http://www.economist.com/agenda/displayStory.cfm?story_id=3555366 A hulking beast joins the dogfight Jan 13th 2005 From The Economist Global Agenda Airbus is about to unveil its new A380 super-jumbo (pictured). Will the 555-seat monster leave Boeing trailing in its wake? AS DISTINCTIVE Routemaster double-decker buses disappear from the streets of London, Airbus is set to unveil a double-decker passenger jet that it hopes will repeat the success of a vehicle that is every bit as iconic: Boeings 747. The European consortiums A380 super-jumbo, which is to be formally unveiled at a lavish ceremony on Tuesday January 18th, will break the 747s longstanding monopoly of the big-jet market when it enters service in 2006. Everything about the new plane is big, from its capacity of 555 paying customers and range of 15,000km (9,320 miles) to the purpose-built hangar, one of Europes largest enclosed spaces, at its construction site near Toulouse in southern France. Bigger, longer-range versions are planned and so far orders have been taken for 149 super-jumbos, over halfway to break-even point. The size of the project reflects estimates about the future demand for air travel. Despite the recent travails of big airlines, both Airbus and Boeing expect a tripling of air-passenger traffic over the next 20 years. But the transatlantic rivals disagree about how the demand should be met. Airbus thinks an extra 16,600 new large planes (over 100 seats)a doubling of the number of passenger aircraft currently flyingwill do the trick, and expects that the average number of seats in aircraft will increase by 20%, to 215. By contrast, Boeing expects sales of 18,600 slightly smaller planes. Airbus is hoping that the A380 will help it retain the lead it gained over Boeing in 2003, when, for the first time since the European consortium emerged as a rival to Boeing in the early 1970s, it delivered more aircraft than its American competitor. Airbus, to Boeings extreme displeasure, kept the number-one slot in 2004 by delivering 320 planes compared with 285 from its rival, according to figures released this week. Boeings seemingly unassailable lead over Airbus was founded on the success of the 747, which entered service in 1970. The original jumbo jet could carry twice as many passengers as the next largest plane then flying and had a greater range, allowing, for example, a long transatlantic flight without refuelling. Its cost per passenger mile was around one-third less than its rivals. A huge home market for the jumbo and the rest of the Boeing range ensured its ascendancy. Some 1,400 747s have been sold to date. However, only 15 were delivered last year. And as the jumbo has aged, Boeings domination of the commercial airways has foundered. The aerospace giants product line is ailing, and attempts to revive it have met with only partial success. The big airlines showed little interest in an upgraded jumbo. And a red-faced Boeing was forced to withdraw its Sonic Cruiser, a plane intended to fly at near the speed of sound, after airlines rejected the idea that passengers would pay a hefty premium for such rapid transit. Boeings latest attempt to put things right, the 250-seat 7E7 Dreamliner, is born out of a belief that passengers will demand, and future deregulation allow, a big increase in point-to-point travel: direct flights between small and medium-sized cities, as opposed to the traditional hub-and-spoke model, in which international passengers fly between a few major airports and are then taken to more out of the way places on feeder flights. Boeing hopes the new plane will prove popular with the time-conscious business flyer. It says that the 7E7s advanced engines will cut airlines fuel costs by 20%. So far it has received 56 firm orders. The A380, by contrast, is designed to fly between big hubs. Its critics say it will mean longer journey times for passengers with onward flights to smaller destinations. But Airbus is claiming a similar step-change to the one that accompanied the launch of the 747: operating costs will be 15-20% lower than those of any rival aircraft, it says. To add to Boeings discomfort, Airbus announced in December that it would introduce the A350 in direct competition with the Dreamliner, offering much the same specifications. Boeings fears that it would be left in Airbuss wake also prompted it to attack on another front. In October, America made a formal complaint to the World Trade Organisation alleging the payment of billions of dollars of unfair subsidies to Airbus. Boeing claims that launch aid has enabled Airbus to roll out five new products in the past ten years while it has managed just one. Like Airbuss rapid response to the Dreamliner, the European Union immediately said that it would file a counter-claim over large sums of aid going to Boeing through indirect government subsidies from its relationship with NASA and the Pentagon. This week, the EU said that it was ready to compromise to resolve the dispute and both sides agreed to suspend hostilities (and subsidies) for three months of negotiations. The huge projected market for passenger jets over the coming years will allow both aircraft-makers to sell plenty of new planes. The A380 aside, Airbus and Boeing seem evenly matched. The success of the super-jumbo may well determine how much higher the Europeans fly than the Americans in the next few years. Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.