state because Boeing is moving them to non-union areas. This State lost attracting companies in the past because the State is the fourth most unionized state in the nation.
The IAM’s Tom Wroblewski pointed to Idaho as having lower wages because it’s non-union. We think Idaho has lower wages because…it’s Idaho. There isn’t a lot there to recommend it, really, despite some truly attractive areas. Among the detriments: it’s long been a pocket for neo-Nazis and skin-heads. (We are braced for the hate mail on this one.) And unionization isn’t a guarantee the state’s education system is going to be funded as it should be, as Wroblewski infers. Washington, the fourth most unionized state in the nation, has been underfunding education for decades. Former Boeing CEO Frank Shrontz was complaining about this in his day, in the early 1990s. Only this year, after the State Supreme Court, ordered the Legislature to more properly fund education did it step up and do so.
We acknowledge the sterling work of SPEEA and IAM 751 members—as we said, they saved Boeing’s ass—but Washington has to compete with the Southern States. Being the fourth most unionized state in the nation isn’t the way to do it.