Airbus and Boeing - The Duopoly in the Skies

When we think of planes and where they come from, the first thing that comes to mind are the two major companies, Boeing and Airbus. Together these two companies control 88% of the market share in short-haul operations and around 100% of the long-haul market share according to Flight Global.

Photo by Boeing

Boeing was founded in 1916, by William E. Boeing in Seattle, Washington, and throughout its life it has gone through a lot of different phases, in the early years it mostly produced military aircraft for the US armed forces, but soon began producing aircraft for mail delivery and civilian use, and also began to operate them as such. However, in 1934 the US passed the Air Mail Act that forced the company split into three smaller corporations, with Boeing continuing to produce airliners and the there after founded and named United Airlines and United Aircraft Corporation taking over mail deliveries and passenger flights.

The corporation continued in the following decades to produce more airliners both commercially and for military purposes, delivering the first 707 aircraft in 1958. This marked the beginning of the 7X7 series of commercial airlines that still stands to this day. Later on, in the 1990s it merged with its major American competitor the McDonnell Douglas company. Most recently in July 2018 Boeing announced a joint venture with the Brazilian Regional Jet company Embraer, following a number of lengthy discussions with the Brazilian government, taking up 80% of the commercial part of the company.

Photo by Airbus

Meanwhile Airbus is much younger, being founded by a coalition of three major European countries, Germany, France and the UK, at the Paris Air Show in 1969 to counter the growth of its American counterpart and to fulfill the public's growing desire of flying. Just like Boeing, Airbus also has both Military and Civilian divisions, however unlike Boeing, it started out with the main focus on Commercial Aviation, launching the A300 in October 1972, and revolutionizing the aviation market with it. In 1981 it launched a joint venture with Aeritalia (now Leonardo) to launch the ATR project and in October 2017, it purchased a 50.01% share on the Bombardier CSeries aircraft, thus entering the regional market.

So what does this all mean? What about the Chinese and the Russians? Why don’t we see any other startups entering the market? Why are these companies so dead set on competing but not overtaking each other? Even after a scandal such as the 737MAX situation that is still happening.

Well to put it simply, both companies prosper from this duopoly and from having a competitor. As we’ve witnessed these past few years both have seen great growth in sales as well as in stock price, and each drives the other to invest and further develop aircraft, while maintaining a certain level and not making too many advances and forcing its opponent to make forced and overpriced developments that could drive them to bankruptcy. Knowing your competition and what it plans and does in advance helps you know what you have to do to remain prominent in the market after all.

So what about the other companies? Well it takes a lot of capital to enter this industry, that’s why we don’t see any startup corporations just designing a new plane to compete and attempt to take over the market share. As we’ve witnessed before, the smaller companies like Bombardier and Embraer, tend to be swallowed up by the bigger manufacturers due their lack of funds and infrastructure to produce aircraft and compete in the market.

How about the other competition? Well, as for the Chinese COMAC, we are beginning to see their rise, with the COMAC C919 coming up to attempt to rival the A320 and 737MAX families. However even with this investment, it took the backing of a company like Ryanair to get the project off the ground, and considering that the Chinese market is one of the biggest and fastest growing ones worldwide, we might see a rise in sales for the COMAC in the coming years, and perhaps with this, the rise of a new competitor. As for the Russian Irkut Corporation, they are launching the MC-21 which is its first attempt to enter the market. However, it's clear that these state owned and dependent corporations are highly limited in what they can due to counter their major rivals in the west.

All in all, we can clearly see that even with the rise of the C919 and the MC-21, it’s unlikely that the Boeing-Airbus duopoly crashes down in the coming years. As for the further future, it’s hard to say, both companies have stated that they expect new competitors and are opened to this, so what do you think? Will we see the fall of this duopoly, or will the Russian and Chinese efforts end up failing to overtake market share in this competitive industry?


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