The term ‘duopoly’ essentially refers to the intense competition between the European multinational Airbus SE and the American Giant Boeing Company within the jet airliner industry. Both companies are in the process of designing and manufacturing civil and military aerospace products. Between the two companies, Boeing is currently leading the market with a market share of 52%, closely followed by Airbus with 48%.
Formation of the Duopoly
Can the Duopoly be Broken?
Conclusion
Formation of the Duopoly
Companies that began to grow, and expanded quickly became market leaders and fierce competitors. The origin of the duopoly could be attributed to a series of mergers and acquisitions within the global aerospace industry. A deeper understanding can be gleaned from understanding the journey of both these companies independently.
The Boeing Company
Initially founded as Aero Products Company in Seattle, Washington in the year 1916 by lumber industrialist William E. Boeing, it was renamed Boeing Airplane Company a year later. The company initially supplied military aircraft for World War I. The company was also engaged in ferrying mail due to its profitability. In the year 1928, William Boeing formed another company named Boeing Airplane and Transport Corporation. He renamed it United Aircraft and Transport Corporation in 1929. United Aircraft and Transport Corporation went on an acquisition spree of several aircraft makers including Avion, Chance Vought, Sikorsky Aviation, Stearman Aircraft, Pratt & Whitney, and Hamilton Metalplane. In 1931, the group merged its four small airlines under one umbrella – United Airlines.
The Airmail Act, which came into force in 1934, effectively prevented companies from simultaneously delivering mail and manufacturing airplanes. This resulted in the company restructuring itself and United Aircraft and Transport was dissolved and three separate entities emerged from it – Boeing Airplane Company, United Aircraft, and United Airlines.
Between the 1960s and 1970s Boeing Airplane Company went on an expansion spree beginning with purchasing Vertol Aircraft Corporation, which was the biggest independent helicopter manufacturer of the time. Subsequently, it diversified its business interests into different industries like outer space travel, marine craft, agriculture, energy production, and transit systems, slowly and surely gaining a monopoly within the industry.
Since then, the company has consistently grown by partnering with Russian, Ukrainian, and Anglo-Norwegian organizations in 1995, to create Sea Launch that provided commercial launch services to geostationary orbit from floating platforms. It also acquired the satellite segment of Hughes Electronics in 2000. Boeing also completed its merger with McDonnell Douglas in August 1997. By 2001, Boeing moved its corporate headquarters from Seattle to Chicago and by the year 2018, it opened its first factory in Europe at Sheffield along with a research partnership with The University of Sheffield.
Airbus SE
The European multinational aerospace corporation primarily with three major divisions – Commercial Aircraft under Airbus S.A.S., Defence and Space, and Helicopters. The company was launched in 1970 as Airbus Industrie GIE as a pan-European (countries included were Germany, France, Britain, and Spain) effort to combat the rising Boeing monopoly globally. The company got its first break with the A300 in the year 1977. Registered in Leiden, Netherlands the ‘SE’ in its name means ‘societas Europaea’ which, essentially, allows the company to be registered as a European corporation as opposed to a national corporation. Through various corporate changes and restructuring, the company got its present name, Airbus SE in the year 2017.
Building on the resounding success of its A300, which also essentially decimated its competition within the continent, the company launched the A320 which continues to enjoy commercial success even today. By the 1990s, commercial airline manufacturing was already a duopoly between these two giants, that continues to this day.
Between 2007 and 2016, both companies were fiercely competing with each other with Airbus receiving 9985 new aircraft orders and delivering 5644 aircraft and Boeing receiving 8978 new aircraft orders and delivering 5718.
Can the Duopoly be Broken?
Boeing and Airbus have dominated the commercial aviation market for almost three decades. Valued at approximately USD 190 billion, this market is considered to be the biggest and the most profitable in the world. Even though over time both these companies have faced issues with their aircraft, these giants together occupy 99% of the global market for large commercial airliners.
Although possible, the duopoly is extremely difficult to break due to various reasons –
1. The global market for medium and large commercial airlines is not big enough to support more than 2 players.
2. The entry barrier within the business is extremely high in terms of capital, expertise, and talent requirement not to mention the consistent operational maintenance required.
3. Initial investment recovery period is very long.
4. Business trust is extremely difficult to build in this industry that already has players with a proven track record.
Having said all this, the new Chinese passenger jet made by the aerospace company COMAC and named C919, showed itself off on its maiden flight at an airshow in November 2020. With its feature and its lower operating cost, it can, ultimately, make its place on the global stage and give stiff competition to the duopoly of Airbus and Boeing.
Abinaya Arangarajan
Conclusion
When it comes to aviation, safety is paramount in whichever airplane flies in the skies. Hence, whichever player, be it a new entrant or a veteran, can offer a safe flight will win the global war. The duopoly can very well become a triopoly within the next decade.
FAQs
Who is bigger, Airbus or Boeing?
The Airbus A380-800 is the world’s largest passenger aircraft with a maximum capacity of 853.
What is the name of Boeing’s most popular commercial airplane model?
Boeing’s most popular commercial airplane model is the Boeing 737. It has been in production since 1967 and is widely used by airlines around the world.
What is the name of the fighter jet that Boeing manufactures for the US military?
The name of the fighter jet that Boeing manufactures for the US military is the F/A-18 Super Hornet. It is a twin-engine, supersonic, all-weather fighter jet used by the US Navy and Marine Corps.
What is the name of Airbus’s most popular commercial airplane model?
The name of Airbus’s most popular commercial airplane model is the Airbus A320. It can seat up to 240 passengers.
What is the name of the Airbus aircraft that is currently the world’s largest passenger airliner?
The name of the Airbus aircraft that is currently the world’s largest passenger airliner is the Airbus A380. It is a double-deck, wide-body, four-engine aircraft that can carry up to 853 passengers in a single-class configuration, making it the largest commercial aircraft in the world.
