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OVERVIEW OF THE U.S. CIVIL AVIATION MANUFACTURING INDUSTRY 26 would otherwise be incurred in expanding capacity in an emergency. If this development and production infrastructure deterioratesâas it inevitably will if the U.S. aircraft industry (or its civil customer base) is not financially healthyâthe defense establishment will undoubtedly do whatever is necessary to help maintain the industry at an adequate level. Consequently, it is in the vital interest of the United States to ensure a healthy aircraft industry and to achieve effective coupling between defense and civil plans and programs where there is opportunity to benefit from such coupling. (Needless to say, our NATO partners also benefit from a healthy U.S. aircraft manufacturing industry.) Rotorcraft represent a special case. Civil helicopters have been principally derivatives of aircraft developed for military use. But new third-generation U.S. military helicopter developments have not yielded aircraft suitable for civil certification and commercial use. DOD has in general recognized the values of commonality with commercial products in providing increased economies of scale and logistics, but its helicopter commonality policy has not considered the additional values that derive from inclusion of civil-certificated derivatives of military helicopters. New military requirements have created such specialized aircraft that they have limited commercial attractiveness to the market. REASONS FOR PAST SUCCESS OF THE INDUSTRY The U.S. aviation industry has dominated world markets since the end of World War II. It is important to understand the reasons for this success before examining some of the trends that are now generating concern. Part of the success results from the large-scale technology and production resource created for World War II. Additional powerful factors that have been decisive in establishing and maintaining U.S, dominance are: (a) a productive, decades-long relationship among the government, the major airlines, and the aircraft manufacturers in the context of a free market economy; (b) a combination of economic and geographical considerations in the United States that has favored air transport over other modes of transportation; (c) the size, diversity, and rapid growth of the U.S, air transport industry that provided a major domestic market; (d) an aggressive, effective program of technology development combined with an advanced, productive aircraft design and manufacture capability that received continuing infusions of resources; and (e) a system of product support that earned customer loyalty. These factors and relationships, including the productive linking of government to manufacturers and airlines, began as early as World War I. The National
OVERVIEW OF THE U.S. CIVIL AVIATION MANUFACTURING INDUSTRY 27 Advisory Committee for Aeronautics (NACA) at its Langley Center, the Army at Wright Field, and the Navy Bureau of Aeronautics established the basic foundation for aeronautical and propulsion technology. The U.S. Post Office contributed significantly by establishing transcontinental airmail service via lighted airways in 1924, and the Kelly Bill in 1925 encouraged private investment in air mail contracts. The modern structure of the industry began to emerge in 1934, with the separation of airlines from manufacturers by government fiat to increase competition and industry development. Direct subsidies to promote passenger travel, economic regulation of airlines, air traffic control, and safety authority were fully codified in the 1938 legislation establishing the Civil Aviation Administration (CAA) within the U.S. Department of Commerce. The functions of the CAA were divided in 1948. Two separate agencies, the Civil Aeronautics Board (CAB), and the Federal Aviation Administration (FAA) were established. The CAB was assigned to handle route and economic matters (economic regulation). The FAA was charged with technical, safety, and certification matters. Both were charged with encouraging the expansion of the industry. The combination of the NACA, Army Air Corps, and Navy technical research in aerodynamics, structures, engines, and fuels, together with R&D by private manufacturers and the development of far-flung airline operations, assisted the United States in becoming the world leader in commercially successful aircraft (e.g., DC-3) and services (e.g., extensive domestic routes and long-range overseas routes using the China Clipper). U.S. civil aircraft, and especially engines, benefited from the continuous stream of large R&D investment by the military establishment, especially the competition for jet bombers. They also benefited from the economy of scale afforded by the growing domestic market, and from the aggressive, market- focused management of the industry. U.S. civil aircraft offered excellent performance, excellent quality and reliability, size and performance range that matched market needs, lower operating costs than European aircraft, competitive purchase prices, and excellent logistics and field operations support. European manufacturers sometimes led in introducing new technology, e.g., first use of jet engines in commercial transports and first smaller two-engine jets, but they did not succeed in marshalling the array of competitive factors that led to commercial leadership. The principal reasons for the past success of U.S. large transport aircraft manufacturers have been a strong technological base, a good perception of airline and business requirements, and a willingness to accept the risk of implementing new technology and to tool up for early high production rates so that the market opportunity could be exploited as rapidly as it developed. United
