Introduction
Boeing and Airbus are the two major aircraft manufacturers in the world, with their rivalry starting in the 1990s, and as it intensified, they absorbed other plane making companies or forced them to exit the market. Airbus, being a European consortium of companies headquartered in Toulouse France is the leading airplane manufacturer in Europe while Boeing is an American company which manufactures commercial and military aircraft, satellites, weapon and electronic defense systems among other tasks. On the other hand, COMAC is a Chinese state-owned limited liability company that is mainly the manufacturer of commercial aircraft for China and also for commercial purposes. COMAC is young in comparison with Airbus and Boeing as it was only established on 1st may 2008.
Rivalry of Airbus and Boeing
Boeing and Airbus are the two major global players in the aircraft production industry commanding more than 95% of the market. In the last five years, the companies have rivaled each other on various fronts. One of the fronts on which the two companies have competed in the last five years is the outsourcing for technologies and labor in making of their products. Boeing had for a long time been outsourcing for products with Mitsubishi and Kawasaki heavy industries and hence having an edge over their competitor Boeing, who were restricted by being a consortium of Europe hence had to make their products within Europe. However, in 2009, Boeing was successful in starting an assembly plant in Tianjin where it is currently producing its A320 series planes. This has placed both companies in an almost even scope for competition in the costs of labor as China and Japan are close in the range of wages offered.
Technology is another front on which the two giants have been competing in the recent times, with each of the two companies striving and heavily investing in technology to oust the other in the provision of better planes and hence go ahead in the market. Some of the areas where the companies have been seeking to have technological advancement include a reduction in fuel consumption, reduction in weight of the aircraft and also increase in the capacity of the aircraft. Another consideration on the technological front is the making of airplanes that befits the models of engines in supply by the major plane engine suppliers in the world namely General Electric, Pratt & Whitney, and Rolls-Royce. Often, the manufacturers of aircraft ensure that their models can use at least engines from two of the three manufacturers. On the other hand, engine manufacturers prefer to have plane manufacturing companies model their planes for one type of engine supplied by one company hence promoting deals that ensure a given model of airplanes will only use engines from a given supplier.
Aircraft costs, currency, and safety of airplanes are also fronts on which Airbus and Boeing continue to battle each other on. Boeing production costs are estimated and paid in terms of United States Dollars while Airbus mostly uses Euros in the production costs. Fluctuations in the exchange rates of the two currencies often result in changes in the costs of producing a plane and hence the market price of the same. Within the last five years, the American dollar has remained quite stable or sometimes even appreciating while the economic turbulence in Europe mixed with the rise in the number of refugees from Asia and Eastern Europe has contributed to the weak performance of the Euro. In terms of the prices for the aircraft, Boeing and Airbus are often engaged in a price war where the two companies despite publishing the prices for their products often sell them as low as fifty percent of the published prices. In terms of safety and quality, modern planes from the two companies are quite safe and of high quality. However, use of old models from the two companies such as Boeing 707 and Airbus A300 have a history of causing fatal accidents. One problem that has been detected in the last five years is the malfunctioning of the batteries of Boeing 787 Dreamliner but experts in the field have alluded that this is a minor problem that is in no way going to affect the sales of Boeing.
World trade organization created in 1995 was to oversee and control to do with trade and competition policies which involve anticompetitive policies. Different nation have different anti-trust and anti-dumping rules which can be related to Airbus and Boeing commercial aircraft giants. The United States, which manufactures Boeing aircraft, has greatly sensitized the issues to do with the internationalization of antitrust rules which would greatly reduce the ability to apply antitrust laws. Antitrust issues were greatly brought about by the trade deficit which occurred in 1986 where the import rose faster than the exports. The antitrust issues greatly affected the airline industry bringing up a fight between the United States and European nation. In reaction to the trade deficit, the European nations have greatly pushed for the relaxation of the antitrust policies for it to gain an advantage over other multinational companies that are headquartered in other nations. In order to solve the anticompetitive practices worldwide, the United States solved planned to form joint ventures. Through these practices, us firm that is undersold by foreign firms are likely to be charged for Dumping. In line with the formation of joint ventures, United States formed a merger between Boeing and McDonnell Douglas in 1997 which brought about a trade war with Airbus, the current manufacturers of Airbus. For the two rivals to be at a consensus US had to provide licenses to Airbus in America and also to give up all supply deals ("Antitrust and Competitiveness in a Global Economy", 2016).
Boeing's top brass have finally come clean about the options under evaluation for a counter attack against Airbus's A350-1000. According to Scott Carson, who is the airplanes Chief Executive, the best counter attack strategy was to have a double stretched 787-10, and a rewinged 777 in order to meet the customer demand and to meet competitive advantage. Secondly to achieve the competitive advantage the company has to increase in its timing to clients as it was the case in Qatar airways which are the big body clients of the A350 airplanes ("Boeing's A350 counter-attack too smart or too late", 2009). After the realization of development in technology in Boeing aircraft, According to airbus, Chief Commercial Officer John Leahy was “to put a hole in Boeings Christmas stockings”. By doing this, they had to ensure they concentrate more on the 200 and 300 seater planes which were currently in high demand in reflection to the 3,000 aircraft in the next 20 years. This proved to be working after they got their first A350 client, Spanish charter carrier Air Europa, who signed a commitment of over 10 aircraft ("A350: Airbus's counter-attack", 2005).
Following 40 years of China endeavoring to construct a national plane without achievement, recently framed COMAC has built up new organizations in the business, attempting to duplicate a model that has as of late ended up being fruitful for other cutting edge commercial ventures in China. In order to maintain a competitive advantage over Boeing and Airbus and keep local clients, the Government of china has stipulated policies that focus more on protectionism and have played a very important role in making COMAC a leader in the local market and also a potential global contender. In relation to marketing strategy, COMAC has come up with differentiation strategies in terms of advantage cost services which are not available in the other major competitors which are Boeing and Airbus. Additionally in order to protect its local market against Boeing and Airbus, China, the current holder of COMAC has formed a partnership with other companies in order to meet its competitive advantage. This is evident through the partnership formed between both companies Barbadian and Embraer with China. This joint alliance was created to cross-market their new, separate, single-aisle narrow-body jets in emerging and mature markets.
According to Ramamurti 2012, the best strategy that would be best for reaching the western market is to be able to reach out to the customer and understand their needs as far as transportation is concerned. This is possible through market differentiation where the company should put more concentration on customizing their planes to meet the customer’s objectives. As Ramamurti suggests, for a product to gain the customers interest should not dwell on the Western countries in purchasing or using their products as a prototype to manufacturing theirs. However, their concentration should be enabling the company to produce planes with features not available in the Western countries. In relation to meeting customer needs, Ramamurti also emphasizes the need to ensure that their cost of production remains to be as low as possible so that the customer needs can be met in the most effective way at a very low cost. Through the application of this strategy, COMAC will remain dominant over the other Aircraft big giants.
References
A350: Airbus's counter-attack. (2005). Flightglobal.com. Retrieved 27 April 2016, from https://www.flightglobal.com/news/articles/a350-airbus39s-counter-attack-193025/
Antitrust and Competitiveness in a Global Economy. (2016). Flatworldknowledge.com. Retrieved 27 April 2016, from http://www.flatworldknowledge.com/1.0/principles-microeconomics/chapter-16-antitrust-policy-an/antitrust-and-competitiveness-
Boeing's A350 counter-attack too smart or too late. (2009). Flightglobal.com. Retrieved 27 April 2016, from https://www.flightglobal.com/news/articles/boeings-a350-counter-attack-too-smart-or-too-late-328515/
