Competition Between Boeing And Airbus

1. Introduction

In the Aviation Industry, there have always been various airframe producers which where competing against each other. Throughout the years, two of them gained the majority of the market share. These two companies are Boeing and Airbus. The American company Boeing has been the market leader for a very long period of time, until Airbus outrunned them for the first time in 2002.

The following paper deals with the History and the development of the competition between the two companies. It will give a brief overview of the different company objections and future market outlooks in relation to the new A380 and Boeing 787 “Dreamliner”.

2. The History of the competition

When William. E. Boeing founded the Boeing Airplane Company, it mainly build small Sport- and Military airplanes. During the Second World War the Aviation Industry grew tremendously. Boeing developed Bombers for the United States, for example the B-29, and helped them to reach supremacy in the air. After the war was over, the company made use of their gained experiences to start building airplanes for the civil air traffic. After already introducing the air-pressure-cabin, Boeing presented the 707, the first Jet-Airplane.

On April 31, 1966 Boeing decided to build an airplane with a capacity for up to 490 people, the Boeing 747. Three years later already, the first “Jumbo” was flying and, like its predecessors it became a huge success for the Boeing Company.

The History of Airbus is a much more recent one. After France and Germany worked on some projects together during the sixties, Airbus Industries was founded in cooperation with the British “Hawker and Sittley” company and the Dutch/German “Fokker” company in 1970. The biggest difference to Boeing was that Airbus allocated their production plants at different locations in France and Germany in order to work more time efficient and support the economy within the areas.

When in 1972 the first Airbus A300 was flying, the company went through a crisis because it couldn’t sell enough airplanes in order to be profitable. Between 1971 and 1977 they only received 33 orders for their airplanes, the same amount Boeing produced in 35 days at that time. But then in 1978, due to positive word of mouth from the airlines which already flew the A300, Airbus received 53 fixed orders and another 41 optional orders. This was the changing point of the company. In 1977 also the British, who up to then backed out of the cooperation due to pressure from the US government, joined Airbus Industries. In 1984 Airbus announced that it would build a new model, the A320, which was seen as a competitor for the Boeing 737. Compared to its competitor, the A320 was much more economical due to, for example, fiber construction and the new Fly-by-Wire-System.

Between 1988 and 1998 Airbus Industries build eight different short- and long-haul aircrafts. A revolution was that all their airplanes, except the A300 and A310 series, had the same cockpit. This made it much easier for the pilots to be flexible between the different types of aircrafts and was therefore again a big advantage for the airlines due to operating costs.

Starting 1998 up to the year 2000, Airbus could win over such companies as CASA, Messerschmidt-BÐ"¶lkow-Blohm, and DaimlerChrysler Aerospace AG for the EADS association in order to be competitive in areas like military, transportation, and space.

In 2001 the Europeans announced that they want to build the biggest passenger aircraft, the A380, which would be bigger than the Boeing 747 but on the other side could be used with 10-15% less operating costs compared to the Boeing flagship.

Within the competition, Airbus recently gained 50% of the market share world wide and in 2002, for the first time, sold more airplanes than Boeing. Airbus therefore took over the world wide leading position from the Americans for the first time in the History of the two companies.

3. Current situation of the Competition

The most important difference in the current situation between the two companies is their view of the future trend of the Aviation Business. There are two alternatives which can be summarized as follows:

First of all, the Hub-and-Spoke system. Here feeder flights from various small airports bring the passengers to a Hub, where they will be put into a big airplane and taken to their final destination.

The other possibility is the Point-to-Point traffic, in this case the demand for long haul traffic would increase and nonstop destinations even between smaller airports would be offered.

3.1. The Airbus business model

The A380

Overall Length Overall Length

Cabin Length 50.68 Meters

Fuselage Width 7.14 Meters

Height 24.1 Meters

Wingspan (geometric) 79.8 Meters

Number of engines 4

Choice of engines Trent 900 or GP 7200

Range (with max. passengers) 15000 Km

Typical cruise speed M 0.85

Max. operating Speed M 0.89

Max. payload (structural) 84 Tones

Typical seating (three class config.) 555 passengers

Table 1: http://www.airbus.com/en/aircraftfamilies/a380/a380/specifications.html

By starting to build the A380, Airbus now concentrates mainly on the Hub-and-Spoke system. The airplane will be able to transport between 555 and 800 passengers, and is going to serve long haul flights between Hubs all over the world. In addition it is possible to operate the A380 with much less costs than the 747-400. This will be especially very profitable in, for example the Asian market, where the demand is much higher than the available slot capacity. Therefore it would be really lucrative for Asian carriers to be able to fly a big amount of passengers at the same time and increase the daily frequency on a certain route. Airbus forecasts say that there will be a demand for 1600 A380s over the next 20 years which mainly focuses on the Asian market where China is seen as the country with the most growing potential.

In