Posted: Fri Apr 22, 2005 8:51 am Post subject: The new Airbus
As we all know Airbus is introducing its latest "mega size" airplane this year. To me that's an indicator that they have no clue about PO and its implications.
Makes one wonder who in the political and corporate arena really knows what we are headed for. In his address to the San Francisco Commonwealth Club Michael C. Ruppert makes the point that the current government of the US orchestrated the attacks of 9/11 which seems absurd (I recall even Howard Kunstler being disturbed by this viewpoint). Nevertheless listen to the audio yourself: http://www.globalpublicmedia.com/interviews/73
(There are other good audios on that site btw. for instance an interview with Kenneth Deffeyes:http://www.globalpublicmedia.com/interviews/128
or Howard Kunstler: http://www.globalpublicmedia.com/interviews/362)
Anyway, not to loose track, Michael Ruppert makes the point, and most of us have heard that argument, that no new oil refineries are being build on the basis that the return on investment is not given, in other words the oil companies know that the supply of oil will not exceed current production rate and the given refineries will do the job.
Why then can such large conglomerates like Airbus go ahead and throw all this money in an extrodinay expensive development that certainly is designed pay off not earlier than 2020?
Joined: Mar 23, 2005 Posts: 183 Location: Norwood, NY
Posted: Fri Apr 22, 2005 9:28 am Post subject: Airbus not totally out in left field
Yes, Airbus is building a monster plane, seating capacity of over 500. I don't think they're totally off base fuel wise. This plane is one of the most fuel efficient ever built. The fuel requirements per pasenger mile are a lot lower than older planes. If there is to be long range air travel in the decade after the peak, it will be best accomplished with this type of plane. Long range air travel isn't really the biggest part of the problem; it's the shorter intra-continent flights that use up so much more fuel. The Southwest Airlines small plane (Boeing 737) model is probably more in danger in the years immediately following the peak. I personally believe that the intra-continental travel now done by plane, and autombile, should have been replaced with high-speed rail a long time ago. In this regard, North America lags far behind Europe and Japan.
Like all things to do with peak oil, the business men believe the official line & are required to produce both product & jobs, hence the US/Euro argument over artificial subsidies to both Airbus & Boeing. neither government can afford to lose the jobs or the business. The official line is that everything is rosy until 2030, so no problem with the Airbus planning !
I know this is b0ll0cks, as do you or you wouldn't be posting here, but the Airbus model will sell regardless, even more of them have been ordered since the price of fuel has gone up. WHY ?, simple the Airbus model is the correct one & Boeing will lose the battle. The Airbus model is based around major hub airports & the fact that the their new plane will give the lowest passenger mile cost of any commercial airliner. Now if we assume that the cost of fuel keeps going up & that people will still want to fly for a while at least they will even be able to afford it, then we will see more of the hub central flight patterns with local ground distribution (read rail etc) & much less of the direct point to point flying that has become popular with cheap seat airlines. That is the model Boeing is hoping to use for sales & it just won't happen.
As the cost of fuel goes up, every empty seat will become critical to airlines & thus the per passenger cost will climb steeply & force the point to point system into decline. It will return to the late sixties early seventies setup where you will fly from London to maybe 3 or 4 airports in the USA etc on a scheduled airliner, after that the schedules will decay from the current hourly local departures to once per day or every other day, until finally they reduce service to full planes only. It will take a few years to get to that point, but I'm certain it will happen. Air transport will eventually be limited at extreme cost to long haul flights over water only. Cheap foreign holidays will become a thing of the past & commercial shipping will resort to combined operations of passenger travel & freight.
The current instant travel world will step back to the 1920/1930's era long holiday periods for the rich and short breaks to the sea side for the working man ! _________________ The roller coaster is still climbing, but it's near the top now !
Where there's a WAR there's a WAY
Joined: Sep 29, 2004 Posts: 2330 Location: Pennsylvania, USA
Posted: Fri Apr 22, 2005 10:09 am Post subject:
The A380's mission is to take the crown from Boeing for the world’s biggest airplane. It does that and provides a lot of jobs for Europeans. The A30 is a fantastic achievement and those involved should be very proud. However, like many business decisions made around the world, free market economics are not the dominant force involved.
Boeing's decision to not pursue a competing model is based on market economics. Boeing is a profit driven company, not a government subsidized consortium. Though Boeing has benefited immensely by military contracts, they have to compete for those with other companies.
The question is will Boeing join with it's American competitors to better compete with Airbus? Probably not. The track record favors free market economics, not government subsidies.
With its Dreamliner, Boeing has explictely staked its future on its more "dynamic" model of small planes servicing more and smaller destinations. It has done so as an explicit challenge to Airbus's model (fewer small hubs, and bigger investments in longhaul intercontinental flights and hubs).
I've never understood Boeing's model. They think people are willing to pay US$ 300 more for a direct flight between say, Hong Kong and Fresno. While they can get to the same destination with Airbus, just by going from Hong Kong to LAX and then taking a US$ 20 bus or cab to Fresno.
The Boeing model makes no sense.
Boeing will only survive as long as it is subsidized and gets major military contracts from the US government. Their Dreamliner is a disaster. _________________ The Beginning is Near!
America wants an end to Europe's soft government loans, known as “repayable launch aid”. These allow Airbus to develop new models safe in the knowledge that much of the “borrowed” development money will be written off should the new aircraft not sell well. In practice, Airbuses now sell like hot cakes and governments collect royalties on the aid even after the principal and interest are paid off. Yet should, say, the new Airbus A380 not achieve 500 sales, Airbus's parent company EADS (and its one-fifth partner BAE Systems) will not have to repay any of the $3.7 billion of soft loans advanced to get it off the ground. On the other hand, Boeing, says Airbus, has long received subsidies indirectly via development contracts from NASA, America's space agency, and from the Department of Defence.
In 1992, Europe and America agreed that Airbus's launch aid would be limited to one-third of development costs, while indirect aid to Boeing would be capped at 4% of its total revenues. But last year America tore up this bilateral deal and demanded an end to Airbus's launch aid, declaring that the 1992 agreement had required it to be phased out over time.
One reason for this new tough stance was that Airbus had started to outsell Boeing and, worse, seemed to be successfully launching the A380 to end the age-old long-haul monopoly of Boeing's 747. Airbus has outspent Boeing both on research and development and on capital investment, making its production perhaps one-quarter more efficient than its rival's.
Another reason, suspect some Europeans, is that America knew it was already breaking the bilateral deal. Direct financial support had been provided for the production of bits of Boeing's new 787 jet by the states of Washington and Kansas.
As for the A380. Of course it is a crown project, but it is also reflects some strategy. I think that when fuel gets more expensive, the first thing that will disappear are short flights. I can go to every European city by train or bus, the only reason why people tolerate the higher prices of a flight is the added comfort and the shorter travel. But of course there is a limit to that.
So the main money will be in the long haul flights as there is no alternative for them (except for the boat). Boeing and Airbus are both aiming for that with the A380 and the 7E7, both have advantages and disadvantages.
The A380 is a lot cheaper. Not only is it more economical in fuel, but you also need less planes and less crews. As you only fly from central hubs you need less personnel on the ground. Disadvantage is that the people have to travel a greater distance to and from the airport.
The 7E7 has the advantage that it can deliver you from door to door in more comfort. However its operation is a lot more expensive.
It would be interesting to see how this competition works out.
So the main money will be in the long haul flights as there is no alternative for them (except for the boat).
Makes sense, since the system will not come to an aprupt end and travel will continue. My original question though, and hence the mentioning of Michael Rupperts speech is to what degree the various political/economical groups are aware of PO and how they cope with it.
Ruppert makes the point that the small circle in and around the current government in the United States is able to operate completely independent of the Pentagon or the larger parts of the secret service. It is just the most curious thing how the awareness of PO infuences the actions of decision makers.
In Kenneth Deffeyes interview (link in my original post above) he points out that he has never seen anyone changing his viewpoint about the Peak Oil predicament. Quote: The number of people that changed their minds about this (PO) after hearing more about the data is essentially zero.
In that sense it doesn't make a difference if the decision makers who gave the green light to finance the Airbus mega project know, knew or ever will know about PO. They operate on a different mode.
In part based on CIA oil intel, in 1971, the US Congress voted to cancel the SST program. France/Britain were stuck with building the Concorde, which was an economic disaster, in part due to rising fuel costs. (Admittedly, there were other issues; noise, ozone depletion, short range)
With tight military & intel ties, Boeing management was quietly informed of peak oil. So the Mach 0.95 "Sonic Cruiser" was cancelled. The new 787 dreamliner (nee 7E7), which is 50% carbon fiber, and 20% more fuel efficient, and smallerthan the previous Boeing flagship model was designed for the post peak oil era. It is a Prius with wings, upmarket fuel efficient air travel for a smaller number of air passengers. The old term "jet set" used to refer to rich people might come back into vogue.
The poor French were left in the dark again. The A380 was designed for exponentially increasing levels of air passenger travel, which we know is now going to happen. It will be a white elephant and will never sell enough units to break even on the huge R&D cost. I call it the Toulouse Goose.
Ruppert makes the point that the small circle in and around the current government in the United States is able to operate completely independent of the Pentagon or the larger parts of the secret service.
That's no secret. These people are called lobbyists. In the US as well as in Europe the lobbyists outnumber the politicians by a factor of two. You don't have to compose such outlandish conspiracy theories as Ruppert does, to understand where the real decisions are made.
In the Airbus case the argument is pretty simple. Airbus made the decision to develop the A380 based on their long term strategy. they calculated how much employment, local economic stimulus and research the project would generate. Then they gave those numbers to their lobbyists together with a finance proposal. After that it was a done deal. I don't think that the politicians care whether the A380 will be a success in 10 years time. The fact that they can say that they have created so many jobs now is more important.
As for Airbus long term planning. I think they are aware that the energy prices will rise and have been so for a long time. Fuel efficiency has been a central theme for the whole A-series. Airbus uses much more composite materials in their designs than Boeing. As a result their planes are more expensive to buy but a lot more efficient in operation.
I think that is Boeing's main problem at the moment. The 7E7 is really Boeing's first plane where they start looking at the fuel efficiency. It is not a great step forward, but an attempt to catch up with Airbus.
That is reflected by the market. China is buying their planes from Airbus, not only the 380 but also the older models. Price-wise that is a strange thing to do. The rising euro makes these deals very unattractive. Yet Boeing sees its sales of its older models slump despite a dollar advantage. The reason these companies are choosing for Airbus is because they know that they are going to earn back the difference at the pump.
Boeing management was quietly informed of peak oil.
Perhaps...
It would explain their more or less ceeding the airliner crown to Airbus. On the other hand Boeing is getting fat off the government trough in the form of Military contracts. Why worry about the vageries of the civilian passenger aircraft industry when you are getting rich off of government contracts? _________________ UNplanning the future...
http://unplanning.blogspot.com
I think both the 787 and A380 are screwed. The present fleet is more than sufficient and the newer jets will not offer enough of an improvement in fuel consumption to make a difference. Even the 20% improvement figure (which I don't believe they can attain by the way) is not good enough. They would literally have to more than triple fuel efficiency (IMPOSSIBLE!!!) for air to compete energy wise with the lowly intercity bus.
I think both the 787 and A380 are screwed. The present fleet is more than sufficient and the newer jets will not offer enough of an improvement in fuel consumption to make a difference. Even the 20% improvement figure (which I don't believe they can attain by the way) is not good enough. They would literally have to more than triple fuel efficiency (IMPOSSIBLE!!!) for air to compete energy wise with the lowly intercity bus.
You can't take a bus from London to New York. I think we're going to see a long period when air travel gets more and more limited to only these journeys that you can't do by land and that take very long by sea. On this, the winners will be big, fuel-efficient planes. In Airbus's hub-and-spoke model (big planes flying between big cities, small planes taking you from big cities to smaller cities), you can switch a part of the trip to land/sea (ie. replace the small plane to a smaller city by a train/ship), in Boeing's direct flight model you can't.
IMHO it all comes down to when the peak hits. If the people predicting imminent peak are wrong and we'll still have fairly cheap oil for a decade or two, Boeing's model will be competitive. If we're looking at moderate prices for a while, Airbus will be better off. If we're looking at immediate superprices, they're both screwed and there's no way any of these new planes will sell enough when the collapse of most of the world's airliners floods the market with used planes.
You can't take a bus from London to New York. I think we're going to see a long period when air travel gets more and more limited to only these journeys that you can't do by land and that take very long by sea. On this, the winners will be big, fuel-efficient planes. In Airbus's hub-and-spoke model (big planes flying between big cities, small planes taking you from big cities to smaller cities), you can switch a part of the trip to land/sea (ie. replace the small plane to a smaller city by a train/ship), in Boeing's direct flight model you can't.
Most people expect severe recession or depression when peak oil hits. A large proportion of air travel is not essential to life. The combination of greatly increased costs and people having to handle the recession will see rapid shrinkage of of civil aviation. Within a few years of peak oil there will be hardly any short haul flights in Europe. The US will take longer to react, because of the pig headed ness of its govt. and the lack of alternative infrastructure (rail). But it too will get there - it'll have no choice.
Long haul air travel will remain, but the volume of it will be vastly reduced. Air travel as a part of 'normal' life will be a thing of the past.
There are likely to be increased governmental restrictions on air travel. When we actually face shortages of fuel, as well as greatly increased prices, govts. will have to control the use of fuel to ensure that the essential uses of it get priority. The US will find this very hard to accept; Europe with its history will adapt to this much more easily.
You can't take a bus from London to New York. I think we're going to see a long period when air travel gets more and more limited to only these journeys that you can't do by land and that take very long by sea. On this, the winners will be big, fuel-efficient planes.
Most people expect severe recession or depression when peak oil hits.
Well, most people here are in a desperate need of some realism. The peak is not any sort of a magic point directly connected to the economy; the only connection comes through the price of oil. We'll feel the peak before it (although we won't know for sure that it's the peak - we might be feeling it right now) and there's a good chance the economy will simply slowly erode over a long time.
Of course, the economy won't be that great, but air travel doesn't all stop the second there's a recession or even a depression. I've lived through a depression (worse than the Great Depression, for this country) and it's not the end of the world. (Well, for some it is, but not for most.) I have the feeling that the typical person here is a young middle-class American, someone who's never had to pinch the slightest and imagines that "depression" means a complete collapse of society or something. It doesn't. Things will still go on.
Quote:
There are likely to be increased governmental restrictions on air travel. When we actually face shortages of fuel,
"When"? You take that as given, but if production simply decreases steadily, there's no reason at all to assume that there would be widespread shortages.
Quote:
The US will find this very hard to accept; Europe with its history will adapt to this much more easily.
Oh no. We should try not to make every thread a crap-throwing contest between the US and Europe. Let's compare Airbus and Boeing, not Europeans and Americans.
Joined: Oct 27, 2004 Posts: 220 Location: Queensland, Australia
Posted: Mon Apr 25, 2005 1:04 am Post subject:
jaakkeli,
Greetings. Personally I believe that the many on the edge airlines are a serious barometer of Peak oil effects. They are very effected by fuel costs and their income is very effected by discretionary expenditure. So given a long slow continuous reduction in spending by the public due to ramping prices (generally accepted as occurring with peak oil) and increased costs, we will see almost every marginal air route collapse. The ones that will survive longest are long distance flights between Megalopoli (??). These routes and the airlines that fly them, will want the newest, most efficient aircraft heading into this long down shift in air travel. By efficiency here I mean basically Fuel ber passenger mile. If this is best done with Big Big Planes then thats the way to do it. Convenience may not vanish on these routes, (There will still be 20minutely take offs between London and New york for a long time.) but your choice of destinations out of smalltown USA will probably reduce to a few major hubs. The days of Flying with only 10-20% occupancy are close to over. (BTW that amazed me with regards to September 11th. The planes were very much under occupied.)
As to your thoughts about young middle class americans (and probably most westerners) seeing depression as the end of society/civilization, I think you are actually on target. For much of the west true lack of wealth has not occurred amongst the middle and higher classes for 30+ years. There are poor people but the middle class has for 30 years and even more so in the last 10-15 has had almost no problem buying a lot of consumerist 'stuff'. A close friend who is younger than myself honestly has no idea what want is. Want a horse Dad purchases a horse stud and the girls get a bunch of em. Turn 17 and new sporty car is sitting in the 6 car garage. Need new computer, $3000 gets paid up. Go home to visit for a weekend and drive back with several thousand dollars of designer clothes of which less than half is ever worn. The thought that no safety net may exist to hold them up with just a phone call is not even understood. To these people long term loss of wealth is a disaster to them. The inability to buy a new Gizmo is horrible, the possible requirement to lose cable is really bad and being forced to wear warm clothing indoors in winter is hard to fathom.
As to your statement "Oh no. We should try not to make every thread a crap-throwing contest between the US and Europe. Sad Let's compare Airbus and Boeing, not Europeans and Americans."
I think you have actually managed to somewhat state a point without meaning to. Boeing is a product of the USA and Airbus is a product of Europe. In some ways they reflect the attitude of the places they are based. In europe they have gone with a series of central hubs with good rail and mass transit services this effects the way Airbus plans for the future. In the US the transport ideas mainly revolve around direct travel for convenience sake. Get to a local airport and fly direct almost the whole way to you destination. Or hop in a car and drive direct to where you want to go. More convenient but less efficient of transport resources. Boeing is trying to keep within these ideas while introducing a more efficient aircraft then existing small aircraft.(although nowhere near as efficient as the a380) Interestingly the Hub and spoke approach is pretty well how the US operated until the mid 80's when regional and local transit corridors etc were developed.
Paul
PS, here in Aus we effectively have just 6 hubs with a few very small regional airports.
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