The annual Paris and Farnborough air show circuit continues this week in England (the even years are in Farnborough, the odd years in Paris). Every July this large airshow displays hundreds of wonderful and amazing aircraft. Attention is usually not on the sky, however, but rather on order books. This event has become a glorified announcement platform for big aircraft sales. In fact I’m not convinced that the world’s major aircraft makers actually employ sales people except for this one week in July (kidding).
With so much emphasis put on these few days each year, my question is this: is the press and attention on orders received annually a good thing for the industry, or has it made an already competitive market more difficult for aircraft manufacturers by focusing on the short term plane orders and ignoring the long-term reality of building big jet planes?
The $1B Impulse Buy?
What I find funny about this airshow is that the press releases make it sound like no aircraft sales are made the rest of the year. They also portray this image of the customers “shopping” the airshow for new planes. It’s like the customer arrives, looks at the plane on the tarmac, and says “I”ll take ten”. I know that’s probably not the case, but that’s my perception. I’m pretty sure that it takes more than one person (usually) to make a wide-body aircraft purchase. Especially in quantity. I would assume that much planning and research go into these deals beforehand, and much work is done by the manufacturers to woo their customers the other 51 weeks in a year.
It is said that any publicity is good publicity, but for the overall health of the aircraft manufacturers’ industry I’m not sure that’s the case. This airshow has become less about metal, and more about paper. On the plus side, the event seems to encourage extra interest in aviation. And during this special week, the collective eyes of the world (and media) are indeed watching and printing stories that the exhibitors don’t have to pay for. Free press is certainly great for the manufacturers who book orders (this year), as well as clients who buy planes (and who do not wish to remain anonymous). And of course newspapers love throwing out big numbers on a headline whenever possible. So why is this bad?
Under Undue Pressure
In the very competitive, cut-throat, and high stakes game that’s played among aircraft manufacturers, winners who book more orders and come out looking good this year may appear shaky next year if they don’t book as many sales. Success in the big-money aviation world is not based on a short game of sport, played for a few hours and won or lost at the buzzer. The score-like publication of sales during this one week each year may precipitate a company’s perceived failure the next year, which puts artificial pressure on the entire group of players to ‘succeed’ by closing huge sales numbers each and every year. (Keeping in mind they may already have years of back orders in process.)
Unfortunately this is a business where cycles are often measured in decades. The fallacy of this self-induced yearly contest is that with an emphasis on a quick score card, sight is lost of the long-term challenges of competing in this market.
Airplanes are incredibly expensive and complex. And just because news outlets and reporters (and this year’s sales leaders) can get much free publicity through the reporting of often shockingly large numbers, the public (and investors) may lose sight of the fact that an A380 or 787 cannot be designed, tested, and built in one week in July.
While some good comes out of this international sales spectacle, the overall trend of an annual high-value game of points from Farnborough-Paris has made it more difficult for its players in the long run to compete successfully and win.