When you step onto an aircraft, about to embark on a flight with a commercial airline today,
in any part of the world, chances are it will either be a Boeing or Airbus jet. Earlier players
in the commercial jet manufacturing arena have bowed out. Left standing now are the
two aerospace giants that seem so unshakable in their duopoly. Indeed, it’s easy to forget things
were ever different. Or indeed, to imagine that it could be any way else in the future.
So how come there are no real competitors
to Boeing and Airbus when it comes to commercial aircraft?
We know that China's COMAC is making a play at some domestic market share with the C919.
Meanwhile, sanction-riddled Russia also hopes to produce 1,000 homegrown jets by 2030 - but
this pretty much pales in comparison to the over 7,000 aircraft in Airbus' backlog at
the end of 2022, or for that matter Boeing's - at just over 4,500 units.
Embraer does well in the regional jet segment, which occupies 13% of the global
aircraft market. Furthermore, turboprops are an area to themselves, taking up 9%. However,
narrowbody and widebody jets make up 60% and 19% of the global fleet, respectively,
and here Boeing and Airbus reign supreme. So what are the key factors that make them so superior?
When it comes to building your own commercial aircraft, it essentially comes down to the
various factors that go into building and operating commercial aircraft. Here is a brief,
but not comprehensive, list of different factors that go into the high barrier to entry into the
aircraft manufacturing market and that the two companies have spent decades developing.
#1 is Expertise. All of these aircraft designs and their variants have been created from the ground
up or over years of research and development. For instance, the A320 was first announced in
1981 and only took off on its maiden flight in 1987. Meanwhile, the 777X variant of Boeing's
popular widebody was launched in 2013 but did not fly until 2020 (and has yet to enter service).
Airbus and Boeing both invest heavily in Research & Development and continuous development - but
even with substantial coffers to pull from, things do not always go according to plan.
#2 is Funding. Because it takes several years, if not decades,
to create an aircraft, new manufacturers would need plenty of funding before they
can even begin contemplating selling the plane to operators. The large players in the industry,
Airbus and Boeing, have a proven track record of delivering planes that airlines trust. As a
newcomer to the industry, it is almost impossible to get a presale without the jet already existing.
Third is Government lobbying. In the perfect marketplace, all companies would be able to
compete for the same customers. However, when one company employs thousands of people in specific
locations in a country, it can actually lobby the government to take action against new competitors.
As seen with the Boeing vs Bombardier case,
firms would also need to find a way to be able to sell the jets they are building.
#4 is Manufacturing. Just like you need money and expertise to design the aircraft,
you will also need a billion-dollar production facility and staff who know how to build them.
Unlike other businesses, you can't just get your jets made elsewhere as
it's such a specific industry. With this comes issues with establishing supply
chains, where Boeing and Airbus have established long-lasting partnerships.
Fifth is Regulatory approval. Aviation is the safest mode of transportation
available today, and certification of new aircraft is a rigorous process.
Having the experience of having gone through the procedure repeatedly is certainly an asset;
something startups do not possess. Aftermarket service and other issues.
Manufacturers do not just build and sell the planes, and then that's it.
Various problems could occur that they could be held accountable for, or at the very least,
shell out a significant amount of money on legal fees to deal with sources of contention,
such as the (somewhat surprisingly) amicably settled argument between
Airbus and Qatar Airways over the A350, or, the horrible scenario of two 737 MAX
jets crashing and causing the deaths of hundreds of people.
Furthermore, Airbus and Boeing both have the economy of scale on their side. With multiple
production facilities, they are able to produce large quantities of aircraft,
which lowers their per-unit production cost. This has allowed the pair of companies to
maintain competitive pricing and increase market share over time. This has resulted
in the two compete being neck-in-neck with each other over the past decade.
So what is going on with the other companies making planes in the shadow of the two big guns?
These days Canadian planemaker Bombardier makes small private jets in the marketplace - having
exited the regional aircraft sector in recent years. The Quebec firm notably overreached with
their CSeries program, which was seen by some as a serious rival to smaller Boeing
and Airbus jets. However, the development costs soared to $2 billion above budget.
When it came to selling its CSeries to the world, Boeing slapped an embargo via the US
government (thanks to aforementioned lobbying) and had the sale banned. Possibly thinking that
all hope was lost in winning its counterclaim against Boeing, Bombardier gave up 50% of the
A220 program to Airbus. This has resulted in the CSeries becoming the Airbus A220.
As with many successful smaller companies, the Brazilian jet maker known as Embraer was almost
scooped up by a larger competitor, namely Boeing. The American aerospace giant wanted
to buy Embraer, much as a response to the Airbus/Bombardier affair, but the Brazilian
government vetoed the sale as the company also made military jets for the South American nation.
The two did strike up a partnership agreement for a joint venture to sell Embraer commercial
jets under the Boeing name. However, things ended on a sour note when Boeing pulled out of the $4.2
billion deal which would have seen it acquire an 80% stake in Embraer's commercial jet division.
The joint venture deal was terminated in April 2020, as Boeing found itself
dealing with both the lengthy grounding of the 737 MAX and the fallout of the pandemic.
Recent years have seen Chinese aircraft manufacturing gather speed,
with COMAC at the forefront of development. The C919 narrowbody selling has been at the
forefront of this, performing well domestically with over 1,200 orders.
The jet seats 174 passengers in a single-class configuration, around the same as the Airbus
A320neo and Boeing 737 MAX-8. Furthermore, China is planning to produce around 150
jets per year in five years' time, as reported by Reuters in January.
Furthermore, it also has a regional jet, the ARJ21, seating up to 90 passengers.
COMAC also has a widebody project together with Russia,
the CRAIC CR929, which is planned as a competitor to the Boeing 787 Dreamliner.
The project has hit several snags on the way, and although it has reportedly entered
the initial design phase, it is unclear when mass production could get underway.
And finally, speaking of Russia, we cannot fail to mention the MC-21 - which despite substantial
hiccups, now looks to be a commercial success if nothing else than for the fact that Boeing
and Airbus aircraft are off the table for Russian carriers, who will be needing new
planes before long. The narrowbody will now only be available in an "import-substituted" version,
designated the MC-21-310. Well, that is one way of dealing with the duopoly, we suppose.
So there’s your rundown of the two manufacturing giants and why they’re
on top - as well as an explanation for why smaller companies have
yet to offer serious competition when it comes to larger aircraft.
Do you think a company like COMAC could eventually rival Boeing or Airbus in their
product offerings and scale of production? Or will there be too many economic or political
barriers for the chinese company to grow? Share your thoughts by leaving a comment!