aIRBUS AND bOEING: a cOMPARISON
Jeffrey Everette Hardee
A Paper Presented in Partial Fulfillment
of the Requirements for PUP 598 -
Air Transportation and Regulation
ARIZONA STATE UNIVERSITY
It may be argued that the next major challenge in the business of air transportation, beyond the invention of heavier-than-air flight and jet-powered planes, is the worldwide separation of the market between two mega-corporations. Airbus and Boeing currently dominate about 90% of the air transportation market with very few major competitors on the horizon. However, Canadian-based Bombardier is creeping up in its business jet market share of 27% (Bombardier press release, 12/4/2003). The competition between Airbus and Boeing, therefore, sets the overall tone for the air transportation industry at present and their decisions of future directions for their companies gives insight into the direction of the industry. However, Airbus and Boeing have recently diverged in their vision of the future of air travel as evidenced by their newest models in production, the A380 and the 7E7 respectively. An economic analysis of the Airbus-Boeing competition by Drs. Irwin and Pavcnik predicts that the A380 will further reduce the market share of Boeing’s 747 by 14.8% (Irwin & Pavcnik, 223). This analysis indicates that Airbus’ current market share will continue to dominate for the next decade while Boeing’s will continue to decline. If one also considers the present renegotiations of the 1992 US-EU subsidies agreement, aimed specifically at leveling the playing field between these two companies, the competition between Airbus and Boeing becomes far more than competing balance sheets. As corporations grow into international behemoths, their business concerns play a key role in the policy decisions of nation-states. Without another corporation to disrupt the polarization created by Airbus and Boeing, their competition may be characterized as that between the upstart European Union and the United States and their policies on the future air travel. Thus, a comparison of Airbus and Boeing, their histories, competition factors, and plans for the future, will provide insights into the globalization forces shaping air transportation and its future.
Airbus, headquartered in Toulouse, France, has quickly moved from the market newcomer to the market leader in air transportation since its integration as a single company in 2001. In 1988, Airbus controlled 16% of the market, climbing rapidly to 37% in 1996 (Dempsey & Gesell, 85). By 2004, however, Airbus has rocketed to over 50% of the market, delivering 305 jets in 2003, and signaling its major suppliers its intention to deliver 310 jets in 2004 and 400 jets in 2005 (Reuters, 9/8/2004). As an international company, yet with an integrated approach, it is no surprise that Airbus has had rapid growth even during the economic downturn of the late 1990’s - early 2000s. Airbus is benefiting from a broad-based customer focus as well as highly innovative designs. Its emphasis on environmental issues for its aircraft is one of the most telling aspects of its internationalism. However, Airbus’ first aircraft, the A300B, was debuted in the 1969 Paris air show. Since then the company has collected a number of ‘firsts’, like the A300 in 1972, the first twin-aisle, twin-engine commercial jet, the A300FFCC in 1982, the first forward facing crew cockpit in commercial aircraft, the A320 in 1988, the first ‘fly-by-wire’ commercial aircraft, and the upcoming A380 slated for operation in 2006, the first four-aisle, double-decker commercial aircraft (Airbus, Our Advantages).
Boeing, headquartered in Chicago, U.S., has emerged as a world leader of aircraft production after a series of mergers and purchases including such companies as Rockwell International (merger, 12/1996) McDonald Douglas (merger, 8/1/97), Hughes Electronics (purchase, 1/2000), Jeppesen Sanderson (purchase,...
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