BAe urges state backing for Concorde successor: Race is on for new supersonic airliner

British Aerospace is on a collision course with the Government over its demands for taxpayers' support for a replacement for Concorde. The company said public money was necessary if UK industry was to benefit from the project to build the new supersonic jet.

It announced yesterday it was forming the European Supersonic Research Programme (ESRP) with Aerospatiale of France and Deutsche Aerospace, part of Daimler- Benz, to intensify research into a new aircraft.

Industry sources say the three companies believe they must spend pounds 20m a year each if they are not to be left behind by the Americans on initial development work. They say the pounds 10bn-plus cost of the aircraft, combined with the limited market, will eventually force the Europeans, Americans and Japanese to collaborate, but that the ESRP must spend now if Europe is to win a sizeable share of the work. Final go-ahead for the aircraft will not be given for at least five years, and it is unlikely to be in service until 2010.

However, BAe, which is currently spending 'a handful of millions' on the project, wants the Government to contribute, as the French and German treasuries are. 'We are saying if we are to be competitive, we need government support,' a spokesman said. Nasa, the US federal agency, is spending almost dollars 200m ( pounds 140m) this year on supersonic research.

But Tim Sainsbury, the industry minister, said last month that the Government did not believe the aerospace industry should be given more help. A supersonic subsidy of pounds 10m or more would stretch the DTI's aerospace R&D budget, which is due to fall from pounds 26m to pounds 22m in the next five years.

BAe and Aerospatiale, the successors to the original makers of Concorde, have been carrying out preliminary research on a replacement for four years. Last year a concept plane, which the French called Alliance, was displayed at the Paris Air Show, and the 'final concept' will be similar. It will carry 250 people, against Concorde's 100, and will be able to fly twice as far - 10,000km or 6,250 miles. This will allow it to fly from London to South-east Asia, or across the Pacific. It will have three classes, and ticket prices will not be substantially above subsonic levels. Top speed will be similar to Concorde: twice the speed of sound, or 1,350mph.

European engine makers, including Rolls-Royce, are working on new engines for the aircraft. Industry experts say they are likely to be variable-cycle engines, as used in the F22 fighter. At low speed they operate as a turbofan, which is more economical and quieter, but at higher speeds they become a full jet.

BAe estimates that there should be a market for between 500 and 1,000 aircraft, and agrees that there will not be room for more than one new aircraft.

Nasa said last year it expected to spend dollars 1.2bn over seven years on developing technology for a supersonic aircraft, which would have similar characteristics to the European proposal.

It is likely that at some stage these proposals will merge. The Nasa research is available only to US manufacturers. However, Boeing and McDonnell Douglas are members of a broad consortium, the Supersonic Study Group, which includes the ESRP as well as Italian, Japanese and Russian organisations. It meets twice a year to discuss issues such as environmental impact and likely demand. The final design is likely to combine Nasa's research with input from the other SSG members.

Concorde was developed in a similar way. The UK and France started work separately in 1956, but merged their efforts in 1962 because their original concepts were so similar. However, the aircraft, which has only 100 seats, was never commercially successful: the oil price rises of the early Seventies meant it could never repay its pounds 2.5bn development costs, which were written off by the two governments. American airlines, faced with environmental opposition to the plane, refused to buy it and only 16 were built. Concorde first flew commercially in 1972, and British Airways and Air France now make a small operating profit on its transatlantic and special excursion services.

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