Airbus [read France] Cries Foul

Airbus believes the decision of state-owned Air India to purchase 50 Boeing aircraft [covered by Dawn's Early Light here] was made from US diplomatic pressure.  This is odd, not because it probably was, but that the French did not play the same diplomatic game as the US in courting India.

It helps that the United States spends roughly 50% of the world's defense spending alone [see DEL here] and has a first rate economy and political, technological and strategic interests well beyond the scope of the EU and specifically France to offer.

However, the Indians are taking the Airbus charges seriously, maybe prompted by recent Indian defense procurement scandals [see DEL here].

Here is a good summation of the charges and the counter-responses from India's Sunday Express:

"• Charge: Air India issued its request for proposal (RFP) two days before Airbus could launch A-350 that could have competed with Boeing 7E7-8.

Counter: There was no prior intimation of the launch and the RFP had been finalised earlier, only board approval was awaited. Specifications could not have been changed to accommodate one aircraft type.

• Charge: A-I made last-minute changes to its seat and aisle width specifications to accommodate a 9-seat configuration being offered by Boeing in the 7E7-8s. No major airline operates what is called a 9 abreast configuration to cater to passenger comfort.

Counter: The specifications were not altered from what was issued in the RFP and that it is the airline’s prerogative to choose the seat configuration. More seats means better economic performance.

• Charge: Delivery schedule of Boeing 7E7-8s cannot begin earlier than 2008-09 while AI had mentioned a quicker delivery timeframe, around 2007, in the RFP.

Counter: Even Airbus had said it would need more time to deliver its aircraft. Especially, in the case of Airbus 340-500 that was competing with Boeing 777-200 (Long Range). Meeting the deadline was a problem with both parties and given the processes still involved in finalising the deal, AI felt it could be flexible on delivery to get the aircraft it wants.

• Charge: Airbus wrote several letters expressing its concerns but received no response from the airline.

Counter: It is inappropriate to exchange communiques when the evaluation is underway. Even IA never responded to Boeing when it brought down its offer by Rs 700 crore after the IA board had opted for 43 Airbus aircraft."

A sour grapes approach by Airbus cannot be beneficial to its image and is not going to change the status quo of the existing offer to purchase the Boeing aircraft.

The International Herald Tribune sums up the diplomatic row this way:

"New Delhi: A high-powered international row has broken out between France and the United States over securing a major chunk of India's multi-crore civil aviation and defence purchases.

Accusations are being hurled freely between the giant aviation companies and their respective governments with both France, whose Airbus just lost the Air-India contract to the US aviation giant Boeing, and the United States having set their sights firmly on the 126-fighter aircraft deal that India is currently shopping for.

The envoys of both countries in India are openly lobbying for their companies, with visible bitterness having crept into relations following India's sudden decision to give the Air-India contract to Boeing. French ambassador Dominique Girard made it clear to news agencies on Thursday that 'some factor other than commercial had played a role' in giving this much-sought-after contract to Boeing instead of Airbus.

He said that Boeing would not be able to deliver the 50 planes on an urgent basis, and that Airbus had been virtually assured of the contract before New Delhi decided to go along with the US company. He said he was 'surprised and disappointed as the Airbus definitely has an advantage over Boeing.' It has been clear from the French reaction that Airbus was caught completely unawares about the Indian decision.

Hectic lobbying is now on by both the US and France, at the government-to-government level, for the 126 fighter aircraft contract. Here too the United States is a late entrant, with no less a person than US secretary of state Condoleezza Rice opening the doors for the supply of F-16s or F-18s to India, which had been looking hard at the Mirage-2000 manufactured by the French company Dassault.

There is apprehension in French circles now over the fate of this deal as well, more so as Indo-US relations could have a direct bearing on this defence agreement. Ambassador Girard said as much to the media on Thursday: 'I am sure the Indian government is wise enough not to base its decision on one factor or the other, but to take comprehensive factors into consideration.' He said that if this deal too went to the US, 'it will mean that a lot of other factors have gone into consideration.'"

The French taking a diplomatic loss public is a further sign of France's growing impotence.  India is moving towards the US because it has a great deal more to offer India, including a vision of a positive Indian future in Asia than French economic interests.

Further Suggested Reading: Joe Katzman of Winds of Change has some interesting observations of India's motives in the comments section of this other DEL post.

Comments

[Amit Kulkarni]

The US is a fickle arms supplier, although most Indians (like me) would like to see closer co-operation between the two nations, India always seem to be at the short end of the stick.

I hope that the current Indian administration weighs this carefully. Although going forward like you say, only the US has the money to be serious about developing new weapons systems. Pretty much everybody has dropped out of the race.

[Sandeep]

Majority of the Indians view the growing US-India relations very favorably. India knows that India & US are natural allies. However, our past experience with US has been full of sanctions & embargoes. For all the right & wrong reasons, India was always at the receiving end, be it sanctions or the Pro-Pakistan stance by US. Indians also understand that US action was a part of the cold-war game. But, this fear of US sanctions or turning its back will not go away soon, as this perception was built over years.We live in a very hostile neighbourhood, and no sensible country would want to see its military capability being held hostage to the threat of sanctions. Hence, expecting India to turn its back on a old & time-tested friend like Russia and opt for massive purchase of arms from US would be a mistake. For, India drastically improving its relations with US while still maintaining its strong ties with Russia would be the best option. And, I am sure that the Americans will understand this rationale. The best part is that this can work as i don't foresee much of a fight between Russia & US in the future. Let the confidence be built over a period of time,whereby India is encouraged to buy US arms as they deem fit. Over a period of time, big ticket purchases and strategic tie-ups would automaticaly emerge.

[Indian]

India-USA history has always been full of controversies,where the Americans have always viewed India as one among the enemy camp. There is no right or wrong to this, as this was during the cold war. But, even post-cold war, this treatment continued. India, which faced cross border terrorism was still seen through the prism of cold war. The US sanctions regime continued, with a deign to hamper all our nuclear, military, scientific & space missions. But, India did succesfully manage to continue with all its national missions inspite of this. While terrorism was breeding in the neighbourhood, arms were still being sold to our neighbour. Inspite of all this, if majority of the Indians still have favourable opinion of the Americans, the it should atleast show the Americans that they should never ever go back to the old policy of treating India as an enemy.

[Bill Rice]

Sandeep and Indian,

Very thoughtful and heartfelt comments about the past of US-Indian relations. The cold war is over now, and the US has determined, wisely, that its interest lies in supporting democracy throughout the world.

In the past, the US has not approached its foreign policy in this light, but rather to focus on shorter term goals with other nations it deemed allies.

September 11 changed America's thinking. There are larger threats to America's security, including Islamic Radicalism and potentially a growing unchecked and unfree China (though time will tell the goals the Chinese are pursuing).

It makes sense for both India and the US to work together for their interests are aligned and aligned in such a way that they make sense beyond the current horizon.

Russian military technology is good, but is growing sorely outdated and the US offers India a better opportunity for high end defensive equipment.

The US wants to see India succeed as an Asian democracy, especially given China's current economic lead.

Reforms undertaken by India to root out corruption will hopefully allow India to catch up and surpass China.

Thank you for your comments. I truly would like to see better US-Indian relations. Granted that will take steps of condfidence on both sides, but the relationship is too logical for both nations, that it is important to forgive the past, though not forget it.

Kind regards,

Bill Rice
Dawn's Early Light