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Writer's pictureYash B

The Aerospace Industry's Biggest Rivalry


From aviation.stackexchange.com

Boeing was founded in the year 1916 by William Edward Boeing and enjoyed a monopoly in the aviation market for fifty-four years until its greatest competitor, Airbus, was founded in the year 1970 by Franz Josef Strauss, Henri Ziegler, Felix Kracht, Bernard Lathière and Roger Béteille. Both companies’ business sectors are organized around three main groups of products and services—commercial airplanes, military airplanes and missiles, and space and communications. Prior to and during World War II, Boeing built several famous commercial aircraft, such as the Model 247 twin-engine monoplane, the Model 314 flying boat (one of Pan American’s Clipper-class aircraft), and the Model 307 Stratoliner, the first airliner with a pressurized cabin.

Even though Boeing receives exclusive contracts from the US military and government, Airbus doesn’t fail to compete in that area either. Although they may not produce a wide range of military aircraft as Boeing does, there are a few notable mentions like the Airbus A400M, CASA C-212 Aviocar, EADS CASA C-295, etc.

There are many factors that should be considered when we talk about the growth or market share of each company and discuss which company is doing better. First being the privileges they have because of their government, as mentioned before Boeing receives a large number of contracts from the US military and government which in return yields then millions of dollars. On the other hand, Airbus doesn’t receive such a large number of orders from their government.

The second factor to consider is where they manufacture their products, Boeing builds most of its planes internationally where products may be cheaper or closer to their customers and then finish them in America, for example, the 787 Dreamliner is heavily built in Japan. In contrast, Airbus, thanks to its European founders, is highly restricted to only use European suppliers and manufacturers. This means that most of their airplanes are built and completed exclusively in Europe.

The third factor taken into account is the subsidies received by the government. Airbus receives unfair tax breaks and government subsidies in the form of government orders. (A subsidy is a transfer of money from the government to a firm that leads to a fall in the price of the subsidized product and a tax break is when the government offers a firm a reduction in their taxes.) This allows Airbus to price their products much cheaper than they should be, as their cost of production was reduced due to the benefits they receive. Last but not least, currency plays a major role in this debate. As Boeing is an American based company, its production costs are mostly in United States dollars, whereas on the other hand, Airbus’s production costs are in Euros. When the dollar appreciates against the euro, the cost of producing a Boeing aircraft increases relative to the cost of producing an Airbus aircraft, and vice versa.

Both companies will continue to succeed in their own ways, although Boeing has a slight upper hand in the Defence and Security businesses, which will help them partially offset the competition. Airbus has come a long way and made the Aerospace and Defense industry much more competitive, and this competition has led to many innovations that have transformed the growing industry.


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