Boeing or Airbus: Which Company Will Dominate This Massive Market?

Boeing 777-8X & 777-9X

Boeing 777-8X & 777-9X

Built-from-scratch planes, reengineered jets, fuel-saving technology — the fight for global supremacy is intensifying between Airbus and Boeing . But which one will emerge as king rests a lot on how the duo capitalizes on the enormous growth opportunity of the Asia Pacific market. Let’s gauge the prospects of this burgeoning market, and see what each of the two is doing to draw higher orders from airlines operating in the region.

Asia Pacific — a hotspot

Asia Pacific is expected to become the commercial aviation industry’s growth engine for the next two decades, as demand slows in mature markets like Europe and America. Some key points show that this is no exaggeration.

Of the top 10 busiest routes in the world, seven are in Asia.
Asia Pacific is home to more than four billion people, meaning 60% of the global population resides in this region.
According to Airbus, in 2012, more than 38% of the world’s middle-income group was in Asia Pacific, and this is estimated to grow to 68% by 2032.
According to the International Air Transport Association (IATA), in 2013, international passenger traffic climbed at a healthy 5.3% in the region.
Growth in domestic passenger traffic was even better with China registering 11.2%, Japan 5.2%, and India 4%.
With annual GDP average of 4.4%, Boeing forecasts 48% of global traffic to come from Asia Pacific, triggering demand for 9,540 narrow-body and 3,570 wide-body planes in the next 20 years. A big reason behind the rise in air traffic is the falling ticket price. Discount carriers such as Lion Air , AirAsia , and FlyDubai are making air travel more affordable, and the growing middle class population is increasingly taking to the skies.

Airbus A321neo

Airbus A321neo

A larger number of low-cost carriers (LCCs) can come into play to cater to this rising demand. In 2014, around 12 more LCCs are expected to join the existing list of 47. Knowing that nearly half the total orders from Asia Pacific come from LCCs, this is a great development for aircraft majors.

Airbus cementing its dominance
Airbus bagged 339 orders or 82% of the industry’s total from Asia Pacific in 2013, and it expects the order flow to remain solid, coming both from full-service airlines and budget carriers. In fact, budget carrier AirAsia X has become the launch customer of Airbus’ recently unveiled A330neo by signing an agreement for 50 units. The company also received orders for 72 A320s worth $7.2 billion from India’s LCC GoAir . Airbus is banking on its narrow-body A320 and A320neo, and wide-body A350 XWB, A330, and the A330neo families to attract more orders.

Emphasizing on the region’s importance, Airbus’ president and CEO Fabrice Bregier had said, “This [Asia-Pacific] is where the action will be for the industry in the coming years.” To cement its dominance further and offer seamless service, Airbus plans to add more partners in the region.

The company is also keeping in mind any possible threats to its burgeoning backlog since the express speed of the LCCs’ growth has also led to interim overcapacities , making orders placed by them somewhat volatile. However, Bregier is upbeat about the Asia Pacific market and reiterates that it’s showing no signs of crisis. He says there will be “winners and losers” in the airlines business, and Airbus should be a little careful regarding managing its order books.

Boeing’s fighting for a greater share of the sky
Boeing is also optimistic about Asia Pacific and thinks that in the long run, the region will become its top market. Most of the demand would be led by the developing economies of China and India. A majority of the requirement would be for single-aisle jets, the 737 and the 737Max families are the company’s trump cards. Boeing claims that its reengineered 737Max, scheduled to enter service in 2017, is 14% more fuel efficient than competing jets. This is a big deciding point for LCCs while placing orders as such jets make flying more efficient, enabling airlines to offer lower fares to passengers.

As far as wide-bodies are concerned, the company’s banking on its revolutionary 787 Dreamliner and the popular 777 aircraft (along with its descendant, the 777X) to maximize orders. This year through August, the American major has received orders for 260 aircraft from Chinese airlines compared with 230 in 2013. Singapore Airlines has placed orders for 30 787-10s, and Cathay Pacific has ordered 21 777-9X models. Boeing also has a $4.4 billion order for 42 737Max jets from low-fare operator SpiceJet

Read more:

Leave a Comment