Japan's Investment in the 787
How Boeing and the Japanese are helping each other out
On paper, Japan Airlines and All Nippon Airways are just two more Boeing customers. In practice, though, Japan's connection to Boeing is much more intimate.
When it comes to purchasing commercial jetliners, politics plays a role. A quick look at the fleets of European and U.S. carriers reveals staunch patriotism on each side of the Atlantic, with most carriers in the U.S. (with the exception of U.S. Airways and JetBlue) utilizing Boeing aircraft and most legacy carriers in Europe (with the exception of British Airways) preferring to stick with Airbus.
What about the Asian market, though, which is becoming increasingly important for both Airbus and Boeing? Given its importance, both companies already have a firm grip on the region, Airbus especially so in China, and Boeing in Japan.
In early April, Boeing announced that orders for its state of the art 787 Dreamliner hit the 500 mark, “making it the fastest-selling commercial airplane in history” [1].
Not surprisingly, Japan Airlines (JAL) was partly responsible for helping Boeing reach this milestone when the airline ordered five more 787-8 airplanes, nudging their total 787 order up to 35 planes.
JAL and fellow Japan-based airline All Nippon Airways (ANA), a launch customer for the 787, purchased a combined total of 85 787’s from the U.S. plane manufacturer, a remarkable order for Boeing.
What’s especially interesting about these orders, in the words of journalist Tanaka Sakai, is the “fine print” [2]. Improved fuel efficiency, reduced emissions, and quieter takeoffs and landings are all selling points for the 787. However, as far as the Japanese are concerned, there’s even more in it for them when it comes to Boeing’s new plane.
Boeing’s link with various industries in Japan to produce the 787 might explain why JAL and ANA are stockpiling the plane. You scratch my back, and I’ll scratch yours?
Three Japanese enterprises will provide 35% of the production of the new plane—Mitsubishi, Kawasaki, and Fuji Heavy Industries. These companies will provide wing construction and a large chunk of the financing. Boeing itself will only assume 35% of the financial burden associated with this project.
How did the Japan-Boeing connection develop? Simply put, Boeing was looking for a way to spread around the financial burden of the project, having just come off a few rough years in terms of sales and aircraft development. At the same time, Japan was looking for a way to revitalize its aeronautics industry.
The country thinks that assuming 35% of the financial burden for the 787 is a small price to pay for access to developmental knowledge of the aircraft. It’s probably right.
This arrangement is actually a big step for Boeing, a company known for remaining tight-lipped about its techniques for designing and mass-producing commercial jet wings.
References:
[1] "Boeing's 787 Dreamliner Surpasses 500 Customer Orders in Under Three Years," 3 April 2007, available from http://www.boeing.com/news/releases/2007/q2/070403d_nr.html.
[2] Sakai Tanaka, “The Fall of Boeing and Japan’s Airline Industry,” available from http://japanfocus.org/114.html.
