Final Blog

What led to the Airbus-Boeing Duopoly?    

        

Prior to the 1990s, there were several manufacturers that produced large civilian jetliners such as Lockheed, McDonnel Douglas, and Boeing. Both Lockheed and McDonnel Douglas were known for their trijets, the L-1011 TriStar (Lockheed) and the DC-10 (McDonnel Douglas). Boeing was and still is known for their 7x7 series. Airbus was formed to compete with their American counterparts. European politicians did not want to risk losing hundreds of thousands of jobs and did not want European airlines to be entirely dependent on U.S manufacturers for new aircraft (Airbus, n.d.). Airbus’ first airliner was the A300 which made its first commercial flight from Paris to London on May 23, 1974. By the end of the decade, Airbus had delivered 81 A300 with multiple orders from other airlines. After 10 years since the creation of Airbus, they achieve 26% market share in dollar value (Airbus, n.d.) By the 1990’s, Airbus was an established name with a multitude of aircraft being manufactured such as the A320, A330, and A340, which can successfully compete with American manufacturers (Airbus, n.d.).

                By the 1990’s, there were several developments in the United States that ultimately led to the duopoly that Airbus and Boeing currently hold. One development was Lockheed’s withdrawal from the civilian market. Lockheed’s only civilian jetliner was the L-1011 TriStar which was plagued with several problems, one of which was its relationship with Rolls-Royce, the only engine manufacturer of the TriStar’s engines (Learmount, 2012). Rolls-Royce was experiencing financial problems in which the British government had to bail them out. In addition, Rolls-Royce had technical problems with the engine they designed for the TriStar (Learmount, 2012). Ultimately, because of the cost, Lockheed decided to pull out from the civilian market. McDonnel Douglas had suffered a series of financial setbacks. With Boeing and Airbus producing large volumes of jetliners, McDonnel Douglas was unable to keep up and with the erupt end of the Cold War, defense spending decreased. During this time McDonnel Douglas lost two defense contracts, thus ultimately leading to a buyout from Boeing (Pae, 2001). In August 1997, McDonnel Douglas merged with Boeing, thus leaving Boeing as the only U.S large body aircraft manufacturer. With the withdrawal and mergers that occurred since the 1990’s, Airbus and Boeing have dominated the large jetliner market. Nobody since has been able to break into the market with much success. However, it doesn’t mean that there aren’t companies that are trying. 

Which countries/companies are trying to break the duopoly?

                Recently, China’s COMAC (Commercial Aircraft Corporation of China) is hoping to break into the duopoly with the development of the C919, which is meant to compete with the Airbus A320neo and the Boeing 737 MAX (Govindasamy, 2016). Currently however, the C919 does not have FAA certification which makes it harder to sell the aircraft to foreign airlines, despite the fact that majority of the aircraft’s components are made in Western nations. Companies like United Technologies, Honeywell International are supplying the parts that consists of the C919, while its engines will be supplied by CFM International, a joint venture of General Electric and Snecma (Govindasamy, 2016). So far, the only operators of the C919 are Chinese airlines, because they are forced to buy due to government ownership of China’s airlines. Unfortunately for China, the C919 is not set for their first test flight until at least 2017 (Govindasamy, 2016). In addition, COMAC has bigger ambitions by teaming up with Russia to develop the C929, which is meant to compete with Airbus and Boeing’s wide-body jets. It is believed to have its first test flight between 2021 and 2022 with a service date of 2025 (Lin & Singer, 2015).

                Russia also has plans to break the duopoly. The United Aircraft Corporation, a joint stock company which consists of Russia’s more well-known aircraft manufacterers have been developing the MS-21, which they plan to market as a cheaper alternative to the Airbus A320 and Boeing 737 (Russia Today, 2011). The selling point of the MS-21 is that it claims that it is environmentally friendly and it has a 15% lower operating cost than their Western counterparts (Gusarov & Kuzmina, 2016). Similar to the COMAC C919, Western components have been incorporated into its design. The avionics, engines, and cabin interior, and etc. have been provided by Western companies. However, the United Aircraft Corporation have also been designing their own engines following European Aviation Safety Agency’s (EASA) approval which will be incorporated into a completely Russian aircraft (Pyadushkin, 2016).

                Two other companies trying to break the duopoly are Bombardier and Embraer. Both are known for their business and regional jets and both have been developing new aircraft. Bombardier has been developing their C-series aircraft, more specifically the CS-100. Recently, Bombardier received certification from both the FAA and EASA and is currently in service (Bombardier, 2016).  Embraer has been developing E2 jet series, which has been marketed as a smaller alternative to Airbus and Boeing (Sciaudone & Johnsson). It can seat up to 144 people and will feature new engines. It will also be bigger than any Embraer aircraft currently in service. The E2 is expected to enter service in 2019 which is also when the upgraded versions of the Airbus A320neo and Boeing 737 Max will enter service (Sciaudone & Johnsson).

Do I believe these new aircraft be successful in breaking the duopoly?

                I do not believe that the new aircraft being developed by various companies will be able to take a large portion of the large jetliner market. Both Airbus and Boeing are established names and have massive funds to develop and market their products. Companies like Bombardier and Embraer are also established by cannot compete directly with Airbus and Boeing, however by producing a smaller narrow-body jet, they have a better chance to sell their product than newer companies like COMAC and the United Aircraft Corporation. While newer companies have a more difficult time selling their product, they have the potential to steal a portion of the civilian jetliner market. Given the fact that, these new aircraft are marketed as a cheaper and supposedly a lower operating cost, airlines may be opt to purchase these new aircraft.      

References

Airbus. (n.d.). Early days (1967-1969). In Airbus. Retrieved December 12, 2016, from http://www.airbus.com/company/history/the-narrative/early-days-1967-1969/

Airbus. (n.d.). The family grows (1988-1991). In Airbus. Retrieved December 12, 2016, from http://www.airbus.com/company/history/the-narrative/the-family-grows-1988-1991/

Airbus. (n.d.). Champagne…and drought (1973-1977). In Airbus. Retrieved December 12, 2016, from http://www.airbus.com/company/history/the-narrative/champagneand-drought-1973-1977/

Bombardier. (2016, June 15). Bombardier CS100 aircraft awarded type validation by both the European Aviation Safety Agency and the Federal Aviation Administration. In Bombardier. Retrieved December 12, 2016, from http://www.bombardier.com/en/media/newsList/details.bombardier-cs100-aircraft-awarded-type-validation-by-both-the-eu.bombardiercom.html?

Govindasamy, S. (2016, February 23). China's Comac aims for first C919 flight by early 2017. In Reuters. Retrieved December 12, 2016, from http://www.reuters.com/article/us-coma-china-c-idUSKCN0VW110

Gusarov, R., & Kuzmina, Y. (2016, June 14). The new generation aircraft MC-21. In Russian Aviation. Retrieved December 12, 2016, from http://www.ruaviation.com/docs/3/2016/6/14/105/?h

Learmount, D. (2012, April 20). In focus: The TriStar heritage 40 years on. In FlightGlobal. Retrieved December 12, 2016, from https://www.flightglobal.com/news/articles/in-focus-the-tristar-heritage-40-years-on-369902/

Lin, J., & Singer, P. (2015, February 13). China and Russia join forces to build new jumbo jet. In Popular Science. Retrieved December 12, 2016, from http://www.popsci.com/china-and-russia-join-forces-build-new-jumbo-jet

Pae, P. (2001, February 22). Last plane out for aerospace pioneer. In LA Times. Retrieved December 12, 2016, from http://articles.latimes.com/2001/feb/22/business/fi-28719

Pyadushkin, M. (2016, July 12). Russia’s MC-21 airliner prepares for first flight. In Aviation Week. Retrieved December 12, 2016, from http://aviationweek.com/shownews/russia-s-mc-21-airliner-prepares-first-flight

Sciaudone, C., & Johnsson, J. (2014, April 10). Embraer’s Biggest jets nibble at Boeing-Airbus duopoly. In Bloomberg. Retrieved December 12, 2016, from https://www.bloomberg.com/news/articles/2014-04-10/embraer-s-biggest-jets-nibble-at-boeing-airbus-duopoly

Job Plans

                My job plan at the beginning of the course was to get a job in aviation and upon graduation look for a job in airport operations. My plans have changed a little. While I currently work in aviation as a deicer for ASIG, it is only temporary. Once the deicing season is approaching the end, I plan to look for another aviation job either in an airline or an FBO working on the ramp. I plan to do that for a least a year or two because I feel that I need to gain more experience working in aviation before I look for an entry level management position in airport operations. 

                My plan upon graduation is to finish the deicing season and get another job working for an FBO or an airline on the ramp while gaining my CM (Certified Member) from the AAAE. After working for an FBO or an airline for a year or two, I plan to look for a position as an Airport Operations Specialist at an airport authority or something similar. If I get a position in airport operations, I will go obtain my AAE certification. 

                The most useful topic we discussed are global airlines and the Export-Import Bank because there is a good chance that I will be working for an airline sometime in the future either on the ramp or management. Knowing how other airlines compete against U.S carriers and how foreign airlines acquire new Boring aircraft provides insight on how the aviation industry works internationally. I feel the least useful topic we discussed is commercial space because I feel that it is more of a bucket-list item than I viable means of transportation. I personally do not see any company providing transportation from point A to point B via space anytime soon.