Airbus and Boeing pursue divergent strategies

Aircraft Engineering and Aerospace Technology

ISSN: 0002-2667

Article publication date: 1 October 2004




(2004), "Airbus and Boeing pursue divergent strategies", Aircraft Engineering and Aerospace Technology, Vol. 76 No. 5.



Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited

Airbus and Boeing pursue divergent strategies

Airbus and Boeing pursue divergent strategies

Keywords: Airbus, Boeing, Aircraft, Production economics

A new study by Forecast International entitled “The World Market for Large Commercial Jet Transports,” has projected that a total of 5,835 large commercial jet transports will be produced between 2004 and 2013. The total value of this production, in constant 2004 US dollars, is estimated at $545 billion. Boeing and airbus are expected to account for the bulk of this production. Boeing production for the 10-year period is projected at 2,911 aircraft, while Airbus is forecast to build 2,778.

Following 3 years of mostly negative results, the airline industry is still struggling, but appears poised for recovery. This anticipated recovery may turn out to be slow and gradual, but nevertheless a sense of optimism seems to have taken hold in the airline industry.

Low-fare carriers continue to be a bright spot in the industry. This should continue to be the case during the anticipated recovery, although the major carriers should also see improved results. Starkly underlining the different near-term prospects of the two airline types, however, is the fact that many low-fare carriers anticipate strong profits in 2004 while the best that many majors can expect for the year is breakeven.

The majors are suffering from yield erosion due partly to competition from the low-fare airlines and, to some extent, from private corporate jets. Other difficulties include heavy competition among the majors and over capacity on long-haul international routes.

The outlooks of airbus and boeing on the future of the large commercial transport market diverge significantly, with each company developing a major new product that reflects its respective viewpoint. The A380 represents Airbus' view that airlines require a 550+-passenger aircraft for use mainly on dense trunk routes between major hubs. However, boeing's new mid-size 7E7 Dreamliner series reflects that company's view that route fragmentation will be the dominant trend in the market, with airlines requiring smaller aircraft to fly point-to-point. Neither company has announced any immediate plans to directly challenge the other's new program by marketing a similar aircraft.

Boeing formally launched the 7E7 program this week. After a series of shelved new product proposals, including the highly publicized Sonic Cruiser, Boeing's credibility in the market was on line with the 7E7 program. Forecast International's Senior Aerospace Analyst Raymond Jaworowski said, “If the 7E7 was never launched, Boeing's reputation with potential customers might have taken a serious hit.”

In the narrowbody market, Boeing's 737 series competes with the Airbus A320 single-aisle family. The A320 family does have one advantage over the 737 in that the A320 cabin is approximately 7in. wider than that of the boeing aircraft. This results in better passenger comfort, which is an important factor in the deliberations of airlines regarding what aircraft to buy. It would not be surprising if a boeing successor to the 737 has a wider cross-section than the current 737. Appearance of any 737 successor, though, is several years away.

Details available from: Forecast International. Tel: +1 203 426 0800; Fax: +1 203-426-6869.

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