Competition between Airbus and Boeing

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Airbus v. Boeing

Competition between Airbus and Boeing is a result of the two companies' domination of the large jet airliner market since the 1980s, which is itself a consequence of numerous corporate failures and mergers within the global aerospace industry over the years. Airbus began its life as a consortium, whereas Boeing took over its former arch-rival, McDonnell Douglas, in 1997. Other manufacturers, such as Lockheed and Convair, have pulled out of the civil aviation market after disappointing sales figures, while the collapse of the Eastern Bloc circa 1990 has put the Soviet aircraft industry in a disadvantaged position. All this has left Boeing and Airbus in a near-duopoly in the global market for large commercial jets comprising narrow-body aircraft, wide-body aircraft and jumbo jets.

The two companies received about 5200 (Airbus 5276, Boeing 5214: [1]) orders each in the decade between 1997 and 2006, and they fight for the best commercial figures every year. So intense is the competition between them that each company regularly accuses the other of receiving unfair state aid from their respective governments.

[edit] Orders and deliveries

Orders

	2008	2007	2006	2005	2004	2003	2002	2001	2000	1999	1998	1997	1996	1995	1994	1993	1992	1991	1990	1989
Airbus	435	1341	824	1111	370	284	300	375	520	476	556	460	326	106	125	38	136	101	404	421
Boeing	418	1413	1044	1002	272	239	251	314	588	355	606	543	708	441	125	236	266	273	533	716
Sources 2008: Airbus orders until May 31: http://www.airbus.com/en/corporate/orders_and_deliveries/ Boeing orders until June 3. http://active.boeing.com/commercial/orders/index.cfm

Deliveries

	2008	2007	2006	2005	2004	2003	2002	2001	2000	1999	1998	1997	1996	1995	1994	1993	1992	1991	1990	1989	Sum
Airbus	201	453	434	378	320	305	303	325	311	294	229	182	126	124	123	138	157	163	95	105	4727
Boeing	195	441	398	290	285	281	381	527	491	620	563	375	271	256	312	409	572	606	527	402	8162
Sources 2008: Airbus deliveries until May 31: http://www.airbus.com/en/corporate/orders_and_deliveries/ Boeing deliveries until May 31. http://active.boeing.com/commercial/orders/index.cfm?content=displaystandardreport.cfm&optReportType=CurYrDelv

Yearly orders.

Yearly deliveries.

Orders/Deliveries overlay.

Since the 1970s Boeing has faced increasing competition from Airbus which has expanded its family of aircraft to the point where it now markets aircraft to rival most Boeing products. Indeed, Airbus is now competing in markets that Boeing once dominated, and in 2003 delivered more planes than Boeing for the first time - and has done so every year since. Boeing won more orders in 2006 and 2007, while Airbus won a greater share of orders in 2001 - 2004. In 2005 Airbus won more orders by number but Boeing won 55% by value.

The A320 has been selected by several low-cost operators, gaining ground against the previously well established 737 in this sector; and after 40 years the A380 now challenges the Boeing 747's dominance of the very large aircraft market. The 747-8 is a stretched and updated version of the venerable 747-400 and will offer greater fuel efficiency and longer range. Frequent delays to the Airbus A380 program caused several customers to consider cancelling their orders in favour of the refreshed 747-8^[1], although none has yet done so and some have even placed repeat orders for the A380. However, all A380F orders have been cancelled. To date, Boeing has secured orders for 105 747-8 with first delivery scheduled for 2009, while Airbus have orders for 193 A380s, the first of which entered service in 2007.

Several Boeing projects were pursued and then cancelled, like the Sonic Cruiser, launched in 2001. Boeing is now focused on the 787 Dreamliner as a platform of total fleet rejuvenation, which uses technology from the Sonic Cruiser concept. Despite having been delayed by nine months, the 787 is the fastest selling wide body airliner in history. The 787's rapid sales success and pressure from potential customers forced Airbus to revise the design of its competing A350, although it still lags behind in development and orders.

In 2004, Boeing ended production of the 757 after 1055 were produced. More advanced, stretched versions of the 737 were beginning to compete against the 757, and the new 787-3 will fill some of the top end of the 757 market. Also that year, Boeing announced that the 717, the last civil aircraft to be designed by McDonnell Douglas, would cease production in 2006. The 767 was in danger of cancellation as well, with the 787 replacing it, but recent orders for the freighter version have extended the program. If Boeing wins the contract for new USAF tankers, the 767 program will continue for years to come.

Recently, Boeing launched five new variants of existing designs: the ultra-long-range 777-200LR, 737-900ER, 737-700ER, 777 Freighter and the 747-8. The 777-200LR has the longest range of any commercial aircraft and was first delivered in 2006. The 737-900ER and 737-700ER will extend the range of the -900 and -700 models. Due to rising fuel costs, the more efficient twinjet 777 has been winning orders at the expense of the four-engined A340.

There are around 4,915 (March 31, 2008) Airbus aircraft in service, with Airbus managing to win nearly 50 per cent of aircraft orders in recent years. Airbus products are still outnumbered by in-service Boeings (there are about 4,495 Boeing 737s alone in service^[2], about 13,000 total^[3]). This however is indicative of historical success - Airbus made a late entry into the modern jet airliner market (1972 vs. 1958 for Boeing).

[edit] Product development

The Boeing 787 (above) will compete with the Airbus A350 on the medium to long range market.

[edit] Subsidies

Boeing has continually protested over launch aid in form of credits to Airbus, while Airbus has argued that Boeing receives illegal subsidies through military and research contracts and tax breaks.

In July 2004 Harry Stonecipher (then-Boeing CEO) accused Airbus of abusing a 1992 bilateral EU-US agreement providing for disciplines for large civil aircraft support from governments. Airbus is given reimbursable launch investment (RLI, called "launch aid" by the US) from European governments with the money being paid back with interest, plus indefinite royalties if the aircraft is a commercial success^[4]. Airbus contends that this system is fully compliant with the 1992 agreement and WTO rules. The agreement allows up to 33 per cent of the programme cost to be met through government loans which are to be fully repaid within 17 years with interest and royalties. These loans are held at a minimum interest rate equal to the cost of government borrowing plus 0.25%, which would be below market rates available to Airbus without government support^[5]. Airbus claims that since the signature of the EU-U.S. Agreement in 1992, it has repaid European governments more than U.S.$6.7 billion and that this is 40% more than it has received.

Airbus argues that the pork barrel military contracts awarded to Boeing (the second largest U.S. defense contractor) are in effect a form of subsidy (see the Boeing KC-767/EADS KC-45 military contracting controversy). The significant U.S. government support of technology development via NASA also provides significant support to Boeing, as does the large tax breaks offered to Boeing which some claim are in violation of the 1992 agreement and WTO rules. In its recent products such as the 787, Boeing has also been offered substantial support from local and state governments^[6].

In January 2005 the European Union and United States trade representatives, Peter Mandelson and Robert Zoellick (since replaced by Rob Portman) respectively, agreed to talks aimed at resolving the increasing tensions. These talks were not successful with the dispute becoming more acrimonious rather than approaching a settlement.

[edit] World Trade Organization litigation

Portman (from the USA) and Mandelson (from the EU) issued a joint statement stating: "We remain united in our determination that this dispute shall not affect our cooperation on wider bilateral and multilateral trade issues. We have worked together well so far, and intend to continue to do so."

Tensions increased by the support for the Airbus A380 have erupted into a potential trade war due to the upcoming launch of the Airbus A350. Airbus would ideally like the A350 programme to be launched with the help of state loans covering a third of the development costs although it has stated it will launch without these loans if required. The A350 will compete with Boeing's most successful project in recent years, the 787 Dreamliner.

 

The Airbus A380 (525 seats in 3 class, 863 all economy) and the Boeing 747 (467 seats in a 3 class configuration) are the equivalent long range high capacity aircraft from the two corporations.

EU trade officials are questioning the funding provided by NASA, the Department of Defense (in particular in the form of R&D contracts that benefited Boeing) as well as funding from US states (in particular the State of Washington, the State of Kansas and the State of Illinois) for the launch of Boeing aircraft, in particular the 787.

[edit] Range overlap

Though both manufacturers have a broad product range in various segments from single-aisle to wide-body, both manufacturers' offerings do not always compete head-to-head; instead as listed below they respond with models a bit smaller or a bit bigger than the other in order to plug any holes in demand and achieve a better edge.

• The A380, for example, is bigger than the 747.
• The A350 XWB competes with the high end of the 777 and the low end of the 787.
• The A320 is bigger than the 737-700 but smaller than the 737-800.
• The A321 is bigger than the 737-900 but smaller than the previous 757-200.
• The smaller A330-200 competes with the 767

Airlines can use this as a benefit since they get a more complete product range from 100 seats to 500 seats than if both companies offered identical aircraft.

[edit] Passengers/range (km) for all models

[edit] Airbus A320 vs Boeing 737

[edit] Airbus A330 vs Boeing 767 or Boeing 777

[edit] Airbus A350 XWB vs Boeing 787 and 777

[edit] Airbus A380 vs Boeing 747

Fuselage-comparison between Airbus A380 and front-section of Boeing 747

[edit] A330 MRTT - KC-45A

In March 2008 the announcement that Boeing had lost a $40bn contract to Airbus to build parts for the new in-flight refuelling aircraft KC-45A for the USAF drew angry protests in Congress.^[24]

[edit] EADS A330 MRTT - Northrop Grumman KC 45 A versus Boeing KC-767

[edit] References

[edit] See also

• Boeing
  • Boeing Commercial Airplanes
• EADS
  • Airbus

[edit] External links

• Official Airbus Website
• Official Airbus Military website
• Complete production lists of all Airbus models
• Official Boeing Website
• Seatguru: Airplane seating chart for many Airlines and Boeings, Airbusses and others
• BBC Q&A: Boeing and Airbus

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