The modern European aviation sector was shaped by World War II. During the War, Britain and America agreed that both would develop and produce fighters and bombers, and the United States alone would develop transport aircraft. When America entered the war the British agreed to concentrate on building fighters and bombers, leaving transport planes to the United States; in 1945 the United States was much better placed to move back into civilian transport planes. In fact, the main reason Britain left transport planes to the United States was that the United States was well ahead in the field anyway. In 1941 the civilian Douglas DC-3 and DC-4 were already flying and the Lockheed Constellation was well under way. Britain's post-War attempts to get back into the civilian market were painful; even before the Comet, flop followed flop.
As early as 1943, when it became obvious that the War was going in favor of the Allies, the British government set up a committee to establish which types of civilian transport aircraft Britain would require, post-WW II. That committee was headed by aviation pioneer Lord Brabazon of Tara and included representatives of British Overseas Airways Corp. in an advisory capacity. Starting in February 1943 the committee met in order to investigate the future needs of the British civilian airliner market. The Brabazon Committee studied a number of designs and technical considerations, and delivered a report calling for the construction of four general designs they had studied along with members of the airlines BOAC and BEA. This select group at last defined five types of aircraft that would be necessary to outfit Britain's after-war airline industry. These aircraft ranged from domestic feeder liners to nonstop, transatlantic airliners.
- Type I was a very large transatlantic airliner serving the high-volume routes like London-New York, seating its passengers in luxury for the 12-hour trip. Type I was given to the Bristol Aeroplane Company and was produced as the Brabazon.
- Type II was a feederliner intended to replace the DC-3 and De Havilland Dragon Rapide, although BEA suggested a larger and much more capable design. Type II was later split into two designs, IIA was a piston-powered aircraft, and the IIB was turboprop powered. Type IIA became the Airspeed Ambassador and IIB the Vickers Viscount
- Type III called for a larger medium-range aircraft for various multi-hop routes serving the British Empire. Type III went to Bristol as the Britannia.
- Type IV was the most advanced of them all, a jet-powered 100-seat design. Added at the personal urging of one of the committee members, Geoffrey de Havilland, the Type IV could, if the whole concept of a jet airliner could be made to work, be able to replace the Type III outright, and many of the duties of the other planes in shorter routes. The Type IV went to De Havilland and would become the world's first jet airliner, the Comet.
The Brabazon Committee published versions of the report several times between August 1943 and November 1945, each time further solidifying one of the types. In 1944, the Ministry of Supply started a tender process for contracts for all of these planes. Through misassignment, prevarication, lack of responsibility, and cold-shouldering of genius, among other causes, not all of the committee's proposed types were successfully developed. There was a definite need to apply the principles of war to national industries. This was evident in the tales of the Handley Page Herald versus the Fokker F-27 and the BAC-111 versus the DC-9.
World War II ended in 1945, with Germany and Italy in utter defeat. Their independent aviation industries had effectively ceased to exist.
The De Havilland company also built the world's first jet airliner, the Comet. It made its first test flight in 1949 and first flew with passengers in 1952. It stirred great excitement with its high speed and in-flight comfort, and orders from airlines rolled in. But during 1954, it showed an unpleasant tendency to blow apart in flight. It was clear by the mid-1950s that modern aircraft were too costly for Britain to pursue on its own. Nor was there need for them; American warplanes were the world's best and could easily be purchased. In 1957 the British minister of defense, Duncan Sandys, issued a White Paper, a formal document that announced a new policy: Great Britain would build no new fighter aircraft for its Royal Air Force. The industry was free to build airliners, sell fighters overseas, and collaborate with the United States and with France. Even so, this policy brought a sharp cutback in the prospects for Britain's planebuilders. They responded with a new wave of mergers. The engine-builders Armstrong Siddeley and Bristol Aero-Engines combined in 1959 to form Bristol Siddeley. Hawker Siddeley took over the big firm of De Havilland Aircraft in 1960. Vickers, English Electric, and Bristol Aircraft united to create British Aircraft Corporation.
France had been under Nazi control from 1940 to 1944, but its planebuilders made a strong comeback after the war. Chief among them was Marcel Dassault, who survived imprisonment in the Buchenwald concentration camp. Another French company, Sud Aviation, built its own jet airliner: the twin-engine Caravelle. Sud sold twenty of them in the United States and many more to European airlines. Moreover, the Caravelle flew with jet engines built by the British firm of Rolls Royce. This encouraged thoughts of a new project, wherein France and Great Britain again would join to craft a particularly advanced jetliner. The project that resulted was the Concorde.
Officials of Sud Aviation took the lead in launching another venture, Airbus Industrie. They drew in two British planebuilders, Hawker Siddeley and British Aircraft, with West Germany stepping in to help with the funding. Since the inception of the European Airbus consortium in 1967, its partner governments, France, Germany, Spain and the United Kingdom, have provided massive support to their national company partners in the consortium to aid the development, production and marketing of large civil aircraft. These government funds facilitated the growth of Airbus Industrie and its introduction of a range of large transport aircraft by allowing its national partner companies to avoid bearing the normal commercial risks that U.S. manufacturers face with respect to investing in new civilian aircraft programs.
Over many years, the governments of France, Germany, Spain, and the United Kingdom have provided subsidies to their respective Airbus member companies to aid in the development, production and marketing of Airbus large civil aircraft. These governments have financed between 33 percent and 100 percent of the development costs for all Airbus aircraft models (launch aid) and have provided other forms of support, including equity infusions, debt forgiveness, debt rollovers, and marketing assistance, including political and economic pressure on purchasing governments. The EU's aeronautics research programs are driven significantly by a policy intended to enhance the international competitiveness of the European civil aeronautics industry.
European aeronautics research is increasingly guided by the strategic direction provided by "Vision 2020" and by the resulting Strategic Research Agenda (SRA) This is reflected in the fact that each country's research program has adopted the SRA objectives. The "country" entities are pursuing these common goals on an increasingly coordinated and cooperative basis, thereby reducing unnecessary duplication of effort and increasing the ultimate effectiveness of the various aeronautics research programs.
The most fundamental goal of the European aeronautics research agenda is to wrest world leadership from the U.S. by 2020. Consequently, all research programs are explicitly aimed at enhancing the "competitiveness" of the European aeronautics industry. The combination of a high level of funding for aeronautics research by both government and industry and its rapidly growing effectiveness from better coordination and cooperation on the basis of common research objectives lends credibility to the European goal of surpassing the U.S. in aeronautics by 2020. If Europe reaches its goal of becoming world leader in aviation, the implications would be substantial and durable.
Through its Framework Programmes (FPs), the European Commission (EC) meets one of the key responsibilities imposed on the European Union by the Treaty of Rome; that of enhancing the competitiveness of the industries of its member nations through research in all relevant areas. The EC has supported aeronautics research since 1990, starting with its 2nd FP. This support was initiated in response to a study, published in 1988, by the European aeronautics industry. The study provided the basis for a strategic approach to pre-competitive research and technology development at the European level. While the initial "pilot phase" took up only the second half of the 2nd FP, subsequent aeronautics research has occupied the full duration of each FP.
All European countries practice "industrial policy" relative to the aeronautics sector to a greater (e.g. France) or lesser (e.g. Germany) extent. Strong industry involvement in defining and performing research as well as in paying for about half the cost in most countries. Industry's share is lower in France, where government pays 78% of total research cost, and in Spain with a 60% government share.
The governments of the U.K., Germany and Sweden expend the smallest amounts on civil aeronautics research relative to total aerospace revenues, ranging from 0.2% for the U.K. to 1% for Sweden. The U.K. government spends much more on aeronautics research for defense than for the civil sector. France, Belgium, the Netherlands and Austria provide government research support to civil aeronautics at about the same level of roughly 3.3% to 4.3% of the revenues of their respective aerospace industries. France supports a sizeable defense research effort in addition to its civil research.
Italy, at 6.1%, is the next highest. This is consistent with Italy's concerted effort to make its research capabilities and infrastructure competitive internationally in order to attract business for its aeronautics industry and its research institutions not only from within the European Union, but also from the U.S. Winning a significant share of the Boeing 787 airframe production as a risk-sharing partner is a sign of the success of this policy. Spain, at 23.4%, not counting zero-interest loans to industry, provides by far the highest level of government support relative to the total revenues of its aerospace industry.
Over its 35 year history, Airbus has benefited from massive amounts of EU member state and EU subsidies that have enabled the company to create a full product line of aircraft and gain a 50 percent share of large commercial aircraft ("LCA") sales and a 60 percent share of the global order book. Every major Airbus aircraft model was financed, in whole or in part, with EU government subsidies taking the form of "launch aid" - financing with no or low rates of interest, and repayment tied to sales of the aircraft. If the sales of a particular model are less than expected, Airbus does not have to repay the remainder of the financing. EU governments have forgiven Airbus debt; provided equity infusions; provided dedicated infrastructure support; and provided substantial amounts of research and development funds for civil aircraft projects.
The $3.2 billion in launch aid that the EU governments have committed for the new Airbus A380 is the largest amount of funds committed for a single project. The EU has provided further loans and infrastructure that has pushed the total amount of A380 subsidies to approximately $6.5 billion. EU governments have spent hundreds of millions of euros to create infrastructure for Airbus programs, including 751 million euros spent by the City of Hamburg to create land that Airbus is using for assembly of the A380 "superjumbo" aircraft and 182 million euros spent by French authorities to create the AeroConstellation site, which also contains facilities for the A380. The beneficiary of more than $6 billion in subsidies, the Airbus A380 is the most heavily subsidized aircraft in history.
On 06 October 2004 US Trade Representative Robert B. Zoellick announced that in order to level the playing field for American workers and companies, the United States would file a World Trade Organization (WTO) dispute settlement case against the European Union (EU) regarding billions of dollars in unfair subsidies provided to Airbus by European governments. The United States had been urging the European Commission (EC) to negotiate a new agreement to replace the 1992 U.S.-E.U. Agreement on Large Civil Aircraft. The agreement placed limits on certain government support, including limiting it to one-third the costs of developing a new aircraft. Boeing is the leading U.S. producer of airplanes, and Airbus is its main competitor. When the 1992 agreement was negotiated, Airbus accounted for only about 30 percent of the global market. By 2004 Airbus represented more than 50 percent of this market.
On 13 April 2006, the Chairman of the WTO dispute settlement Panel stated that the Panel would not be able to complete its work within six months due to the substantive and procedural complexities involved in this dispute. The Panel expected to complete its work in 2007. On 14 December 2007, the Chairman of the Panel stated that, due to the substantive and procedural complexities involved in this dispute, it expected to complete its work in 2008.
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