Essay on Airbus & Boeing

3946 Words Oct 30th, 2010 16 Pages
Airbus vs. Boeing
Stuart Taylor Chris Tillmanns November 13, 2002

The airline manufacturing industry consists of only two firms, Airbus in Toulouse, France and the Chicago-based Boeing. Two recent research and development moves at the two firms offer an insight into the positioning strategy that each is taking in the future market place. It seems the two firms are accenting two niche markets with a pair of flagship products, neither of which are in direct competition with each other. This will allow for the firms to stave off price competition in the short term by differentiating product lines, which is desirable given the recent increase in buyer power gained by lowcost airlines.

Current Market Position
Airbus controls
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They however, disagree on the path of the overall growth. Airbus places more emphasis on the markets between large hub cities and predicts that as airports reach traffic capacity, it will become necessary for airlines to fly as many passengers as possible in a single flight. Boeing, however, anticipates major growth in low cost point-to-point carriers and predicts that while higher
3 Anthony L Velocci Jr., “Sonic Cruiser Plans Secure, Despite Market Unknowns,” Aviation Week & Space Technology, April 15, 2002, 52. 4 Wong, “Boeing and Airbus Marking Their Turf.” 5 Aboulafia, “Airbus and Boeing Race to the Bottom,” 16. 6 Ibid., 16. 7 Ibid., 16.


capacity is desirable, the airlines will continue to augment large fleets with smaller aircraft that enable more frequent and quicker flights. As a result, Airbus foresees a large demand for very large aircraft to service major routes, while Boeing forecasts that most growth will come from single and twin aisle aircraft, to service connecting and point to point routes.

Proposed Aircraft
Slated to enter into operation in 2006, the Airbus A380 is a super jumbo jet capable of carrying 550 passengers, about 130 more passengers than the largest aircraft currently in service, the Boeing 747. The plane will have a range of 8,000nm, and offer operating costs 15-20% lower per seat than the 747. 8 The extensive size of the aircraft has led to Virgin Chairman Sir Richard Branson announcing “a new flying

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