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Airbus vs.

Boeing

Group 3: Abhishek Kumar -11PGDM063 Anuj Malviya-11PGDM073 Dhaval Parikh-11PGDM083 Mohit Kapoor- 11PGDM093 Ravi Dudeja- 11PGDM104 Stuti Sethi -11PGDM114

Agenda
Evolution of Commercial Aviation Industry Evolution of Boeing in the commercial Aviation industry Evolution of Airbus in the commercial Aviation industry Growth of Boeing & Airbus The Subsidy War The 1992 EU-US Agreement

Evolution of the Commercial Airline Industry


On January 1, 1914, the worlds first scheduled flight with a paying passenger hopped across the bay separating Tampa and St. Petersburg, Florida World War I led to the development of commercial aircrafts

Airmail was one of the earliest avenues via which air transportation became commercially relevant During, World War II air transport became the dominant mode of passenger travel

Early history of Boeing


Boeing Airline Company was started in 1917 Boeing entered into the commercial segment with 707 in 1958, in response to British De Havilland Comet, French Sud Aviation Caravelle and Soviet Tupolev Tu-104 In 1967, Boeing introduced another short- and mediumrange airliner, the twin-engine 737

History of Boeing
In 1970s,Boeing faced a bit of turbulence due to *the airline industry recession *temporary withdrawal of Govt support for Supersonic- 2707 *the Apollo Program was almost entirely cancelled In 1980s after the improvement in economic situation, it faced a threat from Airbus as a major competitor In 1997, Boeing merged with McDonnel Douglas

Origin of
Began as a consortium of European aviation firms to compete with American companies - Boeing, McDonnell Douglas , and Lockheed In 1966 , French firm Sud Aviation took interest in building the twinjet aircraft It won the confidence of British and German govt. officials and they agreed to build the plane together Later Spain also joined in through some takeover deal in which it acquired around 4.2% stake in Airbus

Growth of

Consortium

Early 1970s, Airbus industry came about and A-300 was launched 1977-78 : Eastern airlines ordered 4 twinjets. Then, Eastern airlines ordered more of 23 crafts (Quality and reliability established)

1979- Demand further hiked due to the oil crisis & with the launch of A-310, Airbus further grabbed the market

Target Agendas and Vested Interests


Political agenda: French president(Charles de gaulle) resented the dominance of US commercial aviation industry Business agenda: Revival of Concorde. Sud Aviation (Concorde) losing on cost and service
Real Politik into play: To stir interest within US ,engines opted from GE Implication :British withdrew from the venture British were appeased when Hawker Siddeley was granted the contract for crafting wings. Implication: Britain, though ally to US was drawn into the contract

Emergence of Airbus as a major competitor


In 1984-A-320 was launched with huge subsidies from the consortium challenging Boeing 737 and MD-80 series of McDonnell Douglas 1986- With the launch of Program A-330/340 led to direct conflict with the Boeing Sold largest no of jets smaller than 747 and matched Boeings order in North America in early 1990s Overtook Boeing with 125 orders to 120 for the rival in 1994

Global Market share of Airbus & Boeing at different times with major events

Major events of Airbus success

THE SUBSIDY WAR


1981: Boeing & Airbus emerged as major competitors in commercial airline manufacturing segment Since then, US has been making allegations against Airbus being heavily subsidized by the Govts of all the 4 countries According to US, subsidies enabled Airbus to keep really low prices for their aircrafts Airbus retaliated with allegations of Boeing & McDonnell Douglas being heavily subsidized by US Govt in form of R&D

The 1992 EU-US Agreement


Ceiling on the amount of direct govt support (33% of total development costs)
The agreement kept a ceiling on the amount of direct govt support- established that indirect support should be limited to a 3% of the nation's LCA industry turnover In 2004, US withdrew from the agreement and alleged European countries for providing heavy subsidies to Airbus 2005: both the countries made allegations against each other at WTO for subsidizing their respective companies

2010 WTO ruled that European govts unfairly financed Airbus & at the same time Boeing broke WTO rules by unfair payments

References
http://en.wikipedia.org/wiki/Airbus http://www.centennialofflight.gov/essay/ Aerospace/Airbus/Aero52.htm http://en.wikipedia.org/wiki/Boeing http://trade.ec.europa.eu/doclib/docs/20 07/september/tradoc_136044.pdf http://trade.ec.europa.eu/doclib/docs/20 10/september/tradoc_146485.pdf http://en.wikipedia.org/wiki/Competition _between_Airbus_and_Boeing#Subsidies http://www.lexingtoninstitute.org/library /resources/documents/Defense/Europea nSubsidiesBrochureFinal.pdf

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