TPT November 2014

Global Marketplace

Dominican Republic to Manchester, UK. The sudden engine failure, the first such event for the 787 since deliveries began in the autumn of 2011, was a black mark for Boeing. But, if experts like aerospace analyst Richard Aboulafia, of the Teal Group, an aviation consulting firm in Fairfax, Virginia, are right, Boeing will emerge as ultimate victor in the competition with Airbus. The deciding factor will be something that has not, until now, commanded much attention: the preferences of the typical airline passenger, about which Airbus may have guessed wrong. As reported by Jad Mouawad of the New York Times , the A380 – which dwarfs every other commercial jet in the skies – was Airbus’s response, not only to the Dreamliner but also to a trend: more and more air travellers (a projected four billion by 2030), more flights, and increasingly congested tarmacs. Airbus saw the rise of international traffic through major hubs and bet on a big plane to connect those big airports: the A380, ideal for high-traffic high-volume routes or where there are flying constraints. For the plane that cost roughly $25bn to develop, the anticipated benefits have not materialised. So far, according to the Times , Airbus has received 318 orders for the A380 and delivered 138 planes to just 11 airlines – a disappointing showing for what was to be a flagship aircraft for carriers worldwide. A number of reasons could be cited, some merely cyclical; but according to Mr Aboulafia the main problem is more fundamental. People would rather take direct flights on smaller airplanes, he said, than get on big airplanes – no matter their feats of engineering – that make connections through huge hubs. (“Oversize Expectations for the Airbus A380,” 9 August) › Of the 500-passenger A380 with its two full-length decks totalling 6,000ft 2 and a wingspan that almost crowds it out of a football field, the aviation industry expert declared flatly, “It’s a commercial disaster.” Time will tell if that is overstatement. In the meantime, this much is clear: a decade ago, when the world’s two leading plane makers were looking to the future, Boeing saw traffic moving away from big hubs and toward secondary airports. “So it started to build a smaller, more fuel-efficient long-range aircraft,” wrote the Times ’s Mr Mouawad. “Which became known as the 787 Dreamliner.” In brief › The US Securities and Exchange Commission (SEC) requires both public and private American firms contemplating dealings with Iran to file an “IRANNOTICE” with that agency and other regulatory bodies. Boeing Co has filed such a notice with the SEC, reporting its having reached a preliminary agreement with a subsidiary of Iran Air for the potential sale of goods and services. In April, as part of an interim agreement concerning Iran’s controversial nuclear programme, the US Treasury had granted licences to Boeing and General Electric Co to sell parts to Iran to service its ageing civilian air fleet.

There is no question of the value of the newly protected market. “Because of this cheap energy, there’s a lot of infrastructure with steel going on,” Piotr Galitzine, chairman of TMK-IPSCO, said in an interview with the Journal . “We’ve identified $120bn worth of projects in the US which have to do with gas as a fuel and feedstock.” › Expert opinion canvassed by Mr Miller suggests that, even as the ITC tariffs raise the costs of oil and gas companies drilling everywhere from Western Pennsylvania to the Gulf of Mexico, they will not entirely stop OCTG imports. “If the findings had been dramatic enough to stop all imports from South Korea, we’d be looking at Korea leaving behind a 25 per cent market void,” said Mr Galitzine, referring to South Korea’s current share of the market. However, he said, with tariffs in the 5 per cent to 15 per cent range some imports will still trickle through. Other steel executives consulted by Mr Miller are of much the same view. They say that imports from another country will likely take South Korea’s place, as happened when tariffs were imposed on imports from China in 2010. Elsewhere in steel . . . › Tata Steel on 11 August announced that over the previous year it had signed contracts worth $13.4mn with the London-based global contractor Subsea 7 to supply undersea pipes to four separate North Sea projects. The Indian producer is providing “in excess of” 9,000 metric tons of pipe: around 17.4 miles of carrier pipe and 16.8 miles of sleeve pipe, to be manufactured at Tata’s Hartlepool pipe mills in the UK. › The Gerdau Special Steel India plant in Andhra Pradesh – the first investment in Asia for the Brazilian steel giant – was to be inaugurated by the beginning of 2015. The plant, built on an 846-acre site at a cost of $400mn, has an installed capacity of 300,000 metric tons. Aerospace Airbus vs Boeing: Will passenger distaste for connections through huge hubs finally decide the winner of the competition? For years this column has covered the rivalry between the European plane maker Airbus and Boeing, of the US, in which the advantage – in prestige, productivity, profits – passed regularly from one company to the other and back again. When, in August, it was reported that the pilot of a Boeing 787 “Dreamliner” was forced to shut down one of the plane’s two engines about one and a half hours into a scheduled flight over the Atlantic, the advantage moved to Airbus. The plane made a safe emergency landing in the Azores about four hours into a nine-and-a-half hour flight from the

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N ovember 2014