TARIFF WARS: A New Hope?

Airbus tariffs

Each piece of news concerning the Airbus-Boeing tariffs conflict comes up as a new episode of a never-ending movie saga. As you probably know, in these films sometimes things are not usually as they seem to be at first glance. However, every now and then things are exactly what they seem to be. Can we expect the same plot twists in this tariff conflict between aircraft manufacturers? Let’s try to answer this and other questions through this article.

Current context:

The most recent and last episode of this conflict, which could be titled “Airbus strikes back”, happened a few days ago: the imposition of $4 billion in tariffs on United States goods by the European Union.

WTO (World Trade Organization) ruling issued last month entitled the EU to impose these tariffs based on the fact that Boeing had benefited unfairly from government support. People familiar with the matter stated that it had been an expected decision, but it is also true that it has been perceived for some sectors as an action only contributing to add more drawbacks in the path to finally get the conflict solved.

In the end, it is undeniable that this is a response in line with the first action taken by President Trump last year, who referred to the EU as a “foe” and complained about “what they do to us in trade” to finally impose tariffs on EU goods. Although this action was legitimately taken based on the WTO ruling issued last year, many stakeholders on both sides of the conflict would have chosen a negotiated settlement as a better approach.

Proof of the above mentioned was the disappointment expressed by the US-based airlines arguing that these measures put them into a difficult situation:

United Airlines, American Airlines, and Southwest Airlines (Boeing operators) were already struggling due to the mandatory grounding of the 737 MAX, and the stock market was not merciful with them after the tariffs announcement.

JetBlue and Delta (Airbus operators) stated that these tariffs would have an impact somehow on travelers due to the airline fleet strategy is not able to be changed overnight.

President Trump and Boeing’s chief executive, Dennis A. Muilenburg, discussed a long-running trade dispute in 2017 at the company’s plant in North Charleston. – Kevin Lamarque-Reuters.

On the other hand, and as expected, Boeing totally supported these measures as illustrates in the following statement:

“Europe is facing tariffs today because Airbus has refused for years to comply with WTO rulings.” “Unfortunately, Airbus’s noncompliance will negatively impact European member states, industries and businesses completely unrelated to Airbus’s actions, as well as Airbus’s airline customers.”

Boeing’s written statement

In addition, before any tariff was imposed and right after WTO ruling, Airbus called for a settlement trying to avoid tariffs.

Airbus tariffs
Guillaume Faury, Airbus Chief Executive Officer. – GettyImages.

“Tariffs would be a barrier against free trade and would have a negative impact on not only the US airlines but also US jobs, suppliers and air travelers.”

Guillaume Faury (Airbus CEO)

Even with the US tariffs imposition, there were some European leaders who had preferred a more conciliatory approach. Nevertheless, there was a clear motivation in the fact of imposing tariffs on US goods right after a new-elected US president arises (what is highly probable according to current predictions). This imposition results to be the most effective reminder of the fact that this conflict has to be addressed the sooner the better, and no matter who is in charge of US executive decisions.

Despite tariffs approval by the EU, it was clearly and intensely stated that this is not a matter of measures escalation:

Airbus tariffs
From left to right Valdis Dombrovskis, EU’s top trade official, and Peter Altmaier, German Economy Minister. – WTVB.

“We are not escalating anything. We are exercising our rights as awarded by the WTO. We are just here mirroring the US approach. Removing these tariffs would be a win-win for both sides.”

Valdis Dombrovskis (EU’s top trade official)

“We are ready to withdraw or suspend our tariffs at any time when the US is ready to do so on their side, whether it is the current or future US administration.”

Peter Altmaier (German Economy Minister)

Worth to mention as well Donald Trump’s last month statement in which threatened with a quick retaliation if the EU responded to US tariffs.

Airbus tariffs
President Trump giving a speech in a Boeing’s factory. – AERO Magazine.

“If they strike back, then we’ll strike much harder than they’ll strike.”

Donald Trump (US President)

Additionally, there has been news in the last few days that will have an impact somehow on Airbus and Boeing’s interests and decisions in the mid-term. They will hardly imply differences concerning the main strategies followed by each side to face a 16 years-long conflict, but they can lead to changes concerning the urgency or the character (more or less aggressive) of the actions to be taken. Some of them are listed below:

Timeline and highlights:

The origin of this conflict dates back to October 2004 when the George W. Bush administration complained about the fact that Airbus was receiving subsidies from EU governments to design and develop large civil aircraft. These subsidies would have been covered up as loans whose interest rates were below market and being even forgiven.

US and Boeing also state that without this substantial financial support, Airbus would never have been able to become a serious competitor for Boeing. A380 was the aircraft under major scrutiny at the beginning, but further investigations were extended to the rest of the Airbus commercial family including even the A350 in a future stage.

Finally, the figures claimed by the US to WTO in 2006 were $22 billion (€19.4 billion) which US officials estimated that had resulted in a benefit of more than $200 billion.

Airbus tariffs
World Trade Organization (WTO) headquarters in Geneva. – Reuters – Denis Balibouse.

In the meantime, the EU counteracted alleging that Boeing had received $23 billion in US subsidies. These subsidies in form of specific regulations, grants, tax breaks, tax deferrals, etc. would have impacted not only in large civil aircraft manufacturing but also in R&D (Research & Development) projects and contracts for the Department of Defence and NASA.

Airbus and EU claimed to WTO for these aids as its competitor did and in the same way, the investigations were extended to the design and development of a future Boeing aircraft: the 777X.

All the stated above was only the beginning of a trade conflict which has been estimated to reach up to $100 million in costs, and whose end will lead apparently to nobody’s victory.

Find below a summary of the most relevant events of this conflict as a timeline:

  • 2005: WTO initiates investigations of state support for Boeing and Airbus after failed bilateral negotiations.
  • 2006: New Airbus A350 is announced and further government loans from EU are sought.
  • 2009: WTO issues an interim ruling and states that some European aid provided to Airbus violated a ban on export subsidies.
  • 2010: WTO demands to stop immediately the government loans for Airbus commercial aircraft including the A380. These loans are categorized as prohibited export subsidies. However, it rejects including the loans for the A350 as requested by US.
  • 2011: A separate WTO panel partially supports the EU claims alleging $19 billion aid for Boeing from the US, ruling against it, and estimating its value in at least $5.3 billion.
  • 2012: WTO restates the ruling against US support for Boeing. Both sides accuse each other of failing to comply with the WTO’s rulings while stating its own compliance.
  • 2013: New Boeing 777X is announced and agreed to be manufactured in Washington state shortly after an $8.7 billion tax break for the aerospace industry was stated by the local administration.
  • 2014: EU launches a separate complaint against the 777X tax breaks.
  • 2016: WTO states that EU failed to comply with its earlier rulings on Airbus. It also agrees to rule against aid for the new A350 but not putting it in the prohibited category. Tax breaks of the Boeing 777X are categorized as prohibited.
  • 2017: After US appealing, the WTO reverses the ruling concerning 777X tax breaks giving clearance to US in maintaining support for Boeing. Further EU appeals in this regard are dismissed.
  • 2018: WTO states again that EU failed to remove all subsidies to Airbus. US threatens with billions of dollars tariffs on EU goods. Arbitration comes into play to determine the scope of tariffs.
  • 2019: WTO states US failed to remove subsidized tax breaks to Boeing in Washington state. Both sides disagree widely in public, accusing the other of refusing to negotiate any settlement. WTO arbitrators entitled US to impose tariffs on EU goods. US imposes tariffs on most Airbus aircraft and on other EU products. WTO also rejects EU claims that it no longer provides subsidies to Airbus, granting US to increase tariffs on a wider range of EU goods.
  • 2020: US announces an increase in tariffs on Airbus aircraft imported from EU. Washington state votes to remove tax break that had benefited Boeing. Following delays due to the COVID19 crisis, WTO grants EU to impose tariffs on US goods. EU offers not to impose tariffs if US withdraws its existing tariffs on EU goods, but the US refuses arguing that EU has no legal basis to impose tariffs due to tax break were already removed.

In addition, and if you feel like to deep inside in more detail, you can take a look at the official disputes on the official WTO site:

Tariffs imposed in a nutshell:

US tariffs on EU goods:

WTO in October 2019 granted the US to impose tariffs on $7.5 billion of annual EU goods. Therefore, right after the ruling US imposed 10% tariffs on Airbus aircraft made in Europe and 25% duties on several EU products. These products include French wine, Italian cheese, British cashmere, and Spanish olive oil among others.

tariffs
live farmers protest in Madrid against low prices and demand government protection against US tariffs plans on EU agricultural produce. – AP Photo/Bernat Armangue.

EU claimed that it no longer subsidized Airbus but WTO rejected the appeal. It allowed then US to increase tariffs on a wider range of goods to press up for EU compliance. So from March 2020 US announced an increase in tariffs on EU aircraft from the initial 10% to 15%.

This scenario could even be worse for Airbus if, as Boeing expected, the tariffs also had impacted aircraft parts coming from Europe. These parts are needed to feed its factory opened in Mobile, Alabama in 2015. However, it seems that US administration declined to move that way due to local employment reasons.

EU tariffs on US goods:

In October 2020, WTO entitled EU to impose tariffs on $4 billion of US goods, so they did it this November 2020. These tariffs are 15% on Boeing aircraft and 25% on several goods including spirits, dried fruit, tobacco, frozen fish and shellfish, handbags and suitcases, motorcycle parts and tractors, video game consoles, cotton, and so on.

As stated before, EU offered a common tariff withdrawal offer which was dismissed by US.

Conclusion:

It is clear that this conflict is having an impact and negative consequences not only on Airbus and Boeing as large commercial aircraft manufacturers.

Many small producers in EU and now in US are suffering because the export level of its products is drastically lowering due to tariffs. This is affecting directly their business bottom line making them even impossible to survive in some cases. The situation impacts also the end consumers who have to pay more for the same goods. All the above combined with the COVID19 crisis is unsettling the social and economic environment, which benefits nobody.

Stock markets registered strong rises after Biden seemed to be confirmed as elected President of the United States. This indicates that many socio-economic sectors have good expectations about Biden and it is undeniable that Donald Trump and Joe Biden are opposite from each other as night and day in several aspects. However, that is not the case concerning economic matters and with the huge impact of the COVID19 crisis in US, the shadow of protectionism is still present.

Joe Biden, in his first speech as president-elect, urges unity: ‘Time to heal in America’. – Andrew Harnik – Reuters.

Do not forget that with the Obama administration the negotiations of a free-trade agreement with the EU never led to a deal, and Biden’s approach to tariffs is not yet clear.

Moreover, Trump is not going to make things easy if he finally leaves the White House which is expected not to lead precisely to a smooth transition. If he finally remains as official President thanks to his army of lawyers, which seems increasingly improbable as time goes by, the hopes of solving the tariffs issue in a quick and clean way will be almost completely diluted.

Taking into account all these facts, with regards to US administration and its future actions concerning the tariffs issue, maybe the best approach is to lower or at least moderate the level of expectations. Actually, this seems to be the EU way of acting. “Hope the best and prepare for the worst” could be a good summary of the following statements made by the German Economy Minister Peter Altmaier, who led the discussions among the 27 EU nations which ended with the imposition of tariffs on US goods:

“Biden administration will contribute to world trade relations being more rules-based, being more multilateral, being less protectionist in the future.”

Peter Altmaier (German Economy Minister)

Therefore, and even being the negotiated settlement the most probable, hopeful, and expected way of putting end to the conflict by many of the stakeholders the path to follow and the end of this conflict is far from being clear yet.

Worth mentioning that this is not the only tariffs issue involving US and EU, and affecting the Aerospace Industry. In March 2018, Trump administration imposed tariffs on steel (25%) and aluminum (10%) from most countries, extending them to EU as well. The negative effects of tariffs imposition were extended even to Boeing in this case, which saw how its raw materials needed to build aircraft were limited and become more expensive due to tariffs.

Americans who work for international auto companies demonstrate against trade tariffs they say will negatively impact US auto manufacturing. – AP Photo/J. Scott Applewhite.

It seems that this will be neither the only nor the last legal issue between Airbus and Boeing. Wingtips design conflict, or Sharklets vs. Winglets (both known by increasing the efficiency and avoid turbulences at the end of the wings), can be named as other of the most recent ones.

Hopefully not, but who knows if the agreements reached to help Boeing with the 737 MAX grounding issue, or the ones reached in US and EU to help both aircraft manufacturers against the COVID19 crisis could lead to future legal disputes.

I truly think that it is high time US/Boeing and Airbus/EU stop to consider the large aircraft manufacturing industry as a chess match between them. While they are fighting against each other, the China/COMAC team is getting stronger and consistently achieving milestones to become a serious medium-large commercial aircraft manufacturer.

Furthermore, the COVID19 crisis has reinforced China in its path to get the title of world’s leading power, and the prospects of air traffic also position China as the area with most domestic flights and passengers in 2030. These facts should be enough to lead to a change of mindset and strategy of Boeing and Airbus. Maybe not today or tomorrow, but the trends are telling us that the status quo is going to change both: world and aerospace industry.

If you want to know more about COMAC the two following videos will give you a big picture:

China-made C919 successfully completed its first test flight.
The Rise Of Chinese Jets – ARJ21, C919, C929, C939 | COMAC’s Answer To Boeing And Airbus!

And the FCAS goes to…

Mock-up of a sixth-generation combat aircraft at the Paris Air - FCAS (Future Combat Air System)

As though it was an Oscars ceremony, many people were keeping the eye about what company would be finally awarded such a relevant prize in Spain.

At this point in time, the French company Dassault Aviation, and the German branch of Airbus Defence & Space had been already designated to be the main coordinators of the project in their respective countries.

The final decision was eventually made public the Thursday, 4th September 2019, and the local media quickly broadcasted the piece of news.

“And the FCAS goes to … Indra

Spanish Defence Ministry

The reactions were almost immediate. For some people, the decision was astonishing whereas for some others it was perceived as a bang on the table of the Spanish Government.

What is clear is the fact that the Spanish branch of Airbus, the former Airbus Military and Cassidian, was not going to be the main coordinator company of the project in Spain. This decision has broken a trend of more than twenty years of Airbus leadership of the aerospace military projects in Spain.

Defence Ministers of Spain (Margarita Robles), France (Florence Parly) and Germany (Ursula von der Leyen), during the signature of a letter of intent about Spain’s integration in the French-German cooperation on the FCAS (14 February 2019). - Spanish Ministry of Defence.
Defence Ministers of Spain (Margarita Robles), France (Florence Parly) and Germany (Ursula von der Leyen), during the signature of a letter of intent about Spain’s integration in the French-German cooperation on the FCAS (14 February 2019). – Spanish Ministry of Defence.
Defence Ministers of Spain, France and Germany after the signature of a letter of intent about Spain’s integration on the FCAS (14 February 2019). – Spanish Ministry of Defence.

Four months after the signing of a letter of intent about Spain’s integration on the FCAS project, the formal announcement of the Spanish participation in the FCAS project finally took place in Le Bourget during the edition of the Paris Air Show the last 17 June 2019. This announcement was ratified by the French, German and Spanish Defence Ministers signature of the so-called Framework Arrangement for the development of FCAS.

Signature of the Framework Arrangement for the development of FCAS during Paris Air Show (17 June 2019). - Flynews.
Signature of the Framework Arrangement for the development of FCAS during Paris Air Show (17 June 2019). – Flynews.

The Spanish participation and its announcement came late and after the pressure and insistence of some social sectors. Sectors which strongly support the need for investing in the Spanish industry, and in this kind of multinational projects to get benefits in the medium and long term.

This practice of lagging behind rather than being proactive is something that seems to be usual in this sort of subjects for the Spanish Government, no matter the ruling party, an this is another example illustrating that. Actually, almost at the same time and in the same scenario, the German and French companies already selected to coordinate the Project in their respective countries, signed a joint industrial proposal which delivered to the nations.

Dassault chief executive Eric Trappier and the Airbus Defence & Space counterpart Dirk Hoke formalising the joint industrial proposal to deliver it to the nations. - Flynews.
Dassault chief executive Eric Trappier and the Airbus Defence & Space counterpart Dirk Hoke formalising the joint industrial proposal to deliver it to the nations. – Flynews.

Since then, everyone would have still to wait for two and a half months to finally know which company would take the coordinating role of the project in Spain. A decision which demonstrates that the Airbus extensive technical capabilities, its proven experience participating in multinational aerospace and defence programmes, and its excellent track record leading them in Spain have not been enough to tip the balance in its favour.

Time goes by since the decision announcement, and several hypothesis and theories are arising trying to explain the reasons behind the final decision of the Spanish Government. The most relevant and supported ones are addressed below:

National Champion of Defence

In the beginning, Indra was a state-owned compàny until 1999 when it was made a privately-held company. However, this movement was reversed in 2013 when the Government dependent organisation called SEPI (Sociedad de Participaciones Industriales; State Industrial Ownership Corporation) acquired the 20% of Indra participation.

Indra Headquarters in Madrid (Spain). - Indra.
Indra Headquarters in Madrid (Spain). – Indra.

This movement, perceived as a protection of the Spanish industrial interests due to the risk of acquisition of Indra by foreign companies, turned out to be permanent and eventually destined to pursue different goals.

Proof of that was the unsuccessful attempt of acquisition of ITP Aero by Indra during this year, company which currently belongs to the aircraft engine manufacturer Rolls Royce. ITP Aero is an originally Spanish company, well known for participating in the development and manufacturing of aircraft engines such as the EJ200 (Eurofighter Typhoon) or the TP400 (A400M).

ITP Aero Headquarters in Basque Country (Spain). - ITP Aero.
ITP Aero Headquarters in Basque Country (Spain). – ITP Aero.

The acquisition would have been a big step ahead on balancing Indra internal capabilities dominated by IT, and in reinforcing its aerospace ones in order to be better positioned to address future aerospace projects as the FCAS. In addition, it would have led to set up a Spanish Champion of Defence.

Despite the above, FCAS coordination in Spain was achieved by Indra, and it can be considered another step on the way of setting up this Champion of Defence in Spain. Taking these facts into account, strategic movements aiming this goal seem to be very likely to happen in the near future. Even a second try of acquisition of ITP Aero may sound plausible.

Hidden Political interests

The fact that Indra is 20% participated by a Government dependent organisation, which supposes to be the major shareholder, has led some sectors to think about what particular interests could be also behind this decision.

The current chairman of Indra, Fernando Abril-Martorell, is supposed to be replaced in the medium term and the probable substitutes seem to come from the political sphere. Among them, the best positioned is Miguel Sebastián, former Spanish Minister for Industry, Tourism, and Trade during the period from 2008 to 2011 under José Luis Rodríguez Zapatero Government.

Miguel Sebastián who is currently an executive advisor in Indra representing SEPI interests. - El Mundo.
Miguel Sebastián who is currently an executive advisor in Indra representing SEPI interests. – El Mundo.

In addition, it is usual for Spanish politicians to have a second life linked to private-held companies after leaving the political sphere. Felipe González and Gas Natural, or José María Aznar and Endesa are only the two best-known examples. Although morally reprehensible, because their nominations seem to respond to a return for privileged treatment of the enterprise during their public life, this practice is not illegal in Spain. Will Indra be now open as a new destination for Spanish ex-politicians?

From left to right José Luis Rodríguez Zapatero, Miguel Sebastián, and Pedro Sánchez who is the current Prime Minister of Spain. - Energíapost.
From left to right José Luis Rodríguez Zapatero, Miguel Sebastián, and Pedro Sánchez who is the current Prime Minister of Spain. – Energíapost.

Overconfidence

A more questionable theory supports that the more than twenty years consecutively being the winning horse in Spain could have gone against Airbus own interests. According to this theory, the following ones are perceived as potential reasons which could have affected the final decision:

  • Maybe the strategy line followed was not ‘strong’ enough to guarantee its participation as the main coordinator in Spain, or
  • The effort invested in reinforcing the Airbus dominant position of the Aerospace Industry in Spain was too limited.
  • Focusing mainly on how the FCAS programme workload was going to be internally distributed rather than ensuring the Airbus participation at the highest level, is a statement that has room within this theory too.

What is sure is that after this decision, the lessons learnt are not going to be overlooked by Airbus.

Risk of investment and ROI relocation out of Spanish boundaries

This theory relies mainly on two elements: the comparison between the ownership structure of both companies, and the different strategies followed by them during recent times.

The participation of the Spanish Government in Airbus is around 4% through the SEPI, whereas the Indra’s one reaches around 20% as stated before. It means that the Spanish Government is in the third position concerning Airbus ownership, pretty far from the 22% equally distributed between the German and French Governments.

Indra shareholding distribution. - Indra.
Indra shareholding distribution. – Indra.
Airbus shareholding distribution. - Airbus.
Airbus shareholding distribution. – Airbus.

Their ownership distribution is substantially reflected in the OBS (Organisational Breakdown Structure) of both Companies. Indra’s board of directors is fully coped by Spanish people, whereas in Airbus there is no position in the decision front-line covered by any Spaniard (in the line behind decision front-line neither).

In fact, although Airbus Spanish ownership has been always the same, the Spanish influence in Airbus seems to have gone in detriment during the last decade. The present lack of Spanish executives contrasts with the situation in the past when one or even two executive positions were covered by Spaniards. Pilar Albiac Murillo as Executive Vicepresident HO Operations has been the most recent example.

The differences between the top of the organisational charts are the most visible ones. However, some people also support that this loss of Spanish influence goes downstream across the organisational chart even affecting programmes traditionally handled by Spanish managers.

This theory goes beyond, even stating that Spain is pushed into the background behind France, Germany or even other Airbus countries concerning the participation in the development of new core technologies. These technologies as for instance the AI, UAS, Cybersecurity, Cloud and so on are destined to become the cornerstone for the future of the Aerospace Industry.

One of the open debates across LinkedIn supporting this theory (text in Spanish).

Francisco Javier Cruz Hernandez.

Taking the exposed hypothesis as true ones it is not surprising that some analysts support that choosing Indra as Spain’s FCAS coordinator is a sensible decision. If the final goal is to guarantee that Spanish FCAS investment and ROI (Return On Investment) will remain inside Spain and mainly handled by Spaniards during the programme life-cycle, the decision seems to have completely sense. The Spanish branch of Airbus Defence & Spain would have merely been perceived as unable to guarantee that.

In parallel to this theory, there are people who foresee a really bad outcome for the Spanish branch of Airbus Defence & Spain. They support that systematic poor financing of RDI (Research Development and Innovation) initiatives in Spain joint to the low number of orders that Spain places in each programme developed by the Company, pretty far from the German and French ones, logically lead to this loss of influence in Airbus.

In the worst-case scenario, the decision about the FCAS could undermine the Spanish influence in Airbus even more. The consequence would be an unpredictable ‘stall’ (speaking in aerospace language) of the Spanish Airbus branch interests in particular, and of the Spanish Aerospace Industry in general.

Above statements may sound quite catastrophic but as the famous quote says: “Hope for the best, but prepare for the worst”.

FCAS programme in a nutshell

FCAS (Future Combat Air System) is Europe’s most strategic defence programme in the 21st century. Defined as a combat system of systems, the cornerstone of FCAS is the Next-Generation Weapon System (NGWS) where next-generation fighters team up with manned and unmanned platforms and with remote carriers as force multipliers.

Based on leveraging the collective and connected capabilities of pooled platforms, FCAS and its air combat cloud will provide full interoperability with allied forces across domains from land to cyber.

FCAS - Future Combat Air System infographic. - Airbus
FCAS – Future Combat Air System infographic. – Airbus
Promotional video of the Future Combat Air System – FCAS, manned and unmanned European system by Airbus & Dassault published during the 2018 ILA Berlin Air Show.

Data trends in the Aerospace Industry

It is undeniable that the Aerospace one is and has been always in the top of cutting-edge Industries, and even being historically linked to the so-called data sciences it has not remained indifferent to the huge Data wave recently happened.

Below, some of the most relevant projects and initiatives proposed in this regard for some of the main actors in this industry in recent times are introduced:

Boeing AnalytX

Applications using Boeing predictive analytics give customers a glimpse into the near future; more time to evaluate, plan and manage solutions.

Sky Wise

Skywise supports customer’s activity on every aircraft-related aspect of the industry. Integrating disparate data sources and connecting and enabling the complete digital aviation ecosystem to make the data shareable, open and transparent to create value for customers.

SmartForce

SmartForce enables military customers to improve operational readiness, exploiting the rich store of data gathered by military aircraft and helicopters, providing data-driven intelligence whenever and wherever needed. This leads to optimised maintenance practices; maximum fleet availability; better informed, data-driven decision-making; and predictive solutions that reduce workload and costs.

CIMON

CIMON (Crew Interactive Mobile CompanioN) is a mobile and autonomous assistance system designed to aid astronauts with their everyday tasks on the ISS (International Space Station). The first form of Artificial Intelligence (AI) on an ISS mission. CIMON is an experiment overseen by Space Administration at the German Aerospace Center (DLR) in cooperation with Airbus.

AODB

Amadeus Airport Operational Data Base holds the schedules for 95% of the world’s airlines, 365 days in advance, so it gives long-term visibility of passenger and traffic. It provides with automatic updates via a live flight information feed, improving data accuracy and traceability and helping to accurately predict costs and revenues for each future turnaround cycle.

Aviatar

Aviatar offers an extensive variety of digital products and services for airlines, MROs, OEMs, and lessors by combining multiple apps in one place. While every single app provides value in its stand-alone version, it is the interplay of those apps, which creates the unique value proposition for the individual user.

Up to now, only data related topics have been addressed in this article. However, data is only one of the fields belonging to digital trends which are currently on the rise and affecting the Aerospace Industry. There are uncountable proposals in this regard every one of them worth to mention. A summary of them has been compelled in the infographic below: 


Four digital trends in Aviation that will fly high. – EOS Intelligence

What to expect for the future ?

The progress of digital trends has been extraordinary in recent times. Data related trends can be considered the ones which contribute the most to this progress. Therefore it is difficult to predict what are going to be the next steps, or what the next amazing breakthrough is going to take place in this regard.

However, it might be possible to get a great advance based on a combination of enhancements in more than one discipline instead of a huge development in a single one. Chatbots, for instance, are the combination of Artificial Intelligence, voice recognition and text to voice synthesis.

Imagination has no limits and perhaps the following are waiting for us in the near future:

Maybe there will be embarked computers storing and updating all the mission data in real time, able to answer all the crew inquiries even proposing operation actions to the crew in a proactive way, and all of that managed by voice.

And what about fully automated command and control centres in which all the tactical and strategic decisions will be taken based on big data analysis performed by artificial intelligence?

Taking into consideration the recent developments, and in my humble opinion, this is no matter of science fiction anymore. It can be, literally, the reality of tomorrow.

By the way, ‘science fiction’ can be a source of inspiration in this regard. Just read again three paragraphs above after watching the following images.  Do they are familiar to you?

Digital Trends Data Analysis Artificial Intelligence Machine Learning Big Data Alien Film
 Mother Computer embarked in Nostromo spacecraft. – Alien (1979). (Click on the image to watch the film scene)
Digital Trends Data Analysis Artificial Intelligence Machine Learning Big Data WarGames Film
 Military central computer WOPR (War Operation Plan Response) referred colloquially as Joshua – WarGames (1983). (Click on the image to watch the film scene).

Data and Aerospace: the perfect match not new at all

Milky Way Nasa Big Data

Data are present nowadays in almost every aspect of our daily lives. Bringing the professional one into focus, there is no business or industry which had suffered no impact of this macrotrend in recent times.

Nevertheless, this interest in data insights and its exploitation is nothing new for some industries and businesses among which is included, for sure, the Aerospace one. Actually, data have always represented a crucial factor in every stage of Aerospace history.

The present article goes through the Aerospace history stopping over the main events and bringing into focus the data role in each of them:

Data: a crucial factor along aerospace history.

Aerospace and history enthusiasts would probably agree that the first serious step in aeronautics can be considered the first flight of a manned aerostat, in other words, an aerostatic or hot-air balloon carrying human passengers from one point to another in a controlled way. This event was held in Paris the 21st November 1783, where Pilâtre de Rozier and the Marquis d’Arlandes made the first manned flight in a balloon designed by the French Montgolfier brothers.

hot air balloon Pilâtre de Rozier Arlandes Montgolfier first flight
The first untethered balloon flight by Pilâtre de Rozier and the Marquis d’Arlandes, on 21 November 1783 – Illustration from the late 19th Century.

This fact, joint to other factors as the use of hydrogen as balloons filling extended and firmly established the aerostatic flights around the world, having its summit with the Zeppelin during the XIX and the first half of XX centuries. Even today there are a lot of aerostatic flights: manned mainly focused on recreation, and unmanned oriented mainly to science and research.

All of the aerostatic flights in history have something in common, reliable data were and are nowadays a must to carry them out in a safe way. Meteorological status along the flight path must be precisely monitored to guarantee its integrity due to their extreme subordination to weather factors such as wind shears, thermals, pressure gradients, and so on.

Zeppelin New York Manhattan Naval
USS Macon (ZRS-5) flying over New York Harbor in 1933. The southern end of Manhattan Island is visible in the lower left center. – U.S. Naval Historical Center Photograph.

The 17th December 1903 took place the first step in aviation: Wright brothers made the first sustained and controlled flight in a powered aircraft built by them. Since then, the aviation continued its unstoppable development being even more boosted by the WWI  and the WWII (First and Second World Wars), in which became a decisive element for both: tactics and strategy.

Wright First Flight aviation logbook
Wilbur Wright’s logbook showing diagram and data for first circle flight on 20 September 1904. – Wright brothers.

During these conflicts, data and information were major issues able to determine the winning and losing side in every single battle and even in the whole war. A primary role was played by aviation in this regard: conducting aerial reconnaissance by overflying enemy positions to acquire information  (data donor), and striking and bombing enemy aircraft and strategic targets designated by the operation’s commanders (information receiver).

bombing map WWII Nottingham
Map showing the locations of bombing in Nottingham during the Second World War (WWII). – Nottingham Evening Post (17 May 1945).

Commercial aviation made its progress in parallel, and airlines became along its path in one of the most data-driven businesses, if not the most. This is explained by its highly demanding safety requirements – ‘Safety first’: motto always linked to them along their whole history – and due to their extremely complex business environment.

Airlines performance depends on uncountable factors which are in some cases really hard to predict and usually out of their influential area. Some of the categories, not all of them, are listed below and linked to a real example to illustrate this point:

Data and Aerospace
London-Sydney flight paths over the past 10 years (highlighted in green the recommended flight path in 2007 being 8997nm long). The goal is to optimise flight paths by computing and comparing parameters (wind speed and direction, FIRs, refueling spots, war zones, etc.) and their impact. – Airbus Airline Sciences.

What is more than certain is that, as in any kind of business, its first goal is to make money. No matter how complex the approach is: aircraft for airlines are, in the first instance, money-making machines.

Airplanes would have been nothing without airfields where take-off and land and, in the same way, airlines would be nothing without airports. They constitute cornerstone elements acting as grounded bases in which embark and disembark passengers and freight.  Over the years they have become in the most complex logistic centers ever built by the human being. Whichever task performed in there is based on real-time data and information, and the estimations and forecasts made out of them.

Airport Numbers Lithuanian Passenger Flight
Passenger and flight numbers at Lithuanian Airports during the first quarter of 2018. – Airports.com.

As the airlines’ presence exponentially grew around the world, a new discipline arose in consequence to ease the proper use of the airspace and to guarantee the flight safety: the Air Traffic Management (ATM).  It is indisputable that real-time data management and analysis are mandatory in order to monitor and guide each aircraft on-ground and in-flight.

Air Traffic Control Management Radar Tower
A computer monitor in the radar approach control section of the air traffic control tower at Yokota Air Base, Japan – U.S. Air Force photo by Senior Airman Michael Washburn / Released.

Space Exploration began based on the well known V-2 ballistic missiles developed by Nazi Germany during WWII.  The United States and the USSR take this knowledge after the War to develop their missile and launcher programmes during the Cold War. Since the beginning, it has been supported by high calculus accuracy based on space events observation, so data are always involved in any step made in this field.

DARPA Data OrbitOutlook O2 network space situational awareness SSA
Defense Advanced Research Projects Agency’s (DARPA) OrbitOutlook (O2) network for space situational awareness (SSA). The program seeks to provide a way to quickly acquire and process large amounts of high-quality data from diverse nontraditional sources. – DARPA. Click on the picture to know more.

And now and in the future?

It is undeniable that the Aerospace Industry has not remained indifferent to the huge Data wave that recently happened. If you want to know more about the most outstanding current projects in this regard keep on reading this article.

Why will the appointment of Pedro Duque eventually let you down?

As a Spanish aerospace engineer like him, I am proud of us as a collective represented at the highest level of the Spanish Society, and I wish him the best in this new challenge as Science, Innovation and Universities Minister. At present he has my full confidence, and I truly hope Pedro Duque will do the best in his new position. However, a slight voice in my thoughts is telling me that we are going to be let down in this regard.

‘Such a doomsayer!’ I am quite sure you are thinking. But I fully support the theory of analysing different points of views, the more diverse the better, to forge a strong opinion by oneself. So let me present my reasons and then structure your own thoughts:

Lots of years orbiting in the elite

Pedro seems to be distant from the daily life of researchers and scientists in Spain, begging for subsidies and budget extensions every day and having a poor income and a more than precarious and uncertain job contracts. Universities and R&D seem to be closer to his fields of interest and expertise. Will it be enough?

Although hopefully, my judgement will be wrong, there are still many factors out of his area of influence he will have to cope with.

Pedro Duque Spanish astronaut World
Spanish astronaut Pedro Duque embracing the World. / TVE

Tied up due to the inherited budget

An R&D (Research & Development) budget of only the 1% of the Spanish GDP (Gross Domestic Product) whereas the objective set by the EU for 2020 is the 2%. Historically and systematically reduced by previous Governments from €8.4 million in 2009 (1.4% of the Spanish GDP) to €3.2 million in 2016 (1.1% of the Spanish GDP).

Time constraint

Next General Elections in Spain will be held by the end of 2019 giving only a year and a half time to implement some measures and set action policies. No time enough whichever way you look at it.

Political constraints

First time ever the Government in charge has so little power in the Parliament, based on a difficult set of diverse alliances with other political parties.

The situation is even worse by observing the Senate, in which the outgoing Government party has the absolute majority. This majority can be used to block whichever royal decree or legislation initiatives they consider.

Do you remember Obama’s government and the Republicans in Senate? Well, this is not more encouraging indeed.

Reluctantcy to invest in innovation, R&D, and new technologies

Everyone is aware that any amount of money invested in Spain ends up in the brick industry in its vast majority. Even with the deep real state bubble recently burst, it seems that hopelessly trends are not changing.

Business Angels? They are like pink unicorns in Spain: nobody sees them and who assures that they exist is thought to be crazy.

Pedro Duque Spanish astronaut ESA
Spanish astronaut Pedro Duque in an exhibition about Mars in Valencia. / JUAN CARLOS CÁRDENAS / EFE

Marketing based decision?

Finally, if you think about it with a cool head, this decision seems to be purely based on image and promotion. Imagine Andrés Iniesta appointed as Sports Minister, it is not so far from this one.

Whether you share the views exposed or not, what is undeniable is the bravery that Pedro is showing facing this chance. Currently, he is an idol for whoever Spanish people, and getting in into politics in these circumstances is taking the risk of being disliked by the vast majority.

What is the best we can do for him? Lowering a little bit the expectations about his future decisions and their impact concerning the science, innovation, R&D, and universities in Spain.

Good luck Pedro! The better you perform as Minister, the better for us as Society.