FC NOW: The Fast Company Weblog
March 28, 2007
Who's Subsidizing That New Airbus Bus? Us!
The arrival of Airbus’ big-bus airplane in the U.S. last week was the occasion for lots of breathless coverage in the media. The A380, the largest passenger plane in history, did a kind of fashion-runway pirouette across the U.S., visiting JFK International, LAX, O’Hare, and Dulles outside Washington, DC.
The Airbus A380 is an engineering marvel — it has 5,920 square feet of passenger deck space; outfitted for commercial flights, it will have 18 bathrooms and 16 doorways. The luxury version that came to the U.S. seated 519 passengers; configured for all coach class, the cabins could squeeze in 850 people.
The plane also cost Airbus $19 billion to develop, is two years late, and its production problems cost Airbus’ CEO his job. Airbus has orders for just 156 of the planes from 14 airlines — and no U.S. carrier has ordered the plane, which has a list price of $300 million. Airbus needs to sell 400 to break even on production costs.
But something barely discussed (and often omitted altogether) in the stories about the plane’s arrival here is what the A380 is costing U.S. flyers and taxpayers.
The big plane is costing us not just millions of dollars, but hundreds of millions.
We have a remarkably inconsistent attitude about government subsidies of business. When companies become unpopular, “taxpayer support” becomes a big target. One of the most effective strategies for attacking Wal-Mart has to been to detail the billions of dollars in routine subsidies that Wal-Mart receives, from local governments providing incentives to state health programs providing medical care to Wal-Mart families.
Of course, we spend billions of taxpayer dollars building and maintaining roads every year — an expense to which GM, Ford, Chrysler, Honda and Toyota contribute nothing. Their products wouldn’t work very well without those roads, but we want the roads too, so we don’t even notice the “subsidy.”
Indeed, there’s nothing inherently wrong with us deciding to spend government money to make commerce possible. What’s important is to understand that Wal-Mart is hardly alone in receiving such help, to separate out attitudes about companies from attitudes about subsidies, and to have full transparency of the dollars involved.
Which brings us back to the Airbus A380. The plane is so large — each wing is as long as the Wright brothers’ first flight! — that U.S. airports have to be modified to accommodate it. The New York Times reported last week that JFK International has already spent $179 million widening and extending taxiways for the big plane, and may spend up to $300 million before regular service begins next year.
The Los Angeles Times reports that the city of Los Angeles has spent $49 million modifying the decrepit LAX international terminal for the A380, including $9 million for a single, double-deck boarding bridge. Before Quantas begins flying the new Airbus from LAX to Sydney next year, the airport will have spent $121 million on modifications.
Airbus’ North American chief Allan McArtor told the crowd greeting the plane in Los Angeles that the plane is “perfectly designed for Los Angeles and LAX.” Indeed. Once LA finishes spending $12 for every man, woman and child in Los Angeles County.
Posted by Charles Fishman at March 28, 2007 3:06 PM | Category: |
8 Comments
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Your comparison between Wal-Mart and the Airbus missed the point. Wal-Mart's problem is that its labor and market practice is unethical. People are not against subsidizing Wal-Mart because it has become 'unpopular' for no reason. As far as we know, Airbus does not have such ethical issue. You only pointed out that it has missed its production and sales target, this hardly compares to the complex social problem generated by the Wal-Mart cult/corporation.
That is an interesting point, re: taxes - I didn't think of that. The plane is unarguably huge. If you are into planes, check out the blog written by the Lufthansa employees operating the A380: http://touch-down-a380-usa.blogspot.com. I wonder if they'll touch upon the issues you raised.
I'm not sure that we should be subsizing these big planes. Is that really the taxpayer's responsbility, the airlines or Airbus?
When I think of subsidies, I think of the company having a direct benefit from those monies. Unless it is different then I think, Airbus gets none of the money for the airport expansion plans. Additionally, what would the cost be for the new (larger) Boeing Planes - here and at other worldwide airports to suppor their landing?
The terminal modifications are mostly paid for by
the airlines themselves. It is the runways and
adjoining areas that have to be made thicker and
stronger to accomodate this airplane's massive
weight and public money is spent on that.
Of course the same modifications had to be made to
accomodate the 747. The difference being that the
747 filled a genuine need. Does the A-380 or was
it just an ego trip on the part of Airbus to build
the 'largest' airplane?
Surely the extra range and payload of the A-380 is
not a 'dramatic' improvement over the 747 in the
way that the 747 eclipsed the 707. We have also
come to understand the problems of wake turbulence
caused by larger airplanes. I have been told that
the A-380 will need about 2 miles more airspace
behind it than the 747 which will make its extra
passenger capacity somewhat less advantageous as
other planes will be backed up behind it.
I would not want to fly on it for the foreseeable
future due to the wiring issue alone. I won't
predict a fire but I wouldn't be surprise if one
occurs owing to the ad hoc rewiring being made on
the initial production orders.
We just flew into LAX from Sydney yesterday. I was surprised to see QANTAS with two 747-400 flights scheduled out of Sydney for LAX just about 35 minutes apart. Both planes were full to capacity. I think there is a scheduling problem because Sydney has a curfew and closes their airport at night. If they are going to get the passengers across and hit the time windows they do strange scheduling. Maybe in a case like this the 380 might serve a purpose.
However I really have no desire to fly with any more people than were on the 747. Man that is a long cramped experience. If only they would charge $10 more and space the seats a half inch more apart.
I would give up my ability to recline if everybody else would. Once the first guy leans back it is just like dominoes falling.
Airlines give a good value, but do you suffer!
If the US airports didn't modify their airport to accommodate the A380, they's be missing out on a large chunk of the future market. i.e. They'd be turning away business if they didn't allow the A380 to operate there.
Oh, by the way, about half of the A380 major components are designed and made in the USA.
Another thing, in Britain our roads & car parks now have to be wide enough to accommodate increasing numbers of those polluting Hummers and Chevvie SUVs! So are Brits subsidizing the manufacturers of these US vehicles?
I'm not sure that we should be subsizing these big planes. Is that really the taxpayer's responsbility, the airlines or Airbus?