Boeing, Airbus Compete With Each Other And Emerging
Companies
A new study released by Forecast International projects that a
total of 11,844 large commercial jet transports will be produced
during the 10-year period from 2010 through 2019. The market
research firm estimates the value of this production at $1.41
trillion in constant 2010 U.S. dollars.
While it is no surprise that Airbus and Boeing account for over
98 percent of the forecast production, the study also indicates
that emerging competitors from China and Russia may begin to make
small inroads into the market by the end of the 10-year timeframe.
In addition, Canadian manufacturer Bombardier's new CSeries family
of 100-145 seat airliners will straddle the regional jet and large
airliner markets, directly competing with Airbus and Boeing
products.
Bombardier CS100 Regional Jet
Meanwhile, the world's airlines are struggling to return to
profitability after economic recession and collapsing air traffic
in late 2008 caused the airline industry to sink into a sea of red
ink. The good news is that air traffic, especially in the cargo
market, has been picking up since late 2009. This recovery has not
been uniform throughout the globe, though, as the European and
North American markets are lagging well behind such regions as the
Asia/Pacific and the Middle East.
Boeing B737
Against this backdrop of continuing economic weakness and a
still-struggling airline industry, Airbus and Boeing are facing two
big issues. Says Forecast International senior aerospace analyst
Raymond Jaworowski, "First, Airbus and Boeing have to determine how
best to adjust production rates in response to market conditions.
Second, they must decide on the scope and timing of new product
development efforts in the face of competition from each other and
new contenders such as the Bombardier CSeries."
Airbus A320
Throughout the market downturn, both Airbus and Boeing have been
fairly aggressive in keeping production rates high. While each made
some early adjustments to build rates, they have largely declined
to implement the deep production cuts, especially in narrowbody
production, that many observers have claimed are necessary. Indeed,
both companies recently announced upcoming increases in narrowbody
production.
Boeing 787
At the same time, Airbus and Boeing have critical decisions to
make regarding how best to reshape and refashion their product
lines to meet the needs of the future market. In response to
competition from the CSeries and others, Airbus and Boeing are
considering marketing their current narrowbody families with new
engines. Airbus appears more intent on this approach than does
Boeing, and Boeing has indicated that it might instead launch an
all-new narrowbody should Airbus re-engine its A320 single-aisle
series.
Airbus 350XWB Artist's Concept
Boeing also has a decision to make as to how best to respond to
Airbus' new A350 XWB. The XWB itself was a response to Boeing's new
787 Dreamliner. But rather than simply introduce a direct 787
competitor, Airbus ambitiously positioned the XWB to cover much of
the payload/range spectrum that Boeing covers with both the 787 and
the 777. Thus, Boeing has been mulling whether it needs to upgrade
or replace the 777 in order to stave off competition from the
XWB.
Boeing B777
These product development decisions will have long-term
consequences. As Jaworowski notes, "The product decisions that
Airbus and Boeing make over the next few months will have
reverberations for years to come."