Airbus
Transcript: -$20 billion in illegal subsidies. -More than 50% of market share. -Barriers to entry are high due to the significant capital requirements to enter. (Massive subsidies from multiple European nations were necessary to start Airbus.) There is little threat felt by these firms to potential new firms. -Other existing firms find it wise to stick to their small scale production and to smaller aircraft -These two dominating firms have been established long enough to find the most efficient method of production and smaller rival firms know better than to aggressively compete. -Products between the two have little differentiation: Airbus produces 14 models (ranging from 150-555 seats) and Boeing produces 16 models ( ranging from 85-605 seats) -Each firm attempts to differentiate from the other by introducing new technologies, mostly to diminish consumers' operating costs. They are the only firms producing the new technology and essentially increasing demand by creating incentive for airlines to update their fleet and save money money in the long run. -Both firms benefit from increasing oil prices as they have the only solution for airlines, new planes. -Airbus has more pricing power than Boeing: -For each comparable model between the two, Airbus charges more. Clearly Airbus believes its product is better than Boeing's, and airline buyers seem to agree because they buy almost equal amounts of each rather than more of the cheaper substitute. -Neither firm chooses to advertise much to the public because they aren't the ones buying the planes airlines are. “Airbus.” Wikipedia. N.p.: n.p., n.d. Wikipedia. Web. 14 Nov. 2013. <http://en.wikipedia.org/wiki/Airbus>. “Airbus and Boeing Airplane Price List Comparison.” Table. Bloomberg. N.p., 23 May 2011. Web. 14 Nov. 2013. <http://www.bloomberg.com/news/2011-05-23/airbus-and-boeing-airplane-price-list-comparison-table-.html>. “Boeing.” Wikipedia. N.p.: n.p., n.d. Wikipedia. Web. 14 Nov. 2013. <http://en.wikipedia.org/wiki/Boeing>. “Boeing Commercial Airplanes.” Wikipedia. N.p.: n.p., n.d. Wikipedia. Web. 14 Nov. 2013. <http://en.wikipedia.org/wiki/Boeing_Commercial_Airplanes>. “Competition between Airbus and Boeing.” Wikipedia. N.p.: n.p., n.d. Wikipedia. Web. 14 Nov. 2013. <http://en.wikipedia.org/wiki/Competition_between_Airbus_and_Boeing>. “Deliveries and Market Share.” Norbert Haupt. N.p., 29 Apr. 2012. Web. 14 Nov. 2013. <http://norberthaupt.com/2012/04/29/boeing-vs-airbus-education-in-the-united-states/>. EADS. N.p., n.d. Web. 14 Nov. 2013. <http://www.eads.com/eads/int/en.html>. “EADS NV (EADSY).” Wikinvest. N.p., n.d. Web. 14 Nov. 2013. <http://www.wikinvest.com/stock/EADS_NV_(EADSY)>. “Global Market Forcast.” Airbus. N.p., n.d. Web. 14 Nov. 2013. <http://www.airbus.com/presscentre/corporate-information/key-documents/?eID=dam_frontend_push&docID=33976>. Competition Within The Oligopoly -Airbus began as a consortium of European aviation firms, Airbus Industrie, formed by a government initiative between France, Germany and the UK, to compete with American companies such as Boeing, McDonnell Douglas, and Lockheed. -Airbus employs around 59,000 people at sixteen sites in four European Union countries. Oligopoly: The Battle For Orders -The firms aim to gain market share over one another through the introduction of new technologies that increase performance in their products (mostly regarding weight reduction and fuel efficiency which both lower the consumers', the airlines', operating costs) Why Do Billions in Illegal Airbus subsidies matter? Boeing has continually protested over European government subsidies to Airbus, while Airbus has argued that Boeing receives illegal subsidies through military and research contracts and tax breaks. On 31 May 2005 the United States filed a case against the European Union for providing allegedly illegal subsidies to Airbus. Twenty-four hours later the European Union filed a complaint against the United States protesting support for Boeing. There were many critics of Airbus over the years. They asserted that Airbus was not a real company, but it was heavily subsidized by a number of governments, including Germany, the U.K. and France. The 747-8. Bass on a 1960's design. A true case of jet lag! Commercial Aircraft -Lockhead and McDonnell Douglas out of business. -Tens of thousands of lost U.S. aerospace jobs. -Other aircraft manufacturers only produce narrow body aircraft (Airbus and Boeing still account for the majority of the that market too) Looking to the Future The military division of Airbus designs, develops and produces a comprehensive range of highly versatile products for military and “civic”/ humanitarian missions. Competition/Controversy It takes an A380 to compete with an A380. Airbus Military Airbus is an aircraft manufacturing subsidiary of EADS, the European Aeronautic Defense and Space Company. -Today, they are two established competitors making up the duopoly of commercial aircraft manufacturing and compete over market
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