Topic Paper – Week 3
Industry Rivals: Boeing and Airbus Aircraft Market Competitors
BUSN 6120, Managerial Economics
Fall 1, 2010
Submission Date: September 4th, 2010
CERTIFICATE OF AUTHORSHIP: I certify that I am the author. I have cited all sources from which I used data, ideas, or words, either quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course.
The aircraft industry is a unique market. It is defined as being a duopoly, which is a market in which two companies producing a similar type of product have control over the market. In the aircraft industry Boeing and Airbus are the largest competitors and both companies fight intense battles for every major order of commercial aircrafts.
There are several major differences among the two aircraft companies which include their products, production, technology and outsourcing, and military presence. Airbus has spent more than $15 billion on the development of the "Superjumbo" Airbus A380, which seats 550 passengers. Thus far over 5 million people have flown on the A380 since 2007. They bet on the concept that consumers would fly from one hub to the next in the big spacious plane with unsurpassed leg room and cabin space and then take a smaller plane to their final destination. So if one had to fly from St. Louis, MO to Edinburgh, Scotland consumers would take a small plane like the Airbus A320 to New York City, fly on the A380 to London, and then take another smaller plane from London to Edinburgh.
Boeing thought that this idea was flawed and consumers would rather fly directly from St. Louis, MO to Edinburgh and therefore, they went for a slightly smaller plane, but a plane that had a longer range, and lower operating costs....