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European Aeronautics : A vision for 2020 - Contents


Air Transport and Aeronautics:
Key Assets for the Future of Europe


An outstanding contribution
History does not lack for examples of giant leaps forward in science and technology that subsequently transform human experience and possibilities. But few have touched more lives than the invention of the aeroplane at the beginning of the last century. It has shrunk the planet, destroyed distance and vastly expanded human mobility. The resulting economic and social benefits have been immense.

Conquest of the skies has liberated us from the bonds imposed by geography, terrain and water. Air routes are the highways of the global economy, transporting people and goods over vast distances at great speed. Aviation has massively multiplied and facilitated business and leisure opportunities, cultural exchanges and the development of international institutions and political relationships. Very few other developments have made such an outstanding contribution to the development of mankind over the last 100 years.

Europe must "go for it"
The rapid journey from the first tentative flights to the modern airliner is a testament to the restless search for technological improvement that has long characterised the aircraft business. Many aspects of technological evolution are shaped by a combination of changing social needs and competitive market forces. Today, these forces are still generating relentless pressures for change in the air transport system.

This report is an attempt to demonstrate that Europe can continue to meet the challenge of change by mobilising all of those interests and actors - nowadays known as "stakeholders" - behind the task of producing the competitive products and the air transport system that will be needed in the first decades of this new century.

There are two great prizes: global leadership in the marketplace and a world class air transport system for Europe. Europe must go for them or its achievements of the last 30 years will be in jeopardy. Its air transport system has become an indispensable part of the continent's economic infrastructure. Turnover in the aeronautics sector exceeded 65 billion in 1999 and its balance of trade surplus - the difference between the products it sells to the world and the equivalents that are imported - was 22 billion.

Though it is currently struggling to keep pace with the phenomenal increase in mobility and demand, Europe's air transport system is providing safe, reliable air travel that is essential to the requirements of millions of people. It also guarantees them a choice. Without European aeronautics, air travel over medium and long-haul routes would be almost completely dominated by US aircraft.

Conscious of its responsibilities to society at large, the sector is well aware that it has to find an acceptable balance between public expectations and requirements, and the constant, fierce competitive pressures upon it. A generation ago, "Higher, Further, Faster" were the imperatives for any vision of the future for air transport. Now they are "More Affordable, Safer, Cleaner and Quieter", reflecting the need to combine cost-effectiveness with an uncompromising attachment to safety and environmental objectives. The key to securing these objectives is investment in Research and Technology(1) according to a strategy that can meet the demands of the market as well as the needs of the community.

Pioneering the "knowledge society"
Aeronautics is a key asset for the future of Europe. Its direct contribution to economic prosperity is a measure of its success in pioneering the "knowledge society" that the European Union is now urgently seeking to achieve(2). As users, developers and suppliers of advanced innovative technologies, aeronautics companies know the value and importance of continuously developing human skills.

Many of the 400,000 people directly employed in the industry are highly skilled "knowledge" workers, well practised in the use and exploitation of advanced technologies, including the new digital information technologies. Others push forward the technological frontiers in research laboratories, developing the knowledge that is crucial for keeping the industry's firm grip on world markets. Many of the fruits of their research also find applications in markets quite distant from aeronautics that need the technologies but lack the resources to develop them. A great deal of the research work is done in teams, by people whose different national and cultural backgrounds are a reminder of the talent that Europe can mobilise.

Today's strength was built on earlier strategies
Aeronautics is a very unusual business requiring specific rules: it works on very long lead times and requires huge capital sums for developing its products. Governments are important sources of research funds and exercise unusual
influence over priorities for civil and military products, while manufacture of its largest and most costly items, aircraft and their engines, is concentrated in a few very large companies.

The European sector invests 15% of its turnover in R&D (more than 9 billion a year) and has built a global position on much less public financial support than is enjoyed by its main rivals. The seeds of its current strength were sown in the 1960s. They were not scattered randomly, but planted according to strategies for achieving competitive products for civil and military aircraft markets into the 21st century.

The benefits are now being harvested. Airbus is one of the world's two dominant civil aircraft producers. Its share of the market grew steadily throughout the 1980s and its share of world order books is now around 50%, even though more than 85% of the world's passenger aircraft have been built in the US. In the civil helicopter market, EU-designed and originated helicopters now hold around 32% of the world market, while European manufacturers of regional jet and turboprop aircraft have had more than 60% share of these markets over the past 10 years.

Comparison of market shares in civil aero engines is difficult because of the intensity of cooperation between European and foreign firms. But there are striking differences in size between firms: the two largest US producers make twice the revenues of their European counterparts.

For its part, the equipment sector has been able to maintain a leading role in most areas and continues to be competitive against much larger foreign rivals. Little known outside the industry, for example, is the fact that the vital "Primary Flight Control" systems on the latest aircraft from both Boeing and Airbus were developed and are produced in Europe.

Partnerships and consolidation are more essential than ever
But new product development is enormously expensive and for many years the costs of developing and producing a family of new civil airliners have been progressively beyond the reach of one company, and of the budgets of most single nations. So companies inside and outside Europe have had to seek partnerships. The most celebrated in the airframe sector is the European Airbus consortium set up in 1969. Alliances, many of them transatlantic, also characterise relations between engine and equipment manufacturers.

All partnerships reflect the fact that aeronautics is a dynamic global business in which the drive for competitive advantage seeks out the best possible synergies, wherever they can be found. Collaboration is constrained by competitiveness rather than geography, which is why European companies need to be world class to forge the best possible partnerships.

Within the European Union, and more recently supported by it, the pieces on the board have been energetically rearranging themselves. Collaborative networks for R&D have proliferated across borders, broader commercial relationships created and bonds established that have helped to pave the way for mergers, joint ventures and takeovers. Although restructuring of the sector in Europe has lagged behind the equivalent process in the United States, this process of consolidation is creating the platform for maintaining and enhancing its competitiveness over the next couple of decades. R&T systems need redesigning, reorganising and refitting if they are to support the vision described in the following pages.

This vision is broad and comprehensive, seeking to bind and coordinate the efforts of all stakeholders behind a strategy for competitive excellence dedicated to meeting society's needs. It will not be easily achieved. But if the vision can be shared and acted upon by all, the payoff is enormous: leadership in the global marketplace and a first class air transport system for Europe.

(1) Throughout this report "Research and Technology" (R&T) refers to developing new technologies while "Research and Development"(R&D) includes also the effort for the development of new products.

(2) At its meeting in Lisbon in March 2000 the European Council set the strategic goal for the EU "to become the most competitive and dynamic knowledge-based economy in the world".























































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