|June 24, 2013|
Can anyone compete with Boeing and Airbus?
Over the next 20 years aircraft demand is expected to be $4.8 trillion, doubling the current global aircraft fleet. Demand is so strong that Boeing's VP of marketing recently admitted: "There is room for us to grow in terms of production rate, there is room for Airbus to grow in terms of rate and frankly there is probably also room for a third competitor."
But if there's a competitor on the horizon for the world's top two airplane manufacturers, it didn't show itself at this year's Paris Air Show. Quite the opposite as Boeing and Airbus solidified their dominance of the market in impressive fashion.
Bombardier's CSeries and models from challengers such as Commercial Aircraft Corp. of China and Russia's Irkut Corp (IAPO). are being shut out of a single-aisle market projected at almost 25,000 planes in the next two decades. Brazil's Embraer SA (EMBR3), a Bombardier rival in regional jets, has avoided a confrontation with the Boeing-Airbus narrow-body duopoly and won $16 billion of business this week for upgraded small planes.
"It's one thing to have yet another air show where the CSeries doesn't do anything," said Richard Aboulafia, vice president of Fairfax, Virginia-based consultant Teal Group. "It's another thing to have their biggest direct competitor do more in an afternoon than they've done in five years."
Meanwhile, Boeing and Airbus each received about $40 billion in new orders during the four-day show.
So if you're looking for future competition? According to John Leahy, sales chief and chief operating officer at Airbus, "The ones who'll be serious competitors will be the Chinese. This is an industry that requires billions and billions of investments per year. I don't think the Canadians are capable of doing that and perhaps the others aren't interested in the long haul."