New markets ease ‘peaks and canyons’ in EADS’s long-term fiscal landscape

Singapore Air Show » 2008
February 17, 2008, 10:09 PM

 At a recent seminar on “mobility and sustainability” in air transport, held at EADS’s Astrium site in Bremen, company CEO Louis Gallois confidently dismissed fears relating to an economic downturn.

“In the past we had only one big market; it was Europe and North America,” he said. “It was one market with the same cycle. It was a very brutal cycle with peaks and canyons. Now, in addition to the European and North American market cycle, which is presently not the most ‘alive,’ there is another market: the Middle East and Asia. These markets are not dependent but autonomous and we don’t see that the second market is suffering from the economic downturn. So from now on we don’t expect to have peaks and canyons, but more hills and valleys.”

In short, far from painting a gloomy picture, Gallois’ upbeat assessment was that of an “extremely active” market. “Granted, the U.S. airlines are not buying a lot of aircraft,” he acknowledged, “but that was the case last year and also two years ago. Moreover, we never expected to achieve the same level of orders in 2008 as we did in 2007. But 2007 was a historical record and we can’t have records every year.”

On the core issue of the day, Gallois characterized the environment not as a threat or a burden. “It’s the opposite: an opportunity,” he declared. “Environmental questions are now in the core of our business. We have to organize a debate with our partners, not only because of social responsibility, but also because our business is at stake.”

Gallois singled out taxation as a useful tool to encourage operators to move to the most modern, “greener” aircraft. However, rather than penalizing operators, he suggested that taxes could reward carriers for operating the least polluting aircraft. While he said that it could therefore imply a reduction in taxation on airlines that replace their old aircraft, he did not go as far as identifying it as the “silver bullet” in the drive for aviation sustainability. “It is just one of several ideas to be explored and would be complimentary to the main driver for eco-efficiency: high oil prices.” He also cautioned against the seemingly unabated trend regarding pollution rights. “Clearly it’s an incentive, but it can’t be the solution,” he said. “The solution to reduce the environmental impact is not to exchange it against other things.”

When faced with the inevitable questions on the shape of future eco-efficient airliners, Gallois explained: “We will put a new concept of engines on this aircraft and it could have an impact on aerodynamics. For example, if you have an open rotor, you do not put the engines under the wings. You have to tail-mount them. But the next airliner certainly won’t be a “flying wing.” Nevertheless, the flying wing could one day become a very efficient aerodynamic solution. But certainly not in the next decade.

“If we want to achieve a 15-percent fuel-burn reduction, we need a new concept of engines,” he added. “Perhaps prop-fan, geared-fan or open-rotor. Every engine manufacturer has its own solution. We will have to look at them and assess the level of performance, reliability and maturity. These are critical issues.”

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