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Boeing airbus case study
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Airlines all around the world have to look into different types of aircrafts that best fit their needs for their passengers and the distance between destinations. Boeing and Airbus, two of the world’s biggest commercial airplane manufactures in the world have been competing to get airlines attention on when they are looking to expand their airplane fleet. This competition has been characterized as a duopoly in the large airliner market since the early nineties has when a series of mergers in the aerospace manufacture industry merged or ceased operation. Today we have to look at both competitors to see who has best airplanes in the jet airliner market. Both Airbus and Boeing have a wide product spectrum ranging between wide and narrow body aircrafts covering many combinations of capacity and range. These two companies compete head to head with similar airplanes and styles. With the upcoming generation of young pilots coming into the aviation industry, the market needs high tech airplanes for airlines to buy to help this new generation move in to place. When airlines are looking at new planes to buy, they need to look at all the different types of planes that covers range and capacity. Airlines have to make a decision on what best fits their needs when deciding between a Boeing aircraft and an Airbus aircraft.
Boeing is a company that dates back almost a century ago in Seattle Washington by William Boeing. Back in 1916 when Boeing was founded, they manufactured sea planes right out of the Seattle bay. Twenty years later, Boeing’s revolutionary plane was introduced. The Boeing 247 was created and is considered to be the first modern airliner to fly around the world. Boeing operated the planes for commercial purposes. Boeing started u...
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...Geo) Again, the Boeing 747-8 wins for better price at $300 million when the Airbus A380 is priced at $318 million. For when it comes to the best at this category, Airbus offers the best wide range double decker aircraft in the market (Warwick, 2012) (aviatorjoe.net) (WILLIAMSON, 2013) (Frankfurt, Haria 2013) (James, 2013).
In the last 10 years (2003–2012), Airbus has received 7,714 orders while delivering 4,503, and Boeing has received 7,312 orders while delivering 4,091 (Aircraft Compare 2013). Even though competition is intense, each company regularly accuses the other of receiving unfair state aid from their respective governments. But what really matters is what fits the airline’s needs. For longer ranges, Airbus builds perfect aircrafts for that sector. It’s a tossup for the midrange sector, but then it comes to shorter ranges, Boeing seems to have best fit.
The new trend in airline industry to use fuel efficient, high -tech aircraft is of a major concern for Air Canada. It has been under immense pressure to replace its fleet aircraft with more efficient Boeing 777 aircraft. However, the airline has purchased some Boeing777 aircraft, but these new purchases are used only for more profitable international routes depriving Air Canada’s domestic consumers of the facility. Furthermore, the varied fuel price has affected pricing policy significantly as its promotional policies are more price point based as compare to consumer based.
It's expected that in the first few years, Boeing will incur more expenses than income. Revenues will come at a later date when the 7E7 planes are delivered. The project will have to be evaluated periodically and management will have to make changes to ensure that the company is profitable based on current and future conditions. The board's prerogative is not to give Airbus a profit sanctuary' by not accepting the project, but rather to maintain or increase its market in the industry even if it's not profitable in the short-run. Boeing has deep pockets and should be willing to challenge its competitors.
The Boeing Company originally started out as the Pacific Aero Products Co., which was founded on July 15, 1916. The name was changed about a year later to The Boeing Airplane Company. The Boeing Company stayed relatively small until World War I when they were selected by Navy officials to produce an order for 50 model C's planes for the war efforts. The company continued to prosper and by the late 1950s, Boeing President William Allen knew that the company had the scientists, the experience and the facilities to lead the company into uncharted territories. He was right, Boeing has emerged as the leading aerospace company in the world today.
The Boeing Corporation is one of the largest manufacturers in the world. Rivaled only by European giant Airbus in the aerospace industry, Boeing is a leader in research, design and manufacture of commercial jet airliners, for commercial, industrial and military customers. Despite enjoying immense success in its market and dominating an industry that solely recognizes engineering excellence, it is crucial for Boeing to ensure continued growth through consistent strategy formulation and execution to avoid falling behind in market share to close and coming rivals.
Boeing 787 Dreamliner was first announced to the public in January 2003 with approximated costs of five billion dollars , since the sales of the aircraft were high it was supposed to enter commercial service during 2008 but the building up of aircraft seemed more anticipated than expected , since the management decided to use composite materials as an alternative for traditional metals as composite materials are lighter , stronger , cheaper and also resistance to wild variety of chemical agents including acid rain and salt spray as these are the conditions under which metals suffer , Boeing also shared their views in development of air craft with suppliers which effected in a project significantly more anticipated than expected . More than three years later after the project exceeded the estimated budget at last 787 entered commercial service in September 2011.
The airline industry has long attempted to segment the air travel market in order to effectively target its constituents. The classic airline model consists of First Class, Business Class and Economy, and the demographics that make up the classes have both similarities and differences to the other classes. For instance there may be similarities between business class travellers on a particular flight, but they will not all be travelling for the same reason. An almost-universal characteristic of air travel is that customers do not fly for the sake of flying; the destination is the important element and the travel is a by-product, a means-to-an-end that involves the necessity of an aircraft that gets the customer from point A to point B. Because the reasons can differ greatly in the motivations for a customer wanting to fly, it can be difficult to divide the market into discrete segments, that is, there is always going to be overlap in the preferences and characteristics of any given segment. With that in mind, the commonalities that are shared between the clientele that make up the respective classes can easily withstand analysis.
Airbus and Boeing have developed similar capabilities, and an intense competition to be the number one in aviation. The market is a duopoly market, resulting in a low profit margin for both companies. There is slow industry growth in the aviation industry, and no clear market leader. The barrier to exit is high, which leads to intense rivalry between Airbus and Boeing.
The Boeing 737 is one of the most popular aircraft ever produced. Over 7700 in all variants have been produced, with an additional 11,275 aircraft on order. This makes the 737 the most popular jetliner to date. The 737 has a wide variety of uses, and still remains extremely popular and under high demand. Because it is such a widely mass produced aircraft, it is also a target for constant aerodynamic improvements. Boeing has looked at everything from the design of the anti-collision lights, to the reduction of small gaps in the airfoil. This has created an aircraft that is extremely aerodynamic and efficient at any task it performs.
Boeing/Airbus Case Analysis Competition in the Commercial Aircraft Business. With only a few large companies across the globe (Boeing, MD, and Airbus), the commercial aircraft industry essentially exhibits the qualities of an oligopolistic competition with intense rivalry. Here is an analysis of competition in the commercial aircraft business using Porter’s Five Forces. Figure 1: Porter’s Five Forces Applied to Aircraft Industry. Barrier to entry: - High barriers to entry, to a certain extent, help understand the risks involved in operating in the aircraft industry.
... Boeing has gained a reputation for its forward thinking approach to their business model. Boeing appears to be a company that isn’t afraid of risk because they understand nothing risked is nothing gained. In 2001, when the airline industry collapsed after 9/11, they could have folded their 737 division up or sold it off to a competitor, but instead they found a way to make it work, and make it work better than it had previously. During World War II, and the Korean War, Boeing’s innovation helped the US Armed Forces achieve their military goals, and at the same time positioned themselves as the major player in the defense business.
Airbus A380: How the Airlines Compare." Busineesstraveller.com. Panacea Publishing, 31 Aug. 2013. Web. 1 Dec. 2013.
In 1990 Boeing was set to introduce the 777, the world’s largest and longest haul twin-bodied jet at the time. The 777 would serve the medium and long haul markets like the expanding Asian market. Boeing’s main competitors, Airbus Industries and McDonnell Douglas, had already announced plans to produce airliners that would compete directly with the 777. Analysts believed that the intense competition between the manufacturers would serve to depress prices for the airliners. Lower prices for aircraft would mean lower earnings.
Michael, D. (2010, June 9).Emirate Airline Orders More Airbus Planes, Challenging Germany’s Lufthansa. The Wall Street Journal, p.B1.
Airplane – With the only two main airplane suppliers in the industry, Boeing and Airbus, gives EasyJet a low bargaining power making the suppliers to have a high power at determining what price to sell its airplanes, however, EasyJet can increase its bargaining power if it looks to buy in bulk due to the fact that it is internationalizing into Nigeria so the demand for airplanes would be high.
United Airlines is one of the largest airlines in the United States and worldwide. Also, it is ranked as the oldest commercial airline that was founded by Walter Varney. United Airlines started as an Air Mail Service and then extended its services to be an Air Carrier. In 1927, William Boeing started his own airline, Boeing Air Transport, and started buying any other air mail companies, which included the Varney’s Air Mail Company. After a while, Boeing started manufacturing aircraft and parts, which allowed him to extend his company to a bigger organization. Also, within Boeing’s company, he bought several airports to expand his organization. In 1929, Boeing’s company has changed its name to be United Aircraft and Transport Corp. (UATC).