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4 Feb 2005

Industry

Airbus-Boeing in a Sky War: Reflecting World’s Aviation Industry

The formal introduction of Airbus A380 planes, dubbed the �Super Jumbo�, in January of this year reflects the war between the world�s two giant aircraft manufacturers � Airbus of Europe and the US-based Boeing � as to who will be the leader in the commercial aircraft industry. Outstanding features of the A380 aircraft include its gigantic body with 555 seats and a maximum range of 15,000 kilometers. In comparison with the Boeing 747, this new aircraft model can cut the cost per seat/mile by 15-20 percent. Service by A380 aircraft is set to be available in 2006. So far, fourteen airlines worldwide have already placed orders for 149 aircraft of this type with Airbus.

After being in crisis from 2001 to 2003, the aviation business around the globe has slowly emerged from the doldrums since 2004. As a result, commercial aircraft manufacturers have again become active. Certainly, the competition between the two aircraft manufacturing giants has become more intense. While Airbus was developing the huge A380 aircraft, which has just been introduced to the public, Boeing has focused on developing a new type of medium-sized airliner called the �7E7 Dreamliner� with a seating capacity of 250 passengers. This type of aircraft is sleek, modern and has a speed capability of 850 km/hr. Significantly, it can save 20 percent on fuel costs over other aircraft of similar size. With this capability, the aircraft can fly long distances, and it is expected to be available around 2008.

Kasikorn Research Center views that the fight to own the skies in the commercial airplane manufacturing industry between Airbus and Boeing at present is an interesting battle to pursue. Their plans to develop such differing models of commercial planes definitely reflects highly divergent points of view between these two producers towards their views of the world�s future flying business. In the case of Airbus, it believes that the number of people traveling by air will rise dramatically. Therefore, traveling by planes will become more a form of mass transport, and in the future, airports in major cities in the world will become more congested, particularly at regional airport hubs. Airbus believes that traveling by air in the future will mostly focus on traveling from Hub-to-Hub. Therefore, their plane that can carry 500-600 passengers per flight will definitely be able to better respond to such a trend in flying business in the future.

On the contrary, Boeing�s viewpoint differs significantly from Airbus, as Boeing deems that traveling by air in the future will more likely tend toward Direct Point-to-Point flight profiles in nature, where it believes that passengers will want fast service that transports them directly to their destination. Therefore, airlines will be scheduling a variety of flights to respond to passenger demand of passengers over specific routes to their destinations and will open flights to new destinations they have not flown in the past. Therefore, Boeing is aiming at developing the 7E7 Dreamliner as a swifter, fuel-saving capable transport for such service that can still fly Direct Long Haul without stopovers. It is believed that this type of airplane will respond best travelers in the future.

KRC believes that these visions concerning the picture of flying business of both Boeing and Airbus are both correct, while the number of those traveling by planes in the next 20-30 years will grow dramatically until making airline travel a form of mass transport. At the same time, travel by planes will also introduce more varied destinations. Therefore, it is necessary that airlines have many varied aircraft models to respond to differing demands of the flying public. In addition, countries will rather develop their major airports to be regional hubs. But at the same time, they will develop their smaller airports in cities, in parallel. Also, the trend in aviation liberalization that is expanding all over the world will add more liveliness to the picture of airline business in the future. KRC believes that the two giant plane manufacturing companies of Airbus and Boeing are ready to grow together with the trend in the world�s future airline business. a KRC


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