EADS Withdraws from United States Air Force KCX Tanker Competition

The news that EADS has decided to withdraw from the United States Air Force‘s ‘KCX’ replacement inflight refueler competition seems to underline the closed nature of the American defence market vis-a-vis European suppliers, particularly of ‘big ticket’ contracts such as these.

In some ways, the whole programme distills the trans-Atlantic spat between the European Union and the United States over the issues of subsidies for aircraft production. The World Trade Organisation has been hearing a dispute between the two aircraft builders regarding the subsidies Airbus receives from European governments to develop new airliners and, last September, issued an interim ruling in favour of Boeing. However, a countersuit is proceeding through the WTO alleging that Boeing recevies unfair subsidies from at the state level from Washington and Illinois.

The support that the Democrat Party receives in Washington State, where Boeing’s KC-767 production line is located arguably means that, with a Democrat President, EADS and Airbus were always going to have a hard sell with their KC-30 design. This whole issue of pork barrel politics is amplified by the fact that buying the 767 would retain around 2,700 jobs at Boeing’s 767 production line, whereas establishing a KC-30 line in Mobile, Alabama (where the KC-30 was intended to be assembled) would have created around 300.

In these times of economic belt-tightening, President Obama could be forgiven for not wanting to threaten the workers at Seattle who would face redundancy when the 767 production line is scheduled to close in the next few years, should the KC-767 not be selected.

However, one of the ignored questions surroudning the KCX competition is what will happen to the KC-30 design, now that it has been withdrawn from the US Air Force competition? This aircraft has been selected by France, the United Kingdom, Saudi Arabia, the United Arab Emirates and Australia as these countries’ respective new in-flight refuelers. With the KCX competition ‘in the bag’ just where are the future orders for the KC-30?

Airbus might be able to grab the odd purchase of five-to-ten tankers here and there from countries around the world, such as Brazil, which need that capability, but the biggest order has eluded them. Moreover, the fact that the US Air Force operates a particular aircraft is a fantastic selling point, and will likely win Boeing KC-767 orders from nations wanting to fly a similar type of aircraft, particularly those countries closely allied to the United States such as Turkey. With the A400M‘s test flight schedule still far from complete, and the KC-30 thrown out of the KCX competition, what is the future for Airbus’s military aircraft business?

By Thomas Withington


1 Response to “EADS Withdraws from United States Air Force KCX Tanker Competition”

  1. 1 EADS Withdraws from United States Air Force KCX Tanker Competition … | Tailspin Trackback on March 15, 2010 at 12:03 pm

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