The Two Big Boys, Or Is It Three, Or Four?

        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/