The commercial jets market has led to a trade war between the European manufacture Airbus and its American counterparts, the Boeing and McDonnell Douglas at different times in the past two decades. Due to the ever increasing demand for passenger and cargo airplanes, the three companies have been involved in a tight battle for customers all over the world each trying to improve its products.
The battle which seemed to take a political dimension intensified in 1991 when Airbus took control of about 30% of all aircraft orders that were being made globally. Airbus was a conglomerate of various European airplane manufacturers and enjoyed the support of their different governments. This facilitated Airbus’s entry into the largest market in the sector which was the manufacture of aircrafts that would fly across continents. Previously, this had been the territory of the larger and more experienced Boeing which had been started more than six decades earlier. The intercontinental aircrafts had been improved and some new innovative ideas incorporated which made its price increase more that 7 times. However, analysts noted that Airbus needed to invests more in technological research in order for them to float in the long range aircraft business.
The beginning of the 1990s saw each of the companies’ aggressiveness in improving its market competitiveness. McDonnell had to beat the vibrant Airbus in order to stay alive, while Airbus had to invest heavily on research and marketing to beat the older Boeing. Boeing on its side had to fight the threat of loosing the market share to the new and vibrant competitors it was facing. With their eyes on the $600 billion in the decade that was coming, the three companies together with their respective nations had to do anything that could make them remain competitive. This was not a small amount of money and therefore each one of them had to strategically place itself.
The Boeing Company which came into being in 1916 was based in the US in Washington DC. The company became the largest manufacturer of commercial aircraft as well as the largest exporter in America. In addition, it produced military planes and other goods for NASA and other many aerospace firms. The company’s objective was to become the dominant player in the commercial transport sector. It therefore developed several strategies such as incorporation of cutting edge technology in the manufacture of their planes. It also sought to use a huge chunk of its income in research and development in order to improve its aircrafts. This budget did cost the company so much that in 1971, it almost went bankrupt but was able to remain afloat by drastically reducing its workforce by about 60%. Nevertheless, the company had developed so much that by 1990 it had the capacity to create 430 aircrafts in one year which comprised of around 70% of the world’s demand at that time. The armed forces aircraft manufacture helped in the development of new technology and commercial aircrafts for Boeing. Federal military grants made it possible for the company to bring down the knowledge curve on business planes with far less investments of their own. For instance, in the 1960s, the military ordered 600 KC-135 armed forces transports from the company. Since the 707 was a close copy of the KC-135, its profitability was imminent even before its production was started.
Boeing continued developing different types of aircrafts with various passenger capacity as well as flight ranges in order to expand its market and lengthen product life cycles. These included the 727 and 737 which were short range planes, the 767 and 757 which were larger and medium range and 737, a huge plane with a capacity of 400 passengers. The plane could also fly further than any other business plane. In the same way, the development of the military’s giant plane the C-5 let to commercial jumbo jets such as the Boeing 747 as well as the McDonnell Douglas’s DC-10.
The cancellation of the development program for the 7j7 made Boeing financially strong and thus it was able to coordinate its marketing team to sell aircraft on an international scale. The cancellation of the j project also ensured that Boeing was able to compete well on the basis of price with other aircraft manufactures. It was able to target the largest world carriers such as United Airlines, British Airways and Japan Airlines. For instance United ordered 128 planes for $22 billion to be delivered over a 14 year period which was the biggest order in the history of aviation. This made United Airlines an exclusively Boeing carrier and thus boosted its income by a large margin. In addition, Boeing developed a rapid response service for replacement and parts for its clients. The growth of the company was thus enormous and by 1991, it had almost 6,300 commercial planes sold to airlines and other customers. Its range of products made it the only civil planes manufacturer that would meet the demands of most huge continental and global carriers.
In conclusion, Boeing has been a competitive civil aircraft manufacturer since its beginning. Due to several strategic planning, the company has gained popularity not only in the commercial sector but also in the military. It has used several incentives in order to remain competitive in the aviation industry. These incentives include investments in research and technology, affordability of their products and a well established parts and replacement rapid response arrangement for its customers. This has enabled the company to make impressive sales and hence facilitate its economic growth and dominance in the aircrafts market.