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CHAPTER 7
Technology Transfers inCommercial Aircraft
Support Systems
Contents
PageINTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
COMMERCIAL AIRCRAFT SUPPORT SYSTEMS IN THE MIDDLE EAST. 249
Commercial Aircraft Support Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249Commercial Aircraft Support Systems in the Middle East: Current Status . . . . . 251Perspectives of Recipient Countries and Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261Perspectives of Supplier Countries and Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275Future Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
IMPLICATIONS FOR U.S. POLICY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292
SUMMARY AND CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
APPENDIX 7A: COMMERCIAL AIRCRAFT SUPPORT SYSTEMS:SELECTED RECENT CONTRACTS IN THE MIDDLE EAST . . . . . . . . . . . . 296
Tables
Table No. Page62. operating and Performance Statistics of Selected Airlines for 1982 . . . . . . . . 25363. Employee Totals for Representative Airlines, 1982 . . . . . . . . . . . . . . . . . . . . . . 25364. Airport Traffic Statistics for Representative Airports . . . . . . . . . . . . . . . . . . . . 25465. Commercial Airline Fleets in the Middle East in Servicers of March 1984 . . 25666. U.S. Exports of Commercial Transport Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . 27767. Typical Configurations and Purchase Prices of Various Competing Aircraft . 27868. Ten Leading U.S. Exporting Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28069. Export-Import Bank Total Authorizations of Loans and
Guarantees and Authorizations in Support of Aircraft Exports . . . . . . . . . . . . 28270. Export-Import Bank Summary of Commercial Jet Aircraft
Authorizations for Loans and Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2837A-1. Selected Recent Commercial Aircraft Support Systems
Contracts in Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2967A-2. Major Projects and Sources of Investment, 1971-81:
Commercial Aircraft Support in Egypt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2977A-3. Major Projects: Civil Aviation in Algeria, 1979-82 . . . . . . . . . . . . . . . . . . . . . 2977A-4. Selected Recent Commercial Aircraft Support Systems Contracts in Iraq . 2987A-5. Selected Commercial Aircraft Support Systems Contracts in Iran ....,... 299
Figure
Figure No. Page14. Aerospace Industry Funds for Research and Development . . . . . . . . . . . . . . . . 281
Map
Map No. Page5. Airports in the Middle East and North Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . 255
CHAPTER 7
Technology Transfers in CommercialAircraft Support Systems
——-— .—
I N T R O D U C T I O NThe Middle East has been one bright spot
in the generally depressed worldwide commer-cial airline industry in recent years. Sales tothe region of large commercial aircraft andrelated services required to support airlineoperations grew dramatically in the 1970’s andhave continued into the 1980’s, despite the re-cent depressed condition of world air trans-port. This was due to both increased oil reve-nues and to the increased transport needs ofthe Middle East during their decade of dra-matic business expansion. The airlines of theMiddle East have the newest fleets in theworld, with the average age of jet and espe-cially non jet aircraft considerably lower thanthe world average.1 The number of passengerscarried by Saudia alone increased from 1.3 mil-lion in 1974 to 10 million in 1982. From 1980to 1981, Kuwait Airways ranked second in theworld in growth rate of scheduled revenuetonne-kilometers performed.2 According to In-ternational Civil Aviation Organization(ICAO) statistics, scheduled air passengertraffic in the Middle East region will increaseby 10 percent annually up to 1992. This rep-resents the most dynamic growth pattern ofany region in the world.’]
While the Middle Eastern countries mayhave the financial resources necessary to pur-chase aircraft, operations and maintenance re-
—‘The a~era~x’ agc of non jet alrrraft in the \l iddle h;ast is 5,()
>“ear~, (’{)n~parwd to 1:}. 7 ~’ew-s for such aircraft worldwide. F’orj~’t air(.raft. the nurnlx’r is X.2 ~ears, and the world ti~’erage 9./i}.(’;irs
2 The ~um of the pr(du{t+ ohtairmi })?’ multipl}ring the num-her of tonne~ ( 1 tonne 1,000 kg) of re~enue load carried h~the flight distances mt’asured in kilometers is the numher ofre~[~nu[~ ton nt~- k ilometer performed, Separat. [j calculation+ aremade for passengers (including baggage). freight {including ex-pr(’ss). and mail.
‘Rohert llaile~r, “Hoeing Strikes Ilack, ” Jfiddle l“;ast Ijconom-ic l)ige.st, F’eh. u), 19H4, p. 35.
quire substantial ongoing efforts. Whethercommercial airlines are mere symbols of na-tional prestige or important components ofeconomic and technological development de-pends on the extent of technology transfer,particularly in aircraft support systems.
Commercial aircraft support systems covera wide range of capabilities which include: 1)airport design, construction, and manage-ment; 2) basic airplane ground support includ-ing fueling and loading/unloading of passen-gers, baggage, and freight; 3) routinemaintenance/inspection of aircraft; 4) majoraircraft (airframe and powerplant) overhaul;5) passenger reservation and cargo routingoperations; 6) air traffic control flight opera-tions; and 7) in-flight operations includingpiloting and avionics control/communications.Each of these areas requires specialized equip-ment, which entails training in its use and con-tinued maintenance. The emphasis in thischapter is on large commercial (mostly inter-national) operations although the discussiontouches smaller civil aircraft, and civil helicop-ters. Aircraft sales to the region are covered,particularly as they relate to technical serv-ices, training, and spare parts availability andto U.S. policy issues such as official financingand export controls. Military aircraft sales andservicing are explicitly excluded, but the anal-ysis does clarify the limited utility of commer-cial aircraft and related services for militaryuses.
Compared to other technologies covered inthis study, technology absorption has been ex-tensive in the commercial aircraft support sec-tor. Operating statistics of these airlines (in-cluding safety) are comparable to those ofmajor international airlines. This chapter ana-lyzes the reasons for this comparative success.
247
248 . Technology Transfer to the Middle East——
The analysis makes it clear, however, thatwhile indigenous personnel in the Middle Eastare increasingly operating commercial aircraftsupport systems, some airlines may never be-come fully staffed by nationals.
The United States is an acknowledged leaderin avionics and aircraft engines, but adequatesubstitutes are increasingly available fromother supplier countries. U.S. aircraft sales inthe Middle East region, important to sales ofauxiliary equipment and services, have beennegatively affected by U.S. foreign policy con-trols on exports. The European Airbus consor-tium’ on the other hand has expanded salesin the region, and, to prevent future loss ofsales, has even considered recertifying the Air-bus with British Rolls-Royce engines insteadof its present U.S. origin Pratt and Whitneyor G.E. engines in order to avoid possible de-lays arising from U.S. export licensing proce-dures. Some U.S. observers feel that U.S. com-panies are also disadvantaged by subsidieswhich the Airbus receives from its Europeanpartners, and by a comparative lack of high-level diplomatic support. This view, however,is not shared by the Europeans who feel thatU.S. aircraft sales are subsidized by U.S. Ex-port-Import Bank and indirectly by NASA re-search programs.
All Middle Eastern countries under studyhave national airlines, but few turn a profit.Some, such as Saudia, are presently heavilysubsidized. In contrast, Gulf Air, a consortiumof several Middle East countries,5 has been
‘Members are Aerospatiale of France (37.9 percent ownership),Deutsche Airbus of Germany (37.9 percent), British Aerospace(20 percent), and Construcciones Aeronautics of Spain (CASA)(4.2 percent).
‘Bahrain, Qatar, Oman, and the UAE.
profitable even during the recent recessionperiod, despite its tragic crash in 1983.6
This chapter analyzes commercial aircraftsupport systems technology transfer to theMiddle East. First, requirements for commer-cial aircraft support are identified and theirstatus is surveyed in the six countries understudy. The technologies include a broad spec-trum of application and complexity, but tendto be well established and governed by inter-national norms. Recipient perspectives arethen reviewed, focusing on development plansin this technology sector and their absorptionof the technologies. Most of the countriesunder study have placed great emphasis ontransportation needs, particularly civil airtransport (passenger and freight) require-ments. Plans include construction of new air-ports, expansion of existing airports so thatthey can accept larger aircraft and internation-al traffic, and increased personnel training fa-cilities. Experiences with technology absorp-tion have varied, but capabilities have beenimproved at a rapid rate over the past 10years, particularly in in-flight operations andpassenger reservation and cargo routing. Al-though aircraft routine maintenance and ma-jor overhaul work is increasingly performedby the airlines themselves, many of the work-ers are expatriates and, in Saudi Arabia andKuwait, will probably remain so for some time.The chapter also analyzes competition amongsuppliers. Likely short- and long-term develop-ments for the recipient nations and for the sup-pliers are then described, and finally implica-tions for U.S. policy are given. One importantissue addressed is the role of U.S. export con-trols in affecting competition among suppliers.
‘The Gulf Air crash of a Boeing 737 near Abu Dhabi on Sept.23, 1983, with a loss of 111 lives is still being investigated.
Ch. 7—Technology Transfers in Commercial Aircraft Support Systems ● 249———.. -—— —.
COMMERCIAL AIRCRAFT SUPPORT SYSTEMSIN THE MIDDLE EAST
C O M M E R C I A L A I R C R A F TS U P P O R T S Y S T E M S
Commercial air transportation systems con-sist of two interdependent components: first,airline operations (including maintenance andoperation of aircraft); second, airport and avia-tion support services (e.g., air traffic control)provided by an outside agency, usually gov-ernmental. In both, equipment ranges fromthe simple to the very sophisticated.
Labor and capital requirements differ be-tween the two components of the air transpor-tation system. The operation of aircraft ishighly capital intensive, with small flightcrews operating very expensive equipment toserve large numbers of customers. Groundoperations, by contrast, are far more labor in-tensive since they use less expensive equip-ment but employ large labor forces to serviceand turn around aircraft in the shortest timepossible.7
The occupational structure of air transportis consequently very diversified. Airline per-sonnel range from low skill level (clerks, bag-gage handlers) to very high skill level (mana-gers, pilots, mechanics, air traffic controllers).Air transport requires labor mainly in the cler-ical, professional, craft, and service categories.One key occupational group is present in eachcategory—namely, ticket agents, pilots, me-chanics, and flight attendants. Each occupa-tional group has its own very specialized train-ing requirements.8
—. ———————7 According to the U.S. Civil Aeronautics Board, flying oper-
ations made up 39 percent of the expenses of the U.S. airlineindustry in 1980. Expenses for other subsectors included (inpercent): maintenance-10,8; passenger service-9.4; aircraftand traffic servicing— 16.4; general and administrative—3.9;promotion and sales—12.l; and depreciation, amortization,other—8.4. See U.S. Civil Aeronautics Board, Air Carrier Fi-nancial Statistics, March 1980.
8 In the United States, the occupational breakdown for theair transport industry includes: professional and technical, 19percent (including pilots); clerical, 30 percent; craft workers, 20percent (including aircraft mechanics); service workers, 14 per-cent; laborers, 4 percent; managers, 6 percent; operatives, 6 per-cent; and sales, 1 percent. U.S. Bureau of Labor Statistics,Washington, D. C., 1981.
The operations of airlines also depend on theaircraft manufacturing industry. While noneof the Middle Eastern countries under studyhave civil aircraft manufacturing facilities,Egypt is presently manufacturing military air-craft of U.S. design.9
The high costs of purchasing and operatingmodern aircraft are dominant factors in thefinancial positions of airlines; in the UnitedStates, direct flying operations, maintenanceof aircraft, and depreciation makeup over halfthe total expense of airlines. A new McDon-nell Douglas DC-10 in 1980 cost about $60 mil-lion,10 and the ratio of the capital value of flightequipment to ground equipment owned byU.S. airlines was more than 4:1 in 1980.
These high aircraft costs affect labor re-quirements in two ways: first, flight opera-tions themselves are very capital-intensive.With a trend towards larger aircraft in the1960’s and 1970’s, there has been a tendencyto use smaller flight crews serving larger num-bers of passengers. Second, the high cost ofaircraft on the ground puts a premium on rap-id turnaround so as to keep the aircraft flying.
Labor represents the single largest cost itemfor airlines worldwide, with nearly 10 percentof the work force being cockpit crew.11 In theairline industry, labor is highly skilled andmust assume a high degree of responsibility.
‘Mark Lambert, ‘‘Egypt Rebuilds Its Aircraft Industry, In-teravia—Aerospace Reviews, February, 1984, pp. 157-60.
1oAircraft prices vary considerably, depending on plane con-figuration and customer needs for training and spare parts. Forexample, a Boeing 747 in 1984 reportedly ranged in price from$77 million to $84 million (747-SP) to $91 million to $106 mil-lion (747-300 extended).
‘‘Labor and fuel are the two largest cost categories in the in-dustry worldwide. See William E. O’Connor, An Introductionto Airline Economics (New York: Praeger, 1982). Cost per gallonof jet fuel for U.S. air carriers increased from 12.7/gal. in 1973to 57,8/gal. in 1979 to 104/gal, in 1981, and dropped slightlyto 98. l/gal. in 1982. Cost of fuel as percent of cash operatingexpenses moved from 12.2 percent in 1973 to 28.1 percent in1982. Aerospace Industries Association of America, Inc., Aer-ospace Facts and Figures— 1983/84, Washington, D. C., July1983, p. 86. Cost of fuel for airlines in the Middle East dependson refining capabilities and subsidies of the individual countries.
250 . Technology Transfer to the Middle East— — — . — —
Ch 7—Technology Transfers in Commercial Aircraft Support Systems 251
Ground-loading operations for Saudia Airlines
Strict standards in employee selection andtraining are essential.
Ground operations by the airlines also re-quire considerable training. Aircraft servicingand maintenance require specific skills andtraining, as does passenger service to a lesserextent. Cargo and baggage handling may ap-pear to be the least skilled aspect of groundoperations, but in fact skill is required to safelyhandle shipments in international servicewhich on average weigh 600 pounds. Securitypersonnel are also a vital part of the groundoperations since air cargo in storage and tran-sit is particularly vulnerable to theft.12 Thepressure to turn aircraft around rapidly andthe need to meet peak demands, add to the la-bor-intensity of the ground operations.
C O M M E R C I A L A I R C R A F TS U P P O R T S Y S T E M S I N
T H E M I D D L E E A S T :C U R R E N T S T A T U S
During recent years, the Middle East/FarEast route with a load factor of 65 percent hasexperienced the highest passenger growth (22percent) of all IATA (International Air Trans-port Association) route areas worldwide.13 TheEurope/Middle East routes remained at 1981levels, however. Saudia ranked 17th in sched-uled tonne-kilometers performed in 1982 of all121 IATA members and had a 22.8 percentgrowth rate from 1981 to 1982. Kuwait Air-ways had a 20 percent growth rate in tonne-kilometers from 1981 to 1982. Saudia ranked15th among the 121 IATA members in sched-
13 The average load factor worldwide in 1982 was 64.2 percent.
252 ● Technology Transfer to the Middle East
uled passenger-kilometers14 in 1982 with12,277 million.15 Saudia now ranks among themajor international carriers, as shown in table62. According to IATA and ICAO data, oper-ating statistics for these six airlines in theMiddle East such as revenue passenger loadfactor, average daily aircraft utilization, andsafety are comparable in most cases to thoseof other national flag carriers operating inter-nationally. Also shown in table 62 is the factthat these airlines increased operations dur-ing 1982 while several airlines from other re-gions of the world experienced decreased oper-ations.
As another indication of the relative size ofthe airlines, table 63 gives employee totals forseveral airlines in 1982. Saudia airlines is byfar the largest air carrier of the six study coun-tries with total personnel numbering close tothat of TWA or Japan Air Lines. The num-ber of in-flight personnel of Saudia, however,is much lower than that of the non-MiddleEastern airlines listed. Iraqi Airways, with4,863 total personnel, is the smallest airlineincluded in the tabulation.
Table 64 includes airport traffic statisticsfor representative airports in the Middle Eastand the United States. Although not all inter-national airports existing in these countriesare listed in the table, relative traffic volumescan be noted. Bahrain, Qatar, and the UnitedArab Emirates (UAE) are included in the listsince they carry significant air traffic in theregion. Major international and domestic air-ports in the Middle East are shown in map 5.
Descriptions of the airlines of the six coun-tries under study are given in more detail be-low. As a reference, relative sizes of severalof the commercial airline fleets in the MiddleEast are given in table 65.
“Scheduled passenger-kilometers is the sum of the productsobtained by multiplying the number of passenger seats sched-uled by flight distances measured in kilometers.
“International Air Transport Association, World Air Trans-port Statistics, No. 27, 1982.
Saudi Arabia
Saudia, the national airline, has the great-est number of route miles of all national air-lines covered in this study and has surpassedthe beleaguered Middle East Airlines of Leb-anon. Saudia has a fleet which includes 12 Boe-ing 747s, 17 Lockheed TriStar L-1011s, 9 Boe-ing 707s, 20 Boeing 737s, and 11 smallerplanes. Saudia ordered 11 Airbus A300’s tobe delivered during May through September1984.
TWA and Saudi Arabia have been associ-ated in civil aviation since 1945 when Presi-dent Roosevelt gave a DC-3 to Saudi Arabia’sKing Saud. The first contract was signed in1946 between TWA and Saudi Arabia withsubsequent ones through 1984. TWA partici-pated extensively in the management andoperations of the airline in the early period, butsince 1979 its involvement has decreasedmarkedly. With the new 1984 contract, theSaudis have taken over management of theairline. A successful program of training andupgrading of facilities and personnel led togradual “Saudization” of the work force evenwhile the company was expanding at a fasterrate than any other national airline in theworld. During the 1970’s, Saudia had neithersufficient fleet nor personnel and facilities toaccomplish the task of moving foreign work-ers in and out of the country. The main air-ports at Jeddah, and Riyadh especially, usedaged facilities designed for the DC-6 era. Tem-porary airport buildings were rushed to com-pletion within 18 months and by late 1976 theairline began to lease aircraft and integratethem into operations on a temporary basis.Some leased aircraft, mostly Boeing 747s andDouglas DC-8S, still are being used, usuallyduring the annual Haj pilgrimage.16
Saudi Arabia is continuing its large-scale air-port expansion projects which include both in-ternational and domestic airports. Elevendomestic airports will be upgraded to handle in-creased passenger traffic at a cost of approx-
“The Haj is the pilgrimage of Muslims from all over the worldto Mecca, located in Saudi Arabia.
Table 62.—Operating and Performance Statistics of Selected Airlines for 1982—
Passengers Tonne-kms performed Available tonne-kms Load factor
Country Airline—
000s ± change Millions ± change Millions ± change Passenger Weight
Saudi Arabia- Saudia . . . . . . . . . . . . . . . 10,060 41.9% 1,478 22.8°10 3,047 12.40/o 64.20/o 48.50/oKuwait Kuwait Airways. . . . . . . . 1,461 16.6 456 19.9 849 6.7 65.7 53.6Egypt EgyptAir. . . . . . . . . . . . . . 2,433 9.2 395 14.1 702 2.6 60.3 56.3Algeria Air Algeria.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Iran Iran Air. . . . . . . . . . . . . . 2,009 30.5 215 15.7 352 22.0 67.3 61.6Iraq Iraqi Airways . . . . . . . . . . 481 5.2 187 12.7 388 20.3 59.3 48.2
United States-..—
TWA . . . . . . . . . . . . . . . . . 17,854 –1.6 4,429 –1.5 8,149 –2.1 63.9 54.3United States Eastern Airlines . . . . . . . 35,500 –1,4 4,334 –1.0 8,014 –2.5 57.7 54.1United Kingdom British Airways . . . . . . . . 14,838 –3.1 4,310 –6.4 6,827 –6.9 67.4 63.1France Air France . . . . . . . . . . . . 11,584 0.2 4,218 1.8 6,765 3.8 64.1 62.3Federal Republic of Germany Lufthansa . . . . . . . . . . . . 12,775 –1.5 3,746 4.4 6,317 8.5 59.6 59.3Japan Japan Airlines . . . . . . . . 13,329 –4.4 4,993 3.2 8,125 –4.6 62.5 61.4
Total a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384,610 –0.9% 87,529 0.4% 152,901 –0.3% 62.0% 57.2%Note: ± IS percent change from previous year dataaTotal industry value for IATA Members in 1982 based on approximately 121 IATA member airlines
SOURCE: International Air Transport Association. World Air Transport Statistics, No 27 1982
Table 63.— Employee Totals
OtherPilots and cockpit
for Representative Airlines, 1982.
Maintenance TicketingCabin and overhaul and sales
Total±
Traffic- changehandling All other over
Country Airline copilots personnel attendants personnel personnel personnel personnel Number 1981
Saudi Arabia Saudi . . . . . . . . . . 670 - 216 2 , 6 7 1 4,014 2,626 5 , 4 3 7 8,096 23,730 5.70/oKuwait Kuwait Airways . . 174 76 487 1,808 1,139 734 2,113 6,531 4.9Egypt EgyptAir . . . . . . . . 251 81 633 1,981 — — 6,537 10,731 4.2Algeria Air Algérie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Iran Iran Air . . . . . . . . . 193 81 721 1,378 882 2,253 4,027 9,535 –2.7Iraq Iraqi Airways . . . . 136 120 330 1,958 390 478 1,451 4,863 4.3
United States TWA. . . . . . . . . . . . 1,802 971 4,905 7,051 3,752 7,739 3,024 29,244 –4.3United States Eastern Airlines. . 2,839 1,212 5,987 10,228 5,036 10,324 4,325 39,951 –0.7United Kingdom British Airways . . 2,104 447 4,375 9,009 3,376 8,943 9,700 37,954 –15.8France Air France . . . . . . . 1,320 771 4,239 8,767 34,537 2.8Federal Republic of Germany Lufthansa . . . . . . .
— — —1,564 562 3,938 8,353 4,361 6,603 5,331 30,712 0.1
Japan Japan Air Lines . . 1,355 646 5,132 4,951 3,575 3,449 2,632 21,740 0.9SOURCE: International Air Transport Association, World Air Transport Statistics, No 27, 1982
. .
Table 64.—Airport Traffic Statistics for
StateCity Aircraft movements (000)
Airport Commercial air transportSaudi Arabia:
Jeddaha
J e d d a h I n t e r n a t i o n a l . . .Kuwait:
Kuwaitc
K u w a i t I n t e r n a t i o n a lEgypt
CairoC a i r o I n t e r n a t i o n a l . .
Algeria:Algiers
D a r E l B e i d a . ,Iran:
TeheranM e h r a b a d l n t e r n a t i o n a l
Iraq:Baghdad
B a g h d a d I n t e r n a t i o n a lBahrain”
BahrainB a h r a i n I n t e r n a t i o n a la
Qatar:Doha
Doha International .,U .A. E.:
Abu DhabiAbu Dhab i I n te rna t i ona la . .
United States:Washington, D.C.
D u l l e s I n t e r n a t i o n a l . ,United States:
San Francisco, Cal If.San Francisco International .
United States:Philadelphia, Pa
Ph i lade lph ia In te rna t iona l . ,
NOTE Totals may not add up due to rounding
87.5 b
273
518
401
1 5 8
6.3
38.2
156
347
29.2
2686
255.6
Representative
Passengers(000 embarked and disembarked).
Airports (1981 unless otherwise noted)
Total——
7,505
2,376
5,239
2,870
1,689
618
1,588
662
924
2,133
19.848
9,009
International Domestic
3,499
2,376
4.741
1.520
283
618
1,588
662
899
377
2!170
468
4,006
0
498
1,350
1,406
0
0
0
25
1,755
17.678
8,540
Total
478
55.1
568
32.2
39.1
16.7
174
16.7
261
23.2
3179
933
Freight Mail(000 of tonnes) (000 of tonnes)
In ternat iona l Domest ic Total In ternat ional
350
551
563
28.4
33.7
167
174
167
NA
114
NA
8.9
12.8
0
05
38
54
0
0
0
NA
118
NA
843
NA
2.2
NA
NA
17
0 5
1 5
0.5
NA
179
1051
459
a1980 statistics. Complete data not available for the King Abdul Aziz airport but later 1981 data imply a rate of over 100.000 total commercial air transport movements per year
NA
22
NA
NA
16
05
15
0 5
NA
2.3
NA
0 5
Domestic
NA
o
NA
NA
01
0
0
0
NA
157
NA
455
‘1978 data pointC Kuwalt as a city-state has no domestic air servlcesNA—not available
SOURCE International Civil Aviation Organization Airporl Traffic– 1981 Digest of Statistics No 287 1982
————— —.— ——. —Ch. 7— Technology Transfers in Commercial Aircraft Support Systems ● 255
Table 65.—Commercial Airline Fleets in the Middle East in Service as of March 1984 (on order as of March 1984 in parentheses)—
Boeing Douglas Lockheed
Country Airline 707 727 737 747 757 767 DC8 L1011
Saudi Arabia Saudia . . . . . . . . . . . . . . . . . . 9 — 20 12 — — 6 b 17Kuwait Kuwait Airways . . . . . . . . . . 7 4 — 4 —Egypt EgyptAir . . . . . . . . . . . . . . . . 6 7 (3)C
Algeria Air Algérie . . . . . . . . . . . . . . 11 13Iran Iran Air . . . . . . . . . . . . . . . . . 5 10 4 10Iraq Iraqi Airways . . . . . . . . . . . . 3 6 3 4Bahrain, U. A. E., Oman, Qatar Gulf Air . . . . . . . . . . . . . . . . . 9Lebanon Middle East Airlines . . . . . . 7e 3
8
Libya Libyan Arab Airlines.. . . . 4 10Jordan ALIA. . . . . . . . . . . . . . . . . . . . 5 6 3 5Syria Syrianair . . . . . . . . . . . . . . . . 3 2Cyprus Cyprus Airway s . . . . . . . . . . 4
Airbus
A300 A310 A320a
(11)(3) 3(5)82d
6
(5 plus 14options) f
(6) (4)
1 (2) (4 plus 4options)
Totals (existing and firm order) . . . . . . . . . . . . . . . . . . . . . . . . 50 45 59 35 0 (3) 6 30 16(20) 4(16) (4)a The development funds for the Airbus A320 were approved by the consortium in March 1984b Leased from Overseas National and Icelandalr.c These three Boeing 767 extended range versions due to be delivered July 1984.d Leased from Lufthansa.e MEA previously had 18 707s (lATA, WATS 1982) but 6 were destroyed and 5 extensively damaged in the Lebanon Conf l ic tf These may have been canceled, although the contract has not been formally abrogated, according to the M/dd/e East Economic Digcst, Feb 3, 1984, p 35
SOURCE Taken from Exxon International CO , Air World Survey—Turbine-Engined Fleets of thre Worlds’ Airlines 1983. Florham Park, N J and OTA communications with Boeing Commercial Airplane Co Ren.-ton, Wash , and Airbus Industrie, N.Y., March 1984, Note that “firm orders” for a particular jet and “options” in particular can be fairly volatile numbers The 707, 727, DC8, and L1011 are no longerin production.
Ch. 7—Technology Transfers in Commercial Aircraft Support Systems ● 257
imately $295 million. At five airports (Medina,Gassim, Gizan, Abha, and Tabouk) the expan-sion is designed to accommodate wide-bodyjets (Lockheed TriStar and Airbus) which willbe equipped to meet the highest internationalnavigational standards. At the smaller air-ports, the projects are designed to accommo-date Boeing 737 aircraft instead of FokkerF28s. These airport projects in rural areaswere originally tendered in 1983. However, in1984 it was reported that the Presidency ofCivil Aviation (PCA) was retendering thesedomestic airport expansion projects in orderto economize on expenditures.18
Saudi Arabia’s major international airportsconsist of: Dhahran International, Jeddah In-ternational, and Riyadh International. Pres-ently, only Saudia calls at King Khalid Inter-national Airport (KKIA) at Riyadh, but KKIAwill soon open to international carriers accord-ing to Civil Aviation President Sheikh NasserAl-Assaf. 19 Pan American Airways and Saudiapresently operate a joint service between NewYork and Dhahran. Saudia also now flies toNew York from Jeddah. Foreign carrierswhich serve Jeddah or Dhahran include Ali-talia, Air France, British Airways, Lufthansa,Middle East Airlines, and Iran Air. Some 44airlines now fly into Saudi Arabia, and Saudiaflies to major European, North African, Arab,and South Asian cities.
Riyadh’s King Khalid International Airportwas completed in 1983 at a total cost of about.— - — — —-
‘“Saudi Business, Oct. 16-27, 1982, and Oct. 23-24, 1982; SaudiReport, Nov. 29, 1982.
“It is also believed to be the first case of a retenderingprompted by King Fahd’s recent decree that all governmenttenders must be announced publicly. “Airport Expansion Pro-jects To Be Retendered, ’ Saudi Business and Arab EconomicReport, No. 6, May 28, 1983, reported in JPRS, Near EastSouth Asia, June 30, 1983. I t is reported that Saudi Arabiamay revise a portion of its ambitious airport modernization pro-gram because of anticipated cuts in government spending dueto decreased oil revenues. This is not, however, expected to stopany of the large construction or upgrade plans included in thelatest phase of airport modernization, but it may result in ascaling down of certain programs, such as those in the East-ern Province. See Jeffrey M. Lenomvitz, ‘‘Slack Oil Funds MayForce Saudis To Cut Airport Plans, ” Aviation iJeek and SpaceTechnology, May 21, 1984, pp. 41-45.
‘Tony Odone, “KKIA: Beginning a New Phase in Saudia Ara-bia, ” Middie h’ast Economic Digest, Nov. 11, 1983; Saudi Re-port, Nov. 29, 1982.
$3.2 billion. It began receiving commercialflights on December 5, 1983.20 The airport wasdesigned to handle 7.5 million passengers inits first year while it was still in the first stagesof initiating its operations. The number willreach 18 million passengers annually by theyear 2000.2]
Servicing the pilgrimage, with its 800,000visitors, more than 70 percent of whom travelin and out by air, is the second most impor-tant task for Civil Aviation, after supplyingfacilities for national needs. During the 45- to60-day period preceding and following the Hajpilgrimage period to Mecca each year, the traf-fic density at Jeddah airport approaches thatof some of the busiest U.S. airports, such asO’Hare in Chicago. Hundreds of charter flights,many by airlines not normally servicing theKingdom, must be guided to safe landings andtheir airplanes serviced rapidly. It is a uniqueproblem, and the Saudis have increased theiruse of modern computer techniques both tohandle the aircraft and the pilgrims them-selves. The Jeddah airport in its design andoperations thus represents adaptation of com-mercial aircraft support systems to local re-quirements.
E g y p t
Cairo is among the most active air centersin the Middle East and is served by a numberof international air carriers. Egypt’s one in-ternational airport is located in Cairo. Facil-ities at the Cairo airport are to be expandedto handle a projected fourfold increase in pas-senger traffic and rapidly increasing air freighttonnage. Alexandria’s El-Nouzha Airport, lo-cated on the eastern outskirts of the city, re-sumed scheduled operations for domesticflights in late 1980. The airport has two oper-ational runways, one of which will be length-ened to accommodate international flights.
‘“Jim Bodgener, “U.K. Airlines Battle for KKIA Rights, ”Middle East Economic Digest, Sept. 11, 1983, p. 38; Jan. 27,1984, p. 26.
“’’King Fahd Opens the King Khalid International Airport:A Tour Through Riyadh’s New Airport, Which Is One of theBiggest in the World, ” Al-Majallah, No. 196, Nov. 12-18, 1983,pp. 18-21, as reported in JPRS, Near East/South Asia, Jan. 30,1984.
258 ● Technology Transfer to the Middle East
Haj Terminal, King Abdul Aziz International Airport,Jeddah, Saudi Arabia. The roof structure iS evocative
of bedouin tents
The national airline, EgyptAir, has six 707s(plus two more leased), seven 737s, eight Air-bus A300s, two Fokker F-27s (leased), and twoCessnas.” EgyptAir (formerly United ArabAirlines) has been operating since 1931. It pro-vides flights to about 40 cities in Europe, Asia,
22 International Air Transport Association, World Air Trans-port Statistics, No. 27, 1982; also ~msonal communication, Air-b u s Industrie, New }rork, Xlarch 1984.
Africa, and the Middle East. The airLine is con-sidering the creation of an all-cargo subsidiary.A private cargo company, International AirCargo Corp., was formed in early 1977.”
Algeria
Algeria has a relatively good transportationnetwork and is devoting substantial resourcesto its expansion and modernization. Algeria’sinternational airports consist of Dar el Beidain Algiers, Annaba, Ain-el-Bey in Constantine,and Es Senia in Oran. Other major airportsare located in Bechar, Hassi Messaoud, In-Salah, Tamanrasset, and In-Amenas. Fifty-five smaller airports are located across thecountry.
Air Algérie, the state-owned and operatedairline, continues to expand its internationalservices. At the end of 1981, Air Algérie wasoperating a record 250 scheduled domesticflights weekly, for cargo as well as passen-gers.” Its fleet consists of 11 Boeing 727s, 13Boeing 737s, and 3 Lockheed Hercules aircraftas well as 42 Beechcraft and Grumman air-craft for crop spraying, pipeline surveillance,and other purposes. Most of the equipment inAlgerian civil aviation is made by U.S. firms,”although Air Algérie leases two Airbus A300sfrom Lufthansa.
The leading foreign suppliers rank orderedby total sales in 1979-82 were the UnitedStates (aircraft and engines, $165 million), In-dia, Belgium, and Hungary. By total expend-itures since 1979, civil aviation projectsranked second for Algeria among the five tech-nology sectors studied in this assessment($265 million from 1979-82). This was a signif-icant rise over the total value of contractsawarded during the 1972-78 period ($5.7 mil-lion). In addition, the absolute number of con-tracts approved in the later period was higherthan the number approved in the earlier 1972-
‘)U.S. Department of Commerce, Overseas Business Reports,OBR 81-31, “Marketing in Egypt,” December 1981.
“U.S. Department of Commerce, Foreign Economic Trends,Algeria 198.2, p. 11.
‘ ‘Information provided by` the U.S. Embassy, CommercialSection, Agiers, 1982.
Ch. 7— Technology Transfers in Commercial Aircraft Support Systems ● 259
78 period, reflecting the Algerian Develop-ment Plan’s emphasis on transportation.
Kuwait
Kuwait, as a city state, has one internationalairport and no domestic airline routes. Its in-ternational airport has recently been expandedto handle 4 million passengers and 30,000 tonsof cargo per year.26
Kuwait Airways, the national airline, hasfour 747s, seven 707s, four 727s and twoHawker Siddeley HS 125s. Kuwait Airwaysowns three Airbus A310s and has five moreon order. Three Airbus A300s are also on or-der. This company has the fewest route milesof the six national airlines covered in thisstudy. Kuwait Airways is an independent lineitem in the Kuwaiti budget; it is given a sub-sidy and capitalized as an extraordinary item.Operating losses in 1980 reached $33.3 million,reflecting the fact that flying expenses in-creased by 56 percent in 1 year, 1979-80, duepartly to aviation fuel cost increases.
Passenger traffic grew between 1976 and1980 by 45 percent, while freight traffic grewby 160 percent. The airline’s capital has beensubstantially raised to permit purchase andamortization of the first six Airbuses sched-uled to be delivered in 1984. In addition toKuwait Airways, Kuwait is served by GulfAir, Saudia, Iran Air, British Airways, AirFrance, KLM, and Lufthansa.
Iraq
Iraq’s international airport is located inBaghdad. The first phase of the new SaddamHussein Airport has now been completed, andas of 1980, work was underway on a new in-ternational airport at Basra. The presentstatus of both these projects, however, isuncertain, due to the war with Iran. In thenorth, an international airport at Mosul isunder design.27
— . ——“U.S. I)epartment of Commerce, ()\rerseiis Business Reports,
OIIR-79-18, ‘ ‘Marketing in Kuwait. ” ,June 1 !)79,‘-1 nf{)rmation prf)~-ided h~ the IJ ,S. I)epartment of (’ommerce,
1 nternational Trade Administration, Fel). 10, 19/+3,
Iraqi Airways presently has three 707s, six727s, three 737s, and four 747s. Iraqi Airwaysranked 44th out of 121 IATA members in 1982international tonne-kilometers performed, butit grew 12.7 percent by the same indicator dur-ing the 1981-82 period.
Iran
Iran has international airports in Abadan,Esfahan, Teheran (Mehrabad International),Shiraz, and Zahedan. There are 36 major andsecondary domestic airports open to civil avia-tion, Iran Air, the national flag carrier, wasfounded in 1962, taking over limited freightand passenger operations from two privatecompanies. Its load factor grew appreciably,and in 1977 it served 25 different domestic air-ports and provided services in internationalroutes to 24 different countries in North Amer-ica, Europe, and East Asia. Iran Air has five707s, ten 727s, four 737s, ten 747s, and sixAirbus A300s. Iran Air ranked 50th out of 121IATA members in 1982 scheduled tonne-kil-ometers performed and 49th in scheduledpassenger-kilometers.
Regional Efforts
There are a number of regional efforts to de-velop commercial airlines and support systemsin the Middle East. These include technical as-sistance programs, as well as one regional air-line company, Gulf Air, which is jointly ownedby four Middle Eastern countries.
Many technical assistance programs arebeing pursued with foreign participation. TheU.S. Federal Aviation Administration (FAA),for example, is presently conducting techni-cal assistance programs promoting the re-gional development of commercial aircraftsupport in the Middle East. These includeassistance in design and development of theKuwait International Airport, where the Na-tional Aviation System has two resident U.S.advisors. In Saudi Arabia, the FAA runsSaudi airman certification services for the Boe-ing 707/737/747 and the Lockheed L-101 1.During the period 1951-82 the FAA trainedover 550 personnel in the six countries under
260 ● Technology Transfer to the Middle East
study in air traffic control, air navigation fa-cilities, airport services, and flight standards.28
AACO (Arab Air Carriers Organization) hasattempted to organize an aircraft spare partspool similar to those in Europe such as theATLAS (Boeing 747) and KSSO (DC-10), butthe results have been mixed. Saudia is theholder of L-1011 spares at Jeddah, but Lock-heed spares are also stored in Amman, Jordanby TriStar Parts Ltd.29
The IATA Program for Developing NationsAirlines (PDNA) assists airlines in developingcountries in funding for individual or joint air-line projects and in arranging and coordinat-ing consulting and airline training services.30
A training seminar, sponsored jointly byAACO and IATA, was held in Amman, Jordanin April 1983. The basic purpose was to de-termine the specific training needs andpriorities of airlines in developing countriesand to establish the foundation for a com-prehensive PDNA training program in thefuture. In addition, initial steps have beentaken to explore the possibility of conductingdetailed feasibility studies for a Regional Air-line Training Center in Amman.31
ICAO also promotes civil aviation in devel-oping countries worldwide. A major instru-ment in this work is the United Nations De-velopment Program. So far, most of theorganization’s work in this area has beendirected toward the development of the groundservices required for civil aviation and in par-ticular air traffic control, communications, andmeteorological services. [n the past few years,with the advent of larger and more complex.--- —--- ..--— . .
‘8Quentin S. Taylor and J. Stuart Jamison, “FAA’s Interna-tional Training Programs, ’ Journal of Air Traffic Control,October-Dececember 1982, pp. 6-9.
29These spare parts generally include only airframe linereplaceable units, with engine parts inventories held elsewhere.Information provided by TriStar Parts Ltd., January 1983.
30See for example International Air Transport Association,4’Consultancy and Training Services Directory, ” first edition,Nov. 1, 1981; “IA TA-Improved Productivity Through Com-mon Effort, ” August 1982; and “Wings for the DevelopingWorld, ” 1982. As stated by IATA, the basic objective of thePDNA is “for member airlines to develop self-reliance, therebystrengthening the global commercial air transport system.
3]IATA Annual Report and Executive Committee Report,1983, p. 24.
aircraft, requests for assistance are increas-ingly in the more sophisticated fields of avia-tion. Assistance has been provided in theorganization of government civil aviation de-partments and the location and operation offacilities and services, particularly personneltraining. In Egypt and other Middle Easterncountries civil aviation training centers havebeen created or assisted.
Gulf Air is a joint venture between Bahrain,Qatar, the UAE, and Oman. Gulf Air wasfounded in 1950 as Gulf Aviation Co. and wasnationalized in 1974 to become the flag carr-ier for the four countries.32 It is now one ofthe region’s largest passenger carriers, carry-ing numbers of passengers comparable to Iran,Air and EgyptAir. After rapid expansion inthe 1970’s, the airline plans to consolidate cer-tain operations in the 1980’s and must copewith problems such as the worldwide trendtoward fare deregulation, and overcapacitydue to increased competition on Gulf routes.Overcoming difficulties which included lack ofinfrastructure and competent personnel, GulfAir realized a small profit in 1979 which stead-ily increased to $10 million in 1980, $19.4 mil-lion in 1981, and $34 million in 1982.33 GulfAir has recently expanded its network some-what. In 1982, it started flights to Amman,Jordan and Larnaca, Cyprus, reopened a linkto Athens, and inaugurated a London-to-Cairoservice. By the end of 1982 it was operatinga fleet of eight Lockheed L-1011 TriStars andnine Boeing 737s.34
Historically, the dominant airline in the re-gion was Middle East Airlines (MEA) ofBeirut. It was largely responsible for makingBeirut the hub of international air travel tothe Middle East. In 1979, Lebanon began a
—. —“’’Gulf Air: Flying Against the Flag, ” Middle East Economic
Digest Special Report, September 1981, pp. 41-43; and DudleyNigel, “Gulf Air: A Servant of Four Masters, ” Middle East Eco-nomic Digest, Mar. 21, 1980, p. 10.
t~Ibid.; ~d “Gulf Air’s profits Flv Against the Trend, Mid-dle East Econorm’c Digest, vol. 27,-Issue 4, Jan. 28, 1983, pp.8-9, and “Gulf Air Posted 34 Million Dollar Profit in 1982, ”An-Nahar Arab Report and Memo, vol. 7, Issue 27, July 4, 1983,p. 8.
“’’Arab Airlines: Co-Operation in the Face of Competition, ”Middle East Magazine–Aviation Survey, August 1983.
Ch. 7—Techno/ogy Transfers in Commercial Aircraft Support Systems ● 261
$300 million program to expand and modern-ize Beirut airport, and in 1980 MEA an-nounced its planned fleet expansion would in-clude the purchase of five Airbus A310aircraft, plus an option for 14 more. MEA sur-vived the civil war of 1975 and the politicalinstability in the late 1970’s, but the 1982 warin Lebanon caused severe problems for the car-rier. MEA lost six Boeing 707s and anotherfive may be scrapped because of extensivedamage. In addition, its ground facilities weredamaged in the fighting. Insurance will pro-vide only a small portion of the replacementcosts, due to the restrictiveness of war riskcoverage. The airline reportedly began to baseits operations from Larnaca, Cyprus insteadof Beirut. MEA does apparently plan to re-place the aircraft lost and to continue its fleetmodernization/expansion program based onthe A310. The war has, however, eroded Bei-rut’s position as a gateway, and MEA as a ma-jor factor in Middle East commercial aviation.
P E R S P E C T I V E S O F R E C I P I E N TC O U N T R I E S A N D F I R M S
Keeping an airline fleet operating is atechnically demanding business. This sectionfirst outlines requirements for maintenance ofcommercial aircraft, reviews training pro-grams associated with aircraft sales, and dis-cusses the requirements such as airport de-sign. Next, the experiences of six Middle Eastcountries are analyzed in order to assess theextent of technology absorption and the sig-nificance of commercial airline support sys-tems in their economic development programs.
Requirements for CommercialAircraft Operation
Routine Maintenance. –Each aircraft modelhas a routine maintenance program for oper-ation in scheduled service. Routine mainte-nance tasks consist primarily of inspection ofthe airframe, engines, systems and compo-nents to assure safety and satisfactory oper-ation of the aircraft. Such routine maintenanceis carried out by the individual Middle East-ern airlines.
Usually, these routine inspections or checks”are based on flight hours and are called Pre-flight, Transit, A, B, C, and Structural Inspec-tion checks. The Pre-flight check is performedeach morning prior to dispatch and anytimethe aircraft is on the ground for more than 4hours. The Transit check is performed beforeeach flight, usually in a “walk-around” inspec-tion. The flight crew can perform this checkif maintenance personnel are not available.The A, B, C checks are called scheduled checkssince they are performed at specific timeperiods. Each operator develops and obtainsapproval for his pattern of scheduled checks,but in broad terms the A check usually is per-formed approximately weekly (every 100hours) with the B check interval four timesthat of the A (every 400 hours) and the C checkinterval four times that of the B.36
In order to avoid peaks and valleys in main-tenance work and numbers of personnel, thechecks are often combined into a “phase’check which consists of elements of all threechecks, e.g., A + B/2 + C/8. There are manyvariations of these phases, normally estab-lished to correspond to a particular operationalschedule.
Each inspection generates additional main-tenance not part of the routine maintenance.A complete maintenance cycle includes theseroutine checks as well as major overhaul(structural inspection). Over the course of acomplete maintenance cycle, nonroutine main-tenance man-hours approximately equal theroutine maintenance man-hours.
The number of personnel required dependson the type of check being performed and the—. ———
“The maintenance check is defined as a maintenance actionrequiring thorough examination of an item, component, or sys-tem for general condition with emphasis on proper attachment,safety wiring, cotter pins, fasteners, clamps, latches, tubing,plumbing, electrical wiring and connctions, linkages, bearings,alignment, clearances, lubrication, obvious damage cracks,delamination, fraying, operating pressures, fluid leakage, ex-cessive wear or play, corrosion, evidence of overheating, rub-bing, aging, preservative coating or finish, cleanliness, and gen-eral appearances.
“The Structural Inspection (or airframe overhaul) is usuallyperformed at intervals 10 times that of the C check, or, in theexample noted— 16,000 hours. Major overhaul is discussedbelow.
262 ● Technology Transfer to the Middle East
length of time the aircraft is available formaintenance. The size of the aircraft alsodetermines maximum crew size. The Boeing747, for example, requires a maintenance crewapproximately twice the size of that requiredfor the 737. While a Pre-Flight or Transitcheck can be performed with as few as threeto five people, a Phase (or C check) could re-quire up to 50 people (for a 747) or 25 (for a737).
Crews must include personnel skilled in air-frame and systems, powerplant, electrical,avionics, sheet metal, and interiors. These per-sonnel must include some who are licensed towork on and, particularly, to signoff work forrelease of the aircraft to operations. Crew com-position for a scheduled maintenance crewshould be approximately 50 percent airframeand system mechanics, 20 percent engine spe-cialists, and the remainder equally dividedamong electrical/electronic, radio, instru-ments, sheet metal, interior, and quality con-trol specialists. Additional specialists from theoperator’s maintenance shops are utilized onan “as-required” basis on airplane checks. Thesuggested ratio of licensed personnel to skilledis approximately 1 to 3.
Each operator, if purchasing an aircraftfrom a company such as Boeing or Airbus, re-ceives information in the form of documenta-tion, complete drawings and verbal briefings,as to the ground support equipment required
Photo credit Saudi Arabian Ministry of Commerce
Jet turbine engine repair
to maintain the airplane. The specificationsand/or engineering drawings of equipment re-quired to maintain a particular aircraft modelare supplied to the buyer as part of the salespackage. The buyer can purchase equipmentthrough the seller, from outside sources, or canmanufacture the equipment. Availability ofequipment or manufacture of equipment at aparticular operator’s maintenance base de-pends entirely on the industrial capabilities ofthe local area. In most areas in the world, thereare local industries capable of manufacturingthe required equipment. Provisioning of equip-ment, whether through the aircraft seller, orfrom other sources, is a separate negotiation.A potential customer can include these costsin the total package.
Maintenance provisions and their costs canbe very important in making an aircraft sale.Equipment investment forecasts are per-formed regularly for presentation to potentialcustomers, Since spares and ground supportequipment investment and maintenance costscomprise about 20 to 25 percent of an airline’soperating costs, improvements in methodsof maintenance, extensions in maintenanceschedules, and reductions in numbers of spe-cial tools and equipment required are factorsinfluencing sales. Over the life of an airplane,spare parts sales can easily equal the purchaseprice of the airplane. Efficient management ofspare parts inventories has become increasing-ly important, due to the high costs of main-taining excessive stock and the long leadtimesrequired for obtaining certain aircraft parts.
Major Overhaul.–Major overhaul is costlyand technically demanding. A fleet of approxi-mately 15 airplanes is normally required to jus-tify establishing an overhaul center, but thereare many other considerations such as fleet com-position, age, and engine types. The only majoroverhaul center presently in the Middle East isin Saudi Arabia. Despite attempts to establisha regional center, such a facility has not beenset up, and seems unlikely in the near future.
A major overhaul of an aircraft is usually con-sidered to be a structural inspection, duringwhich the airplane is moved into a hangar withbuilt-in work stands (or docks) which allow ac-
Ch. 7— Tecbnology Transfers in Commercia/ Aircraft Support Systems c 263
cess to all areas of the airplane. The aircraft islifted on hydraulic jacks high enough to allowlanding gear retraction and extension. The in-terior furnishings (seats, galleys, and lavatories)are removed and interior wall and ceiling panel-ing and insulation are taken out. Componentsare removed, serviced, or repaired as required.
Personnel required to staff a major overhaulcenter include those skilled in engineering, train-ing, production planning, quality control, sparesplanning and procurement, and shop personnelskilled in many different functions, such as elec-tronics, welding, instruments, nondestructivetesting, sheet metal, machining, and plastics re-pair. A total of approximately 450 people is re-quired to staff such a maintenance base.
Guidelines for major overhauls in the UnitedStates are established by the FAA, and theseguidelines are also used in the Middle East, re-gion. Frequency of major overhaul dependson the operator’s approved maintenanceschedule and on flight hours. Boeing recom-mends a major overhaul at 16,000 flight hoursfor the 737 airplane. A structural inspectionwould be performed every 6 ½ years for anoperator flying 7 hours a da-y, 2,500 hours peryear. 38
Many operator-s contract to perform all lev-els of maintenance including structural inspec-tion for Middle Eastern airlines. The struc-tural inspections are performed mainly inEurope or the United States, but there are fa-cilities available in the Far East and otherparts of the world. Normally, the operator de-termines where and how much contract main-tenance will be carried out.
Training Programs Associated With an Air-craft Sale.— Through training, airlines seek to
‘ 1‘ .S (’oti[ of F’[dera] l{f~ulat irm~, I;3 17, Fedora] .1 YiationIcirlllnistr:i[]on. ‘1’]tk 11 /\eronauLic\ and Spa(’(~- I’urt .$~l, i\p-pendix A Major Alterations, Mojor Repairs,. and PreventiveMaintenance, p. 624 ff. Only two systems for overhaul are usedi n t ht, ~{~rld, t 1][> [ 1.>. f+’/\ ,+3 sj’+tt,n~ an(i ii f~rlt ish s} st[~n~, wit hth{ 1;/l )1 sj’st [’m domlnat ]n~ w~)rldwid(’, I ATA ar;d 1(’ ~10 clon CII prom u IEa t (J {~~(v-h a u I sp[’{’ i fi ca t i on \
“lpor a ft~wmg 717 i[ is rc~(~~nlrl~~~r~cle(j that a nl:i,j(jr {J\~’rha[]l~ xxwr a ft~’r X) ,()()~) h( jurs I { IJw(’t[’r, the ;-i 7 n{)rnlal 1~ flit’~ 1( jn~rt,r.fli~ht w~m[’nt.~ A\suming 12 h~}ur< p{ir (la} utilizat ]on. {Jr i. tot)h~)ur+ ~]tr- ~(,ar. t h[ in~p{,ct ion M()\Il(i 1)[ pt’rforn~lwl t,l [,r~ i I .Jre:i r<
become self-sufficient in aircraft operation andmaintenance. Training thus directly contrib-utes to technology absorption. Generallyspeaking, the smaller the airline the greaterthe need for follow-on training as the pool ofexperienced personnel and trainers is smaller.
A comprehensive and professional trainingprogram is considered extremely important tothe sale of aircraft. While a superlative train-ing program will not win the sale, lack of sucha training program can significantly contrib-ute to loss of a sale. I n the competitive envi-ronment of commercial aircraft sales. this factis well known, hence all suppliers stress train-ing in their packages. Because of this, no onesupplier has a significant advantage over com-petitors because of the training programsoffered.
Personnel training associated with the saleof a commercial aircraft generally includesboth flight operations and maintenance.39 Atypical training program offered by major air-craft manufacturers and included in the priceof an airplane consists of: 1) flight operations,usually including complete training for a cer-tain number of flight crews,40 dispatchers, andflight attendants: and 2) maintenance train-ing, usually including training in airframe andsystems, electrical systems, avionics systems,corrosion prevention, and control, and post de-livery practical maintenance training.
The three major U.S. aircraft manufacturersprovide about the same level of flight opera-tions training support. Of the three, Boeingis the most prominent in the commercial air-line field, with Lockheed (maker of the L-1011)no longer producing commercial aircraft. (TheMcDonnell Douglas DC-10 jumbo jet is out ofproduction except for a military version, but
39Personnel trained for flight operations include: pilots, flightengineers, performance engineers. (1 l~j)il [4ht, r\. f] i~l] [ ;lt t (,11( iants, instructors suptm iwrs, iiIICi k )a(i lr] :ic-t [ Lt-\ I )( M )n] f ~pt’r:i t I Ir \[)(~rsonnel trained for maintenance int’lu(i[ t’1[’~.l r](i:ilr+, ‘Iirfr:irrlfand systems spt~cialists. ak’it )nic ~ spt’(’l :~1 ] ~t ~, :i n(i ] n + [ ru{’t f ~r~>1] p[~rl ] ~( 1l-s.
“ “’I’hc> t~pi(al t(xk~]]t (.rti~ ~t)nslst + of a pilot, first offlf(r((st ~pll(~t ) iin(i flight [m~inw~r. SOIII(I of tht’ new’(’r p]ancs SUL’11 a~t 11( I )tIugl as hl I )-,<( ) or ll{x’ln~ 767 r[~f~u I r-(, ( }n 1}’ t w{ 1 pfu ~] )It’,
n:itn[’1~ t ht~ pilot ami (>opilf)( This is due to improved instrumen-tation and more automatic features.
264 “ Technology Transfer to the Middle East
their MD-80 142- passenger airliner, previous-ly called the DC-9-Super 80, is still being pro-duced.) The amount, type, and technologicalsophistication of training techniques incourses offered by Airbus are roughly compa-rable to that offered by Boeing in both flightcrew and line maintenance training.
Most airplane customers have a significantnumber of options with respect to brandnames of equipment, control and functions ofthe avionics equipment and numbers of “sys-tems” to be installed in their aircraft. Muchof the avionics equipment is used by severaldifferent airplane manufacturers. The new in-tegrated digital avionic systems introduced inthe Boeing 757/767, McDonnell Douglas MD-80, and Airbus Industrie A310, for example,are expected ‘to have an impact on air carrieroperations equal to the introduction of radionavaids (navigational aids) and two-way voiceradio half a century ago.”41 In this case, theentire collection of avionic sensors and subsys-tems has been designed to function as an in-tegrated flight control and management sys-tem. This will enhance operational efficiencyand flight safety and ease flight crew workload.
Aircraft companies generally provide train-ing in the Middle East similar to programsprovided to customers in other developing ordeveloped regions. From a flight crew view-point, there is not much variance among oper-ators arising from special qualifications re-quired to fly a specific aircraft. At the requestof the customer, courses can be extended todeal with language difficulties. All MiddleEastern students must, however, meet mini-mum requirements before attending mainte-nance training courses.
According to U.S. industry experts, train-ing of personnel in aircraft maintenance and-— . —
41"New Avionic Systems offer Efficiency, Safety Benefits,’Aviation Week and Space Technology, Apr. 19, 1982, p. 52.Training programs for the use and maintenance of avionicspackages at the “line maintenance” (or systems) level are mod-ified for each customer. The “shop level” (or test repairoverhaul level) is not considered as critical, and courses gener-ally teach ‘‘typical configuration components to several cus-tomers at a time.
operation in the Middle East has proceededsuccessfully. From a flight operations view-point, Middle Eastern students generally arewell educated and have sufficient knowledgeof English to permit efficient and effectivetraining. (Since all flight and maintenanceclasses are taught in English, training timeand efficiency depend on the English fluencyof the students. ) Language problems in air-craft operations training are usually mostnoticeable in the case of ground support per-sonnel.
Egypt and Algeria have the largest numbersof nationals maintaining their aircraft, whilethe Saudis and the Kuwaitis the smallest.Since being a mechanic is not a prized occupa-tion in these latter two countries, reliance onPakistani, Egyptian, Jordanian, and Palestin-ian mechanics will probably continue far intothe future.
Airport Development. – In the Middle East,some of the world’s newest and most techno-logically sophisticated airports have been builtto accommodate expanded airline operations.Several of the newer, larger airports in theMiddle East have been planned, designed, andsometimes constructed by foreign consultantsand contractors.
The selection of a site suitable for a newairport normally depends on certain criteriawhich are also applicable to the expansion ofexisting airports. The location of an airport isgenerally influenced by the following factors:1) type of development of the surroundingarea, 2) prevailing weather conditions, 3) ac-cessibility to ground transport, 4) availabilityof land for expansion, 5) presence of other air-ports in the general area, 6) surrounding ob-structions, 7) economy of construction, 8)availability of utilities, and 9) proximity to ur-ban centers. These factors vary greatly amongthe Middle Eastern countries.
The design of the passenger terminal com-plex must accommodate different types ofusers—passengers, visitors, airlines, airportoperators, and concessionaires. Different de-sign objectives, and consequently criteria, canbe identified for the different users. The most
Ch. 7— Technology Transfers in Commercial Aircraft Support Systems ● 265
important evaluation criteria for passengerterminal planning are: 1) ability to handle ex-pected demand, 2) compatibility with expectedaircraft types, 3) flexibility for growth and re-sponse to technology changes, 4) compatibilitywith prevalent ground access modes, 5) com-patibility with the total airport master plan,6) potential for delay, and 7) financial and eco-nomic feasibility.
In addition to the passenger terminal, air-freight handling and storage facilities, controltower, powerplants, fuel storage, repair hang-ars, administration buildings, fire station,communications, concessions, parking, oftenhotels or residential facilities, and publicsafety facilities are needed. Airport planningand development is thus a complex architec-tural, engineering, and logistical task.
Air Traffic Control.–Air traffic control(ATC) requires various types of navigationalsurveillance and communication equipment(both in the cockpit and on the ground). Thetechnologies involved, while widely used, arefairly complex, and training in their use, main-tenance, and repair is not trivial. The equip-ment presently installed in the Middle Eastranges from state of the art to outmoded.
Aids to aerial navigation can be broadlyclassified into two groups: 1) those that are lo-cated on the ground (external aids), and 2)those installed in the cockpit (internal aids).Some aids are designed primarily for flyingover oceans; other aids are only applicable toflight over land masses; and finally there areaids that can be used over either land or wa-ter. Some aids are used only during the enroute portion of the flight, while other aids arenecessary in terminal areas near airports.42
The principal aids for ATC are voice com-munications and radar. English is the inter-national language of ATC. The controller mon-itors the separation between aircraft by means
———.—— — . .42Rohert lloronjeff. }’)mm’ng and Design of .4irports (New
}rork: hlc(; raw-1 Iill, inc., 1975), For further descriptions of alter-na[ ii’e AT(’ s~’sten]s+ consult ,\irport and ,4jr Traffic (’ontm]SjFstem.S, OTA-S’I’1- 17,5 ,Januar}” 19%2, and Re~rie~r of the F.-l ,Aj :)xy ,f’atjon~ .lir,sp~cc ,S~5tem Plan, oT44-sT1- 176. August19S2, both publications of the U. S. Congress, office of Tech-nology Assessment, Washington, D.C.
of radar and instructs the pilot by means ofvoice communication.4s
The Operation of Commercial AircraftSupport Systems in the Middle East
Designing airports, and operating and main-taining commercial airline fleets are complexand technically demanding tasks. Some Mid-dle Eastern countries have effectively usedthese technologies. A major purpose of the dis-cussion that follows is to analyze factors con-tributing to this comparative success in tech-nology absorption.
Saudi Arabia.–The Saudi Arabian nationalairline, Saudia, is one of the fastest growingairlines in the world. Carrying 4,000 tons offreight in 1970, it grew to accommodate 100,000tons of cargo and 9.4 million passengers in1981. Saudia systemwide traffic increased 11percent in 1983 to 11.1 million passengers, andthe airline expects continuing expansion in1984, particularly on routes to the Far East.The stated goal of the International AirportsProject directorate under the Ministry of De-fense and Aviation is “to plan and build air-port facilities vital to the continued social pro-gress and economic growth of the kingdom. “44
All three international airports in Saudi Ara-bia are undergoing or recently completed ma-jor expansions. Jeddah’s new $6 billion airport(opened in spring 1981), the King Abdul-AzizInternational Airport covers 104 square kilo-meters, making it in area the biggest in theworld. Bechtel (U. S.) supervised constructionwhile a Ralph M. Parsons/Daniel joint venture
——“There are t~’~ t~’p~s of radar: Primar}’ and heacon. I’rimar}’
radar show’s reflections from the aircraft bod~ as small “h]ips;on a radarscope. Beacon radar (sometimm referred to as sec-ondar~r radar) consists of a radar recei~’er and transmitter onthe ground that transmits a strong coded signal to an aircraftif that aircraft has a transponder. A transponder is an airbornereceiver and transmitter which receives the radar signal fromthe g-round and responds by returning a coded reply to the in-terrogator on the ground. Most commercial aircraft carry trans-ponders.
““ Saudia Continues (~rowth - At a Cost, ” .iliddle I;as[ }4.’c(}-norni(> I)igest, Aug. 28, 1981, p, 29; Roy Allen, 4 ‘Air FreightIlusiness Zooms Ahead, ” .-l~’iation: .4 Aliddle East fi;conomicIIige.st Business Feature, ,June 25, 1982, pp. 62-64; ‘iSaudia Ex-pects Traffic Rise to Continue, ” ,4 ~iation Ii”twk and Space Tech-nolo~~, NI a~’ 28, 1984, p. 37ff.
266 “ Technology Transfer to the Middle East-—— —
- !it
New Riyadh Gateway— King Khaled international Airport iS the new aerial gateway to Riyadh, capital city of the Kingdomof Saudi Arabia. Its four-passenger terminals are alI served by air bridges The mosque, center left,
rises 40 meters above the arrivals level roadway
operates it. The new Riyadh airport, which willexceed Jeddah’s in eventual size, was also builtby Bechtel, using more than 12,000 workersfrom 35 countries.45 The third major airportis Dhahran International.
Saudia has had a predominantly U.S.-man-ufactured fleet until its latest purchase of 11wide-bodied Airbuses for delivery in 1984. Inorder to service its large fleet, Saudia hasestablished extensive maintenance facilities.Saudia completed a comprehensive mainte-nance facility in 1979 and can perform all ofits own aircraft checks and overhauls. TWAhas had a deep influence on Saudia standardsand operating procedures, but European influ-ences have also been felt.
-—— .- —— — ——45 Transport: Airport I’acilitie+ Keep I’ace \$’it,h Kingdom’s
(; rowth, Saudi .\r:~bia: ,Iliddje East .Speciaj Heport, JohnN’he]an ([d ). Nlicidle E; a s t F;conomic I)igest Iiouse, 1,ondon(August 1 9/+2), pp. 161-164. See also, Roberl Bailey, ‘‘Count-down Begins for- ,Jt!ddah Airport “ .\liddle l<ti.<t Economic Di-gest. ,Apr 17. 1981, p. 42.
Recruitment of personnel, both ground andflight crews, has been international in scope,Saudia now has over 600 pilots. Saudia ex-pects 400 to be nationals by the year 1990. Un-til recently, training of Saudia pilots hasoccurred largely in TWA facilities in theUnited States. The suppliers of hardware (andsoftware) for the computerized reservationsystem have also been involved in training ofSaudia staff. Much of the training of staff, ex-cept for pilots, has taken place in the exten-sive Saudia facilities in Jeddah.
Training of Saudi nationals by both Saudiaairlines and for the Presidency of Civil Avia-tion has been more successful, according to ex-perts, than technical training in most othersectors of the Saudi economy. Faced with ex-tremely high costs for expatriate labor, Saudiachose to recruit high school graduates andgave them in-house training. Most Saudia traf-fic agents are now Saudis and most middle andlower management personnel are also Saudis.
Ch. 7— Technology Transfers in Commercial Aircraft Support Systems ● 267—
*.. .
More than half of the flight crews are nowSaudi nationals.
In certain technical areas and in the morecomplex maintenance of aircraft, Saudia stilldepends on foreign technicians. A drive tofind, train, and retain Saudis in this field isnow under way, but it will be several years be-fore the majority of such technicians are Saudinationals.
Saudia now performs all A, B, C, and Dchecks, and plans to carry out base checks(every 6.000 hours) on its Lockheed TriStars.Saudia can carry out major repairs and hotsection maintenance on several types of en-gines. By 1984, Saudia plans to contruct andoperate an entirely new maintenance base inJeddah, which will meet projected mainte-nance requirements to the year 2015. Saudiahas recently begun operations with a twin-cellcivil engine test facility located in a new sup-port area of Jeddah’s King Abdul Aziz Inter-national Airport.
In a given year, more than 700 hangar visitswill be made by Saudia aircraft for routinechecks, modifications, and repairs. Saudia usesits own Automatic Test Equipment, a comput-er-controlled laboratory facility, to diagnoseproblems in electronic equipment so that air-planes can be put back into service with the
— .——
least possible delay. The Saudia MetrologyLaboratory tests and calibrates the equipmentused in the aircraft to ensure proper perform-ance. Their MEMIS (Maintenance and Engi -neering Management Information System) isparticularly useful in time control. and in theissuance of purchasing and repair orders. Self-sufficiency in maintenance is thus rapidly be-ing realized within Saudia, and maintenancetraining courses are being expanded to includemore and more key personnel.
The Bendix Corp. (U.S.) is engaged in a 15-year agreement which aims to eventually staffSaudi Arabia’s airports with Saudi nationals.46
In a separate award, Bendix’s technical serv-ices subsidiary, the Bendix Field EngineeringCorp., won a $337 million, 5-year air trafficcontrol contract. It will supervise 31 airportsin operations, systems engineering, and main-tenance. Six hundred Saudi staff will beneeded; 500 of them will be managers and tech-nicians.47
Saudia thus eventually expects to operatewithout a major expatriate work force. on the
268 ● Technology Transfer to the Middle East—. — .—— ——— ——————— — — —
other hand, one reason why the airline hasoperated at a loss over the past few years isits massive investments in training, computer-ized systems, and flight simulators, as well asnew aircraft and other capital investments.48
In 1980 alone, official subsidies for Saudia Air-lines amounted to almost $75 million. The air-line is determined to eliminate subsidiesgradually through higher fares and increasedefficiency. The government, through account-ing and financing procedures, is attemptingto provide incentives to operate the airline asa profit-seeking enterprise. Saudia’s airfreightbusiness has been an important component ofits growth and Saudia is considering modify-ing its A-300s on order to a combination pas-senger-freight configuration. Aiming to makethe new airport at Jeddah the hub for air-freight traffic to the Middle East, the airlineplans to increase its airfreight business andenhance profitability.
Saudia, which tries to restrict recruitmentto nationals, expanded its training budget inthe late 1970’s: the budget grew by 164 per-cent between 1977 and 1981 to $47.7 million.In 1977, there were 4,261 trainees; the figureprojected for 1981 was 9,149.49 Approximate-ly 1,200 Saudi nationals are being-trained bySaudia at its $42 million institute in Jeddah.Some Saudi nationals are also studying in theUnited States.so Saudia courses include flightcrew training, computer programing, market-ing, and technical and managerial skills. WorldWide Languages (United Kingdom) comput-erizes translations and typesets manuals deal-ing with installation, operations, and techni-cal specialties. Indicating the internationalnature of Saudia operations, the manuals are— . —
48 Roy Allen, “Air Freight Business Zooms Ahead, ” op. cit.,pp. 62-64.
49Edmund O’Sullivan, “Saudi Arabia–Bridging the LabourGap,” Middle East Economic Digest, May 22, 1981, p. 53.
50The Sierra Academy of Aeronautics located at Oakland In-ternational Airport, Oakland, Calif., will use a computerized,multi-engine aircraft simulator to train pilots from SaudiArabia. The training features the 99 instrument approachesused at King Abdul Aziz International Airport, Jeddah Inter-national Airport, King Khalid International Airport, RiyadhInternational Airport, Dhahran International Airport, and air-ports in 15 other cities in the Kingdom, “Courses for SaudiPilots Added to U.S. Program, ” Saudi Report, Jan. 24, 1983,p. 3.
reproduced in Arabic, Russian, French, Span-ish, Chinese, and English.51
The key to the long-term objective of “Sau-dilation, ” says Ibrahim Serage, Saudia’straining director, is giving trainees sufficientincentives and “opportunities for promotion.This means we are not training people simplyfor jobs, but for career development.”52 In1980, the company recruited 700 employees,of which 200 became Saudi flight crew.53 Theratio of Saudi pilots to nonnational pilots fellfrom 1975 (75:25) to 1980 (50:50) as the de-mand for flyers grew rapidly. The goal is toraise the ratio to the 1975 level by 1985. Tothat end about 100 pilot trainees are recruitedeach year. Some observers have pointed to thetragic fire on the Lockheed TriStar L-1011 onAugust 19, 1980, as an indication that Saudiamay be growing too fast.54 Nevertheless, Sau-dia has a good maintenance record and its pi-lots are generally considered capable.
The strides being made by Saudia are veryimpressive; complete staffing by Saudi nation-als, however, will not occur in the near future.Successful technology absorption in severalaspects of commercial aircraft support sys-tems has come as a result of lengthy experi-ence, and a strong commitment to training.Saudia is a comparatively independent oper-ation and can offer technicians exceptionalhousing and other perquisites and has, there-fore, been able to recruit and retain educatedblue-collar technicians. Training programshave been costly, but they have contributedsignificantly to the high quality of operationsand maintenance of Saudia.
‘]’’ Saudi Arabia Continues Growth, ” op. cit., p. 30.“Quotation cited in “Saudi Arabia–The Manpower Contro-
versy, ” Middle East Economic Digest, Apr. 24, 1981, pp. 40-41. See also “Saudis Seek Technical Self-Sufficiency, ” AviationWeek and Space Technology, May 14, 1984, pp. 68-70.
‘34’ Saudi Arabia Continues Growth, ” op. cit., p. 29.“John Whelan, “Airline Safety Questions Follow Riyadh Dis-
aster, ” Middle East Economic Digest, Aug. 29, 1980, p. 35. Theofficial declaration of cause for the accident which killed 14 crewand 287 passengers was a fire of undetermined origin in thecargo compartment. Factors contributing to the fatal resultswere listed primarily as pilot error in not making a maximumstop landing and immediately evacuating upon landing and notproperly utilizing the flight crew during the emergency. Infor-mation provided by the National Traffic Safety Board, Wash-ington, D. C., March 1984.
Ch. 7—Technology Transfers in Commercial Aircraft Support Systems “ 269———. . . . . — — ———. — — ——
Kuwait.–Kuwait’s aim to become a regionalcenter and a hub in East-West air traffic hasbeen the driving force in civil aviation policyand the growth of Kuwait Airways during thepast two decades, Kuwait Airways is unusualamong world-class airlines in that it has nodomestic air service. Yet Kuwaitis probablytravel more by air than people from almostany other nation. The airline, however, cannotmake up in receipts on international air trav-el for the lack of domestic air service. In addi-tion, heavy losses due to increased operatingcosts in the past 3 years, and the fact thatlonger range aircraft make stops in the Mid-dle East less necessary than before, havechanged the likely future growth pattern ofthe airline and probably will modify the needfor building a new airport.
The Kuwait Airways Corp. (KAC) has beenexpanding the range of services it offers usingeight-seat aircraft that fly up to 6 hours non-stop. Air taxis to the Persian Gulf and partsof Europe were initiated in 1982. The goals ofthe new service are said to be to reduce theuse of private planes and to increase saggingrevenues of the company. Another tactic toboost profits is the goal of increasing KAC’smarket share on Gulf flights. To do so, how-ever, fares were reduced by 35 percent for tripswithin the area in order to make the airlinemore competitive.
Kuwait Airways has placed a ceiling on fur-ther hiring, and the management intends tocut the substantial losses of the past few yearsthrough emphasizing profitable routes, suchas the one to New York, and perhaps by of-fering less frequent service or canceling someroutes. Politically, however, it maybe difficultfor Kuwait to withdraw from certain routeswhile continuing to serve others.
Kuwait’s sole airport, Kuwait International,was built in the 1970’s. In the 1970’s the Bri-tish firm Frederick Snow designed a runwaywhich an Italian contractor was unable tobuild in the very hot climate of Kuwait. A Jap-anese architect, world-famous in this field,solved the problem: huge slabs had to besawed in two at great expense. This remains
a well-remembered example to Kuwaiti plan-ners of the need to monitor technology trans-fers.55
An airport development plan completed in1975 has been largely ignored, and the pres-ent Civil Aviation Department has authorizeda new conceptual study by Aeroport de Paristo cover requirements to the year 2000. AnIATA team has prepared another report onthe subject. Both reports identify coordinationbetween military and civilian airport needs asa major factor in determining whether or nota new second airport can or should be built.Another key issue is Kuwait’s future impor-tance in regional and international air traffic.Studies indicate that the existing airport, witha design capacity of 4 million passengers peryear, will have to cope with about 5 millionpassengers by 1990. This compares with 2.8million in 1981. Like Algeria and Egypt, Ku-wait is thus anticipating a growth in air pas-senger traffic beyond its present physical andservice capacities.
The aircraft support industry in Kuwait isheavily staffed with nonKuwaitis. Even priorto the completion of expansion plans, effortswere made to expand recruitment. For exam-ple, in August 1980 airline pilots (as well asemployees of the fire department) were ex-empted from military conscription. The over-burdened airport traffic controllers were to be“stretched” by upgrading automated controls.A computerized radar system was put into ef-fect in September 1980 at a cost of $3.7 mil-lion. Chief executive officer of KAC Ahmadal-Mashari announced in June 1981 that an in-service training system for Kuwaiti and otherArab engineers and technicians had beenstarted.56
Staff training is included in the $775 millioncontract between KAC and Airbus Industrie
“Pacific Consultants, the Ballast Nedem (the Netherlands),and Soleco (Italy) were all involved in the building of the air-port. Minor parts of the present airport system, including thejetways, were designed or furnished by U.S. firms. The airportdevelopment plan was drawn up by the Netherlands AirportConsultants.
56"KAC Plans Major Projects, Middle East Economic Di-gest, June 12, 1981, p. 28.
270 ● Technology Transfer to the Middle East—— --— —-— -.— — . — — .-
for purchase of 11 aircraft.57 Some say that theBoeing 767 had the technical edge over theAirbus A310; moreover the U.S. company hadthe advantage of having provided the rest ofKAC’s fleet. Boeing reportedly lost this awardfor political reasons. The Airbus was reported-ly selected because the political positions ofmajor consortium participants, particularlyFrance, were seen as more acceptable.” Polit-ical considerations in aircraft sales in the re-gion are covered in more detail in a followingsection.
The political importance attached to havinga national airline should not be overlooked inexplaining Kuwait’s strategy. In the future,KAC’s expected increase in services and as-sets will result in expanded requirements forskilled manpower, even with more extensiveuse of automation. Two points should benoted. First, there is no indication that thework force will be primarily Kuwaiti. Depend-ence on expatriates must be increased to carryout these plans. Secondly, although trainingis included in the plans, it is not clear whetherthe planned training is sufficient in view of thephysical expansion.
Egypt.–Expansion of Egypt civil aviationsector has been uneven during the past fewyears, despite projections which show large fu-ture increases in passengers. While financingproblems have not postponed construction ofairport facilities and telecommunications im-provements, EgyptAir has had to retrenchplans for major aircraft purchases.59 Redefini-tion of its market segment, competition, andmanagement problems have contributed to theslowdown in expansion of the state-owned aircarrier.
Passenger traffic through Cairo is expectedto rise rapidly from the current level of 4 mil-lion passengers per year, possibly at a rate of
—57Middle East Economic Digest. vol. 25, May 29, 1981, p 26.5H’”Pro-Arab Stand ‘Wins Airbus Deal’, “Middle East Eco-
nomic Digest, July 11, 1980, p. 34. The number of aircraft givenin the 1980 announcement of the contract award was six butthe 1981 figure was revised to 11.
“Alan Mackie, “EgyptAir Trims Expansion Plans, ” hfidd~el+la.qt Econonu’c Digest, Sept. 5, 1980, pp. 3-4.
15 percent annually.60 The airport at Cairo will
be expanded according to designs by Aeroportde Paris. The first annex will raise overall ca-pacity from 5 million to 10 million passengersannually when it is completed in 1984. An-other 5 million may be accommodated by asecond annex to be built by 1987. The airportplan allows for completion of further annexesas necessary.
A complete overhaul of the air traffic con-trol system for the whole country is underway.Thompson-CSF (France) will build and equipthe Cairo air navigation center- as well as sevenradar stations in other parts of the country,linked together by microwave. Air traffic con-trollers will be trained on the SIMCAT simu-lator to be supplied by Thompson-CSF. TheFrench Government is helping the EgyptianGovernment to finance the package–worth$72.5 million. The French officially subsidizedfinancing was reportedly a critical factor in thedecision to choose the French company.
Regional airports at Alexandria, Aswan,and Luxor are being improved. There has alsobeen discussion of building two new interna-tional airports in the northern Delta area.These would be located at Alamein and Ameri-yah and would tie into industrial developmentschemes for the region. 61
EgyptAir has been redefining its relation-ship with the government over the past fewyears. Ali Gamal al-Nazer, Tourism and Avia-tion Minister, announced in November 1980that the company was doubling its capital to$72 million through investments from the Na-tional Bank of Egypt and the Misr InsuranceCo. Independent observers noted that Egypt-Air had been permitted to exercise increasingautonomy and had been commercially success-ful, recording operating profits of $17.4 mil-lion for 1979.62
Nonetheless, planned investments havebeen scaled back. Orders for four McDonnell
‘“Robert Bailey, “Safety First at Cairo Airport, ” Middle EastEconomic Digest, June 12, 1981, p. 24.
‘i)’ ’Northwest Development Planned, ” Middle East EconomicDigest, July 3, 1981, pp. 7-8.
62Mackie, op. cit.
Ch. 7— Technology Transfers In Commercial Aircraff Support Systems ● 271—
Douglas (U. S.) DC-10/30 aircraft were canceledin August 1980. Refer-ring to the purchase ofthree Airbus Industrie A300s, the Tourismand Aviation Minister said that the new in-vestments could not all be made simultane-ously.63 The company decided to forgo thelong-haul market, for which the DC-10s wereordered, concentrating exclusively on the me-dium-range market. Further planned invest-ments were being limited. Discussions focusedon either canceling or reducing in size by 75percent the planned maintenance center toservice the Airbuses at Cairo Airport.
The government, nonetheless, affirmed itssupport for EguyptAir virtual monopoly asit protected the company from potential com-petition from a newcomer. Arabia (Arab In-ternational Airlines) was incorporated in De-cember 1978 with $15 million in capital owned60 percent by pritvate Egyptian and 40 percentby Saudi Arabian investors. Its staff of 150were all Egyptians.64 But after operating forless than 6 months, it was forced to terminateoperations, It was not permitted to fly on lu-crative international routes, which wouldbring it into direct competition with the state-owned company. Closely restricted domesti-cally, Arabia finally succumbed to price-cutting tactics. Further evidence of the gov-ernment commitment is the fact that of the$226 million allocated for civil aviation in fiscalyear 1981-82, EgyptAir was to receive $103million.
The Egyptian labor profile, which includesan abundance of labor and a large professionalcontingent, is well suited to air transport.Specific vocational training programs are re-quired, however, for each occupational cate-gory (the four major areas being aircraft pilots,flight attendants, ticket and station agents,and aircraft mechanics). Skilled labor occupa-tions such as mechanics may present thegreatest difficulties in terms of availability oflabor, while training flight attendants and
“‘“ Ijgypt (’ance]s 1)(’-1 (.)s, ,lljridlf~ j;a.st J;(’(>nor7]i(” l)i~vj.st,A ug, 2!), 19x(), p . I X; itl ackie, op {’it,
“’.Jenah Tutnj i, “Arah W’ings: F’lying th~~ (’hm-k’r tt’a~,” ;lli~i-dlt’ l.’a.~( l<cc~n{~tnic I)ige.qt, .J une “26, 1981, p. 26.
ticket agents does not present a great prob-lem.65
Algeria. -Algeria is simultaneously expand-ing airports, purchasing aircraft, and planningfor increased demand for trained staff due tothe forecasted increases of 3 million to 5 mil-lion passengers annually in passenger air traf-fic during the 198084 development plan peri-od.66 Two of the fundamental criteria involvedin the plan are to decrease charter freight andto upgrade the fleet in the face of growing airtraffic.
The Algerian 5-Year Plan mentions alloca-tions for a potential fleet of 54 aircraft. How-ever, because aggregate investment levels are
n o t s p e c i f i e d , i t i s u n c l e a r h o w m u c h e x p a n -s ion beyond present levels wi l l ac tua l ly occur .The 1980-84 deve lopment p lan a ims to providei n t e r n a t i o n a l c o v e r a g e f o r t h e s o u t h e r n p a r tof the count ry and to expand fac i l i t ies in then o r t h t o m e e t i n c r e a s i n g d e m a n d . A p p r o x i -mately 00 airports are to be built or upgraded,20 of which are located in the south. These willbe used pr imar i ly for shor t -haul s topovers enroute to points in west , cent ra l , and southernA f r i c a .
Contrac ts for des ign and const ruct ion of twoo f t h e s e a i r p o r t s w e r e r e c e n t l y w o n b y t h es t a t e - o w n e d i n t e r n a t i o n a l A i r p o r t A u t h o r i t yof India. The turnkey contracts for the air-ports at Batna and Setif are reportedly val-ued at $100 million.67
Despite deliveries in May 1982 of two Boe-ing aircraft, a 737 and a 727, Airbus Industrieappears to be gaining ground in negotiations.One attractive feature of Airbus proposals hasbeen broad sales and leasing packages thattake manpower needs into consideration. For
“’Jllgypt’s acquisition of militar}r aircraft t,whnolog~’ (throughlicensed assemhl~’ and military pr(xwr(~nlent) ma?’ impro~e te{h-nical capahi]i ties u wful t o ~h~’ conltn(~rciaJ aircraft +t’c t or. .s[Y~Clar[’nce .+4. J{ohinson, Jr., “F~~~’pt Seeks Te(’hnoloK} ‘l’rans-ff’r. .4 l’i:~tion JI”<wA an~ ,Spa(”e 7’e(hn{dO~n, .Aug. 15, 198~). p129ff.
“’>Nl ichat’1 Frost, ‘‘Algeria I)lans !’vlajt)r Airport I;xpansic)n,:Jliddle J,’ast h;conomic l)ig~.s[, Aug. 28, 1981, p. 7.
‘-.lfiddle ]’;ast ~,’cor?on]ic l)igest, .Jul~ 2, 19H 1, [). 4: “ 1 ndian>Sign ,lirporl (’ont ract <, ,}tiddli~ l+;a,st F,’(”onon]it’ ljigf’.st. \ ()\.5, 1 WY, p 13.
272 c Technology Transfer to the Middle East
example, Lufthansa (West Germany) will trainAir Algérie crews on A300s at the Frank-fort/Sieheim base of Lufthansa.68 This arrange-ment is part of the terms of a lease for twoAirbus Industrie medium-range passengerplanes. Eight Air Algérie maintenance teamswill also receive technical training. Until theAlgerians are fully able to take over opera-tions, Lufthansa itself will provide crew andmaintenance technicians.
According to some estimates, Algeria mayneed up to 25 Airbus Industrie A300s in thenext 15 years.69 Although the comparable Boe-ing 757 is less expensive, Airbus is said tohave the edge. In this case the French haveoffered to train Algerian engineers and aircraftmechanics at Airbus’ factories in Toulouse.Moreover, the French proposed to setup com-plete maintenance facilities for Air Algérie atEl-Djazair within 3 years.
A civil aviation school for pilots and techni-cians is planned as a step towards implemen-tation of the current development plan.70 Theschool, to be located in Constantine, will bemodeled on the Ecole Nationale d’AviationCivile in Toulouse.” Its estimated value as aturnkey package is from$115 million to $230million. Funding of $818,800 has been pro-vided through the United Nations Develop-ment Program while the Algerian Governmenthas allocated some $68.2 million. The Enter-prise Nationale d’Exploitation Meteorologiqueet Aeronautique, within the Transport Min-istry, is in charge of the project. Tractional (ofBelgium) is carrying out preliminary studiesfor the proposed 636-student institute.
Algeria plans to purchase sophisticatedequipment for use in training and research.For example, Algerian leaders have been dis-cussing the purchase of flight simulationequipment from Latecoere (France). The sim-ulators would be used for testing the physio-
—- . . . — .68"Air Algérie Leases Airbuses,” Middle East Economic Di-
gest, May 22, 1981, p. 8.69"Airbus Looks to Air Algerie. Middle East Economic Di-
gest, Oct. 15, 1982, p. 6. It presently has no Airbus or Boeingaircraft on order, however.
70F’rest, op. cit.“Middle East Economic Digest, Feb. 27, 1981, p. 8.
logical effects of flying on the flight crews aswell as for testing aeronautical equipment.72
Algeria has plans to purchase a research air-craft with the help of a $7 million loan fromthe Arab Fund for Economic and Social Devel-opment (AFESD). It will be used for testingground control equipment by some Africanand all Arab countries.73
If Algeria proceeds with its planned fleet ex-pansion, investment on the order of $55 mil-lion could be required and an additional 1,000workers could be needed. It appears that theoverall composition of the national labor forcecould support the annual levels of growthplanned in airline-related occupations, givenadequate vocational training in the specific oc-cupations required.
Serious attempts are thus being made by Al-geria to develop manpower apace with in-creases in air traffic and airport expansion.Airbus Industrie, with its multigovernmentsupport, is said to offer attractive training ar-rangements and financing terms. Thus Airbusis said to be favored for large purchases of air-craft in the coming years.
Iraq.— Iraqi Airways uses Lufthansa serv-ice for its aircraft maintenance but performsits own routine maintenance (A and B checks).Plans have been laid to build new airports inmost provinces with a view to expanding andimproving Iraqi Airways services. There areplans to expand the domestic network throughairports to be built at Arbil, for which the de-sign contract has already been let, and atAmara, Kirkuk, and Najaf.74 Decreased oil rev-enues and the strains of the Iran-Iraq War,however, make delay of these plans likely.
Iraqi Airways has experienced impressivegrowth, especially since 1977, and consider-able investments have been for new airports,both international and domestic. Foreign con-tractors from a wide variety of nations have
72"Aviation Contract Discussed, ” Middle East Economic Di-gest, Apr. 11, 1980, p. 22. The contract was valued at $45million.
73Middie East Economic Digest, Aug. 8, 1980. pp. 15-16.“Information provided by U.S. Department of Commerce, In-
ternational Trade Administration, Feb. 10, 1983.
Ch. 7—Technology Transfers in Commercial Aircraft Support Systems . 273
participated. Pacific Consultants of Japan woncontracts for airport design studies in 1976and 1978. The major construction contract forthe Baghdad International Airport (valued at$900 million) was awarded in 1979 to theFrench company Spie-Batignolles and Fouger-olle. The major Basra Airport constructioncontract was awarded in 1980 to an Austria-West Germany consortium of UniversalHoch and Treflou and Bil Pinger. In 1978Scott, Brownringy and Turner of the UnitedKingdom received a contract of unspecifiedamount for design of passenger terminals;another British group, Kirkpatrick and Part-ners, received an airport consultancy contractin 1982. In conjunction with the contract, Pak-istan’s Feedai Agency is supplying labor forthis construction.
The primary suppliers of passenger aircraftand parts have been U.S. corporations. ThreeBoeing 727s and 747s, at a cost of $183.6 mil-lion, were sold in 1981. Three other 727s weresold in 1980. In 1975, two 747s, three 727s andone 737 were supplied by Boeing at a cost of$150 million.
The State Organization for Civil Aviationhas plans to build a comprehensive traininginstitute. Programs in operation and mainte-nance of airports, aircraft, air traffic control,and radar equipment will be offered. Pilots andcabin crew will be trained in a broad range ofskills, including foreign languages. 75
Iraq has been active in developing special-ized manpower for its commercial aviation sec-tor. Now that women as well as men are be-ing admitted to train as pilots at the Takritair force academy, the pool of skilled labor thatcould be eventually drawn from military to civ-il aviation may be expanded once the Gulf waris ended.76 This move is indicative of nationalpolicy to expand the indigenous labor force.
The government is not waiting for domes-tic facilities to be completed before intensify-ing training activities. In October 1981, Brit-ish Airports International won a $1.3 million
-—“’illiddfe Jjast I;conornic Digest, Apr. 10, 1982, p. 28.“,i!liddle East Economic Digest, Apr. 9, 1982, p. 5.
contract to train over 400 Iraqis in airport elec-tronics.” The courses to be given in the UnitedKingdom will include both classroom study,at universities and technical institutes, andhands-on training at airports and at centersof aviation equipment manufacture. A simi-lar contract worth $530,000 to train Iraqi airtraffic controllers in the United Kingdom wasawarded at the same time.
British firms thus have been particularlysuccessful in the Iraqi aviation training mar-ket. Some companies have had long-time work-ing relationships with Iraq, such as the LancerBoss Group which has been dealing withIraqis for 20 years, Non-British firms havemade inroads in this market. For example, inJanuary 1982 an airport staff training con-tract worth $1.4 million was awarded to theWest German firm Flughaven Frankfort amMain.
The national airline of Iraq continues tooperate despite the war with Iran. Under pres-ent circumstances, however, it is unlikely thatIraq would divert capital investment or occu-pational training (pilots and aircraft mechan-ics) from the military in order to build up thecommercial airline industry.
Iran.– Iran Airways presently handles mostof its own routine maintenance, with theassistance of technical specialists from othercountries. Major overhauls are carried outabroad. Iran’s Fifth Development Plan, (1973-77), under the Shah’s regime, called for expan-sion of existing airports and the constructionof new airports, including the new Teheran air-port scheduled for completion in 1980. Author-itative information on the current status ofthese projects and of Iran Air is unavailable,although it can be assumed that military capa-bilities have been given priority over commer-cial aviation in the air transport sector.
As of 1982, Iran Air was reported to havea labor force of 5,500 trained technical person-nel. Iran carried on negotiations with Austral-ia to set up a training program for Iran Air.
77Middle East Economic Digest, Oct. 16, 1981, p. 28.
274 ● Technology Transfer to the Middle East. — . — . . . — — — — .— —
About 150 commercial pilots of the nationalairline would be involved in the program.
Iran reportedly has budgeted some $33 mil-lion over the next 5 years for building a newinternational airport south of Teheran. Designand preliminary construction were completedprior to the Shah’s overthrow. Plans have beenscaled down from an annual capacity of 20 mil-lion passengers to 7½ million. Total cost isnow estimated at between $100 million to $200million. Despite the political situation, Iran’scommitment to the airport project suggeststhat the government expects more internation-a-1 visitors and is willing to provide modern fa-cilities for them.78
Regional Efforts.–The expansion of air traf-fic in the Middle East over the last few yearshas seen considerable cooperation among re-gional and national carriers. One official,speaking about joint provision of air servicesbetween the Middle East and North America,summed up the general situation quite suc-cinctly: “At the moment we do not have theequipment, the machinery, or the manpowerto do it [cover demand for services] individu-ally. The idea is for a pooling of resources tobenefit every body.”79
In 1980 a technical consortium was formedthat included Middle East Airlines, Saudia,Kuwait Airways, Gulf Air, and ALIA (theRoyal Jordanian airline). The consortium alsoheld discussions with other members of theArab Air Carriers Organization (AACO), butnone have yet joined. Programs being consid-ered or actually underway include shared serv-ices (especially telecommunications) and uni-fied training.
Shared Services.–Sharing electronic equip-ment and technical services may be an attrac-tive option for Middle East carriers. Highlyspecialized electronic and telecommunicationsmay cost as much as 20 percent of the totalsum required for a new airport. Elements typ-ically included in a turnkey package are radar,
78Middle East Business Intelligence, vol. 2, No. 13, Aug. 15,1983.
7“ ‘Arab Airlines Plan Atlantic Route, ” Afiddle East EconomicDigest, June 20, 1980, p. 16.
telecommunications, navigational aids, andlighting. Multinational corporations or consor-tia of suppliers of equipment and services gen-erally offer to install, maintain, and staff theairport.
In order to limit the number of expatriateworkers who form the largest proportion of thetechnical staff in most cases, airlines in theMiddle East have the option of automatingoperations. Keeping the labor component toa minimum while at the same time develop-ing regional capabilities requires coordinationin telecommunications services. Perhaps themost impressive effort is the joint computer-ized reservation system. ”” Based in Bahrain,it will handle an estimated 10 million reserva-tions a year for the 10 airlines involved: ALIA,Domestic Yemen Airlines Co. (South Yemen),Gulf Air, Kuwait Airways, Libyan Arab Air-lines, Middle East Airlines, Saudia, Sudan Air-ways Corp., Syrian Arab Airlines, and YemenAirways (North Yemen). At present only GulfAir has its own computer reservation facilities;the rest lease services from outside the region.Iraqi Airways did join the group because it hasa central computer judged to be adequate.
Another labor-intensive service that couldbe performed more cheaply through a regionalcenter is the calibration of instruments.Among the Arab countries, only Saudi Arabiahas such capabilities. A regional air traffic con-trol system may be attractive from an econom-ic perspective, but there is overlap between themilitary and civilian control networks so thatsuch cooperation may not be politically feasi-ble. Aircraft maintenance centers and joint ca-tering services are under discussion.
Unified Training. —Royal Air Maroc’s experi-ence with training Moroccan nationals fortechnical flight staff shows how expensivetraining can be.81 In 1980, the airline an-nounced its goal of complete staffing withMoroccan nationals by 1982. The 1980 defi-.————— --—.
‘[’Robert Bailey, “Airlines Plan Computer Reservation Cen-tre, ”Middle East Economic Digest, Apr. 11, 1980, p. 19. Theproject is estimated to cost $30 million to $40 million.
“’Da\id Hawley, “RoyaI Air Maroc . . . Facing the Competi-tion, ” A}’iation: A Nfiddle East Economic Digest BusinessFeature, ~rol. 26, June 26, 1982, pp. 62-63,
Ch. 7— Technology Transfers in Commercial Aircraft Support Systems ● 275——.———
cit of $2.6 million (up from $1.9 million theyear before) was attributed largely to trainingcosts totaling $3.8 million in 1980. As of June1980 approximately 60 percent of the techni-cal staff was Moroccan. Nevertheless, the air-line has expanded its role in regional training.The At-ah Civil Aviation Council has consid-ered promoting Morocco as a base for a civilaviation high technology institute.82 The RoyalAir Maroc center in Casablanca is trainingsome African airlines students (e. g., from AirMali, Air Zaire, and Air Mauritania) in addi-tion to Moroccan nationals.
The AAC() has met with some success injoint training of management-level staff. TheDouglas Aircraft Co. (subsidiary of McDon-nell Douglas Corp., U.S.) organized a popularseminar for the 18-member AACO in August1981. This was followed the next year by amarketing course offered to 25 executivesfrom the group. Sessions included fleet plan-ning, aircraft financing, performance assess-ment, and forecasting.83
In September 1981 the chairmen of severalArab airlines met to consider a unified train-ing system as well as the joint building of alarge airport hangar. The airlines involvedwere Kuwait Airways Corp., Saudia, MiddleEast Airlines, Gulf Air, and ALIA. There has,however, been no reported progress in theseventures.
There is general agreement that cooperationamong Arab airlines is economically desirableand perhaps necessary to reduce staff require-ments of individual carriers. The AACO is themost comprehensive organization, but varioussmaller groups of countries have participatedin joint programs, The notable achievementhas been the development of the Bahrain-based, centrally computerized reservation sys-tem, Joint provision of other telecommunica-tions, maintenance, and training services hasbeen discussed rather more than implemented.
P E R S P E C T I V E S O F S U P P L I E RC O U N T R I E S A N D F I R M S
Commercial aircraft support systems com-prise a variety of equipment and servicesneeded to operate and maintain local airlinesin the Middle East. As discussed earlier, theyfall into two groups: the goods and servicesneeded to operate aircraft, and those neededto operate airports. The former are usuallysupplied by other airlines, aircraft and aircraftengine manufacturers, and aircraft mainte-nance firms. The latter are supplied by a di-verse group of communications, aerospaceelectronics, and airport construe’ti(jn firms.
The diversity of products exported to beparts of airports and air navigation traffic con-trol systems, and the large services componentin aircraft maintenance and operation precludeany simple analysis of trade flows. While mostequipment for aircraft and aircraft enginemaintenance is exported as aircraft parts(SITC 7349), a large portion is linked to theoriginal aircraft purchase.84
A multitude of equipment manufacturersoften coordinated by construction manage-ment firms, provide the various airport sys-tems components. For example, Bechtel washas the construction manager for the newRiyadh airport, but the equipment installationand construction was handled under a num-ber of separate contracts. The French firm
“’J’h~, r]]tijc~r qulpmen[ Ittlrn+ in t hi< <(([( lr :ir(, 1 IS[ t’(1 ;I((’I )r(l-lng to Standard I ndu st rial ( ‘las~l 1 IC:I t I( )r~ [ S 1(‘) :Ln(i St ,ln(iur(]1 ndu+t ri:il Trad[J (’la+sifl(.lti(~rl ~ S 1 ‘1’( (( Klt I r] (I rlll)[,r+
SICcode
3662
3721
37243718
1611
276 ● Technology Transfer to the Middle East
Thomson-CSF is supplying air traffic controland navigation systems. Firms from theUnited Kingdom are also active, particularlyin Saudi Arabia. Germany’s major presencehas been in Iraq, while U.S. firms are primar-ily involved in Saudi Arabia. Some recent com-mercial aircraft support system contractsawarded in several Middle East countries areshown in appendix 7A in tables 7A-1 to 7A-5.
Aircraft maintenance and support are per-formed by the local airline, by foreign person-nel employed by the local airline, or by foreignairlines and maintenance firms on a contractbasis. The contracts in the Middle East (andelsewhere) cover a 3- to 5-year period. This isdone to spread the nonrecurring costs over abroader base, thus lowering the person-monthrate.85 As mentioned previously, after the ini-tial aircraft sale, there is a substantial amountof follow-on training for flight operations per-sonnel, especially for smaller airlines which donot have their own training program. Crewsand performance engineers are trained andpreviously trained personnel are brought upto instructor qualified level. There may be asignificant amount of follow-on maintenancetraining in the more specialized areas, such asrigging and composite repair.
The degree and magnitude of the follow-onspare parts business is determined by manyvariables, including.
1. The amount of spare parts initially pur-chased from the manufacturers and sup-pliers prior to delivery of the first aircraft.
2. The degree of customer expertise in air-plane maintenance and repair of parts re-moved from aircraft.
3. The number of airplanes of a particularmake the customer has in operation. Forexample, the same quantity of certainhigh-cost repairable spare parts is suffi-cient to support one or several aircraft.As a general rule, however, the larger thefleet, the more spares that are needed overtime.
“’Person-month rate is the cost of employing a person for 1month including salary, benefits, and general overhead.
4.
5.
Daily utilization by the customer of thefleet and the route structure. The higherthe utilization rate of the aircraft, themore spares are needed in inventory atthe main base and at those locations in-cluded in the route.The extent to which a customer partici-pates in pooling of inventory with opera-tors in the same region.
Fleet homogeneity assists in maintenancesince the publications, training, ground sup-port equipment, and spare parts needed reflectonly the differences between early aircraft andlater model aircraft of the same model. Main-tenance capabilities can be pooled, but usuallythese capabilities and services are contracted.There are, however, several consortiumswhose members perform maintenance for eachother. These usually do overhaul work for theconsortium. For example, one operator maydo engine and auxiliary power unit work; an-other hydraulics; another airplane structures.Regional airline spare parts pooling agree-ments are administered and controlled by theairlines-prime manufacturers are not partici-pants. Most Middle East customers currentlyparticipate in the International Air TransportPool (IATP).
Competition Among Suppliers inTechnical Assistance and CommercialAircraft Sales
The factors which affect competition amongfirms supplying technical assistance to airlinesin the Middle East are, not necessarily in or-der of importance, fleet compatibility, geo-graphical proximity/route compatibility, his-torical ties, and commitment to service. Fleetcompatibility, or capacity for type-specificmaintenance and support, and geographicalproximity are more prerequisites than compet-itive factors. Historical ties have been an im-portant determinant of technical support rela-tionships, but they must be reinforced in orderto remain influential. Underlying historicalties with foreign airlines are bilateral politicalrelations. With the exception of MEA andTrans-Mediterranean (all cargo), Middle East-ern airlines are government owned, heightening
Ch 7— Technology Transfers in Commercial Aircraft Support Systems “ 277.
the importance of political factors. While thecontracting of maintenance services is not nec-essarily a long-term commitment, combinedwith other technical services and assistanceit is an important aspect of airline operationsand is unlikely to be entrusted to an airline ofa country with poor or faltering political rela-tionships. Price, which is always a factor, issometimes not as important a considerationas quality and efficiency of service combinedwith commitment. It is costly and disruptiveto have aircraft grounded; airlines have beenwilling to pay for reliability in service.
Sales of large commercial aircraft lead tosales of auxiliary equipment and services.Table 66 shows the large U.S. export value ofsales of large commercial aircraft. In 1982,sales to the Middle Eastern region were sur-passed only by sales in the European andAsian regions.
The Boeing Commercial Airplane Co. hopesto sell aircraft valued at $600 million to $800million to Middle Eastern customers in 1984alone. According to projections from Boeing,the world market for commercial jet aircraftbetween 1983-95 will be worth about $185.1billion at constant 1984 prices. Of this, 3 and4 percent will come from the Middle East andAfrica, respectively, representing total sales
. —
of $12.9 billion.86 Middle Eastern sales may bean important indicator for sales in the rest ofthe world. Whether carriers in the Middle Eastwill invest in brand new aircraft, or refurbishor buy used planes in order to meet their ex-pected growth, is a major question for supplierfirms.
The chief rival of Boeing and McDonnellDouglas is Airbus Industrie, a multinationalgroup of companies that are wholly or partlyowned by European governments. Membersof Airbus Industrie are Aerospatiale of France(37.9 percent ownership), Deutsche Airbus ofGermany (37.9 percent), British Aerospace (20percent), and Construcciones Aeronautical ofSpain (CASA) (4.2 percent).87 Airbus Industriewas formally constituted in December 1970.Its first plane, the A300, a short- to medium-range twin-engine wide-body transport, wentinto service in May 1974. A smaller Airbus,the A310, was delivered to customers begin-ning in the spring of 1983.88
*“Rolwrt l]aile~, ‘ ‘Boeing Strikes Ilackl ” ,Ifiddl[’ 1,’ust Fjco-nomic Dig~~st, F’et), 3. 1984, pp. :34-35,
‘“Th[’ French ( ;o~rernment owns more than 97 p[’rcent ofAcrospatiak, the l~ritish ( io~’ernmmt holds $~.~] Perctjnt of 13rit -ish Aerospac~~ shares with the rest held privately. CASA iswholly owned by the Spanish Government. Deutsche Airbusis a subsidiq’ of two commercial companies that are in the pr(x-ess of merging.
‘“Richard C’. Schroeder, “rl’r-ouhled Air Transport Industr?. ‘“i;diforid Re.warch Reports, ~ol. 1 1 , No. 20. NOI, 2f~, ] 982, p ,882,
Table 66.—U.S. Exports of Commercial Transport Aircraft (33,000 lb and over airframe weight, 1978-82)
1978 1979 1980 1981 1982
Total number exported . . . . . . —
111 200 - – 237 255 121Canada ., ., ... . . ... ... 4 20 22 25 13L a t i n A m e r i c a n a n d C a r i b b e a n . , 14 19 31 35 13Europe . . . . . . . . ... ., ... ., 36 68 109 108 31Middle East ... ... ., . . . . 17 17 9 21 13Asia . . . . . . . . ... ... . 24 60 53 34 25Oceania . . . . . . . . 6 6 7 19 8Africa . . ... ... . . . . . . . 10 10 6 13 18
T o t a l v a l u e ( m i l l i o n s o f d o l l a r s ) $2,558 $4,998 $6,727 $7,180 $3,834Canada . . . . . . . . . . . 132 373 299 584 294Latin America and Caribbean . 187 423 640 1,027 301Europe . . . . . . . . . . . . . . . . . . . . 906 1,601 2,670 2,528 938Middle East. ... . . . . . . . . . . . ... . . . . 541 582 236 841 699Asia . . . . . 478 1,722 2,467 1,405 1,096Oceania . . . . . . . . . . . . . . . . . . . 118 149 179 559 234Africa . . . . . . . . ... ... . 196 148 236 236 272
SOURCE Bureau of the Census U S Exports - Schedule B Commodity by Country." Report FT 446 (annually), in Aerospace Industries Association of America Inc..Aerospace Facts and Figures 1983/84 Washington, D C July 1983 p 133
278 c Technology Transfer to the Middle East——-..—. -.
Commercial aircraft, however configured,are costly, as shown in table 67. Enormouscapital outlays are required for developing andproducing new models of large commercial air-craft. A new airline program can cost $2 bil-lion to $3 billion before deliveries even begin.89
This figure may exceed the company’s entirenet worth.90 There is no guarantee that evena best-selling plane will be a major revenueearner. Of 23 models of commercial jet-pow-ered transports produced, only two are be-lieved to have been profit-earners–the Boeinglong-range 707 and the medium-range 727.(over 1,800 727s have been delivered.) Lock-heed’s L-1011 lost $2.5 billion by the time itwas canceled, after approximately 200 weredelivered. The supersonic transport Concorde,developed by the British and French, was a
“’S(v~ c’h }’ 1, ‘4rI’h(~ f:con[)mii’s oi I,:ir”gc ‘1’ransp(jrt I)LJ\L~lop-m[~n t, I ‘r( xiuc. tion, ;ind ( )p[~rat i( In in tht~ [ I ni t ed St at[~s, ..\ ( ‘fJII]-pctiti~c’ t.~seh.<tr]t>nt of the i ‘..S. (’i\il .iircraft industr>. ( i ,S,
1 )t,[);ir[ n]errt of (’omnl(r(w, I ndustr! An:il!sis 1)i\ision, ( )ffic’c{Jf I ndu \t r} .,1 sw~s~m(’nt, hl ar~.h I 9H4.
““l”ht~ (it’(>ision t{) Iwild a nt~w j~,diner ha~ lx~t’rl r~~ferred to :i~‘‘}NIL L ing the c.onl~):in} .‘ S(w ,) ohn Nt’whous~~, ‘1’h(~ Sport}” ( ;:~m(
Table 67.—Typical
Manufacturer/country
Airbus lndustrieFrance, United Kingdom,
Configurations
Federal Republic of Germany, Spain
BoeingUnited States
McDonnell DouglasUnited States
technical success but a major financial failure;only 16 were produced.91
Boeing’s newest planes are both twin-enginejetliners with new, fuel-efficient engines. The767, a twin-aisle wide-body, smaller than the747, began flying commercially in the UnitedStates in September 1982. It has seven seatsacross with a capacity of 211 passengers. The757, under delivery beginning in 1983, is ashort- to medium-range jet with 186 seats.
Some observers note that, until recently, noaircraft available on the market had 150 seatsto accommodate a smaller number of passen-gers. This perceived gap in the market led air-craft manufacturers in the United States andEurope to begin work on a smaller airplane.This size is desired by airlines for its fueleconomy.
Boeing disputes that the 150-passenger air-craft need must be filled by a completely re-
‘“ .,~nnahellti Nlti}, “(’oncorde- IIird of 1 iarnl(m~ or I’olit i{:]]~lll)at ross: In F;xiimination in t h~~ (’ontt~xt of I)rltish 1~’ort~ignl’olic~. lnt(’/7]ati(jn/~l or~wniz:ltion, Jol. ;l~l, N {), 1, 19’79, pp. 481-50H.
and Purchase Prices of Various Competing Commercial Aircraft
Model
A300A310A320C
737-200737-300
737-400
747-SP747-200747-300
757-200767-200767-3007-7d
MD-80
Yearavailable
197419831988
19681984
under review
197619711983
198319821986
late 1980’s
1980aNumber of seats depends on seat pitch (spacing) used. First number is for a typical layout
Seating’(seating range)
260 (250-260)210 (200-210)150 (134-174)
115(122-149)
(134-161)
331452496
186211261
—
140(133-155)
Costb
(millions 1984 dollars)
504524
16-2023-25
NA
77-8486-10191-106
38-4248-5456-61
—
23-24
bCosts are highly variable and are given as a reference only Aircraft configuration customer needs provision of spare parts and other factors make exact numbersfor aircraft or cost comparisons between companies difficult
cThe Airbus A320 project received final go ahead funding from the consortium in March 1984dThe Configuration of the 7-7 is unknown it wiII probably make greater use of Composites and may use a Iighter Weight metal skin.
SOURCES The Air War Boeing Airbus Fight for Jetliner Contracts All Around the World." Wall Street Journal, Mar. 20, 1984; information provided by Boeing Com-mercial Airplane Co. Airbus Industrie and McDonnelI Douglas Corp., March 1984
Ch. 7— Technology Transfers in Commercial Aircraft Support Systems ● 279——. —- .— —
designed (and hence very expensive) airplane.Their 737-300 model can accommodate a max-imum of 149 seats. f]’ Under study are a 737-400 configuration (a stretched version of the737-300) with 134 to 161 seats, and a short-ened version of the 757-200 (presently 186seats). Boeing has recently reached agreementwith the Japanese for development of a newplane, presently termed the 7-7, which couldend up being in the 150-seat range.’)]
The Douglas LID-80 has 142 seats andmight be stretched into the 150-seat range.The MD-80 series plane is already selling wellin the United States and elsewhere, with threemodels in production (the Super 80, MD-82,and MD-83 seating up to about 155 passen-gers). This makes the aircraft already an ef-fective rival in the 150-seat market.94 McDon-nell Douglas is now studying a new version,the MD-88, which would seat up to 164 pas-sengers and use the projected new interna-tional V2500 engine being developed by themultinational International Aero Engines con-sortium. 95 The latter powerplant is being de-veloped by a group of seven companies in fivecountries, with Pratt and Whitney of theUnited States and Rolls-Royce of the UnitedKingdom the project leaders. The engine is ex-pected to be available around 1988 and prob-ably will also be used in the Airbus A320.
The need for a new 150-seat jetliner was amajor concern in the deliberations leading toapproval of funding for the A320 by the sep-arate members of the Airbus consortium.96 The
.-‘“[ iermain (’ham }mst, “Iheing’s 7;~7-;N)o: A Step Into the 150-
SLIaL hlarket. ” lnter:~~i:~-,lerospac’t” l{e~riew, \larch 1984, p p .240-241.
<”4 [lf)~’ing, Japan Sign J$’or-k Share I’act for 7-7, .AI ~’r’ation11‘e(’k and S’pacv Twhndo~:\, NI ar. 19, 19/+4, p. 32,
“’~lichae] I)ixon, “hl(’I)onnell-I) (Juglas Stud~’ing N1 1)-M) Air-lin[r I)(ri~ati\t’,” ~’inan(.iaJ Tim(s, Nlar. 16, 1984, p . 6.
‘ Il)i(l,; .1 Iia[ion ll”wk and .Sp:Ict~ ‘1’echnolo~?, hlar-, 19, 1984,p. :11.
“ I)uring delitwratir)ns h~’ t ht~ Ilritish, ~largarct Thatcher wasquoted as sa~ing, ‘‘ I don’t want another Concorde. J$’here isthe market’? (1’eter Ridden, “ U K Aid for Airhus - I I )on’t J$’ant.,lnother Concorde.” F’inanciaf Times, hlar 7, 19841. The flrit -ish (; o~’ernment finall~’ appro~ed 250 million pounds in launchaid to 13 ri t i sh Aerospace for its shartj of the ,,1320 project i nearlJ. hl arch 1 W-1. Ilritish Aerospace argued that the A ;120 wasnot a technological breakthrough into an untested market like( ‘oncorde” hut an updated and impro~(d ~cv-sion of the existing
production go-ahead for Airbus IndustriesA320 Transport program (which will cost a to-tal of over $2 billion) was endorsed by Euro-pean governments under the condition thatthe consortium work to improve its profita-bility and more equitably distribute equip-ment contracts among participating countries.The 150-seat aircraft is expected to make itsfirst flight in February/March 1987. Certifica-tion and start of deliveries are planned forspring 1988.97
Government Roles in Aircraft Sales
Competition between Boeing and Airbus isalready intense and will probably become moreso once the 150-seat A320 is introduced in1988. Each company complains that the otherenjoys unfair marketing advantages. Boeingargues that Airbus is subsidized by the partici-pating governments, allowing it to providepreferential financing. Boeing also contendsthat nationally owned European airlines nat-urally prefer Airbus planes. Airbus refutes thisby pointing to sales of the Boeing 757 to Brit-ish Airways. As a response to charges by U.S.aircraft manufacturers, Airbus states that aero-space research undertaken by the U.S. Nation-al Aeronautics and Space Administration(NASA) and made available to Americanmanufacturers, constitutes a subsidy for U.S.companies. Airbus also states that the U.S.Export-Import Bank devotes an inordinateamount of its resources to financing overseasaircraft sales. Boeing has the largest exportsof any U.S. company, as shown in table 68.
One of the reasons given by the Europeansfor their government support of Airbus is thatEuropean industry faces a fundamental prob-lem in its lower volume of production in com-parison to U.S. manufacturers. According tothis view, long production runs give the U.S.manufacturers, particularly Boeing, economies. .European Airbus project which would replace existing medium-range aircraft. Firm orders and options for the A320 numberapproximately 100, It is estimated that 600 must he sold forbreak-even, or more than 700 for the British Government toearn a reasonable return on its investment, (Ibid, Riddell.)
‘-tJeffre?’ hl, I,enoro\’itz, ‘“ I+; uropeans Endorse A320 Production, ’ A ~iation I!’mk and Space 77t’chnolog\, Nlar. 19, 1984,p, 29-:]0.
35-507 0 - 84 - 19 , ~JI, 3
280 . Technology Transfer to the Middle East—
Table 68.—Ten Leading U.S. Exporting Companies——. -.—
Total salesa Exports a PercentageRank Company (in billions) of sales———
1 - Boeing . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . $ 9.78 $6.10 62.40/.2 General Motors . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.69 5,72 9.13 General Electric .., . . . . . . . . . . . . . . . . . . . . . 27.24 4,34 15.94 Ford Motor 38.24 3.74 9.85 Caterpillar Tractor, . . . . . . . . . . . . . . . . . . . . . . . 9.15 3.51 38.36 McDonnell Douglas, ., . . . . . . . ., . ., ..... 7.38 2.76 37.57 E. I. du Pont de Nemours , . . . . . . . . . . . . . . . . 22.81 2.64 11.68 United Technologies.. . . . . . . . . . . . . . . . . . . . . . 13.66 2.63 19.29 IBM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.07 1.85 6.3
10 Eastman Kodak ., . . . . . . . . . . . . . . . . . . . . . . . 10,33 1.80 17.4aFor 1981, as reported by Fortune, Aug. 9, 1982, p. 68Boldface denotes companies that are engaged wholly or partly in aircraft manufacture
SOURCE Richard C Schroeder, “Troubled Air Transport Industry." Editorial Research Reports, vol. 11, No. 20 Nov. 26, 1982, p 883
of scale which are extremely difficult for theEuropeans to match unless they can secure asizable share of the huge U.S. airplane mar-ket.98 They note that out of 353 A300/A310Airbuses ordered to date, a total of only 36have been ordered by two U.S. airlines.99 View-ing Airbus investments as very speculative,these observers argue that the bulk of thefunding has to come from their governments.
For their part, U.S. aerospace industry lead-ers point out that U.S. aerospace companiesfund a substantial amount of research and de-velopment (R&D) themselves. A NationalScience Foundation (NSF) analysis of indus-trial R&D shows that the aerospace industry’sR&D funding far outpaces the average for allU.S. manufacturing industries. In 1981 aero-space company funding of R&D (civil plus mil-itary) was 4.2 percent of net sales, comparedto 2.0 percent for all U.S. manufacturing in-dustries. Total aerospace R&D funding (com-pany plus government) was 15.3 percent of netsales while the comparable all-industry per-centage was 2.9.100 Figure 14 shows the Fed-eral and company funds spent on aerospaceR&D (civil and military) from 1970 to 1983 incurrent and constant dollars.
—— —. —98"The Airbus Example,” Financial Times, Mar. 5, 1984.‘gMichael Donne, “U.S. Airbus Protests Arouse Little Euro-
pean Sympathy, ” Financial Times, Mar. 22, 1984. The Euro-peans also note that Airbuses have approximately 30 percent[J. S. content by dollar value.
‘wAerospace Industries Association of America, Inc., Aero-space Facts and Figures 1983/84, Washington, D. C., July 1983,p. 109.
The issue of subsidization becomes morecomplex if one examines only the componentof U.S. Government support for commerciallyoriented aeronautical R&D. The Federal Gov-ernment, through NASA, devotes roughly$300 million a year to these commercial aero-nautical R&D projects.1O1 NASA supportslong-term R&D in some areas that may beunderfunded by private firms, such as aircraftnoise and safety. Other programs support thedevelopment of more fuel-efficient and betterperforming aircraft, goals for which some feelprivate incentives may be adequate. On theother hand, some believe that there are nogrounds for favoring this industry over othersalso facing international competition but re-ceiving little R&D support. Advocates ofNASA’s support argue that reductions inthese programs could have a negative effecton the international competitiveness of theU.S. civilian aircraft industry.
The federally supported U.S. Export-ImportBank (Eximbank) lends money at subsidizedinterest rates to foreign purchasers of U.S.products. The industries benefiting most fromEximbank’s subsidized overseas lending in thelast decade have been manufacturers of com-
—“)’ Reducing the Deficit: Spending and Revenue Options, a Re-
port to the Senate and House Committees on the Budget–Part111 (Washington, D. C.: U.S. Congress, Congressional BudgetOffice (CBO), February 1984,) p. 173. CBO listed eliminationof NASA commercially oriented aeronautical R&D programsas one way to reduce nondefense discretionary spending. Thisone change. if adopted, could generate savings of $1.9 billionover the 1985-89 period, according to CBO estimates.
Ch. 7—Technology Transfers in Commercial Aircraft Support Systems ● 283
Table 70.—Export-lmport Bank Summary of Commercial Jet Aircraft Authorizations for Loansa and Guaranteesb
(fiscal years 1957.82, values in millions of dollars)
Number of jets Export value Number of credits Gross authorizationsYear Loans Guarantees Loans Guarantees Loans Guarantees Loans Guarantees
New authorizations:1957C-68 . . . . . . . . . . . .1969 . . . . . . . . . . . . . . .1970 . . . . . . . . . . . . . . .1971 . . . . . . . . . . . . . . .1972 . . . . . . . . . . . . . . .1973 . . . . . . . . . . . . . . .1974 . . . . . . . . . . . . . . .1975 . . . . . . . . . . . . . . .1976 . . . . . . . . . . . . . . .1977 . . . . . . . . . . . . . . .1978 . . . . . . . . . . . . . . .1979 . . . . . . . . . . . . . . .1980 . . . . . . . . . . . . . . .1981 . . . . . . . . . . . . . . .1982 . . . . . . . . . . . . . . .
Cumulative newauthorizations . . . . . . .
Transfers andreversals . . . . . . . . . . .
Cumulative grossauthorizations (netof transfersand reversals . . . . . . .
32255
142126145129189136
773129
118136121
13
1,784
—
1,784
—16
2557
2118
7
187
—
187
$2,572451
1,7491,5391,3341,7292,1952,0701,017
330479
2,9383,9754,568
441
27,603
(8)
27,595
$ 331207
340
925—
5139902253317901637113
4,064
—
640
4
58183849292322101114
51024172
333
—
4,064 644 333
$ 1,520197598481475690895691398138189
1,3991,6932,550
199
12,208
(24)
12,184
$ 274111
79363183191133
6487
29477
2391,088
53378
3,853
(20)
3,833NOTE: Detail may not add to totals because of rounding.aLoans are commitments for direct financing by the Export-import Bank to foreign buyers of U.S. equipment and services, including direct credits and loans authorizedunder the Cooperative Financing Facility (CFF) until the termination of the CFF program in 1981, but excluding Discount Loans, which are made by the Export-ImportBank to commercial banks and which subsequently may be guaranteed by the Export-Import Bank, in which case the value of the loans is included with Guarantees.
b Guarantees by the Export-lmport Bank provide assurances of repayment of principal and interest on loans made by private lending institutions, such as Commercial
banks, for major export transactionscFirst year of commercial jet aircraft authorizations.
SOURCE: Export-Import Bank of the United States, in Aerospace Industries Association of America, Inc., Aerospace Facts and Figures 1982/84, Washington, D. C., July1983, p. 137
grounds that they give an advantage to somefirms over others, and create income transfersfrom taxpayers in the United States toassisted firms and also to foreign buyers.
These issues are complicated by the factthat complex buyback arrangements are notuncommon in jet airliner sales. The manufac-turers do not disclose details of individualdeals, but Boeing is understood to have an in-ventory of approximately 50 aircraft (includ-ing jets of other manufacturers) that it haseither already bought back, or has agreed toacquire at a future date, in order to win newsales of its own jets. In another case of com-petition for sales in Kuwait, it was reportedfirms were proposing to buy back jets manu-
factured by their competitors and not yet de-livered in order to win sales.103
High-level supplier government economicdiplomacy has frequently been employed. Thesale to Egypt of three Boeing 767-200 ER (ex-tended range) worth $163 million was a par-
103Michael Donne, “Why Boeing is Buying Airbuses to WinKey Orders, ” Financial Times, Feb. 2, 1984, p. 5. These buy-backs are reportedly sometimes at above market rates. In thebattle between Airbus and Boeing for a Thai Airways Interna-tional order for two planes, which Airbus eventually won, Boe-ing offered to purchase three old DC-8s from Thai Airways In-ternational at $5 million each. Airbus offered $5.1 million foreach with spare engines. The market value for DC-8s is presently$2 million to $3 million. See William M. Carley, “The Air War:Boeing, Airbus Fight for Jetliner Contracts All Around theWorld, ” Wall Street Journal, Mar. 20, 1984, p. 1.
282 ● Technology Transfer to the Middle East— . . —
mercial aircraft and heavy equipment, includ-ing power generators. The large share of loansfor commercial jet aircraft exports from theExport-Import Bank is shown in tables 69 and70. Table 69 lists total Eximbank authoriza-tions of loans and guarantees as well as sepa-rate exports for fiscal years 1974-82. In theyears 1979, 1980, and 1981, aircraft exportsrepresented 37.3 percent, 41.8 percent, and50.3 percent of total loan authorizations. Thispercentage, however, fell dramatically in 1982to 7.8 percent of a much smaller total loanauthorization of $3,104 million. Total author-izations for loans in support of aircraft exportsin 1982 were less than one-tenth that of theprevious year. Some of the reasons for the de-crease were the soft market for aircraft salesduring the worldwide air transport recession,lower total Eximbank funds, and questions asto which U.S. planes truly were up against un-
fair competition.]”’ Table 70 gives a summaryof commercial jet aircraft authorizations andthe number of jets involved. The number ofjetliner exports covered by these loans andguarantees fell sharply from 1981 to 1982.
Supporters of the Eximbank program main-tain that it is a necessary response to thesometimes “predatory” policies of foreigncompetitors offering advantageous financingterms to attract and retain buyers. They alsofeel that export programs stimulate U.S.employment and promote development oftechnology. Critics contend that such pro-grams are inappropriate interference in thefree market causing economic inefficiency.They also criticize the programs on the
“’i’I’he F;xport-Import Bank determined that loans would onlybe pro~’ided in cases where U.S. exporters faced direct competi-tion from foreign suppliers.
Table 69.—Export-lmport Bank Total Authorizations of Loans and Guarantees and Authorizations inSupport of Aircraft Exports (fiscal years 1974-82, millions of dollars)
.——Authorizations in support of aircraft exportsa
Total Percent of totalYear authorizations Total authorizations—.Loans: c
1974. , . . . . . . . . . .1975 .., . . . . . . . . . . . . .1976, . . . . . . . . . . . . . .1977 . . . . . . . . . . . . . . . .1978 .., . . . . . . . . . . . . . .1979. ., . . . . . . .1980 .., ., . . . .1981, . . . ... . . . . .,1982. , . . . . . . . .Guarantees: d
1974 ......, . . . . . . . .1975 ......, . . . . . . . . . . . . .1976 . . . . . . . . . . . . . . . . . . . . .1977. , . . . . . . . . . . . . . . . . . . . .1978 ........, . . . . . . . . . . . .1979 . . . . . . . . . . . . . . . . . . . . . . .1980 ..., . . . . . . . . . . . . .1981 . . . . . . . . . . . . . . . . . . . . . . .1982. , . . . . . . . . . . . . . . . . . . . .—
$3,9812,7012,285
7472,9273,8254,0875,0793,104
$1,5941,5741,6611,021
589908
2,5101,513
727
$ 946.2710.4421.9139.0195.2
1,427.71,710.12,555.0
241.4
$ 154.084.5107.6307.5
97.6261.4
1,131,9562.6104.2
23.8%26.318,518,6
6.737.341.850,3
7,8
9.7%5.46.5
30.116.628.845,137.214.3
Commercialjet aircraft
$ 894.6691.2398.4137,6189.5
1,399.41,692.62,550.3
199,1
$ 132.964.087.2
293.977,2
239.31,088.1
533.478,4
Otheraircraft b
$51.619.223.5
1.45.7
28.317.54.7
42,3
$21.120,520.413.620,422.143.829.225,8
alncludes complete aircraft, engines, and Partsblncludes business aircraft, general aviation aircraft, helicopters, and related goods and servicesc Loans are commitments for direct financing by the Export-lmport Bank to foreign buyers of U.S.equipment and services including direct credits and loans authorized
under the Cooperative Financing Facility (CFF), until the termination of the CFF program in 1981, but excluding Discount Loans, which are made by the Export-importBank to commercial banks and which subsequently may be guaranteed by the Exporf-import Bank, in which case the value of the loans iS Included with Guarantees
d Guarantees by the Export-import Bank provide assurances of repayment of principal and interest on loans made by private Iending institutions, such as commercial
banks for major export transactions
SOURCE: Export-Import Bank of the United States, in Aerospace Industries Association of America, Inc., Aerospace Facts and Figures 1983/84 Washington, D CJuly 1983, p 136
Ch. 7—Technology Transfers in Commercial Aircraft Support Systems ● 283—- — -.
Table 70.— Export-Import Bank Summary of Commercial Jet Aircraft Authorizations for Loansa and Guaranteesb
(fiscal years 1957-82, values in millions of dollars)
Number of jets Export value Number of credits Gross authorizations
Year Loans Guarantees Loans Guarantees Loans Guarantees Loans Guarantees
New authorizations:1957C-68 . . . . . . . . . . . . . . . . 322 53 $2,572 $ 331 92 58 $ 1,520 $ 2741969 ., ., ... 55 23 451 207 23 18 197 1111970 ... ... 142 1 1,749 3 44 3a 598 791971 ., 126 9 1,539 40 58 49 481 3631972 ., 145 2 1,334 9 44 29 475 1831973 ... ... 129 4 1,729 25 60 23 690 1911974 ., 189 — 2,195 — 79 22 895 1331975 . ., 136 1 2,070 5 64 10 691 641976 . . ., 77 6 1,017 139 34 11 398 871977 ., 31 25 330 902 16 14 138 2941 9 7 8 29 5 479 253 18 5 189 771979 : : : : : 118 7 2.938 317 35 10 1,399 2391980 ... ., 136 21 3,975 901 36 24 1,693 1,0881981 ... ., 121 18 4,568 637 26 17 2,550 5331982 . . . . . 13 7 441 113 5 2 199 78
Cumulative newa u t h o r i z a t i o n s 1,784 187 27,603 4,064 640 333 12,208 3,853
Transfers andreversals — — (8) – 4 (24) (20)
Cumulative gross—
authorizations (netof transfersa n d r e v e r s a l s . 1,784 187 27,595 4,064 644 333 12,184 3,833
NOTE: DetaiI may not add to totals because of rounding—. . .— .
a Loans are commitments for direct financlng by the Export-Import Bank to foreign buyers of U.S. equipment and services including direct credits and loans authorized
under the Cooperative Financing FaciIity (CFF) untiI the termination of the CFF program in 1981, but excluding DIScOU nt Loans which are made by the Export-ImportBank to commercial banks and which subsequently may be guaranteed by the Export-Import Bank in which case the value of the loans IS included with Guarantees
b Guarantees by the Export-Import Bank provide assurances of repayment of principal and interest on loans made by Private Iending institutions, such as commercial
banks for major export transactons.c First year of commercial jet aircraft authorizations.
SOURCE Export Import Bank of the United States in Aerospace Industries Association of America, Inc., Aerospace Facts and Figures 1982/84 Washington D C July1983 p. 137
grounds that they give an advantage to somefirms over others, and create income transfersfrom taxpayers in the United States toassisted firms and also to foreign buyers.
These issues are complicated by the factthat complex buyback arrangements are notuncommon in jet airliner sales. The manufac-turers do not disclose details of individualdeals, but Boeing is understood to have an in-ventory of approximately 50 aircraft (includ-ing jets of other manufacturers) that it haseither already bought back, or has agreed toacquire at a future date, in order to win newsales of its own jets. In another case of com-petition for sales in Kuwait, it was reportedfirms were proposing to buy back jets manu-
factured by their competitors and not yet de-livered in order to win sales. ’”’
High-level supplier government economicdiplomacy has frequently been employed. Thesale to Egypt of three Boeing 767-200 ER (ex-tended range) worth $163 million was a par-
.——““ltlichael Donne, “W’hy Boeing is Buying Airbuses to J4’in
Ke~’ Orders, ” Financial Times, Feb. 2, 1984, p. 5. These buy-backs are reportedl~ sometimes at above market rates. In thebattle bet ween Airbus and Boeing for a Thai Airways Interna-tional order for two planes, which Airbus e~’entuall~’ won, Boe-ing offered to purchase three old DC-8S from Thai Airwa~’s In-ternational at $5 million each. Airbus offered $5.1 million foreach with spare engines. The market value for D(73s is presentl~’$2 million to $3 million. See W’illiam M. Carle3, “The Air W’ar:Boeing, Airbus Fight for Jetliner Contracts All Around the\\’orld, 11’all Street Journal, Mar. 20. 1984, p, 1.
284 ● Technology Transfer to the Middle East—
ticularly difficult one. Between the initialagreement in September 1983 and formal con-tract signing on January 12, 1984 (for deliv-ery in July and August 1984), the govern-ments backing Airbus reportedly instructedtheir ambassadors in Cairo to lobby PrimeMinister Fuad Mohieddin to persuade Egypt-Air to choose Airbus.104 In a final but unsuc-cessful effort to thwart the Boeing sale, Aer-ospatiale’s chairman, Henri Matre, was saidto have offered Egypt a role in producing theairliners.105
It thus appears that both U.S. and Euro-pean manufacturers of commercial aircraft arebeing subsidized–but the extent of the sub-sidies, either direct (through subsidized loans)or indirect (through R&D programs or diplo-matic support) are difficult to gauge. Bothsides see the growth of government assistanceas a response to the ‘‘unfair” practices of theother players. Boeing Commercial AirplaneCo., as a private, for-profit business, mustcompete against Airbus, an essentially state-run business which is predicated on other fac-tors in addition to turning a profit.
Because of continuing disagreements oversubsidies, a special aircraft sector agreementwas established in 1981 between the UnitedStates and major European countries to setclearer rules of the game in financing exportsof commercial aircraft. This common-lineagreement (subject to renewal every 6 months)sets a minimum interest rate and maximumcover for government agencies. Thus, in thepast few years progress has been made to en-sure that supplier governments adhere to sim-ilar rules of the game in financing exports ofcommercial aircraft.
Aircraft Engine Suppliers
Aircraft engine manufacturers have been in-volved in maintenance facilities in the MiddleEast. General Electric, for example, recentlyassisted Egypt in setting up an engine main-
“’’Robert Bailey, “Boeing Strikes Back, ” Middle East ECO-nomic Digest, Feb. 3, 1984, pp. 34-35.
‘[’’ Ibid., also David Marsh, “France Offers Egypt AirbusWork in Bid to Beat Hoeing, Financial Times, Dec. 6, 1983.
tenance facility. This is a limited modular fa-cility capable of expansion, but it is not nowconducting major overhauls. Similarly Rolls-Royce is providing Saudi Arabia with engineoverhaul equipment. The engine manufactur-ers play an important role in supplying equip-ment for local maintenance bases, but muchof this equipment can be supplied by othertypes of firms involved in aircraft and enginemaintenance. Chief among these are the ma-jor airlines.
Commercial aircraft engine manufactureand sales is a separate realm of competition.Ten years ago, the situation was fairly sim-ple: Pratt and Whitney (U. S.) dominated themarket and each plane model was matchedwith a specific engine from a specific company(almost always Pratt and Whitney). Today,the Pratt and Whitney Aircraft Group (a divi-sion of United Technologies Corp. ) has twostrong competitors: Rolls-Royce (U. K.) and theGeneral Electric Aircraft Group (U.S.)106 G.E.also has a joint venture called CFM Interna-tional with the French corporation, Snecma.
Today, each of the new, more efficient air-planes, the Boeing 757 and 767 and the AirbusA300 series, can be fitted with engines fromat least two of the manufacturers. In addition,a multinational consortium, InternationalAero Engines, is now developing the V2500engine which will be able to power the A320now under development (the A320 can also bepowered by the CFM International CFM56-4).The fact that an airliner can now be built withengines from different manufacturers is impor-tant on two counts. First, it intensifies com-petition among the engine makers who maybe willing to make concessions in order to wincontracts for particular planes. Second, if anaircraft manufacturer feels that its sales maysuffer because it carries a particular engine(e.g., U.S. controls on exports of U.S. engines
‘[’’Worldwide projected market shares for jet engines in the1982-86 period are projected as Pratt and Whitney (36 percent );G.E. (30 percent); CFM International (23 percent); Rolls-Royce(9 percent); and other (2 percent), according to Forecast Asso-ciates, Inc. See Agis Salpukas, “Aircraft Engines: Stiff Rival-ry Pratt Loses Its Big I.cad, The New York Times, Jan. 21,1983, p. D1.
Ch 7— Technology Transfers in Commercial Aircraft Support Systems ● 285
prevented sales of Airbuses to Libya), the com-pany may opt for another engine which doesnot present those risks.
Competition among engine manufacturers,particularly in fast-growing markets such asthe Middle East or Asia where an entry in thelucrative market is desired, has been hardfought. In competing for sales of the two newjetliners for Thai Airways International, theaircraft manufacturers and engine manufac-turing groups that initially teamed up to bidlater shifted sides.107
Airbus Industrie is becoming increasinglycautious about using U.S.-origin engines intheir airframes. U.S. export controls report-edly delayed the sale of Airbuses to Libya. 108
The Airbus consortium therefore consideredusing engines made by Rolls-Royce as a wayto circumvent the U.S. ban.109 A study was car-ried out in 1983 by Airbus Industrie to deter-mine what components would have to bechanged on the A300 or A310 in order to ex-port these aircraft to Libya.110 The study in-dicated that Airbus aircraft include more than30 percent U.S.-built content by dollar value(much of this due to U.S. engines), and thatwith such a high percentage of U.S.-builtequipment, the aircraft are effectively underthe restrictions imposed by U.S. export con-trols. Although the new A320 being developedmay not be free of these restrictions since bothavailable engines are partly U.S.-built, theEuropeans talk of reducing U.S.-built contentas much as possible so as to limit [J. S. influ-ence on Airbus export sales.111
“ See W’illiam >1. (’arle}, ‘“I’he Air W’ar-130eing, AirhusI;ight for .Jetliner (’ontracts All Around the \$rorld, Jt’,alj sfree~,I(jurnal, hlar. 20. 19H4, p, 1 The real winner of this contest ma?ha~t) lxx~n t h(~ customer-Thai I nternationaf. Thai Senior ~’iceI ’resident, hlr, I,urnholdt, was quoted as saying, "We got a won-derful deal with all the concessions, we figure we got one !$50m i 11 i( )n a i rpl ant’ for free,
‘- I)a\id \l’hit{, “ }Jlrhu+ [)eli~rcries to I,ih}’a [Ma~red.” Finan-cial ‘[’inle.~, Aug. :). lgHZ
““ I,ih)ran 4 irlines N e g o t i a t e s Airhus I,ease, ‘“ Nfiddie I.’ast]<;<Y)tI{JX1liC l)i~rt)~f, t’ol, 26, No. 47. INo\’. 19. 19H2.
I ,1 ~ia ti~jn II ‘t,[,k ~~n(j ,<’p:~[’~ Techllofom’,” Apr ‘~, 1 ~~~:~. P 2:],and .$1 at-, 19, 1 !9H4, p f; 1, SEW also hlichael Don nt’, ‘‘Air hus I n-dustrle S t i l l [ lctpes ‘1’(] S e l l I,i})\’a /\~lOOs, ” F’inancid ‘1’r’rr7w, Ipr.2fi, 1 9hi , p. 7.
1 ] 1‘ ( I S, ‘1’ri[% to Stc~nl ..lirt}u~ l]usin(~ss [xJs\, ,4 Iriaticjn J1’twkand .~’pa(w ‘1’ech nolo~:i’, \lar. 1 f). J 9H4, p, 31. ( ’rawford E’. [3ru-l)ak~’r. I )ttput \ ,,4 <si+tant S~wret ar~’ of (’c)mn~erct for a~’r{)spac’t’
The Airbus A320 will be powered by enginesproduced only partly in the United States–the CFM International CFM56-4–or the V2500under development by the multinational Inter-national Aero Engines consortium. These en-gines are nevertheless subject to U.S. exportcontrols. The fact that the V2500 falls into thiscategory is of great concern to Rolls-Royce ofthe United Kingdom, one of the members ofthe engine consortium along with Pratt andWhitney of the United States. The U.S. Gov-ernment has agreed to working-level discus-sions concerning the control of exports of theV2500 engine once it has been certificated. Inreturn, Rolls-Royce has indicated that it willabide by U.S. export control restrictions onthe engine.’” As a result, the U.S. Departmentof Commerce issued export license authoriza-tion for the program on March 9, 1984. TheBritish, however, are still concerned that U.S.export controls that may be administered inan extraterritorial manner. Rolls-Royce offi-cials have stressed that their agreement wasnot a government-to-government one, and thatthey agreed to abide by U.S. export controlson the understanding that there will be seri-ous negotiations on how the rules will be ap-plied to the V2500 engine. ”
Airport Systems
Airports in the Middle East are being ex-panded to accommodate increased air trafficin the region. Saudi Arabia recently completedairports at Jeddah and Riyadh and is planninganother major development for Dhahran, aswell as a number of regional airport projects.
who \isited w-ith go~’ernment and i~[’rt)<piic.~~-indust ry official+in Europe in March 1984, said ht’ would not like to see a recfuc-tion of U .S, participation in the A320 program. 1+ owe~’er, hostated that there appeared to be a growing trend toward ‘‘ d(J-Americanization, or, put the other wa~. the l~;llropeaniz:lti{)rlof the A 320. See also tJeffery NT. [~n(~ro~itz. ‘‘ [+~u ropeans l’; n-dorse .4,320 Production, ” . 4 i’iation if eek a n d .%>ace Techn(~l-o~, ltlar. 19, 1984, p. 29.
1‘2R0115 Signs V2500 l~xport Plan, ” . 4 iiation ii’eek a n d SpaceTechnoIog\, Mar. 19, 1984, p. 32, See also .’\ ~iati’on It’twk andSpace, Nm. 7, 1 W;), p. 30.
]‘ ‘I bid.: .4 tiation li’eek and Spact’ Tt’chnok]hp, Alar. 19, 1984,p. :12. see alw ‘ ‘ A irhus o r d e r s f o r R o l l s - l{o~’ce, l’”inanc>ia)Times, 31aJT 1 i’, 19x1, p. 8: and Keith F. !LIordoff, “.!irhus ‘1’(~off~’r \-2500 option on Ai120, A ~iation 11 eek a n d .Space Tech-ncdo~<~, h! a~ 21, 1984, pp. 33-34.
286 ● Technology Transfer to the Middle East—. -— —— —— — .
Abu Dhabi recently opened a new airport, andmajor work has been underway in Cairo andBaghdad. Algeria has more modest plans forupgrading and expansion.
Airport development in the Middle East hasrelied extensively on technical assistance andequipment from the West. This has been pro-vided by a variety of firms including airportconsultants, architects, airlines, constructionfirms, civil aviation authorities, aerospacemanufacturers, and a multitude of equipmentmanufacturers. This scattering of activityamong so many different types of firms makesit extremely difficult to analyze the factorsdetermining commercial success in supplyingand transferring the technical skills for the de-velopment of airport systems. Bechtel (U. S.)had the role of construction manager for theJeddah airport project. The firm was respon-sible for up to 60 primary contracts at anygiven time since 1978. Some of these contractsinvolved extensive subcontracting; one report-edly involved 1,500 subcontracts with equip-ment suppliers. Yet public information onmost of these contracts is not generally avail-able. The bulk of the primary contracts aresaid to have gone to non-U. S. firms, but thereis no way to document this. Although muchof the actual equipment orders sourcedthrough subcontracts reportedly have beenwon by U.S. firms, there is no way to verifythis.
The civil aviation authorities of Westerncountries have been a major source of techni-cal assistance in airport planning. France, theUnited Kingdom, and the United States havebeen the most active in this respect. Tradi-tionally, such services were provided largelyon the basis of colonial and historical ties, buttoday these links are less important. Franceactively seeks technical assistance relation-ships, and often assumes the costs under for-eign aid. The United States responds to re-quests for assistance, which has been on a fullyreimbursable basis since 1967. The UnitedKingdom pursues an approach similar to theUnited States, although it does occasionallyassume the cost of technical services.
The actual implementation of airport devel-opment projects, such as those in Saudi Arabia,is normally carried out by groups of firms withseparate contractual responsibilities. U.S. con-struction firms, Bechtel and Parsons, in jointventure with Saudi firms, are providing con-struction management services at Riyadh andJeddah. The actual work and equipment con-tracts have gone to a multitude of firms fromseveral countries, as mentioned above. In con-trast to this type of multicontract internation-al division of labor is the French approach ofproviding a comprehensive package which in-cludes planning and design, construction,equipment installation, and even financing.This approach has reportedly enhanced thepositions of French firms, as illustrated by theCairo airport modernization work. This proj-ect began with a feasibility study by Aeroportde Paris in 1978, which included design of theterminal and construction supervision. Thom-son-CSF supplied and installed the electronicequipment for the air traffic control system,and terminal construction was carried out bya French/Egyptian joint venture. Some financ-ing was also made available through officialexport credits. This size of package would nothave been sufficient to accommodate projectssuch as those in Riyadh or Jeddah. This ap-proach does, however, allow for coordinationof all facets of project development and imple-mentation, which the French foster throughthis type of consortium.
Technical support in the operation and main-tenance of airport systems is provided by awide variety of firms. The Dhahran airport isoperated by a services division of the BoeingCo. In other areas, technical assistance is pro-vided by affiliates of airlines such as BritishAirports International, which has been activein the Gulf States, diversified aerospace com-panies such as Lockheed, which had a contractfor the first phase of Saudi Arabia’s air traf-fic control system, and equipment manufac-turers. In Saudi Arabia, the major responsi-bility for operation and maintenance of the airtraffic control system is handled by Bendixunder a 1980 contract from the Presidency ofCivil Aviation (PCA).
Ch. 7— Technology Transfers in Commercia/ Aircraft Support Systems ● 287
The case of the Bendix air traffic controlcontract illustrates factors influencing compe-tition. Bendix won a contract in 1980, replac-ing the U.S. firm Lockheed. Bendix has over-all responsibility for the air traffic controlsystem, including staffing, equipment main-tenance, training, and advising on new equip-ment for expansion. Logistical arrangementof the system is an important component ofthe contract, due to the variety of equipmenttypes installed and the need to replace partsfrom many different countries. Bendix man-ages a training center in Jeddah, which hasmockups of all the major systems in use. Themajor aim of the contract is to train SaudiArabian nationals for eventual takeover. How-ever, due to the shortage of qualified person-nel, complete takeover by the Saudis is stilla long time in the future, Bendix has over1,000 foreign nationals under contract in SaudiArabia, but some portion of these are in sup-port services such as housing, transportation,etc.
Bendix did not have a proven track recordin managing similar operations in other coun-tries, but the firm did have 20-years experi-ence with NASA projects in the United States,Its principal competition was from Lockheedand SEL, a German equipment manufacturer.Bendix had done extensive work in SaudiArabia, for the navy and army, and was wellknown to the PCA. Primary factors affectingthe contract award were reportedly price andthe efforts of a well-placed Saudi agent. Ben-dix was the low bidder on the project, and alsoset forth an institutional arrangement andcontract proposal which satisfied PCA's con-cerns about logistical functions and internaldecisionmaking. Bendix met these concerns byestablishing an autonomous division in SaudiArabia capable of handling the logistical andother responsibilities. Bendix also emphasizedtraining Saudi nationals as controllers andsystem managers.
The most important factors influencing air-port systems contract awards appear to be aproven track record in the technology or tech-nical management area, a demonstrated will-ingness to train nationals, the effective use of
— —.
local agents or joint venture partners (espe-cially in Saudi Arabia), historical relationswith a country or firm, perhaps including theinvolvement of the civil aviation authority,and price/financing. In different countries,these factors are of differing importance: SaudiArabia, for example, has been comparativelyless concerned with price and is increasinglyattempting to diversify suppliers.
Air Traffic Control/Avionics
Air traffic control (ATC) in the Middle East-ern countries under study ranges from SaudiArabia’s state-of-the-art system to Egypt’svisual sighting. ICAO periodically publishesa status report for airport ATC throughout theworld which lists requirements for raising ma-jor airports to ICAO international standards.In this publication, Middle East airports rate,as expected, from excellent to poor. Upgrad-ing recommendations are generally for airfieldlighting, markings, radio navigational aids,AFTN (Aeronautical Fixed Telecommunica-tions Network), and AMS (Aeronautical Mo-bile Service-approach control). New aircraftsuch as the Boeing 757/767 and Airbus 300/310 come with the state-of-the-art ATC com-patible equipment—but these are of no use ifthe airport does not have adequate groundATC equipment, such as is the case in Egypt.Improved ATC enhances airline efficiency andsafety and is thus a priority in airport mod-ernization. Raytheon (U.S.), Bendix (U.S.), andThompson-CSF (France) are major competi-tors in ATC equipment.
Aircraft avionics encompasses both ATCfunctions and aircraft systems monitoring.Collins Avionics (a subsidiary of Rockwell In-ternational) and ARINC (Aeronautical RadioInc.) are leaders in aircraft monitoring equip-ment. Delco and Litton Industries, also fromthe United States, are the leaders in generalinertial navigation systems with Honeywellspecializing in laser-gyro based inertialreference systems. Major competition for U.S.firms comes from Thomson-CSF and Aero-spatiale ATEC equipment, which supplies theAirbus. New digital equipment also is beingmanufactured by France’s Sfena in coopera-
288 ● Technology Transfer to the Middle East.——— —. .— — . — — — —. -- ———-
tion with Great Britain’s Smiths Industriesand Germany’s Bodenseewerk Geratechnik forthe Airbus. Although. avionics seems an idealentree for Japanese electronics technology,Japanese firms have not yet entered into thisfield. Color cathode-ray tubes for crew alert-ing systems are made by Toshiba and Mitsu-bishi, and Japan Aviation Electronics Indus-try, Ltd., is developing a laser-gyro inertialreference system for use in the Kawasaki XT-4trainer. It is generally assumed that the Jap-anese will soon take significant steps intoavionics, particularly digital systems.
Avionics will become dominated by digitalsystems (as opposed to analog) in the next fewyears, much as turbine engines largely re-placed piston engines in large commercialtransports. Digital systems are more expen-sive but more reliable (two to three times themean time between failures) than analog sys-tems. However, when they do malfunction,highly trained personnel with sophisticatedequipment are needed to service them. Man-power requirements will thus shift even fur-ther to highly skilled technicians. At present,digital equipment manufacturers often give 3-year warranties which cover microprocessorsand software modification. After that period,investing in spare parts for the equipmentmay be less expensive than developing digitalmaintenance expertise.
Aircraft simulators can cost up to $7 mil-lion each, $400 per hour to operate, and requirehighly trained personnel. However, when com-pared to the cost of actually flying a plane, thelifecycle cost savings are significant. Presentlysimulators are available for 13 commercialtransport types and an equal number of small-er regional/corporate aircraft. Helicopter sim-ulators are also available, although they arenot as numerous. Major manufacturers of civilaircraft simulators include CAE Electronics,Ltd., of Canada, Conduction (U.S.), Curtiss-Wright (U.S.), Thomson-CSF (France), Red-ifon (U.K.), and Singer-Link (U.S.). Demand forsimulators will grow as simulator “fidelity”(likeness to real-life) continues to improve.’”—-————
114 See ICAO Bulletin Special Issue: ATC and Flight Simula-tors, vol. 37, No. 5, May 1982, for six articles on aircraft simu-lators.
Private Aircraft and Helicopters
In addition to private travel within and out-side some Middle Eastern countries, generalaviation is used in air photography for oil andminerals, mapping, spraying, servicing of re-mote construction sites and drilling rigs, andfor light freighting. Ownership of executiveaircraft is concentrated in the Gulf area.
The use of private aircraft is limited by localproblems. Many airports have a limited capac-ity for dealing with private aircraft, which willbe expanded as airports are improved. In ad-dition, because of security considerations,some governments have restricted registrationof civil aircraft and individual aircraft move-ments. 115
Among the smaller aircraft used by corpora-tions, the Gulfstrearn, British Aerospace, Can-adair, Falcon, and Lear models dominate theMiddle Eastern market.
Helicopters are used to service oil derricksin the Gulf, worksites for fire control and firstaid, such as at pilgrimage sites. Helicoptershave been used to offload cement and steelpipe at Saudi ports and to lay pipe in the in-terior. Major suppliers in Saudi Arabia in-clude: Agusta (Italy) primarily for militaryuse, Bell Helicopter (U.S.), and Kawasaki(Japan).
Helicopter sales to the Middle East fell in1982, although the downturn in world saleswas sharper.116 Nevertheless, the demand forhelicopters in the Middle East has been fairlybouyant. It is estimated that 95 percent of thehelicopters sold in the Middle East are for mil-itary uses. The largest helicopter sales at pres-ent in the Middle East are in Iraq (primarilydue to the Iran-Iraq War) and Saudi Arabia.
————— .—115This assessment is found in “The New World of the Exec-
utive Jet, Middle East Magazine—Aviation Survey, August1983.
‘i’’ ’Market Survey, Saudi Arabia” U.S. I)epartment of Com-merce, ITA, May 1981; “Building Up the Helicopter Fleets, ”Middle h’ast Magazine–Aviation Sur\wy, August 1983; “Sau-dis Expand Kawasaki KV-107 Helicopter Fleet, ” ,4\riation M’edand Space TechnoloM’, May 21, 1984, pp. 150-151.
Ch 7—Technology Transfers in Commercial Aircraft Support Systems s 289— — — ——. — .
U.S. Export Controls
At the end of 1981, sale of Airbuses to Libyawas restricted by U.S. foreign policy con-trols.’” The sale of ten aircraft were blockedbecause they were to have General Electric en-gines, Six of the aircraft were not built. Fourcompleted Airbuses destined for Libya report-edly remain at the Airbus production head-quarters in Toulouse, France.
Table 65 shows the fleets of Middle East-ern airlines, including aircraft on order. Whilethere is a preponderance of Boeing and Lock-heed aircraft, reflecting the historical U.S.dominance in commercial aircraft, most air-craft on order are Airbuses. Indeed, Boeinghas sold only three of its new generation air-craft (757 and 767). Airbus has made almostall sales of twin-engine, wide-bodied aircraftsales in the Middle East.
Opponents of foreign policy controls believethat these controls have strongly contributedto U.S. market losses in commercial aircraftsales in the Middle East. Potential buyers in-clude countries designated as supporters ofterrorism—currently Libya, Syria, and thePeople’s Democratic Republic of Yemen—aswell as other countries in the region that mayturn to non-U. S. suppliers out of resentmentof controls used for political purposes. Kuwait,for example, has urged other Gulf States toseek alternative suppliers of aircraft, in directresponse to U.S. antiterrorism controls. TheU.S. Department of Commerce cites such reac-tions as a partial basis for the reduction insales of U.S. aircraft and avionic equipmentin one of the largest and fastest growing mar-kets in the world.
In testimony before the House Foreign Af-fairs Subcommittee on International Econom-ic Policy and Trade on March 19, 1981, Mr.Harry Kopp, Deputy Assistant Secretary forEconomic and Business Affairs in the Depart-ment of State, stated that:
In no other area of the world were the suc-cesses of the competition so spectacular and
117 David Marsh. ‘‘A irt)us (’omponent + I)lans Face I)rotf’stsP’t-om ( ‘ , S . , ” J’inancia] ‘1’ime.~, Nlar. 21, 19H4, p . 1.
our own sales performance so dismal as in theMiddle East last year. Jet aircraft sales in theregion climbed to $1,977 million, of which U.S.suppliers won only $259 million, or 13 percent,as compared with U.S. sales of over $1.5 bil-lion the year before. Airbus, in contrast, sell-ing $1.7 billion, captured 87 percent of theMiddle Eastern market. . . . [Our] regional civ-il air attache in Tunis notes that the enormousdecline in U.S. fortunes was not likely due totechnical considerations, a lack of effort on thepart of our manufacturers, not even to thequality of the airbus (sic). Rather, pivotal fac-tors most mentioned by his contacts were: fi-nancing, political considerations, includingforeign policy controls; high-level political sup-port for Airbus; and the U.S. Foreign CorruptPractices Act.
New orders for large U.S.-origin transportaircraft destined for the Middle East droppedfrom a peak of $1.1 billion in 1979 to $186 mill-ion in 1980,$380 million in 1981, and $89 mil-lion in 1982 (through September). On the otherhand, Airbus orders for the same countrieswere $289 million in 1979, $1.2 billion in 1980,$484 million in 1981, and $661 million in 1982(through September). Airbus orders for theMiddle East totaled $2.3 billion during the1980-82 period, compared with $655 million forU.S. aircraft.
Undoubtedly, various factors explain thisshift in market sham, including differing avail-abilities of export finance as well as a desirein the Middle East to diversify sources of sup-ply for civilian aircraft. Because U.S. exportcontrols in this area were uniquely restrictive,they contributed to the decline in the positionof U.S. firms. The U.S. embargo of spare partssales to Libya, especially, further added to thereputation of the United States as an unrelia-ble supplier. For Middle Eastern countrieswhose positions differ with the United Stateson issues such as the Palestinian problem,such controls present a real potential risk thatthey may be denied access to U.S.-producedaircraft.1‘g The recent modification of controls—— — — -.——
118 A Saudi manager recently said: “Another element [for Air-
bus selling so well in the Middle East Persian Gulf area] is thepolitical climate thew days. !vlany Middle East countries wantto reduce their reliance on the LJ. S, This should not beunderestimated in e~aluating Air buses sales success in the re-
290 . Technology Transfer to the Middle East
by U.S. officials to permit sales to scheduledairlines represented an effort to mitigate theadverse impacts of these controls.
Summary of Supplier Perspectives
Sales of large commercial aircraft are impor-tant both for the large dollar volume of aircraftsales and for the sales of auxiliary equipment,which includes testing and maintenance equip-ment, avionics packages, and spare parts.Planning, building, or operating airports, airtraffic control, and navigation systems in theMiddle East normally entail consulting ormanagement contracts, a major area ofstrength for U.S. firms.
U.S. firms have led in commercial aircraft,avionics, and airport management. However,the stiff competition afforded by West Euro-pean firms in each of these subsectors in-dicates that U.S. firms cannot count on con-tinued technical superiority as the key to ef-fective sales. Other factors such as low-costbids, on-site support, and reputation for long-term supplier reliability may be critical in con-tract awards.
The main competition for aircraft sales inthe Middle East presently is between the Air-bus 310 and the Boeing 767. Industry expertsnote that neither one has a clear technical ad-vantage over the other. While Airbus Indus-trie claims an edge in its avionics (aviationelectronics), Boeing claims superior fuel effi-ciency. Both planes compete in the medium-range market, covering flights of 1½ to 5½hours, which account for about 37 percent ofdepartures worldwide. In the Arab world, thissector is expected to be worth $20 billion overthe life of this generation of aircraft.119
Commonality of aircraft and engine typewithin an airline fleet is an important but notoverriding consideration. If the price and fi-nancing terms offered by suppliers are simi-lar, and future availability of spare parts is not
gion, ” quoted in “Middle, Near East Airlines Increase A300/A310 Use, ” Aviation Week and Space Technology, May 14,1984, pp. 47-49.
‘ “’”NO Holds Barred in the Airbus–Boeing Battle, ” AliddleEast Magazine-Aviation Survey, August 1983.
a problem, in most cases airlinesmixed feets.
In airport systems development a
. —
assemble
multitudeof equipment manufacturers provide the va-rious system components, often coordinatedby construction management firms. For exam-ple, Bechtel has the construction managementcontract for the new Riyadh airport, but theequipment installation and construction is be-ing handled under a number of separate con-tracts.
Supplier firms such as Thompson-CSF ofFrance have special strength in supplyingATC and navigation systems. The UnitedKingdom is active in the Middle East commer-cial aircraft systems market, particularly inSaudi Arabia. West Germany’s major pres-ence has been in Iraq. The United States is pri-marily involved in Saudi Arabia.
Official diplomatic support (involving theuse of official negotiating leverage to influencecontract awards) is a factor in commercial air-craft support systems. However, relationsamong airlines such as the 30-year TWA-Sau-dia relationship, or the previous Pan Am-Irantechnical assistance agreements, may carrymore weight. The importance of governmentsupport has some relevance in airport systemscontracts, but strong links are often estab-lished through technical assistance providedby civil aviation authorities.
Technological differentiation is limitedamong firms supplying equipment and serv-ices for commercial aircraft support systems.The technologies and equipment are fairlystandard; many firms from several countriescan provide adequate support. The basic tech-nologies (although constantly improved) arerelatively mature and well dispersed amongthe major industrial countries and even somenewly industrializing countries such as HongKong (aircraft overhaul) and South Korea (air-port construction). Indeed, India and Pakistanhave been involved in airport construction inthe Middle East (see tables in app. 7A). Thestanding and experience of the supplier firmis sometimes important, although aircraftoperation and maintenance relationships arebased more on initial provision of aircraft.
Ch 7— Technology Transfers in Commercial Aircraft Support Systems ● 291
The use of localsometimes required,support contracts
agents is an important,means of winning aircraftthroughout the Middle
East. This has been especially the case in Sau-di Arabia and Kuwait. While in the past, localagents have been used solely to garner politi-cal influence in bidding contracts, their rolehas generally expanded to involvement in as-suring contract performance and maintainingcontinuing client relationships. Hiring wellplaced agents has been an important meansof penetrating new markets for firms with lit-tle prior experience in a country.
Price is important in aircraft operation andmaintenance, because of the routine nature ofthese services and the fact that the-y are cur-rent, not capital expenditures. Price and fi-nancing are becoming more important in thetraditional oil-surplus countries, as the exten-sive development plans conceived in the 1970’sprogress into implementation while surplusesfrom oil revenues have diminished. Pricing andparticularly financing arrangements have beenimportant in commercial aircraft sales. Stiffcompetition for aircraft sales in the MiddleEast and the large future stakes believed tobe involved have led suppliers to use, alongwith attractive financing, purchase incentives.These include buy-back of competitors’ planes,package agreements for spare parts, training,or engine maintenance centers, or promises ofassistance to the buyer’s aircraft or even non-aircraft industries. These purchase incentivesseem likely to continue in aircraft sales in theMiddle East.
The expansion of foreign policy controls onU.S. exports of aircraft along with other typesof export controls and regulations on U.S.business, have affected U.S. exports negative-ly. West European governments have subsi-dized the Airbus consortium; at the same time,the U.S. Export-Import Bank has supportedsales of U.S. aircraft with loans. What distin-
guishes the policies of supplier governmentsis the absence of export controls in WesternEurope, and their greater use of high-level eco-nomic diplomacy.
F U T U R E P R O S P E C T S
In the short-term, the recipient nations willcontinue to carry out their commercial aircraftplans incorporated in their 5-year plans. ForIran this may be difficult; for Iraq, almost im-possible. Saudi Arabia has the most ambitiousplans and can be expected to complete its pres-ent airport infrastructure goals without majorproblems. Algeria has a fairly well-developedairport system, and its needs are more in thearea of modernization and expansion thanbuilding new airports. Kuwait, with one ma-jor airport, will continue to consider a secondairport. Egypt, despite major financing diffi-culties, will attempt to improve its existingairports and ATC systems.
In the long-term the world airline industryis expected again to prosper, and increased air-line traffic worldwide in general and in theMiddle East in particular, will provide a cli-mate conducive to improved profitability.Freight transport in particular is expected toincrease dramatical. All of this will place in-creased demands on Middle East air trafficcontrol, airport management needs, and air-craft service. The Middle East countries willbuild on their positive experiences with tech-nology transfer in this sector, and will even-tually fully staff their commercial aircraft sup-port systems with indigenous workers.
U.S. firms can be expected to maintain theirleadership in the civil aviation sector in cer-tain countries in the Middle East for the nearterm—however, U.S. firms can no longer relyon technological superiority. Aviation technol-ogy is becoming increasingly international..
292 ● Technology Transfer to the Middle East— . —. — —
IMPLICATIONS FOR U.S. POLICYThe importance of supplier reliability is es-
pecially evident in commercial aircraft supportsystems due to spare parts compatibility andtraining needs. The United States has gainedthe reputation of being an unreliable supplier,in large part because of U.S. export controls.U.S. export controls govern sales of commer-cial aircraft, in that sales can be restricted ifcountries are seen as supporting terrorist ac-tivities. These controls are used to imposesanctions on countries supporting terroristacts. The military applicability of civilian tech-nologies is, however, limited.
Equipment that can be used directly for mil-itary purposes includes radar capability, trooptransport airplanes (e.g., C-130 S), dual-use run-ways, and fuel storage and maintenance facil-ities. Concerns have been raised regarding ap-plicability of commercial aircraft maintenanceto military aircraft maintenance. However,maintenance, diagnostic tools, and training arevastly different for military aircraft that arenot derivatives of commercial aircraft. Whileit provides a general base of knowledge inmaintenance and repair, commercial aircrafttraining is not directly applicable to nonderiv-ative military aircraft such as the GeneralDynamics F-16 air combat fighter or theNorthrop F-5G. Military equipment, as com-pared to civilian, is built to different standardsand requires different spare parts, and differ-ent maintenance training. Civilian helicoptersare not easily used as military equipment, ex-cept for simple surveillance and transport.Thus, technically, there is little overlap be-tween civil and military technologies andequipment. Some aircraft, however, do haveboth civilian and military uses, such as theU.S. C-130, or can be modified for military use.
Subsidies for manufacturers of commercialaircraft exist for both the United States andEuropean rivals, either in the form of supportfor aircraft development, or subsidized loans.Diplomatic channels are often pursued by the
Europeans in the form of trade missions byhigh-ranking government officials in order topromote sales, a route the United States doesnot often pursue.
Boeing and Airbus are engaged in intensecompetition, as illustrated by the Thai casementioned earlier. In the Middle East, wheremany major purchasers of aircraft are less con-strained by financial considerations than mostdeveloping countries, political factors havebeen particularly important in influencingsales. While it is often difficult, if not impos-sible, to identify the precise effects of politicson a particular sale, it is clear that the Euro-peans have in some instances benefited fromtheir political support for Arab States. In con-trast, strong U.S. support for Israel and theuse of foreign policy export controls has un-doubtedly served as an irritant to potentialbuyers in the Middle East. As a result, com-petitors are able to argue that the UnitedStates maximizes politics above trade, and re-cipient governments can point to purchasesof comparable aircraft from non-U. S. firms asevidence of support for Arab positions.
The Airbus Industrie consortium, in itsshort 14 years of existence, has become a sig-nificant supplier. Although the consortiumwants its aircraft to be profitable, motivationsother than profits (employment, diversifica-tion of supply, technology development, pres-tige) are important, thus ensuring their con-tinued support even if investors do not realizea favorable rate of return. U.S. policymakersmust recognize that competition between Air-bus and U.S. aircraft manufacturers, when car-ried out on fair terms, can be a good thing (forthe companies and consumers alike). En-hancing, or even maintaining, U.S. marketpresence in commercial aircraft and aircraftsupport in the Middle East will be increasinglydependent on cost, financing arrangements,diplomatic support, and especially, consistentpolicies regarding export controls.
Ch. 7—Technology Transfers in Commercial Aircraft Support Systems . 293——.— — —
SUMMARY AND CONCLUSIONS
Each of the countries under study has a civ-il passenger airline (Kuwait Airways Corp.,Saudi Arabian Airlines Corp., EgyptAir, AirAlgérie, Iraqi Airways, and Iran Air) with thelongest route miles being covered by Saudiaand the shortest by Kuwait Airways. Operat-ing statistics of these airlines (e. g., revenuepassenger kilometers flown, revenue passen-ger loads, and average daily aircraft utiliza-tion) are comparable, in most cases, to thoseof other national flag carriers operating inter-nationally.
The airlines of the Middle East have a pre-ponderance of Boeing aircraft (707, 727, 737,and 747 in several variations), a smaller num-ber of Lockheed L-1011s, and an increasingnumber of Airbus A300s and A310s. The air-lines also have smaller planes such as the Fok-ker F-27, De Havilland DHC-5, and HawkerSiddeley 748. The average age for MiddleEastern jet aircraft is much lower than theworld average for nonjet planes. All air car-riers can perform routine maintenance andchecks at their own facilities. Saudia, whichhad a comprehensive maintenance facilitycompleted in 1979, can perform major over-hauls as well. Aircraft engines for large com-mercial aircraft are manufactured by Prattand Whitney, General Electric, Rolls-Royce,and CFM International.
All of the airlines rely on expatriate laborto some extent, with Kuwait and Saudi Arabiabeing the most dependent and Egypt and Iranbeing the least. The airlines are making effortsto reduce expatriate labor (e.g., Saudia hasbeen successful in making one-half of its pilotsSaudi nationals) but in the near term completeself-sufficiency will be difficult if not impos-sible to achieve-particularly among mainte-nance and overhaul personnel needed for SaudiArabia’s and Kuwait’s airlines. Thus, MiddleEastern airlines will continue to need techni-cal support in aircraft maintenance and oper-ation from foreign sources.
The six countries under study have carriedout significant airport development, with theefforts of Saudi Arabia being the most ambi-
tious. Most major new airport construction iscomplete or near completion. Future plans em-phasize upgrading existing airports ratherthan initiating new, expensive projects. Up-grading of a regional airport to handle inter-national (wide-body jet) flights is planned forSaudi Arabia, Algeria, and Iraq. Upgradingof air traffic control is also planned for all butthe newest airports. Major airport design-ers/prime contractors are all from the Westand include Bechtel, Aeroport de Paris, andHochtief. Actual construction work is, how-ever, increasingly done by Korean firms.Future work will emphasize improvements infreight handling, airport access, runway ex-pansion and strengthening, and constructionof maintenance facilities.
Commercial aircraft support thus involvesfairly well-defined, well-established technol-ogies and technological processes which can,and have been, increasingly performed by in-digenous personnel in the Middle East. Thefact that the process of training indigenouspersonnel takes so long demonstrates that,even for moderately complex systems, tech-nology absorption can be difficult and requiresconsiderable efforts on the part of both recip-ients and suppliers. Despite the movestowards self-sufficiency in this sector in theMiddle East, in some countries all aircraft op-erations may never become fully staffed by na-tionals. This is, however, not due to lack of ca-pability on the part of local workers, but toa shortage of indigenous manpower willing toperform certain tasks, such as engine mainte-nance in Saudi Arabia or Kuwait. These twocountries should be able to complete the ex-pansion of their commercial aircraft supportsystems but will have to continue to use for-eign workers at some levels. For Algeria,Egypt, Iraq, and Iran, the local labor forcecould support an expansion of commercial air-craft systems. Attention will have to be paidto the training of aircraft mechanics, in par-ticular. Civil air traffic expansion is unlikelyin Iraq or Iran while their war continues. Tech-nology absorption in the commercial aircraftsupport systems sector can be expecte to be-
294 ● Technology Transfer to the Middle East—. —.
come more extensive in the years ahead, dueto expanded facilities and training programscurrently underway.
The fuller absorption of commercial aircraftsupport systems technology by the recipientMiddle Eastern countries compared to othertechnologies in this study stems mainly fromthree factors: 1) a commitment on the part ofthe recipient governments to develop thistechnology for transportation infrastructureneeds and for prestige; 2) the fact that train-ing and performance in this sector are well de-fined by international standards; and 3) the rel-atively long experience with these technologieswhich are in some respects not as demandingas nuclear power or certain types of telecom-munications systems.
Commercial aircraft support worldwide isbecoming increasingly sophisticated and willrequire more highly trained personnel in thefuture. The heavy responsibility which comeswith commercial airline support services withregard to human lives, invested capital, andreputation is a continued impetus to maintainhigh standards. The increased complexity ofavionics systems, simulators, and air trafficcontrol will ensure expansion of trainingthroughout the world, not just in the MiddleEast.
Airline operations in the Middle East aregenerally on a par with internationally ac-cepted standards except for air traffic control.Egypt is considered to have one of the leasteffective ground ATC systems in the world al-though it is now being improved. The ATCsystem of Iraq is also poor. Increased passen-ger and freight traffic will require modernizedsystems to maintain and improve airline effi-ciency in the Middle East.
Airport planning and construction has beenperformed primarily by expatriates, bothworking for private firms and internationalorganizations such as ICAO and IATA, Con-struction has been managed by Westerners,with construction crews often from the FarEast. Airport management in the Middle Easthas often been performed by nonnationals,particularly in the Gulf States where U.S.
firms have been active. Indigenous personnelare being trained and will increasingly takeover these operations.
The United States is generally acknowl-edged as a leader in avionics and aircraft en-gines. Increasingly, however, adequate substi-tutes are available for U.S. technology. TheUnited States has recently been perceived asan unreliable supplier in the Middle East dueto U.S. export controls, and more Middle East-ern countries are attempting to diversify sup-pliers. The Airbus, for example, uses U.S. en-gines and hence deliveries to Libyan ArabAirlines have been delayed due to U.S. foreignpolicy controls on exports to Libya. The Air-bus consortium was considering recertifyingthe Airbus with Rolls-Royce engines (despitethe considerable cost) in order to avoid suchdelays. That the new Airbus A320 will containless U. S.- manufactured equipment appearscertain, partly in response to concerns aboutU.S. export controls.
A major concern for U.S. aircraft manufac-turers is the inroads the Airbus 300 (and po-tential inroads of the Airbus 310 after 1984)have made in the Middle Eastern market. Thenew fuel-efficient Boeing 757 and 767 have notbeen purchased extensively by buyers in theMiddle East. Some say this is not because ofthe technical superiority or better after-saleservice of the Airbus, but because the UnitedStates does not support aircraft sales finan-cially or politically in the manner that theFrench sell the Airbus consortium. ThroughU.S. Government support for aerospace R&Din the form of export credits, however, the U.S.aircraft industry has been promoted.
U.S. export controls are also often cited asa reason for lack of new U.S. sales of aircraftin the Middle East region. Future sales of U.S.civil aircraft, and perhaps of aircraft enginesin the growing Middle Eastern market are hin-dered by these controls, despite the aggressivesales techniques of U.S. manufacturers andthe high quality of their products. Sales of ex-port aircraft, plus their long-term attendantsupport services and spare parts, are a signif-icant factor in the U.S. balance of trade and
Ch. 7— Technology Transfers in Commercial Aircraft Support Systems ● 295. — —- —
in U.S. employment. Other large marketswhich may eventually develop in Latin Amer-ica and Africa could also be affected by thefear of potential purchasers that they mightbe subjected to future controls. While support-ers of export controls see them as a means toexert pressure on countries supporting terror-ist activities, policy makers must also take into
account the commercial costs and the evidencethat foreign policy controls do not appear tohave by themselves resulted in change in thepolicies of foreign governments. Modificationof present U.S. foreign policy control policiesconcerning commercial aircraft sold to foreigncommercial airlines deserves serious consid-eration.
296 ● Technology Transfer to the Middle East
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Table 7A-2.—Major Projects and Sources of Investment, 1971-81: Commercial Aircraft Support in Egypt.
Foreignnat ions
Source of funds Project InvolvedYear
startedLevel
e x p e n d i t u r e s
$150 million
Contractors Produce
— StudyUpgrade to
internationalcapabiIity
General Electric Overhaul aircraftengines
T h o m s o n - C S F Radar contro l
s ys tem
Comments
Not a U S company.
USAID feasibilitystudy requested
— Cairo airport expansion –World Bank Luxor airport — — —— Imbaba airport (Cairo) United States
$14 million Turnkey project— EgyptAir engine shop United States
1981French government 8-9°0, Commercial aircraft France10-year term radar system
U.S. foreign military salescredits Benha Factory (No. 144) United States
Expected to besigned soon
Licensed productionunder discussion
Westinghouse TPS-63 military radar — —
SOURCE Off Ice of Technology assessment
Table 7A-3.—Major Projects: Civil Aviation in Algeria, 1979-82. .
Description of projects Clients Contractor Location Value of contract
Not stated
Year
19811. Design of
2. supply ofwith Pratt
3. supply ofaircraft
4. Design ofrunway
5. supply ofaircraft
pilot training centers Ste. Metal-urgique Tractional TheniaRias-Bajas (Belgium)
Boeing 737s and 727s Air Algérie Boeing Co. —and Whitney engines (United States)six C-130 Transport Air Algérie Lockheed —
(United States)airport with 3,000 meter Air Algérie Uvaterv Tiaret
(Hungary)three Hercules L100-300 Air Algérie Lockheed —
(United States)
$35 million 1981
$100 million 1981
Not stated 1981
$30 million 1981
6. Turnkey contract to design and Air Algérie International Setif and Batnabuild airports Airport Authority
(India)— — .SOURCE Off Ice of Technology Assessment
$100 million 1982
298 ● Technology—
Transfer to the Middle East
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Ch.7— Technology Transfers in Commercial Aircraft Support Systems ● 299—-— . —
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