Airbus and Boeing: a Comparison
aIRBUS AND bOEING: a cOMPARISON by Jeffrey Everette Hardee
A Paper Presented in Partial Fulfillment of the Requirements for PUP 598 -
Air Transportation and Regulation
ARIZONA STATE UNIVERSITY
September 2004 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
A Paper Presented in Partial Fulfillment of the Requirements for PUP 598 -
Air Transportation and Regulation
ARIZONA STATE UNIVERSITY
September 2004 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
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