Managerial Economics Report: Airbus vs. Boeing Competition Analysis

This report provides an analysis of the competitive dynamics between Airbus and Boeing, the two dominant players in the aerospace and defense manufacturing industry. It examines their market strategies, including their approaches to market share, and their responses to competitive pressures. The report highlights the duopolistic nature of the market, where both companies collectively hold a significant portion of the market share. It also investigates how acquisitions, mergers, and trade conflicts, such as those involving tariffs and the World Trade Organization (WTO), have shaped the competitive landscape. The report further considers the importance of markets like China for both companies and how trade deals and economic factors impact their market positions. The conclusion suggests that changes in the market could lead to shifts in market share, with the recent trade deal with China playing a crucial role in Boeing's future prospects.

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
The approach of the Airbus and Boeing in aircraft marketplace.................................................2
Conclusion.......................................................................................................................................2
References........................................................................................................................................3

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Introduction
The manufacturing industry of the defense and aerospace is dominated by the two largest
organizations such as the Airbus and Boeing (Airbus.com, 2020). The revenue generated by the
Airbus and Boeing was 63.7 billion euros and 101.13 billion US dollars respectively. Both
companies together hold the market share of 99%.
Discussion
The approach of the Airbus and Boeing in aircraft marketplace
The major share of the jet airline market is occupied by the two big players such as the
Airbus and Boeing. Both of the organization were operating in the aircraft craft market since
1990 (Boeing.com, 2020). The market of both of them are characterized as duopoly. The market
share of the Airbus in the civilian helicopter segment is 54% while, there is no share of Boeing in
the same segment. On the contrary, in the transport and military attack helicopter segment,
Boeing is the market leader.
A series of acquisitions and mergers resulted in stronger presence of the Airbus and
Boeing in the aerospace industry of the world. A European consortium gave birth to the Airbus.
On the other hand, former arch-rival, McDonnell Douglas was absorbed by the Boeing in 1997
(He, Hipel & Kilgour, 2017). There were various players in the market those who forced to leave
the market due to harsh competition from the Airbus and Boeing. As the competition between
two large companies got intensified. The government of the UK and USA blamed the Boeing
and the Airbus to use unfair practices in business respectively. In retaliation of, improper
subsidies imposed by the Airbus, the government of US imposed penalties in form of tariffs on

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goods of European Union and Airbus. The US government also got the permission from the
World Trade Organization (WTO) to impose the tariffs (Forbes.com, 2020).
According to the WTO, the imposition of the tariffs would affect the EU goods of worth
8 billion US dollar. Both side would be affected by the imposition of tariffs. The total amount of
defense and aerospace exports of the US to Europe stood at 30.5 billion US dollar. On the other
hand, the total import stood at 23.6 billion US dollar. Hence, the major loss would be carried out
by the Boeing due to tariff imposition. China is one of the important market for both the aircraft
companies (He, Hipel & Kilgour, 2014). Though, the Airbus remained beneficial due to dealing
with the growing Chinese market. The trade conflict between the US and China, kept the
position of the company in doubt. However, the finalization of the recent trade deal between the
US and China would benefit the Boeing. As China decide to purchase the Boeing planes of
worth 16 billion US dollar to 20 billion US dollar.
Conclusion
The competition between the both organizations remained since the establishment of both
the Airbus and Boeing. Some favorable changes may lead to Boeing beat the Airbus and gain
larger market share. The trade deal with China would play an essential role in the market share of
the Boeing.

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References
Airbus.com (2020). Airbus Home. https://www.airbus.com/
Boeing.com (2020). Boeing: The Boeing Company. http://www.boeing.com/
Forbes.com (2020). How Will Boeing Gain Market Share?. Forbes.com. Retrieved 25 January
2020, from https://www.forbes.com/sites/greatspeculations/2019/02/21/how-will-boeing-
gain-market-share/#4af2081c1e9b
He, S., Hipel, K. W., & Kilgour, D. M. (2014). A hierarchical approach to study supply chain
conflicts between Airbus and Boeing. In 2014 IEEE International Conference on
Systems, Man, and Cybernetics (SMC) (pp. 1559-1564). IEEE.
He, S., Hipel, K. W., & Kilgour, D. M. (2017). Analyzing market competition between Airbus
and Boeing using a duo hierarchical graph model for conflict resolution. Journal of
Systems Science and Systems Engineering, 26(6), 683-710.