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Comment by dekhn | Hacker News Reader

Air travel in the US is a massively subsidized business (the government gives huge amounts of money to Boeing to make next-gen warcraft, then Boeing translates those R&D concepts into airplanes.

The airlines were, for a long time, subsidized by air post. Fuel prices are still much lower than they could be.

These things are barely directly profitable, but they contribute immensely to the global economy. That's the interesting tradeoff in post-capitalism.

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Defense contracts are not subsidies. They are won by competition with the likes of Lockheed. Most of the money won is spent providing the product or service. The profit margins on defense contracts are not nearly large enough to "subsidize" an airline business. Yes, some R&D crosses over but it's no easy trick. Lockheed does not play in the commercial space at all.

Disclosure: Former Boeing Employee.

I've read enough books about Boeing to say that this is established practice (IE, the people who ran boeing during the 747 period specifically said this internally).

Some R&D examples I've seen is the movement of advanced electronics and structural materials from military craft to commercial craft. Boeing and AirBus both benefitted tremendously by their military contracts.

I think the point is that at a certain level there are only 3 or so defense contractors that have the infrastructure to bid on and win those contracts. Given that they are not "subsidies", but when there are only 2 corporations that are expected to receive the money, then you must call a spade a spade.

If you look at things like the Boeing/Northrop Grumman Tanker contract, then it is hard to fathom that any of the $35B for 180 planes (that's 190M for each plane) wouldn't lead to significant development that could be shared with Boeing's commercial sector.

That's not a subsidy in the true sense of the word, though. It's a company using a massively profitable but specialized industry (blowing stuff up as efficiently/quickly/quietly/spectacularly as possible) to fund a much smaller-margin but comparatively very broad industry (commercial aeronautics).

Boeing Defense doesn't make a whole lot of surplus cash either.[1] They've eaten some large expenses in the last 2 years (KC-46 tanker cost overrun, Advanced Super Hornet development program) and probably others. I don't believe there is significant cash flow over to Boeing Commercial Aircraft. There is exceptions like the KC-46 and P-8, but most programs are Boeing Defense only with almost no crossover.

The Boeing 737NG line is probably their most profitable product overall. That is from Boeing Commercial Aircraft.

Some financials for your reference [1] http://boeing.mediaroom.com/index.php?s=20295&item=128736

"Boeing Defense doesn't make a whole lot of surplus cash either"

It does give you economies of scale in the sense that any larger company gains purchasing power and for that matter visibility (and political power) by employing more people.

The US ExIm bank also provides billions in either direct loans or loan guarantees to foreign companies; this keeps the export market artificially high and effectively subsidises non-US operators and lessors too.

... And all of Airbus's blueprints, courtesy of the NSA.

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