Presentation On

Airbus 350 vs. Boeing 787Battle for the Skies

Prepared By:
Group C
Anisha Adhikari
(01)
Rishav Devkota
(09 )
Niraj Lekhak (21)
Shabnam
Maharjan (22)
Shradha

Objectives of the Case

Understand competition existing in a duopoly market

Understand demand and supply in the aviation industry

Analyse the competitive strategies
Analyse possible threats from various new entrants

Introduction to Duopoly
Market condition in which only two firms have dominant

control over a market

Most basic form of oligopoly (a market dominated by a
small number of companies).
Characteristics
Only Two firms in the industry
Uses Non-price competition to compete
Strong control over price
Strong Barriers to entry

Introduction to the Case

Established in 1970
Challenged Boeings
monopoly and gradually
changed market to duopoly
Backed by European Union

Established in 1916
By William Edward Boeing
Backed by US government
Enjoyed monopoly till
1970
Similarity

Equipped in manufacturing similar aircrafts like single aisle, long

range and wide body aircrafts
Aircraft Subsidies
Cause of dispute

What is Subsidy?
A benefit given by the

government to groups or
individuals usually in the form
of a cash payment or tax
reduction.
Generally given to support an
industry of public interest

Effects of subsidy on
Demand and Supply

Subsidy Issue between Airbus and Boeing

Claims of Airbus
Boeing being
subsidized by US
government

Claims of Boeing
Airbus being
subsidized by
EU
Solutions

1992- signed a bilateral agreement

-over the years ignored and bypassed by both
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Major Highlights of 1992 Bilateral

Agreement
Subsidies limited to 33% of the

total costs of developing a new

aircraft
Repay with interest within 17
years
Indirect subsidy limited to 3% of
nations LCA (Large Civil
Aircraft) turnover

Filing of cases against each other

Main reason:
2003- Sales of Airbus> Sales of Boeing
Continued in 2004

Boeing Against Airbus

To WTO for violating the 1992 bilateral agreement
Receiving unfair subsidies from EU

Airbus against Boeing

Unfair tax reduction from US government
Investment subsidies from Japanese Airlines

Verdict of the Case

Different verdicts have been given till now.
Appeals still going on
The twin subsidy cases at the WTO have already entered

the record books as the world's largest and costliest trade

dispute, with both sides claiming victory at every step.

Source:
http://en.terra.com/news/news/appeal_verdict_looms_in_aircraft_su
bsidy_dispute/act462770
Source:
http://en.terra.com/news/news/appeal_verdict_looms_in_aircraft_subs
10
idy_dispute/act462770

The Competition-For aircraft orders

Larger
A380
A320
Boeing 737-800

Smaller
Boeing 747
Boeing 737-700
A320

Benefactors

Airlines all
over the World
Common strategy adopted
Airbus
350 XWB -2007

Boeing
787 Dreamliner-2005
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Dreamliner-Boeing787
Take passengers where and when they want to go,

without intermediate stops

Provide utmost comfort to passengers
Make it simple and cost-effective for airlines to operate
Lighter than previous ones(using of composite material)
Fuel efficiency gave an edge for models saleability
Engines reducing noise pollution- environment+comfort
of passengers
Dreamliner is the most advanced and efficient airplane
in its class, one that will set new standards for
environmental leadership and passenger comfort
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Current Status of Sales and Orders

787 Dreamliner
1,105 orders from 58 customers as

of 2015
Entered commercial service on
October 26, 2011 with launch
customer All Nippon Airways
A total of 163 Boeing 787 aircraft
(all variants) were in airline
service as of July 2014
Source:
http://en.wikipedia.org/wiki/Boeing_787_Dreamliner
13

Airbus A350 XWB(2007)

To compete with Boeing
Improvised version of A330
Sales of A330 decreased due to introduction of 787
Customers did not favour the design of A350
Redesigned with wider fuselage-A350 XWB
Accommodate wider economy seat maximized usable

space
Passenger windows 5 cm wider to A330

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Airbus A350 XWB(2007)- contd

According to company sources
Fuel efficiency: 4% to 5% per seat greater than 787
Engines more advanced than 787

It is heartening that Airbus has listened to customer

airlines and has come up with a totally new design for
the A350.- Chew Choon Seng, CEO of Singapore
Airlines

15

Current Status of Sales and Orders

A350 XWB
780 total orders as of March,

2015
The A350 entered
service with Qatar
Airways in January, 2015
A total of just 2 A350 delivered
to Qatar Airways and currently
in service
Source: http://en.wikipedia.org/wiki/Airbus_A350_XWB
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Boeing vs Airbus:
How Did They Do in 2014?

ORDERS VICTOR: Airbus

Source: http://www.airlinereporter.com/2015/01/boeing-vs-airbus-2014/
17

Other Aircraft Manufacturers

Third largest-Bombardier Aerospace (Canadian

and UK government invested $700 million)

United Aircraft Building Corporation (UABC)
ARJ-21 aircraft ( by China with 60-105 seatplanning to manufacture a wide body aircraft
along with Russia)
Upcoming
Mitsubishi Heavy Industries (of Japan)

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Forces in the Aircraft industry

Internal Rivalry
Government subsidies
Substitutes
Barriers to entry
Suppliers and Buyers

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Is transformation from duopoly to Oligopoly

possible in aircraft manufacturing industry?
Not in the foreseeable future because Boeing and

Airbus enjoy:
long experience
advanced technology
Oligopol
Duopoly
government support
y
loyal clients
network of suppliers and resources
Rising global companies may gain shares in the
market and transform it to oligopoly market eventually
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References
http://www.airlinereporter.com/2015/01/boein

g-vs-airbus-2014/
http://en.wikipedia.org/wiki/Airbus_A350_XWB
http://en.wikipedia.org/wiki/Boeing_787_Drea
mliner
http://en.terra.com/news/news/appeal_verdict
_looms_in_aircraft_subsidy_dispute/act462770

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Any Queries ???

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