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Despite their monopolistic overtones, the Europeans have a point: unfettered competition can have a few bad repercussions. Example: the U.S. inspired stand-by fares. They functioned smoothly only as long as planes were not being filled by passengers with confirmed reservations. Now the standbys are left stranded in appalling situations. To their woe, a few foreign carriers, notably El Al, Iran Air, Air-India and British Airways, have tried to match low U.S. transatlantic fares and have ended up with thousands of irate standbys on their hands. Most foreign airlines have resisted the deep discounts, and they have far fewer problems, at least on the North Atlantic.
Lufthansa Chairman Herbert Culmann predicts that, in a competitive free-for-all, the airlines with the best chance of survival will be those with Government backing. "The American carriers are in danger," he warns. "Whether Air France gets 400 million francs from the French government today or 500 million francs tomorrow, you can be certain of one thing: Air France will still exist." So, he might add, will Lufthansa, British Airways, SAS, KLM, and all those other airlines that are the major flag carriers of their nations.
If Culmann's dire prediction is even partly fulfilled, and some U.S. airlines are financially weakened, the American planemakers that supply them could be hurt. In turn, the nation's balance of payments would suffer. Of all commercial plane sales in non-Communist countries, Boeing rings up about 52%, McDonnell Douglas 28%, and Lockheed 3%. At about $7 billion a year, sales of aircraft, engines and parts abroad are the second largest U.S. export (after food).
Now the Europeans are disputing U.S. dominance as never before. The challenger is the Airbus A300, made by a French-German consortium with a Spanish junior partner—and financed by all three governments. It is the world's first twin-engined wide-body jetliner, and it can carry up to 310 passengers for almost 50% less in operating costs per seat mile than the stretched version of the 727, which has similar capabilities. In a sense, the Airbus is the finest American plane that the Europeans could build; its highly efficient engines are produced by General Electric. The Airbus Industrie consortium has sold 157 Airbuses to 16 airlines, and the largest order, for 23, came from Eastern. In 1974, President Borman began begging American planemakers to build a weight-saving twinjet, but they dallied. Next, a new-generation Airbus, designated the A310, will be a direct competitor to Boeing's planned 767. Already the new Airbus, which seats 200 and has most advanced technological features, has been ordered by Air France (four), Lufthansa (ten) and Swissair (six)—and Airbus sales teams are canvassing potential buyers throughout the world.
Since Borman outraged U.S. planemakers by buying a European plane, Boeing has led a campaign in Washington against what Treasurer Jack Pierce calls "predatory financing." Indeed, Borman got a good deal, which includes a $250 million loan guaranteed by European government agencies. Somewhat reluctantly, the U.S. Export-Import Bank has agreed to try to meet the European terms by making more of low-interest loans available to foreign buyers of U.S. aircraft.