Peter Jackson column
Jan 20 2005 By Peter Jackson, The Journal
European joint venture aircraft do not have a great history of success, at least not if one views Concorde in purely commercial terms.
However, let's not be negative about the new Airbus A380, unveiled this week. In fact, Airbus are confident that the plane will sell and that the joint venture will soon recoup its costs and go on to make a profit.
It is certainly an ambitious project, the twin-deck aircraft being the world's largest passenger plane.
It has been developed on the back of rising worldwide demand for air travel and it is hoped that that will feed into demand for giant planes offering cheaper seats between major cities.
US rival Boeing, on the other hand, is developing the 7E7 `Dreamliner', a smaller aircraft which will be able to fly direct to a wider number of smaller airports.
It remains to be seen who has judged the market correctly but, as a non-aviation expert, it seems to me likely that both could be right.
The public's insatiable demand for cheap air fares - clearly demonstrated by the increasing number of destinations served by Newcastle - will, if trends continue, provide plenty of work for both the A380 and the 7E7.
And, on the face of it, there seems no reason why those trends should not continue.
In the US, passengers are paying less, on average, than they did in 1988 and analysts see no signs of fares going up this year, as the low-fare carriers maintain the pressure on the traditional carriers.
It is also forecast that 2005 will see a recovery for US airlines from the 9/11 atrocity, with a 5pc increase in spending by air travellers.
However, it is worth sounding a warning note. More people than ever may be flying, but airlines are losing billions of dollars as they cannot pass on record aviation fuel prices to those same eager air travellers.
It is estimated that the American industry alone will have lost $8bn in 2004, bringing total losses since 2001 to $30bn.
This is being repeated on this side of the Atlantic and for the same reasons. Oil prices are nudging the $50 a barrel level and this feeds through to aviation fuel.
It is likely that some low-cost carriers will fail, and when that happens, the pressure on air fares will be upwards. Add to that increasing environmental concerns and the future for mass air travel doesn't seem as untroubled as Airbus and Boeing might like to think.
