Boeing and Airbus Rivalry – A Strategy Analysis and a Look into the future
Airbus and Boeing have been dominant players in the
commercial jetliner market since the last two decades and they have been
competing with each other producing safe and cost-efficient aircrafts. Airbus which
is backed by the European Union (EU) through subsides and Boeing which is based
in the USA form a good example of Oligopoly. It might take several years of
planning and large multi-nation financial backing for another major player to
compete with them. An analysis of their
strategic plans reveals the fundamental differences in their production
philosophy and also gives us an insight as to who is best poised to emerge as a
winner in this competition.
Boeing’s Strategy
1. Technology: Boeing has long been a supporter of
conventional flight control systems and built its 757 and 767 aircrafts using
this strategy. However, considering the cost advantages, the newer 777 and 787
models have implemented the fly-by-wire technology, increased flight automation
while at the same time giving the pilots the final say in overriding the
automatic flight controls limits.
2. Non-Stop Flight: Boeing believes the current air-travel
market is fragmenting and that customers want direct flights rather than
changing to smaller flights to reach their final destination. After analyzing
the profits and market trends for larger versions of 747, Boeing has opted out
of the Jumbo Airline market and built a more compact 787 Dreamliner.
3. Globalization in Production: In order to improve innovation in the organization at reduced
costs, Boeing has decided to outsource many of its operation to foreign firms
particularly in Japan and China. By offering these countries the task of
manufacturing aircraft components Boeing has been successful in taping into the
foreign markets. Boeing’s Dreamliner (787) model uses composite materials for
its light-weight fuselage and was manufactured by subassemblies across the globe.
Airbus on the other hand has started plants in the USA to gain more customer
base.
Airbus's Strategy :
1.
1.Technology(Who is flying the plane?): Airbus
first introduced the fly-by-wire control system in 1988.This system transmits
the pilots input to the flight control computer which then move the actuators
to provide the appropriate response .With the elimination of heavy electrical
cables, there were lower maintenance costs, smoother ride for passengers and
reduction in pilot’s workload. Airbus introduced flight envelope protection to
prevent pilots from making inputs that could endanger the aircraft. But these
advances have not been without accidents, and they required improvements in the
interface between pilot and computer system. For instance, in the Crash of Air
France Flight 447, the Airbus’s philosophy of removing mechanical control yoke
and adding a side stick contributed to the inability of crew to see what the
Pilot was doing and hence it might have contributed to the eventual crash into
the Atlantic Ocean.
2 2. The
adoption of risk-bearing contracts with other third party suppliers and
purchasers meant that foreign governments took a shared responsibility of the
manufacturing defects and in-turn helped
Airbus manage the supply chains.
3.Airbus has focused on creating Jumbo-jets which
carry more than 300 passengers, such as the A380, citing the higher traffic patterns
in the Asia-Pacific reason. This Strategy for mass commute may well work in the
favor of Airbus in the developing countries, where cheaper cost will be the key
factor in deciding on which flight to choose.
Conclusion – No
loser?
With the introduction of 747max Boeing has increased its
presence in the short-haul aircraft market which is dominated Airbus
(eg.A320neo).As the short haul aircrafts form the bulk of revenue for both
these companies, capturing this market will determine who gains the lead. The
two companies will continue their hard fought marketing battles and the
organization which incorporates a design philosophy based on the needs of the
passengers will determine who the leader is. The most important point this
rivalry has brought to the fore is that, Boeing and Airbus will have innovate
to compete in the
expanding airline market and they may continue to dominate in their own niche
markets.
References:
http://nyu.academia.edu/GiorgioBilli/Papers/1002325/Airbus_vs._Boeing_a_technology_strategy_analysis
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