Product strategy

Airbus has 4 range types of products:  Passenger Aircraft, Corporate Jets, Freighter Aircraft and military Aircraft.  Each family of product is composed by several models, in order to satisfy needs of all the segment market (low cost, full-service, freighter, VIP and military segment).

We are going to focus on Passenger Aicraft in this article.

• The A320 family  is a single ailse jet liner family, and according to airbus website there are the most eco-efficient products. The constructor still continu to invest on this family by innovating on design and efficiency, with for instance the development of  the A320neo.

• The A330 family (5 products) covers all market segment and provide low operating cost, high efficiency, flexibility and optimised performance.

• The A340 family is reputated for is long distance performance, and can transport from 250 to 359 passengers.

• The A350 family, Airbus defines it as the future of air travel, combining aerodynamics design and advanced technologies.

• The A380 which is the world largest commercial aircraft, with an high level of confort.

As Airbus Boeing covers the same markets going from commercial to military Aircraft.

In the field of commercial airplanes the American constructor provides from 100 seat to 500 seats planes.

• The 737 family is a short to medium range airplane available in three sizes from 120 to 220 seats. The new product generation include advanced technology and specific wing design. These innovation made planes more eco-efficient and anable them to increase traveling distance.

• The 747 family provide among the lowest operating cost and best economics on large passenger. In the 748-7, despite of large efficiency improvements, a clear focus was to increase and improve passenger experiences.  It is one of the most famous plane models, and people are able to recognize it all over the world.

• The 767 family is composed of four models for jetliners passenger, according Boeing website two words can define it comfort and profitability. Indeed, this family has the lowest operating cost of any widebody airplane; moreover planes are available in 3 sizes and compatible with all world airports.

• The 777 family consists of 5 models and has been created to make non-stop fly avoiding escales.

• The 777X family is the newest family of twin-aisle airplanes, it was designed to satisfy t consumer needs and preferences.

• The 787 Dreamliner, is a long range plane, it can carry from 210 to 330 peoples. This twin-engine jet airliner is supposed to be 20% more fuel efficient than the 767.

Boeing as well as Airbus have developed a large range of products covering almost all the markets segments. Even if products seems to be closed and focused on the same items (quality, efficiency, comfort), some differences still exist between the product strategy of the two constructors. As you can see on the following picture there are gap more important in term of seat capacity and models among the airbus range. 

Moreover the European constructor has always designes planes for hub-to-hub travel, this is why some experts has dubts about this strategy, and think that in the future passenger will prefer direct and faster travel.

Sources : http://www.airbus.com/aircraftfamilies/

http://www.boeing.com/boeing/product_list.page?

Market Shares

As we seen in the different articles Airbus and Boeing are in a duopole market.

According to the Boeing CEO James McNerney and the Airbus CEO Fabrice Brégier

Market share by type of travel distance
The long haul market is leading by Boeing with a market share of 60%.
At the opposite the medium hall is leading by Aibus with a market share of 70, we can explain this leading of Airbus thnaks to the market share of its A320 with represent 60% of the medium plane, compare to the 40% of the 737 of Boeing.

Market share by Zone
The Middle East, Russia and Asia zone are leading by Airbus. The Airbus planes represent 60% of the air fleet of the national companies in this zone

Source
http://www.lefigaro.fr/flash-eco/2012/10/25/97002-20121025FILWWW00567-airbusboeing-la-guerre-continue.php

Communication strategies for a duopoly

Airbus and Boeing are reigning on the aeronautic market and know the importance to fight between them a battle of communication, without forgetting the emergency of new planes constructors. The two brands lead a communication campaign in BtoB but also in BtoC.

Concerning the BtoB communication strategy, Airbus wants to spread a reassuring message to airlines companies and to its employees in a difficult international context. Moreover, the Airbus direction has recently changed and the communicated objectives have to be clear and precise. For Boeing, the notion of "working together" is very important and the brand focuses its communication on the future of flight. In other words, going in the same direction for a better future. We can see these values on the official website.  

If we look at the BtoC communication strategy, Airbus wants to be part of a sustainable development approach with the support of the Green Wave Project in 2011 for instance. The aim of this project is to push people to make more intelligent choices in their life and to help to build a sustainable future. Airbus has organized a photography game contest : "See the Bigger Picture" and the company asks to children all over the world to take pictures which represent the idea of biodiversity.

Boeing is also concerned by the environmental issues. From 2009 to 2011, 20 billion of dollars have been invested to help local communities to reduce their impact on the environment. The brand also tries to be closer to the airlines' passengers and to better understand them. In April 2010, Boeing first appeared in the social media with the creation of 3 Twitter accounts. 

Sources :

http://ludozone.net/2010/04/20/boeing-changes-communication-strategy-with-new-website-twitter-accounts/

http://jwkieser.free.fr/marketing/exposes_CC_2009/airbus.pdf

http://www.seethebiggerpicture.org/fr/

http://www.boeing.fr/Decouvrez-Boeing/L-esprit-Boeing

Consumers' perception of Airbus and Boeing

In despite of a very strong competition, Airbus and Boeing keep on reigning the aeronautic sector. Two of the key factors of this success is a good perception from customers and a strong brand awareness, that is to say the way of the two brands are represented in people's mind. However, they also undergo some limits. 

First, it is important to remind that Airbus and Boeing do business in BtoBtoC : they work with countries and private buyers but the final consumer is the passenger who hopes to travel without facing problems. So, perception of a State is as important as perception of the large public. 

Airbus and Boeing are well-perceived by large public and States. Airbus is seen that a very innovative company which explains its success currently. Its aim is to allow passengers to benefit from the best performances and flight qualities as possible, reduces exploitation costs and a better comfort. The A380 plane was a case in point. For instance, Airbus was one of the first aeronautic constructors to use composite materials, allowing them to save weight and finally to reduce fuel consumption. Concerning Boeing, the brand is also very innovative with the Boeing 787 Dreamliner plane in 2009 for example but the consumers' perception is focused on passengers comfort. 

According to the large public, when we ask him what are the French companies for which he has a good image, Airbus ranks 2nd :

However, Boeing and Airbus have a current perception problem that they have to face : technical problems in an area of safety. Indeed, Boeing has undergone different problems with the structure of the 787 Dreamliner's rear fuselage. Some gaps have been discovered and have caused sections of the carbon-fiber. In addition, European air safety regulators have inspected the A380 plane after having discovered some cracks in critical wing components in 2012.

Boeing and Airbus have immediately reacted but they have to be careful because if the large public thinks that a model is unsure or less sure than other planes, his perception can change, modify his preferences and have an impact on the sales. 

Source :

http://investorplace.com/2012/02/boeing-and-airbus-have-a-perception-problem/#.Up8x_8TuJOE
http://www.lamatrice.com/FR/barometre-posternak-ifop-entreprises.html
http://www.boeingcontreairbus.sitew.com/#INNOVATIONS.D

Vision and strategy for the future

Sources : http://www.airbus.com/innovation/

http://www.boeing.com/assets/pdf/commercial/cmo/pdf/CMO_2013_Presentation.pdf

http://www.airbus.com/presscentre/corporate-information/key-documents/?eID=dam_frontend_push&docID=33755

Dreamliner VS A350: the battle begins

On the successful segment of 250 to 350 seats, Boeing recently released the 787 Dreamliner. The American aircrafts manufacturer chose to bet on efficiency with this new plane. In order to do that, the 787 is built with lighter materials like carbon fibre and runs on two engines instead of four. With smaller fuel consumption and a larger operating range, Boeing wants to appeal to the airlines companies looking for cutting costs, especially on kerosene since it's one of their major spendings.

In response, Airbus decided to develop the A350 XWB for "Extra Wide Body" which means that this plane will also focus on energy saving with lighter materials. Other innovation will come with these new planes like larger windows, more space for luggages, less noise and even less air pressure in the cabine.

But even if Boeing faced many issues during the 787 development and again after the release with several incidents, Airbus is far behind because the A350 is expected to be in service only in 2014 (i.e. the first commercial flight). They didn't see the trend. In fact, in the future there will be more and more direct international flights, like Lyon-New York or Strasbourg-Singapore for instance. Consumers are tired to move to airport hub like Roissy in France or Heathrow in the UK in order to fly to New York. Furthermore, the bigger the plane, the bigger the line for boarding so it takes more time, thus leading to higher costs for airlines. That's why this new trend oriented the airlines' demand for more economic aircrafts, with fewer seats.

How to target Airlines Companies ?

Boeing and Airbus had to change their product strategy due to the crisis economy. Indeed, in the process of purchasing, Airlines companies pay attention to a lot of criteria. Their buying process is generally based on a market vision for the 20 next years.

During many years the two constructors have spent billion dollars on developing plane able to cross the world in a direct way. However, nowadays airlines companies want to buy efficient products, without any over superfluous options. You can see on the chart the main criteria taking into account by airlines company to build their strategy.

The two constructors are really aware of that, and are already in a strength competition on these criteria. One of the options for Airbus and Boeing to differenciate themselves is to provide to their costumers: Flexibility. This is why there are always definite and optional parts in the orders.  

They also give important discount on the planes, according to John Leahy sales manager in Airbus, these discounts are traditionally around 40% but can reach 55%.  As you can see below the price could be reduce by 60% for some models.

Sources : http://www.latribune.fr/entreprises-finance/industrie/aeronautique-defense/20130621trib000771629/vous-voulez-acheter-un-airbus-ou-un-boeing-voila-comment-ca-se-passe.html

http://www.challenges.fr/salon-du-bourget-2013/20130612.CHA0743/le-vrai-prix-des-avions-d-airbus-et-de-boeing.html

Aeronautic: a sector with a great potential of development for the future

The aeronautic market keeps on increasing despite difficult economic times and offering many jobs in design offices or directly for a constructor. If American constructors are leaders on the jet aeroplanes market in the world, leaders are European concerning the small commercial aircraft market. And European constructors have the three quarters of planes. For instance, France has 30% of the aeronautic European market.

Today, the needs in planes have never been so important and it is a very good news for the duopoly which dominates the market, that is to say Airbus and Boeing. In september 2013, Airbus has published its forecasts of planes demands for the next 20 years. It considers that 29 220 new planes will be necessary to answer to a growing demand. The aeronautic market would represent 4 400 billion of dollars.

It is not really a surprise because this growth is due to developing countries which think to keep an economic development thanks to aeronautics. Indeed, we estimate that 2/3 of people living in developing countries will take a plane at least once a year. Today, only one person per five take a plane once a year.

Finally, what constructors will take advantage of this rising demand ? Airbus and Boeing, of course. But many other constructors hope to have a greater importance on the market for the following years. If Airbus and Boeing will represent 87% of the global market in 2032, other constructors will not want make up the numbers forever like the Canadian Bombardier, the Chinese Comac, the Brazilian Embraer, the Russian Ikrut or the Japanese Mitsubishi.

Sources : http://www.emploi-et-industrie.fr/emploi-aeronautique/laeronautique-un-secteur-en-perpetuelle-evolution
http://www.usinenouvelle.com/article/le-marche-des-avions-grossit-le-duopole-airbus-boeing-s-effrite.N205726

Airbus/Boeing and the new entrants

In the aeronautic sector we are in a duopolistic sector with two majors companies which are Airbus and Boeing, but recently they have to face to a new competition, with three new entrants which are the Canadian Bombardier, the Chinese Comac and the Russian OAK.

For the year 2012, the different companies have recorded:

• Boeing: 1339 orders for the commercial planes
• Airbus: 914 orders for the commercial planes
• Bombardier: 138 net orders for the commercial planes, 343 net orders for the business 
• Comac: no figures
• OAK (UAC): no figures

Boeing and Airbus still the leader but with those new competitors they will have the obligation to be innovative and to propose plane models for all the different types of clients.

Gross orders of Boeing and Airbus since 2003

As we can see Airbus sells more planes compare to Boeing for the commercial planes business which is their main business activity, except in 2006 and 2012.

For the orders in 2013 it is only included sales  from January to September, Airbus leads the way but with the Dubai Airshow that will reverse the trend because Boeing has recorded 342 orders and Airbus only 160.

Year (gross orders)	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013
Boeing	240	277	1029	1050	1423	669	263	625	921	1339	957
Airbus	284	370	1111	824	1458	900	310	644	1608	914	1215

Sources:
http://www.latribune.fr/entreprises-finance/industrie/aeronautique-defense/20131120trib000796843/pluie-de-commandes-pour-boeing-et-airbus-au-salon-de-dubai.html
http://active.boeing.com/commercial/orders/index.cfm?content=displaystandardreport.cfm&RequestTimeout=500&optReportType=AnnOrd&pageid=m15521
http://www.airbus.com/newsevents/news-events-single/detail/airbus-beats-order-target-and-sets-new-company-delivery-records/

Airbus bets on Superjumbos with the A380

These years the competition between the two companies was harsh. They have chosen two different strategies with their aircrafts offer. With the A380, Airbus expects to put an end to the Boeing 747 supremacy in the superjumbo segment. The optimized version of the A380 can carry more than 800 passengers allowing economies of scale, the objective is to reduce the fuel consumption per passenger and one of the strategies is to increase the number of seats in planes.

But many experts remain skeptical about airbus' A380 because studies show that the trend is not going in their direction as the demand for long distance planes is more focused on 250/300 seats like the Boeing 777 which is a commercial success for the American manufacturer. So the critics argue that Airbus may have wasted time and money developing the A380 while Boeing was improving the smaller 777, enlarging the range and launching the 787 Dreamliner. Moreover the break even point for the A380 will probably be hard to reach because of high costs of development and a too small market share to ensure enough return on investment.

It seems that the hub system is less and less popular among passengers, indeed they prefer direct flights instead of waiting long hours in airports. The problem is that Airbus bets on these hubs for the future as they launched the A380 and some analysts think this could be a problem for them.

The success of the 777 illustrates the trend of 300 seats plane on the long distances. Moreover Boeing focuses on efficiency by using only 2 engines planes, with composites body parts which make it lighter.

http://www.capital.fr/enquetes/strategie/boeing-airbus-duel-au-couteau-sur-le-long-courrier-840107

http://fr.wikipedia.org/wiki/Concurrence_entre_Airbus_et_Boeing

Boeing overview

Boeing is composed of 4 historical and remarkable companies of the aircraft history: Boeing, Rockwell International, Mc Donnel and Douglas. In 2000, a fifth one has joined the company: Hughes Spaces and Communications; which became Boeing Satellite Systems.

Boeing is now present on different markets; it provides commercial and military aircrafts, satellites, weapons, electronic and defense systems, launch systems, advenced information and communication systems, and performance-based logistics and training. 

Today the company employs more than 170 000 people in USA and in 70 countries all around the world. Its head-quarter is located in Chicago. The aircraft company owns contracts with 26,500 suppliers and partners.

Boeing is divided into two business units: “Commercial Airplanes” and “Defense, space and Security” which are based on different corporate function, as you can see in the following scheme:

In 2012, the company’s revenue was $81, 7 billion. 70% of this revenue was made outside USA.


Source: http://www.boeing.com/assets/pdf/companyoffices/aboutus/overview/boeing_overview.pdf

Boeing suppliers

Boeing, the American airplane builder, employs French suppliers.

The aviation segment encompasses the design, manufacture and commercialization of aircraft (airplanes, helicopters, drones, etc..) and specific  equipment related to (propulsion, aircraft systems, etc..).

The French aerospace industry is rather located in the Midi-Pyrénées and Aquitaine regions.

According to the picture, Boeing use Safran (a French group) for the landing gear, wheels and brakes. The company also collaborates with Michelin, a French manufacturer, for the pneumatics.

Thales is an international electronics group specializing in aerospace, defense and information technology. Present in 56 countries, Thales is a leading provider of equipment for the aviation and space. The company works with Boeing for the entertainment during the flight for example.

Zodiac, a French aerospace supplier specialized in embedded airplane systems, flight safety and cabin layout, works with Boeing on the management of water, seats and the toboggan evacuation.

LATECOERE, aviation suppliers and best known for his seaplane, collaborates with Boeing for the passenger doors.

http://fr.wikipedia.org/wiki/Safran_(entreprise)

http://www.latecoere.fr/

http://www.airemploi.org/f/industrieaeronautique/

http://fr.wikipedia.org/wiki/Secteur_a%C3%A9ronautique_et_spatial

Le salon du Bourget

The Salon international de l'aéronautique et de l'espaceParis-Le Bourget, better known as the Paris Air Show, or under the SIAE, is one of the most important international events presenting aerospace materials in the north of Paris. Known by the English speaker as the Paris Air Show, the Salon took place every two years. It is the first appointment of the global aviation industry, just before the Farnborough (Germany).
The Salon includes days reserved for professionals and other for the public.

Manufacturers exhibit their latest aircraft in flight demonstrations.

http://fr.wikipedia.org/wiki/Salon_international_de_l'a%C3%A9ronautique_et_de_l'espace_de_Paris-Le_Bourget

Different logos of Airbus

1970

Before 2010

After 2010

For the first time since 1969, Airbus has changed its logo in adopting this new modern police which should strengthen its brand image.

The logo before 2010 symbolizes the different sizes of the fuselage Airbus product line

The logo after 2010 has not changed so much. It represents the merger between Airbus and EADS.

The Airbus company

Airbus is an European aircraft manufacturer based in Toulouse in France. 100% subsidiary of the industrial group EADS, the company produces more than the half of the plane in the world.
Airbus employs 62,751 people in 18 sites in France, Germany, the United Kingdom, Belgium and Spain. Airbus has subsidiaries in the United States, China, Japan and India.

The company produced its first Airbus A300 aircraft in 1972.
It was announced a restructuring of EADS to become Airbus Group on January 1^st 2014.

http://fr.wikipedia.org/wiki/Airbus

Airbus, Boeing and the state intervention

Airbus and Boeing operate in a strategic sector requiring huge investment and years of development to come up with new planes. If they face some issues during the advancement of a project, it can lead to delays in the delivery, higher costs and even breakdowns like with Boeing's Dreamliner. Moreover, the airlines can request a discount on their orders since this could be harmful for them. 

For instance, recently Boeing had issues with the Dreamliner's ion battery and Japanese airlines – already using several 787 Dreamliner – were forced to cancel hundreds of flights because of these technical incidents.

Because of the risk taken by Airbus or Boeing, no banks would finance their project unless the State brings its support. This is materialized by subsidies. Airbus for example is a subsidiary of the group EADS with both public and private shareholders. Airbus received subsidies for the A380 program and recently for the A350 by the different public investors in EADS (France, Great Britain, Germany, Spain). On the other side of the Atlantic, Boeing is a private company but they also obtain government aids through their military programs. These innovations are then applied to the commercial planes.

For many years, the two firms have been arguing about the state intervention and the aids. Both claim that these are unfair and the bone of contention lies in the amount of the subsidies. They asked the WTO to carry out an investigation and to be the mediator but it doesn't have the power to condemn one of the actors.

It's a war going on between the two major actors of this oligopolistic market. A lot of money and jobs are at stake and this industrial sector is strategic for governments as it influences the balance of trade through exports.

http://www.lepoint.fr/economie/subventions-boeing-triomphe-airbus-aussi-12-03-2012-1440507_28.php

http://www.franceinfo.fr/economie/tout-info-tout-eco/qui-d-airbus-ou-boeing-profite-le-plus-des-subventions-etatiques-554941-2012-03-13

http://www.economist.com/node/14214813