There are only two airplane manufacturers
in the world that can deliver an order of a fleet of aircraft that seat 100 or
more passengers, Boeing and Airbus. This effectively makes the two companies a
duopoly. Nearly all of each company’s aircraft are in direct competition with
the opposite company’s offers, less some variants designed for specific
operations. Though born in different circumstances, these companies have a lot
in common. Boeing, started by Detroit’s own William Edward Boeing, has origins
nearly as old as aviation itself. Awed by the accomplishments of the Wright
brothers at Kitty Hawk, Boeing saw aviation as an opportunity for profit and
set out to build sturdy and reliable seaplanes (Boeing Aircraft Compny, 2013) . Through
acquisitions and the successful identification of needs within the aviation
industry, the Boeing Aircraft Company has become the powerhouse that is today.
Airbus was an idea brought to fruition by the European Aeronautic Defense and
Space Company (EADS) in the 1960’s, in response to Boeing’s successful use of
the aircraft jet turbine engine in its commercial airliners (EADS, 2013) . The increased power
and efficiency made available due to the advent of the jet engine was the
impetus that made large-scale passenger aircraft viable. The rest is
competitive history, and/or future.
This past week Airbus/EADS did
something that had not really ever happened in the Boeing vs. Airbus rivalry,
poached one of Boeing’s long time clients. Airbus was able to gain a Lion Air,
an Indonesian low-cost air carrier, fleet expansion contract. There is a lot of
speculation as to why Lion Air would suddenly switch over to Airbus. The likely
cause is that Airbus simply offered a more cost effective deal. In a CNN
article, Richard Aboulafia stated that the fact that Boeing has had problems
with the batteries in the new Dreamliner was not likely the cause for the
switch as most aircraft introductions have some minor, forgivable, glitches (Dubois, 2013) . The contract was
not a make or break sort of deal, but no company can lose many of its clients
to competitors without feeling some backlash. Both companies have their fingers
in many pots, and commercial aviation only makes up for about half of either
firm’s business. If one were to compare the values conveyed on either company’s
web pages, they would find the same sort of ideas, i.e. advancing technologies
in flight and aerospace. Military contracts are big in both company’s
respective portfolios, with this in mind advancing technologies is the
life-blood of both companies (EADS 2011 annual report) (Boeing
Company, 2013) .
It may be a good thing that these firms have the history in technology
development that they do, because there are new commercial airline companies
popping-up as the market for airliners gets larger.
The emergence of the regional jet
has changed the airline industry in many ways. These efficient smaller aircraft
have become the norm for short-distance air travel. As technologies improve,
regional jets are becoming more capable of longer distance flights. As these
aircraft begin to make their respective manufacturers money, the manufacturers
begin to think there is more to be made. In a report issued by Peder
Anderson, a member of the United States International Trade Commission, a
new development in civil aircraft manufacturing is highlighted, regional
aircraft manufacturers are looking to grow into large civil aircraft
manufacturers. Companies like Embraer, Bombardier, and the Commuter Aircraft
Company of China have begun to plan to build aircraft capable of carrying 100+
passengers (Anderson, 2009) . Duopoly no more!
What this will mean for the current big cheeses of the industry has yet to be
determined, but contract poaching will likely soon be the norm.
-Jay
Works Cited
Anderson, P. (2009). New Civil Aircraft
Manufacturers On The Horizon? Retrieved from usitc.gov:
http://www.usitc.gov/publications/332/Executive_Briefings/NewCivilAircraftExecutiveBriefing.pdf
Boeing Aircraft Compny. (2013). Boeing History Narrative. Retrieved
from boeing.com: http://www.boeing.com/boeing/history/
Boeing Company. (2013). Boeing 2012 Annual Report. Retrieved from
boeing.com:
http://www.boeing.com/companyoffices/financial/finreports/annual/2012/annual_report.pdf
Dubois, S. (2013, March 19). Boeing vs Airbus: Can't we all just get
along? Retrieved from cnn.com:
http://management.fortune.cnn.com/2013/03/19/boeing-airbus-lion-air/
EADS. (2013). Airbus History Narrative 1967-1969. Retrieved from
airbus.com: http://www.airbus.com/company/history/the-narrative/early-days-1967-1969/