Name: Why Airbus And Boeing Dominate The Sky
Uploaded: 2019-07-23T14:41:53.000Z
Duration: 14 min 47 s
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Relative clauses (Restrictive vs. nonrestrictive)

If you're one of the four billion people who flew last year

chances are you flew on either an Airbus or Boeing aircraft.

The Airbus-Boeing duopoly dominates the already under competitive

aircraft manufacturing industry by producing more than 99% of

its large airplane orders globally. It's become one of the most

efficient duopolies ever in the history of manufacturing

Are smaller competitors finally giving them a run for their

money? Or are they just getting scooped up? Will China step into

the market and make waves? What about the future of flying? Will

Supersonic planes challenge Airbus and Boeing's dominance?

Before we answer those questions let's start with how we got to

a place where just two companies own the air

Boeing has always been a big player in the aviation field for

over 100 years. The Boeing Company was created in 1916. William

Boeing founded the Aero Products Company and developed a single

engine seaplane and the business was renamed the Boeing Company

and sold its planes to the Navy during the First World War

Boeing continued to sell its aircraft during the 1920s and 1930s

to the U.S. military. During this time Boeing also expanded into

flight up to Vancouver B.C. This was the first ever

international mail ever carried by planes into the United

The Boeing Airplane and Transportation Corporation was formed and

it covered both the manufacturing and airline operations but the

Air Mail Act of 1934 split aircraft manufacturers from air

transport. So the conglomerate of the day was dissolved in the

company went back to being called "Boeing." With the development

of turbo jets, the Boeing 707 was introduced to the public in

1958 on Pan American's trans Atlantic route and the public loved

it With smoother rides and a shorter flight time Boeing paved

the way for the future of commercial flight. Boeing may

encapsulate Americana via the golden age of flying but the much

younger Airbus had a rough road to success. It started as a

group effort in Europe to take on American manufacturers.

In 1967 Germany, France, and Britain came to the agreement that a

cooperation of aviation field would promote technology and

economic growth in Europe. They drew up plans for a short haul

European Airbus that would accommodate the public's desire to

fly more for less. Plans were made to construct the A300. In

October of 1972 the A300 completed its first flight. But Airbus

leaders had an uphill battle ahead of them convincing the world

they created the most innovative aircraft. By 1984 Airbus

received 411 orders and had 282 aircraft in active service. The

persistence paid off the long run because in 2018 Airbus

delivered 800 planes. 11% growth from the year before. And

Boeing's business is thriving as well. In 2018 the company set

the record for the most airplane deliveries with 806 commercial

jets, 5.6% growth from 2017. And the stocks have reflected the

company's dominance. Both Airbus and Boeing stocks have

significantly outperformed the S&P 500 over the last 10 years.

How can you tell these planes apart? Boeing and Airbus have

subtle differences. For instance the cockpit of a Boeing 737 has

a yoke control whereas an Airbus A320 does not. That's just one

of the many ways these companies diverge in their manufacturing.

Most are only felt by the crew and travelers with a keen eye.

How do airlines decide which company to buy from? Think of it

like going to a car dealership and choosing between a Chevy and

a Ford. Both are supposed to get you to your destination but

which one has a better deal? And what does the existing fleet

look like? For example, Spirit and Frontier operate only

Airbus, while Southwest is an all Boeing fleet. It's hard for

low cost operations like these to switch. The legacy airlines

So what does it take for companies like Airbus and Boeing to

control the airline industry? Well, building these airplanes

isn't cheap. To be a real competitor aviation companies must

The barriers to entry in this business are huge in terms of

capital requirements, in terms of technology experience,

customer support, customer finance, all of these things.

A single plane can run up millions of dollars in construction

fees. Boeing is currently working on a new series of airplanes

called the 777X. A single 777-9 has a list price of

$388.7 million dollars. That's because there are hundreds of

thousands of components to an airplane. A Boeing 747 alone is

made up of six million parts. But materials aren't the only

thing that costs aviation companies big. Safety comes with a

It's definitely a well-regulated industry. I don't think there's

any question about that. I actually view much, not

regulation has a historical partnership that has actually served

the industry quite well. If you consider that the airlines today

aviation globally carries three billion passengers a

year and most years kill fewer than 500 of them. Some years

none. That's a pretty extraordinary record. And reaching that

level of safety requires a great expense And these massive

And at least for Boeing a lot of it comes from the government. It

was the second largest government contractor in 2017 behind only

Lockheed Martin bringing in more than 23 billion dollars. It

also spends big to keep its close relationship with Washington.

The company spent more on lobbying than any other company in the

United States other than General Electric from 1998 to 2018

according to Open Secrets 270 million dollars. The acting

Secretary of Defense at the beginning of 2019 is a former Boeing

executive that led the 787 Dreamliner program. And the acting

administrator of the Federal Aviation Administration or the FAA

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Why Airbus And Boeing Dominate The Sky

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