Aircraft maker's battles

The airline making business is fiercely competitive, exemplified by the ongoing fight between the two biggest players, Boeing and Airbus, for customer orders and in the courts, over the legality of subsidies each has received.

Their behavior however, is not altogether unexpected. Getting and keeping market share is all about making the right aircraft, which unlike designing something like a new chewing gum flavor, involves huge fixed costs, and takes a long time. Aircraft makers need to predict today what types of aircraft will be in vogue in a few years time, and spend billions to develop them.

For a while though, it looked like both Airbus and Boeing had decided what that future aircraft was all about. Airbus seemed set on the super-jumbo as the linchpin to their hub-and spoke model, while Boeing was championing their Dreamliner and the point-to-point approach.

But more recently it looks like the two strategies are somewhat converging, as each player is starting to develop models to directly compete with the other ones supposed niche.

The European consortium has, along side its uber-sized A380, also started building the A350, which is a direct competitor to Boeing’s fuel efficient long-distance baby.

And in more recent news, it looks like Boeing may be re-vamping its iconic 747, the Wall Street Journal reported yesterday. Presumably this move is a hedge against the success of the A380.

This might mean that both companies take a much less risky approach, but it will most likely also make it difficult for each to wean themselves off those much fought over subsidies.