Airbus, bankruptcy, and monopoly

The Economist has a story about the daunting problems facing Airbus. As usual the magazine is informative, but for one bit of idiocy:

More alarmist analysts think that doing nothing would kill the company and make Boeing a monopoly producer.

Let's say Airbus/EADS goes bankrupt. Boeing will not be a monopoly producer, because Airbus will continue. Its investors will lose their shirts, its factories and other assets will simply be picked up by other investors.

Even in a make-believe world where bankruptcy led to assets going *poof* Boeing would only have a temporary monopoly position in a part of the market for large airliners. Bombadier and Embraer would develop larger airframes, Ilyushin would have a viable market position and one or more Asian companies would see an opening and act.

The only concern Kitchen Linker has is that these companies may be behind Boeing and Airbus in producing efficient aircraft. And that is a major concern.

Taxing planes

That is plane trips tax the environment. "Jane Galt" says:

If you take just two cross country and two overseas trips a year . . . not a big number for today's more mobile young adults . . . you're consuming as much carbon as you would by driving a huge gas-guzzling SUV 12,000 miles a year.

So Kitchen Linker says,

• Discourage low-value plane trips with a pigouvian tax.
• Stop subsidizing airlines. There are many subsidies, see a recent New York Times story about a smaller one.
• Lead the way with "only travel when strictly necessary" policies, replace travel with tele-, video-, and "second life" meetings.

On the other hand, air tavel has been getting much more efficient, which surprised me a little bit.

Billion Biofuel Branson

Bully for Branson. The article reads like most of the expected $3 billion (highly unknown, based on future Virgin profits) will be spent on developing biofuels. That sounds unexciting, but looks like they're going for big improvements.

The first investment was made in Cilion, a new California company building ethanol refineries that Virgin officials said burn far less fossil fuel than conventional biofuel operations.

However I think people are confusing not using fossil fuels and not producing greenhouse gasses:

“But the only way global warming is going to be beaten is to invest in new fuels that can actually replace fossil fuels.”

Uh, biofuels still produce greenhouse gasses. That's why I'm more excited by solar, windpower and other zero-emission technologies.

But airplanes aren't going to fly on electricity anytime soon, so Branson can be forgiven for being conservative. IATA has some cool figures on airplane fuel efficiency:

• New aircraft are 70% more fuel efficient than 40 years ago and 20% better than 10 years ago.
• The industry is aiming for a further 50% fuel efficiency improvement by 2020.
• Modern aircraft achieve fuel efficiencies of 3.5 litres per 100 passenger km.
• The A380 and B787 are aiming for 3 litres per 100 passenger km – better than a compact car!

I had no idea airplanes had improved so much. Sounds like another good investment would be to retire old planes ASAP. Maybe big airlines will lobby to force retirement, as new airlines using old planes are cutting into big airlines' profits.