The civil aircraft industry is the stuff of legends. The cost and complexity of building a large commercial airplane sets this industry apart from most others, so much so that the Boeing Company would likely enjoy a monopoly were it not for Europe's efforts to overrule the market. Unwilling to concede this commercial rivalry to the Americans, the four Airbus states have spent lavishly on their national champions, battling for market share in an industry that is widely regarded as the “crown jewel” of high technology. Incumbency, however, has hardly bred apathy on the part of the United States, since even Boeing “bets the store” on each new airplane. Governments on both sides of the Atlantic have, in fact, invested greater resources fighting for civil aircraft than for most other high-technology industries. Yet both sides have also gone out of their way to negotiate agreements to bring this commercial rivalry back from the brink of a trade war. This chapter seeks to explain why.

In the aftermath of World War II, numerous firms entered the market for civil aircraft. Military contractors readily diversified into commercial production, given commonalties in design. The economics of a maturing airline industry changed all this: carriers needed low-maintenance airplanes capable of servicing routes at home and abroad, whereas the military placed increasing emphasis on “performance at all cost.” One implication of this greater product differentiation was that civil aircraft firms were less able to count on the “spin-offs” from the military side of the business to ease their financial burden.