- Airbus tops the global commercial aircraft market
- Prominent competitors now and over the years of Airbus and Boeing
- Road ahead for the two giant plane manufacturers
With the crisis of its 737 MAX dragging on to 2020, Boeing has lost the title as the world’s biggest plane maker in 2019 after its delivery numbers fell drastically to 345 aircrafts as compared to 863 aircrafts deliveries from Airbus. This new achievement for Airbus will push it to the top of the ranking in the market duopoly (with a combined market share of 90%+) between the two aerospace giants, a first since 2011 when Boeing took the top spot. Airbus, had its own share of glitches with some industrial problems, forcing it to cut its 2019 delivery goals by 2%-3%, but still delivered 863 aircrafts against its revised target of 860 aircrafts, as per exclusive reports by Reuters. Deliveries for Airbus rose by 7.9% in 2019 from that of 2018, highlighting a huge gap in performance between Airbus and Boeing during the year. As per estimates by Forbes, Airbus which had a market share of about 45.3% in 2018 is estimated to have spiked to almost 62.5% as of September 2019 due to the reduced deliveries from Boeing. Also, the order backlog for Airbus as on September 2019 is sizably larger with 7,482 aircrafts as compared with Boeing which had an order backlog of 5,662 aircrafts.
The past couple of years haven’t been kind to Boeing with two devastating crashes involving the Boeing 737 MAX that killed 346 people. It’s the type of year that most companies across most industries would never recover from. But since the aircraft building space is not like most industries with barriers to entry like no other, any new company is not simply going to enter and start building aircrafts worth hundreds of millions of dollars. It’s no secret that the giants enjoy a duopoly status in the aircraft manufacturing industry and with both history and money on their side, the rival companies have not been able to penetrate their dominance. More importantly, even the rivals tiny market share has been getting smaller over the years, so breaking into the stronghold of Airbus and Boeing is a task next to impossible, considering all the huge financial requirements and complexities of the business.
Example of instances where some of the smaller companies have tried to enter the aircraft manufacturing space includes Bombardier without much success with its C-Series aircraft to compete against the likes of Airbus A320 and Boeing 737 models. The company launched its C-Series aircraft program in 2005 and spent almost $15 billion over the course of its development, which is a lot of investment for a company which had a market value of less than $15 billion. This program was ultimately bought by Airbus which acquired a majority stake in the Canadian aircraft manufacturer after much controversy between Bombardier and Boeing with regards to order for the Bombardier jets by the US airliner, Delta.
Another potential competitor is China’s COMAC (Chinese state-owned aircraft manufacturer) which is building its own C919 aircraft to compete with the likes of Boeing 737 sized jets and the Airbus A320 series. The company has already completed its test flight, though it took the company almost 10 years to complete the same (financial investment on its program is not available since the company does not publish any financial statements or related information). As per reports, the C919 has only about 300 firm orders as of now, compared to Boeing and Airbus which have more than 10,000 firm orders for similar sized aircrafts. Plus, the commercial delivery of the aircraft of COMAC are expected by 2021, which is nearly five years behind schedule. Perhaps COMAC can compete with the two giants but it has still a long way to go and considering it is yet to hit the markets, maybe it will take another generation to actually make an impact, that too, if it delivers as expected.
The crisis of the Boeing 737 MAX is not a first for Boeing, which in 1965 faced similar issues when three of its Boeing 727 aircraft crashed in less than three months. The Boeing 727, which was stated as one of the most advanced aircraft of its time, had some issue with its wing flap system which was not fully understood by the pilots and made the planes to descend at great speed. Then in the 1990s, Boeing had another issue with its rudder with the 737 resulting in multiple incidents and killing passengers on board. Also, in 2013, Boeing had issues with its 787 Dreamliner, where its battery caught fire.
As Boeing works to restore the confidence of the public after its deadly crashes, they will have their history play book of their crisis that they can use. The company has also done several rejigs in the top management to take control of the situation and find itself out of crisis. No doubt, 2019 was the year for Airbus with more cash inflow for future projects while for Boeing it has not been the easiest year as it is being hit with cash-crunch situation with everything that has happened over the past couple of years. But Boeing for its part is certainly not out as they still have their Boeing 787 series which is far more popular than the similar category, Airbus’s A330 and also enjoy better profit margins. Additionally, Boeing still leads the deliveries for wide-body aircrafts, delivering 224 wide-body aircrafts compared with Airbus’ 147 aircrafts in the past year. And with the new Boeing 777X launch, it could give some serious competition to the Airbus A350. Considering the complexity of the business, not only its smaller rivals but even its biggest rival Airbus cannot simply increase production and benefit from the woes of Boeing. Also, as per Airbus’ CEO Guillaume Faury, Airbus has an order backlog of more than 7,000 aircrafts as of September 2019 which in itself will take the company between eight to ten years to fulfil. Net to net, though Airbus flipped Boeing from its top position in 2019 due to unforeseen accidents, the latter is likely to comeback over the next few years and may once again regain the top spot.