Boeing & Airbus - Analysis of the Global Commercial Jet Aircraft Market

Visiting Boeing & Airbus - Analysis of the Global Commercial Jet Aircraft Market

Jayant Rana

• High barriers to entry

• Capital intensive industry

• Building aircrafts is extremely complex

• Profits start to realize after a long time

• Government limitations on technology

transfer also pose as a barrierLOW

Threat of New Entrants

Bargaining Power of Suppliers

• Dependent on a large number of suppliers

• Only two major players in the industry

i.e. Boeing and Airbus

• Less likelihood of a supplier to integrate

vertically

MODERATE

• Can be rated as Moderate

• Boeing & Airbus hold nearly the entire

market – limiting buyer’s choices

• Aftermarket Support increases

switching costs, further decreasing the

buyer’s powerMODERATE

Bargaining Power of Buyers

• No alternatives for long distance journeys

• Aircrafts - Primary means of transport over

long distance

• Future requirements for aircrafts &

demand very high

• Effects of economic slowdown

• Cost cutting measures of corporate sector LOW

Threat of Substitutes

• Bidding for a limited number of high

value contracts

• Competitive pressure built up by the

buyers (airline industry)

oCut throat pricing

oLowering passenger revenues

oEfficient & cheaper maintenance

HIGHCompetitive Rivalry

• In Regional Jet Category from countries like

China, Russia and Japan.

• In Long Range Commercial Jets, threat is

posed by AVIC (Aviation Industry

Corporation) & COMAC (Commercial Aircraft

Industry of China).

Competition in Future

• Demand is set to increase in the Commercial

Jet segment as well as Regional Jet segment.

• Industry forecast are from 25000 to 29000

aircrafts, where a major chunk of this i.e.

75% will be of Commercial Jets, in next 20

years.

• Asian Airlines are expected to triple their

fleet to represent 31% of World’s

Commercial Aircraft.

Demand Predictions

• “Big Ticket” size orders will give some power to the

buyers, but because of only two producers, both

Boeing & Airbus will hold the major power over

buyers.

• In Regional Jet category, buyers will hold more power

due the entry of players like the Sukhoi Superjet 100

from Russia, the Mitsubishi Regional Jet (MRJ) from

Japan, and the ARJ21 from AVIC in China.

Buyer Power

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