U.S. Companies Pressure Major Air Shows To Cut Costs
Aviation Week & Space Technology
01/19/2004, page 404
James R. Asker
Washington
U.S. companies pressure Paris, Farnborough, Singapore, Dubai to cut costs of air shows
A Quickie in Paris?
If the U.S. aerospace industry has its way, there will be fewer lavish international air shows and the ones that survive will be shorter, cost less and have fewer attendees. The gatherings may even dispense with the flying of airplanes.
To effect such change, the Aerospace Industries Assn. of America has fired off a letter to officials of four shows telling them U.S. companies cannot continue to support them in the style to which they have grown accustomed. And the AIA has issued a policy statement intended as a shot across the bow of the smaller shows.
AIA president John Douglass says officials of the four biggest shows--Paris, Farnborough, Singapore and Dubai--have already indicated their "strong interest" in sitting down with U.S. industry to discuss its concerns. An official of the Paris air show said, "Discussions have not gone beyond the exploratory stage yet."
There's nothing new in the sentiment in industry that there are too many shows held too often and at excessive cost. Nor are the arguments for throttling back new: Modern communications and travel mean the industry and its customers don't wait to cut deals at shows. Product life cycles are longer and major players less numerous, so there aren't many new aircraft to see each year. In short, there are fewer reasons to get together face-to-face and kick the tires so often.
The AIA made an effort to get shows downscaled in the mid-1990s--to no avail. But this time, the U.S. companies may actually have a shot at getting the show world to reform, or at least make some significant modifications.
Why? The pivotal event, if there is one, was the Paris show last year. Under pressure from the U.S. government--prompted by a defense secretary profoundly piqued by France's intransigence on the war against Iraq--attendance of military brass and corner-office industrialists was off drastically.
Companies learned long ago that a unilateral approach to lowering their presence wouldn't work; the marketing department would complain the next year that the show cutback had shorted them on sales. So, many were happy to have an external impetus for all to downsize. Mostly, they cut back on the size of their delegations to the show. The result, says Joel Johnson, AIA's international affairs chief, is that most U.S. companies' reaction was, "We got along quite nicely at Paris, thank you."
Even in 2003, the costs for industry were staggering. One large U.S. company cut its delegation in half and still spent about $5 million--$4 million for show expenses and about $6,000 apiece for 150 employees' travel and hotel expenses.
Singapore, in late February, is the next major show. But Farnborough, set for July, may be the next real test of whether the U.S. industry's effort to lessen the pain has any credibility, because arrangements for shows have to be made so far in advance. While the U.S. government clearly wants to tilt toward its staunch ally in the Iraq war, the AIA expects a cutback in American aerospace employees attending the London gathering similar to that at Paris. Adding to the pressure, the dollar's value has slid relative to the pound and euro.
"Show organizers, whether they admit it or not publicly, know they have a problem," Johnson says. Publicly, they may cite growing numbers of companies and attendees, but the exhibits are smaller and space is being discounted. A few shows have even widened the aisles in exhibit halls to make them appear more full, the AIA says.
What's more, the Americans think they have real leverage. "We are the heart and soul of these shows," Douglass says, adding the U.S. accounts for a third to half the industrial presence at the majors.
Still, no one wants the shows to go away. Even though many top execs leave in midweek, the big shows are still seen as unsurpassed opportunities to network.
So, what does industry want? The AIA knows reducing the frequency of most shows is a non-starter, so it is suggesting that shows be shortened. It also wants fees unbundled, complaining that it doesn't allow companies to tailor their presence to their needs. For example, if face-to-face networking remains the main value to the trade, why must allocation of chalet space, aircraft static-display ramp space and exhibit space be linked?[/b]