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Is It OK For Politics To Control Orders?

Fri Aug 02, 2002 10:24 am

What do you think ?. Is it OK for a country to block orders for brand A to protect brand B which is built in their own country ??

This is a VERY SERIOUS question. As you can see from a few current topics at least two airlines have had their orders blocked.

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RE: Is It OK For Politics To Control Orders?

Fri Aug 02, 2002 10:28 am

If the airlines in question are State owned and not private or publicly traded companies, than sure.

State owned entities are not subject to free trade.

Take Amtrak for example, the US Government owns Amtrak.

They can tell Amtrak what company to buy trains from, and who to do business with. Simple as that, same with Airlines.

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RE: Is It OK For Politics To Control Orders?

Fri Aug 02, 2002 10:55 am

I guess it all depends. If a country pressures a carrier to buy aircraft which don't fit into its business strategy, then that would be an example of political pressure as a detriment to the airline.

However, if a government pressures an airline to order a certain type of plane which fits well into that carrier's fleetplan, then I personally don't see too much of a problem with the practice.

Aaron G.
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RE: Is It OK For Politics To Control Orders?

Fri Aug 02, 2002 11:08 am

"OK" is actually a very relative term, here.

Would it be ok for the U.S. government to strong-arm Northwest out of buying Airbus planes? Absolutely not. They're a viable, strong company in a free-market economy and can do what they want.

What about USAirways, when they're desperate to get government-backed loans? Perhaps it's ok (if they needed mainline jets) to push for a Boeing order over an Airbus order, seeing as they're seeking loan guarantees, and that such an order would result in more jobs for American citizens (at both Boeing AND USAirways), and in more taxes for the government. There would definitely be an air of nationalism behind it, though.

How about a totally government-subsidized carrier, like Air France? (They're still gov't owned, if memory serves) It would definitely be appropriate for the French government to try and swing an Airbus deal over Boeing...but again, "Nationalism!" would be the cry.

So is it ok to bring politics into the equation? Yes. No. Maybe. It depends. THERE'S your answer.  Smile
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group

RE: Is It OK For Politics To Control Orders?

Fri Aug 02, 2002 11:57 am

It's not desirable.

First, any competition between the two plane makers on the merits of their products goes out the window, and is replaced by competition based on who delivers the greatest benefits to the politicians. Politicians might be frequent fliers, but they get rewarded for being popular or admired, not for making smart, long-term decisions or delivering a good return on investment.

Second, it's a form of gambling with taxpayers' money. If a government pushes an airline to buy a certain type of airliner, you can bet there's taxpayers' money behind the scheme. Every so often, the government will end up betting on a turkey, possibly even against the airline's best interests: remember how the British government pushed BEA to buy the Trident when the airline preferred the 727?

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