Boeing and Airbus : A Global Competitive Battle over

Supremacy in Producing Commercial Aircraft

Boeing has historically been a global leader in manufacturing commercial

airplanes . However , in 2001 , Airbus had more orders than Boeing for the first
time in their competitive history . But , in 2006 , Boeing regained its supremacy
with 1,044 versus 790 orders for commercial aircraft . The main turnaround in this
battle for competitor orders has been most visible in the super jumbo category
with Airbus’s A – 380 versus Boeing’s 787 .

Apparently in 1992 , Boeing and Airbus’s parent EADS agreed to a joint study on
prospects for a super jumbo aircraft . The impetus for the study was the growing
traffic in China and India . However , Airbus and Boeing reached different
conclusions concerning the market trends , and the joint effort was disbanded .

Boeing’s 787 Dreamliner design focused on long – range efficient flight , capable
of transporting 250 passengers , where as Airbus’s strategy focused on long - haul
flights with the A-380 offering 550-Plus seats . In their diverging strategies , Airbus
focused on flying to larger airports that use the hub – and – spoke system , whereas
Boeing concentrated more on a point to point system in which smaller airports are
more abundant . In reality , the Airbus A – 380 aircraft , on the other hand , can
land at many more airports around the world and the number is growing in
emerging economies , such as throughout Eastern Europe where smaller airports
desire international connections .

Airbus won the competitor battle that occurred between 201 and 2005 because it
focused on the midsized market as well , using the A-320 strategy , which competes
with Boeing’s 737 and 757 aircraft . The A – 320 was more efficient than the
aircraft used by Boeing , and Boeing did not respond to customer demands to
create new , efficient aircraft . In fact , it had slowed its innovation process in
regard to new models . Besides the lack of new models , the commercial aircraft
business was sluggish : new orders significantly ebbed due to the complications of
the terrorist attacks and the subsequent recession . It was a bleak time for Boeing
relative to Airbus .

More recently , Boeing’s strategy in regard to overall design with 787 Dreamliner
is winning the day , as far as the battle goes . It has realized success by implementing
a different strategy in regard to the production process . It has been able to speed
up the process by creating an efficient global supply chain that involves many
potential customers around the world . , including Japan , China , and others .
Moreover , Airbus is behind in its schedule to produce the A 380 and its midsized
plane , the A – 350 , has also had redesign issues . The midsized plane , the A -350 ,
has also had redesign issues . The midsized A – 350 , has also had redesign issues .
The midsized A-350 , compared to the Boeing 787 is behind schedule and Airbus
has had to provide significant incentive discounts to increase future orders .

Also , Airbus has been forced to produce of its plane parts in European countries
because governments have significant ownership and provide subsidies to
Airbus . Accordingly , these governments – Spain , France , Germany , and the
United Kingdom – want to maintain employment levels in these countries , and
thus Airbus must continue to produce primarily in European countries . “ Boeing
outsources 85 percent of the work for its 787 ‘ Dreamliner ‘ aircraft . The
corresponding figure for Airbus’s A 380 is 15 per cent . “ As a result of the design
and development delays , Airbus’s development costs for the A-380 have risen to
$14 billion versus the $8 billion invested by Boeing for the 787 .

In making its decision to move ahead with the 787 Dreamliner versus a more
jumbo aircraft comparable to the A-380 . Boeing made a more concerted effort in
connecting and getting input from its airline customers , as well as the ultimate
customers , the passengers . Overwhelmingly the passengers in particular , and
thereby the airlines , preferred smaller aircraft which would enable them to get
smaller airports quickly , without as many transfers on a point – to – point system .
Additionally , Boeing followed up with the ultimate creditors , the leasing agents ,
asked what they would prefer as far as risks were concerned . Again , the leasing
agents preferred a smaller aircraft which would reduce their risks in financing
versus the large super jumbo A-380 . These business level strategies have created an
obvious advantage in the near-term for Boeing .

Interestingly , Boeing only receives 50 per cent of its revenue from the commercial
aircraft division as a result of its diversification strategy . the other 50 per cent of its
revenue comes from military contracts , as well as business from space satellite
launching . Some crossover takes place in the technology used between military
aircraft and commercial aircraft , which indirectly contributes to lower commercial
aircraft development costs . This argument is used by Airbus when Boeing
confronts it regarding the subsidies from local European governments . the
ultimate battle will continue between these firms , but currently Boeing has the
winning edge and it looks like that will continue . Boeing’s orders are now so
plentiful , it will not be able to deliver all that are ordered in 2007 until the 2012 –
2013 range .

1. During which period , Boeing was second to Airbus ? How it happened ?

2. Which of the emerging markets were studied by leading manufacturers of
aircrafts ? What are their major strategies to capture those markets ?