Why Russian aircraft industry has nothing to oppose Boeing and Airbus

More recently, the head of the Antimonopoly Service, Igor Artemyev, proposed "to destroy state corporations to increase competition." Obviously, a member of the Yabloko party is convinced that a Russian private owner will be able to effectively counter Western corporations within the framework of a market economics. The realities, for example, in the aviation industry, and what domestic companies will expect without state support, can be judged by the endless trade war between Boeing and Airbus.




The proceedings between the American and European corporations in the WTO have been going on for a very long time. Unexpectedly for the followers of the “invisible hand of the market” it turned out that both companies received hidden support from the state. Boeing had serious tax incentives, allowed funds received through the Pentagon, including the development of civilian liners. Its European competitor also received multibillion financial support from EU countries in the form of subsidies. This information is for those who naively admire incredibly efficient private business in the absence of government intervention.

It will be even more interesting to learn how Western corporations literally eat up their competitors. In addition to Boeing and Airbus, Canadian Bombardier and Brazilian Embraer are widely known in the aircraft market. These companies made and sold wonderful planes, all as expected in the framework of liberal theory. However, this grace abruptly ended at the click of a finger from the United States.

Two years ago, Canadians signed a contract to sell 75 Delta Air Lines CS100s. In response, Boeing complained to the U.S. Department of Commerce, saying it created unnecessary competition for its 737MAX-7. The result was a promise to raise import duties on the Bombardier CSeries to 300%. That, in fact, is all. Remarkable Canadian planes were left without a market with the assistance of US authorities. Airbus immediately flashed a buzz, which bought a controlling stake in the Bombardier CSeries, renaming it to A220.

The takeover of the Canadian manufacturer by the European forced Boeing to become more active. Airbus also kept an eye on Embraer. Last year, the American corporation created a joint venture with the Brazilian company for the production of civil liners, where Boeing's share was 80%. Apparently, the Embraer management was already aware of their prospects when they would have the “invisible hand of the market”. This is the question of how to compete with TNCs.

Having swallowed those who got in their way, Boeing and Airbus clung to each other even more tightly. In theory, their lawsuit could last for many more years, but the development of the conflict was catalyzed by two disasters of the Boeing 737 MAX 8 in a row. The American corporation began to lose ground in the market, since it did not work out quickly to fix the problem. I had to crush the European competitor in the WTO line to stop its expansion.

Independent Arbitrators have determined that the US will be able to receive compensation in the amount of $ 7,7 billion in the form of duties on goods from the EU. As part of the decision, European aircraft and their components will be subject to a 10% duty. Interestingly, patronage in relation to Boeing will have negative consequences for all global air travel, Airbus executives explained:

If the US Trade Representation prefers to impose tariffs on imports of aircraft and / or spare parts for them, this will result in instability and interruptions not only in the aerospace industry, but also in the global economy as a whole.


A similar decision can be made in defense of the European aircraft manufacturer. In fact, this violates the principle of duty-free access to foreign aircraft, which is used in many countries. In 1999, ICAO defined the following principle:

It is widely recognized that taxes on the sale or use of international air transport are a relatively unjustified form of taxation and may have adverse economic consequences for the further development of this type of transport.


Aircraft can become significantly more expensive for air carriers and prolific discounters. This means that ticket prices will increase, which will reduce the number of passengers on air lines. For the sake of "America, which is first and foremost," the blow will be dealt without exaggeration throughout the global economy. So he asks, what is there to catch after privatization to domestic producers?
Photos used: https://rtp.pt/
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  1. steelmaker Offline
    steelmaker 8 October 2019 12: 28
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    And why do not any duties and sanctions apply to our military aircraft? I think the main thing is that we can assemble these aircraft from scratch ourselves. Over the past 20 years, we have not built and created private business from scratch for the country and people. Even Yeltsin is a center, out of 7 billion rubles, 5 budget money. Because business needs profit quickly, and not in years and decades, and charity is only "at gunpoint." In our country, even agriculture is not financed in the same way as in Europe and the USA. Do you want airplanes? Conclusion - as long as the state government itself does not work, and does not rely on private business, we will not have civilian planes! Our government wants to collect only taxes, and others should work.
    1. Marzhecki Offline
      Marzhecki (Sergei) 8 October 2019 12: 50
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      No private aircraft manufacturers will not compete with TNCs.
      1. g1washntwn Offline
        g1washntwn (George Washington) 8 October 2019 14: 49
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        In general, yes. But this is if you climb into the commercial international market, the internal needs of such risks are almost devoid, since for the foreign market it is more important not the plane itself, but the service. It is in terms of service and the spare parts market that Boeing hits. The "invisible hand of the market," which is actually the Transnational Corporation, is crushing others with dumping and hidden corruption (as the Russian aircraft industry was practically strangled). If, as a result of corporate showdowns, world prices rise, both for airplanes with spare parts, and for the cost of transportation, then the others have the opposite, having a little squeak, to get in between the two fighting. The main thing here is not to merge because of quick and easy money, like Bombardier. True, if (even and most likely, this is the case) it is simply a collusion between Boeing and Airbus for takeovers, then, of course, nothing will help here due to different weight categories and Embraer is doomed, like "superjets".
  2. Bulanov Offline
    Bulanov (Vladimir) 8 October 2019 14: 15
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    Admittedly, industrial capitalism in Russia has not worked out well. If that works, then there are entirely foreigners in the leadership, or shareholders. It's time to curtail the shop and go to the "national enterprises" and the State Planning Commission.
  3. Screw Offline
    Screw (Gennady) 9 October 2019 09: 08
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    Aviation Marshal Shaposhnikov, who allowed Aeroflot to purchase 20 Boeings at the beginning of the saints of the 90s, “huge” reverence - blushed, making excuses, in the Duma, like a chaste girl.
  4. oracul Offline
    oracul (leonid) 10 October 2019 07: 58
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    The desire of the West to maintain its dominant position in the sphere of finished goods is understandable - this is according to Marx, since raw materials that have gone through various redistributions are always more expensive. The Golden Billion has done almost everything to claim the position of the world hegemon in this field (patent and copyright, the WTO, the IMF and the World Bank, the Internet with its capabilities, the SWIFT payment system, the dollar as a world currency, etc.). Did not have time! First of all, Russia and China interfered. Russia has maintained military-technical parity with the West, covering the developing world, China has become one of the leaders in the global economy. True, the root reason lies in the fact that natural resources and raw materials are not unlimited and - alas! - they are concentrated, moreover, unevenly, mainly in the third world. An increasing contradiction arose in attempts to maintain a standard of living with the “golden billion” due to the monopolization of the right to deeply redistribute products and advanced technologies, and the reluctance of the rest of the world to give up their raw materials cheaply, while preserving their destiny for the “orphaned and wretched”. So, the aircraft industry only reflects one of the sides of the contradiction.