Aerospace in 1991: The Airbus Dispute
The aerospace industry in 1991 witnessed the Airbus dispute. In Toulouse, France, Airbus Industrie completed final assembly of the A340, a midsize four-engine long-range jet that made its first flight in late October. As the A340 approached operational status, the growing dispute between Airbus Industrie and U.S. manufacturers began to take on crisis proportions. At issue were the subsidies that Airbus, an international European consortium, enjoys from member nations. Formed in 1970, the consortium has developed six commercial airliners and now accounts for some 30 percent of all new airliner orders in competition with McDonnell Douglas and Boeing. Although Boeing still leads the world in airliner sales, McDonnell Douglas has dropped to third place. The U.S. manufacturers claim that Airbus has benefited from European government subsidies of 60 to 90 percent of program costs, or over $13 billion. European industry points to benefits that U.S. manufacturers derive from military and space research, but the Americans contend that such assistance is negligible in comparison.
After months of talks between the United States and Airbus members failed to produce a compromise, the United States in June finally placed the issue before an arbitration panel under the General Agreement on Tariffs and Trade — a step that EC officials characterized as setting ‘a much more confrontational environment.’ The United States was intent on securing a more competitive position over the next 18 years or so, as manufacturers go after an estimated $600 billion market in new airliners. As the EC moved closer to economic integration, many observers saw the dispute as a harbinger of things to come in U.S. competition with Europe for market share in other key technologies. However, aerospace in 1991 was indeed reshaped to face future challenges after the Airbus dispute.
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