Boeing versus Airbus

One of the subjects of consultation of President Sarkosy with the German Chancellor was to compare and adjust their notes for an action on the holding company of EADS. The two countries main shareholders of EADS have to get their act right as their actions will have an impact on the work force of each country. Besides the fierce competition of the aircraft manufactures could well be fiercest of the many competitions between the US and the EU. China & Dubai will be investing in Airbus. Much is at stake.

There have been a couple of books written on the Boeing Airbus rivalry. Flight of the titans (2005), Boeing versus Airbus (2006) are the recent books. I read through the summary of the 2006 book written by John Newhouse, the prolific author and former columnist of a renowned American newspaper: The Newyorker.

Who will ultimately win the battle? And which battle are they fighting?

Is it the battle of the survival of the firms? Much has to be said about the financial structure of each company and the support given by the respective governments. On the one hand, the US had accused the Europeans to subsidize Airbus on the other technological break through researched and paid by the NASA are used by Boeing. Conveniently, Boeing is also a manufacturer of strategic aircraft for the military.

Will the battle then be about market share?

At this stage, it would appear that the strategic decisions taken by each company are different. Seattle-based Boeing didn’t want the super-jumbo jet to carry fewer than 600 passengers, so that it could preserve the market for any expanded version of its 747 jumbo jets, which have a current maximum capacity of 420 seats…Some Airbus members wanted any joint US-European line of super jumbo jets to begin with a 500-seat version to prevent Boeing from increasing its own overall share of all airliner markets.

The two firms also disagreed at a fundamental level about future demand dynamics. Boeing maintained that increased fragmentation in the form of point-to-point travel would solve the problem of congestion at major airports. Airbus, on the other hand,believed that hub-to-hub travel, particularly at the major airports in London, New York,Los Angeles, and Tokyo would continue to grow. While it agreed with Boeing that some increases in fragmentation and frequency would occur, it did not believe that theyrepresented long-term solutions to increasing travel, especially at major hubs in Asia. Asa result, Airbus saw the development of airplanes with greater capacity as essential.

At any rate, once their collaboration ended, both competitors reverted to independent efforts in this product space. Airbus quickly set up a Large Aircraft Decision to pursue the market opportunity in VLA. Thus in 2008 the Airbus 380 will be on stream. And for its part, Boeing considered two updated and “stretched” versions of its popular 747 jumbo jet, the 747-500X holding up to 490 passengers and the 747-600X holding up to 550 passengers, at a total cost of $5to $7 billion. Boeing is also pursuing its efforts and energies in a more efficient and ecology efficient aircraft, the dream liner 787 using new engines and new material for the aircraft body.

It looks like now and in the future Boeing is ahead in market share, and ahead in the game of the future which will be a more efficient and pollution friendlier technology. Whilst Airbus battle ground is still on today’s turf it looks as if Boeing is furrowing in the new rules of the Future, the fuel efficient aircraft and reduced pollution.