Presentation On Airbus350 vs. Boeing 787- Battle for the Skies

Presentation On Airbus 350 vs. Boeing 787- Battle for the Skies1Prepared By: Group CAnisha Adhikari (01)Rishav Devkota (09 )Niraj Lekhak (21)Shabnam Maharjan (22)Shradha Prajapati (25)Prajwal Thapa (35)

Objectives of the Case

Understand competition existing in a duopoly marketUnderstand demand and supply in the aviation industryAnalyse the competitive strategies Analyse possible threats from various new entrants 22Introduction to DuopolyMarket condition in which only two firms have dominant control over a marketMost basic form of oligopoly (a market dominated by a small number of companies).CharacteristicsOnly Two firms in the industryUses Non-price competition to competeStrong control over priceStrong Barriers to entry 33Introduction to the Case

Established in 1916By William Edward BoeingBacked by US governmentEnjoyed monopoly till 1970

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

Equipped in manufacturing similar aircrafts like single aisle, long range and wide body aircraftsSimilarityAircraft SubsidiesCause of dispute4What 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

5 Effects of subsidy on Demand and Supply

6Subsidy Issue between Airbus and BoeingClaims of BoeingAirbus being subsidized by EU7

Claims of AirbusBoeing being subsidized by US government

1992- signed a bilateral agreement -over the years ignored and bypassed by both

SolutionsMajor Highlights of 1992 Bilateral AgreementSubsidies limited to 33% of the total costs of developing a new aircraftRepay with interest within 17 yearsIndirect subsidy limited to 3% of nations LCA (Large Civil Aircraft) turnover

8Filing of cases against each otherMain reason:2003- Sales of Airbus> Sales of BoeingContinued in 2004 Boeing Against AirbusTo WTO for violating the 1992 bilateral agreement Receiving unfair subsidies from EUAirbus against BoeingUnfair tax reduction from US governmentInvestment subsidies from Japanese Airlines9Verdict of the CaseDifferent verdicts have been given till now.Appeals still going onThe 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.

10Source: http://en.terra.com/news/news/appeal_verdict_looms_in_aircraft_subsidy_dispute/act462770Source: http://en.terra.com/news/news/appeal_verdict_looms_in_aircraft_subsidy_dispute/act462770Common strategy adopted11LargerSmallerA380Boeing 747A320Boeing 737-700 Boeing 737-800A320Airlines all over the WorldBenefactorsAirbusBoeing350 XWB -2007787 Dreamliner-2005The Competition-For aircraft ordersDreamliner-Boeing787Take passengers where and when they want to go, without intermediate stopsProvide utmost comfort to passengersMake it simple and cost-effective for airlines to operateLighter than previous ones(using of composite material)Fuel efficiency gave an edge for models saleabilityEngines reducing noise pollution- environment+comfort of passengers12Dreamliner is the most advanced and efficient airplane in its class, one that will set new standards for environmental leadership and passenger comfortCurrent Status of Sales and Orders 787 Dreamliner1,105 orders from 58 customers as of 2015Entered commercial service on October 26, 2011 with launch customer All Nippon AirwaysA total of 163 Boeing 787 aircraft (all variants) were in airline service as of July 201413Source: http://en.wikipedia.org/wiki/Boeing_787_Dreamliner

Airbus A350 XWB(2007)To compete with BoeingImprovised version of A330Sales of A330 decreased due to introduction of 787Customers did not favour the design of A350Redesigned with wider fuselage-A350 XWBAccommodate wider economy seat maximized usable spacePassenger windows 5 cm wider to A330

14Airbus A350 XWB(2007)- contdAccording to company sourcesFuel efficiency: 4% to 5% per seat greater than 787Engines more advanced than 78715It 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 AirlinesCurrent Status of Sales and Orders A350 XWB780 total orders as of March, 2015The A350 entered service with Qatar Airways in January, 2015A total of just 2 A350 delivered to Qatar Airways and currently in service16Source: http://en.wikipedia.org/wiki/Airbus_A350_XWB

Boeing vs Airbus: How Did They Do in 2014?17

Source: http://www.airlinereporter.com/2015/01/boeing-vs-airbus-2014/ORDERS VICTOR: AirbusOther Aircraft ManufacturersThird largest-Bombardier Aerospace (Canadian and UK government invested $700 million)United Aircraft Building Corporation (UABC)ARJ-21 aircraft ( by China with 60-105 seat- planning to manufacture a wide body aircraft along with Russia)UpcomingMitsubishi Heavy Industries (of Japan)18Forces in the Aircraft industryInternal RivalryGovernment subsidiesSubstitutesBarriers to entrySuppliers and Buyers

19Is transformation from duopoly to Oligopoly possible in aircraft manufacturing industry?

Not in the foreseeable future because Boeing and Airbus enjoy:long experienceadvanced technologygovernment supportloyal clientsnetwork of suppliers and resourcesRising global companies may gain shares in the market and transform it to oligopoly market eventually2020Referenceshttp://www.airlinereporter.com/2015/01/boeing-vs-airbus-2014/http://en.wikipedia.org/wiki/Airbus_A350_XWBhttp://en.wikipedia.org/wiki/Boeing_787_Dreamlinerhttp://en.terra.com/news/news/appeal_verdict_looms_in_aircraft_subsidy_dispute/act462770

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