News Round Up No. 4

It’s the beginning of advent! Finally! Feels like its been forever since December decided to roll around. Here are 2 news stories from this week, both sourced from, a fantastic website which has its own magazine as well!

Virgin Galactic’s SpaceShipTwo glides in

Virgin Galactic has begun glide flights of the SpaceShipTwo sub-orbital vehicle three days after completing a captive carriage flight under WhiteKnightTwo, its mothership.

The flight commenced on December 3rd and took off at 6:50 am Pacific Time, the spaceplane and its carrier ascended to a height of 50,000 feet before the SpaceShipTwo was released after around 50 minutes of flight. The spaceplane glided back for a smooth landing around 10 minutes later, being piloted by chief test pilot David Mackay and company test pilot Mark Stucky. The crew apparently experienced ‘excellent flight qualities’ and boats several improvements to its predecessor, which was lost in a tragic crash in October 2014, and this includes better horizontal stabilisers and rudders. This second SpaceShipTwo is built by Virgin’s sister company, The Spaceship company. The flight also marks the first drop test made from the carrier aircraft (WhiteKnightTwo) since the development of new procedures which significantly improve WhiteKnightTwo’s take-off and balanced field length performance. This glide flight was supposed to launch a month ago, however it was delayed by high winds and a series of undisclosed technical problems and events.

This glide flight clears Virgin to begin to explore flutter and handling at lower speeds, before moving on to powered test flight in 2017. In my opinion, commercial space flight in its early stages is not going to be very popular at all. It will be too expensive, leaving it only accessible to the ultra-wealthy, and of these people, only a few will be willing enough to try out this new experience, due to it not yet having a proven track record of safety, so the price of trips will begin to slowly drop. It is true, however, that there will be a tipping point where tickets will be within the realm of possibility for less wealthy people, but this tipping point is well off from the present, maybe 50-100 years perhaps? This is true for all forms of transport, though. The same could be said during the early stages of the airplane, where it was only used for cross-country journeys, instead of international crossings.


Trump Risks and Rewards for Boeing

Since Boeing is the US’s biggest manufacturing exporter, this means that it is vulnerable to radical and unpredictable shifts in the US trade policy, and since the incoming Trump administration (*shudder*) has promised new trade negotiations, this is going to be risky for not just Boeing, but also for the entire US aerospace sector.

Consider Boeing’s heavy dependence on free trade and open borders: about 5,500 of the 7,522 jets delivered by Boeing in 2000-15 were exported. More important, Boeing’s market is trending very heavily toward exports. In 2000, U.S. operators took 46% of all Boeing jetliner output; in 2015 they took just 20%. On top of this, all civil aerospace companies have very streamlined global supply networks which rely on seamless trade between nations, and there is no clear way to determine what the president-elect will do. One New York Times column outlines three possible policies Trump may put in place.

The first possible course is that world trade agreements remain the same, but the U.S. takes a more assertive stance within them. This might create a few problems, but would not be a major threat. In fact, Boeing might benefit if the U.S. gets more aggressive about the U.S.-EU Boeing/Airbus trade deal.

The second is that trade agreements remain the same, but the president uses his authority to enact much more aggressive tariffs and other barriers, and this would primarily target China. Trump threatened a 45% tariff on all Chinese imports, which would immediately produce a trade war. An obvious target would be jetliners, with orders shifted from Boeing to Airbus. This is the greatest risk for Boeing. In 2015, the company delivered 145 jets to China, or 19% of jetliner output, their most important export market.

The third possibility would be the end of the post-World War II trade order. Before and after the election, Trump vowed to withdraw the U.S. from the proposed Trans-Pacific Partnership. He also promised to renegotiate or terminate NAFTA. The Trump administration will consider ignoring World Trade Organisation (WTO) rulings, which would jeopardise that institution—and make the U.S.-EU jetliner trade case irrelevant. There is no way to tell how airliners would be effected by this third possibility, as the growth of air travel has been from the growth of world trade, and so if trade slows, so will aircraft demand.

Despite these threats posed by possible Trump administration policies, there is a likely upside to Boeing’s other half. The prospect of rising defence budgets, both in the U.S. and abroad, is likely to lift its Boeing Defence, Space & Security unit, with more F/A-18 and rotorcraft procurement, and of course increased smart munition demand. The company’s business outlook, therefore, reflects the world’s direction today: more nationalism and conflict, and less trade and globalisation.



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