When it comes to aircraft choices, Airbus and Boeing dominate the market and have done so for decades. How did this duopoly come to be, and how have Boeing and Airbus taken on the competition over the past years?
The story of the rise of this duopoly is one of the successes of two companies, with very different origins, combined with the downfall, or takeover, of several other companies. This article explores this fascinating history and the rise to dominance of these two companies.
A leading duopoly
According to reports by CNBC, Airbus and Boeing together account for 99% of all large aircraft orders (and these orders together account for 90% of all aircraft sales).
How have they come to this dominant position? It’s a tale of expansion and takeover that has been going on since the 1970s.
Boeing and Airbus have very different histories. Boeing was one of the first aircraft manufacturers, started over 100 years ago, and launched some of the most significant aircraft in the first 50 years of aviation history. It has since grown even further with significant acquisitions.
Airbus, by comparison, is young, formed only in 1970, but with significant European backing and worked quickly to develop direct competing aircraft. It started with the intention to take on Boeing and has done precisely that.
Since the competition fell away over the past decades, nothing has really challenged the duopoly. That may be about to change those with the rise of other manufacturers, particularly in China.
Boeing – history and growth
Boeing’s rise to dominance comes firstly from its history and long experience in the market. As it has built its technical expertise, its reputation with airline customers and governments has likewise been strengthened.
Boeing has been a leading aircraft manufacturer since 1916. William Boeing started the Aero Products Company. It soon changed its name to the Boeing Company and became a leading supplier to the military.
This was, of course, very early days in aviation and powered flight. The Wright brothers had only made the first successful powered flight in 1903, just a short 12-second hop. The first aircraft to use a stick to successfully control roll and pitch followed in 1908 (the Bleriot VIII).
Focus on military and airmail
The Boeing Company developed itself mainly as a supplier of military aircraft during the First World War. This continued long after the war ended, and still does so today. Much of this technology was re-used when it started manufacturing passenger aircraft. The Boeing 707, for example, used the same Pratt & Whitney turbojet engines as the B-52 Stratofortress, and its design was intended to double up as a military tanker aircraft.
Boeing’s first expansion outside of military operations was with airmail. Again, they became a leading player here too. Boeing offered the first commercial aircraft, the B-1, on mail services across the US, with several contracts from the US Post Office. Its mail service was so successful it set up a second company, Boeing Air Transport, in 1927. This would eventually become United Airlines.
In 1930, Boeing took its airmail services further with the Boeing Monomail aircraft. This moved away from the traditional biplanes seen before, with a sleek single wing design. It was also an all-metal airframe (Junkers had first introduced this in 1915 with the Junkers J1, but most aircraft still retained partly wooden airframes).
The Monomail was a revolutionary aircraft. It went through several variants and set the standard for many of the aircraft that followed. It also firmly established Boeing as a shaper of the aviation industry.
Passenger services start, and clash with Douglas Aircraft
Boeing launched the Boeing 247 aircraft in 1933. This built on many of the design successes of the Monomail and was the first practical passenger aircraft built. It could take 10 passengers, and (according to Boeing) could operate from New York to Los Angeles in 20 hours with seven stops. Boeing built 75 aircraft, with the majority (60) operated by Boeing Air Transport.
The Boeing 247 may have started the era of reliable and comfortable passenger travel, but it was another company that had the most early success. The Douglas Aircraft Company had been formed in 1921 and was a significant competitor to Boeing. It had similarly delivered military aircraft during the war but came head to head with Boeing over passenger development afterward.
As a response to the Boeing 247, Douglas designed and built the DC-2 in 1934, soon followed by the improved DC-3 in 1936. This improved on the range, capacity, and comfort offered by Boeing and went on to be a huge success. According to analysis in the Smithsonian, it was the first profitable passenger aircraft, able to operate passenger services without any cargo or mail subsidies.
In total, just over 600 passenger DC-3 aircraft were built. And as of August 2020, there were 172 DC-3 aircraft still in operation. The success was well noted by Boeing, who went on to work closely with Douglas and, eventually, to take them over.
Jet aircraft – leading the way with the 707
Boeing did much better with early jet aircraft than it had with its first passenger propeller aircraft. The first passenger jet aircraft was the de Havilland Comet, entering service in 1952. This was a groundbreaking aircraft but suffered from several serious problems, from which Boeing took the chance to learn.
The Boeing 707 first flew in 1957 and is widely regarded as the start of the successful jet age. It also established Boeing as a dominant civilian manufacturer, with the 7X7 series continuing, of course, to today.
The company took this further with the 727, launched in 1960. This was another success for the company and was the first airliner to reach 1,000 sales.
The 737 launched in 1967 and has been the best selling commercial aircraft to date (although now beaten by the Airbus A320 in numbers of orders). Boeing made some great design choices with the 737, including twin engines mounted under the wings and a wider fuselage, increasing passenger and cargo capability.
The early popularity this gave over the competition, combined with Boeing’s ongoing work to adapt and evolved the series, has given them dominance in the narrowbody market.
Changing the industry with the 747
Similarly to how the 737 set the standard for narrowbodies, the 747 did the same for larger widebodies. The 747 launched in 1970, following collaboration between Boeing and Pan American World Airways to build a new aircraft, 2.5 times the size of the 707.
The 747 has remained in production ever since and has been the best selling widebody aircraft to date. It not only pushed the size and performance of aircraft but also changed the economics of aviation. It allowed airlines to offer lower fares and longer routes. Combined with the deregulation of airfares in the US around the time of its launch, this opened flying to more passengers.
Merger with McDonnell Douglas in 1997
One of the main reasons we have ended up with a dominant duopoly in aircraft manufacturing is the lack of competition. Acquisition is part of this, and the most important example of this was Boeing’s merger with competitor McDonnell Douglas in 1997.
Douglas Aircraft and McDonnell, both successful aircraft manufacturers, merged to form McDonnell Douglas in 1967. Douglas had already had huge success with the DC-2 and DC-3, and the new company went on to produce several important aircraft, including the DC-8 and DC-10.
The merger created the world’s largest aerospace company and combined the last remaining two large American aircraft manufacturers. The new company retained the Boeing name, but the new emerging company was now very different.
It took with it many of the McDonnell Douglas strategies and ways of working (a full discussion of this is not necessary here, but many think this led to the move away from aircraft innovation and a lower cost strategy of updating existing models).
Following the merger, Boeing offered an even larger range of aircraft. The MD-95 became the Boeing 717, and passenger production of the MD-11 ended.
Although the merger with McDonnell Douglas was the largest, it was not the only expansion of Boeing into its competitors. In 1986, Boeing purchased De Havilland Canada, the manufacturer of the popular Dash 8 aircraft.
Focussing on efficiency, and competing with Airbus
The years since the 1990s have had a different focus for Boeing. It has continued to innovate and develop new technologies (with many advances outside commercial aviation), but in aircraft manufacturing, it has had to respond to significant competition from Airbus.
The development of new aircraft has responded to the shift in demand for efficient and ‘green’ focussed aircraft. The 787, for example, promised a great deal in this area and was the most successful aircraft ever for early orders. The 737 family has, of course, continued to evolve with more efficient Next Generation and then the 737 MAX families.
Airbus – the competition began in 1970
Airbus has its origins back in the 1960s, with several European manufacturers looking to come together to take on the much larger US manufacturers. Both manufacturers and European governments realized that collaboration was needed to take on these companies and share the cost and risk of aircraft production.
In 1965, UK based Hawker Siddeley, and French manufacturers Breguet and Nord Aviation began working together on plans for an ‘Airbus’aircraft, with a capacity of over 100. Other French and German partners soon joined.
Airbus Industrie GIE (Groupement d’Intérêt Économique or Economic Interest Group) was formed in December 1970, with French and German manufacturers each owning a 50% share.
Taking on Boeing
By the time Airbus was formed, Boeing was already a leading manufacturer. It had seen great success with the 707, ushering in the real start of the jet age. Airbus planned to take it on with the A300. The ‘300’ in the name referred to the planned passenger capacity (although this was reduced following market research that suggested 250 would be more popular).
Construction was indeed a joint European effort (as has remained the case with Airbus to date). This enhanced ability is what has enabled the larger company to take on Boeing; no smaller European company could have done it alone. France would lead the construction of the cockpit and central fuselage. Wings were manufactured in the UK, other fuselage sections in West Germany, flaps and spoilers in Holland, and the tailplane in Spain.
The A300 sold well, and not just in Europe. By 1979 the consortium had 256 orders, and Airbus was already working on its replacement, the A310.
The launch of the A320 in 1987, though, was the move that secured Airbus’ dominant place in manufacturing. Work had already begun on a single-aisle narrowbody aircraft in Europe in the 1970s, and these plans transferred to Airbus to become the A320.
Of course, Airbus looked extensively at what Boeing had already achieved with the 737 and set out to beat it. Part of the appeal of the A320 would be its European origins, targeting European airlines. But it would also end up competing well, and in fact, won over US customers as well.
Taking on widebody competition
With its financial backing and vision, Airbus was also well placed to take on Boeing in the widebody market, something other competitors never did. It launched the A330/A340 program in 1986. This was an innovative approach to design two aircraft together, with plenty of cost-saving opportunities in both design and construction.
Airbus has, of course, gone on to launch the A380. While it has not been as successful as hoped, it has been far from a failure. It was envisioned to take on the Boeing 747, and it has done just that, winning several customers and selling 251 aircraft. Had the freighter version gone on to be launched (it was dropped when the passenger version began to suffer delays), it could likely have challenged Boeing in that market as well.
Taking a stake in Bombardier
Although not as dramatic as Boeing and McDonnell Douglas’ merger, Airbus has also seen competitor acquisitions as part of its growth. In 2017, it announced it was taking a majority stake in the Bombardier CSeries program (this started at just over 50% but has since increased). This became the Airbus A220 and removed one more competing planemaker from the market.
Growing fast to reach Boeing
According to CNBC, the two companies were delivering the same numbers of aircraft by 2018. Airbus had 800 aircraft that year, compared to 806 from Boeing (but with Airbus showing almost double the growth of Boeing from the previous year).
Forbes estimates that in 2019, Airbus’ market share had reached 62.5%. This is inflated by the slowdown Boeing saw with the grounding of its 737 MAX aircraft. Nevertheless, this is an impressive achievement for a company formed over 50 years later!
What about other competing companies
Boeing and Airbus have had great success but from very different starting points. They have not been the only major aircraft companies, though. The limitations, other plans, or failures of other companies have been vital to their rise to dominant duopoly status.
We consider here some of the most critical manufacturers over the past 100 years, and why they have ended up failing to challenge Boeing or Airbus sufficiently.
Lockheed Martin
Lockheed Corporation was a promising player in commercial aircraft manufacture in the 1960s and 70s. It launched the L-1011 TriStar in 1972, promising to be one of the most advanced jets. It was a great aircraft, but sales fell short of expectations.
Lockheed left the commercial aircraft manufacturing business in 1983 and focused instead on defense and aerospace contracts. Its merger with Martin Marietta in 1995 created Lockheed Martin, one of the world’s leading aerospace companies, but concentrated on military and defense projects.
de Havilland
Many people will remember de Havilland from the de Havilland Comet. But the UK based company had its origins long before this. It was established in 1920 and was a leading manufacturer of military and civilian biplanes through the 1920s and 1920s. It also developed the wooden Mosquito, an important aircraft during the Second World War.
The de Havilland Comet was a groundbreaking aircraft launched in 1952, the first passenger jet aircraft. While it marked a significant step forward in aviation, it had some serious problems. Most notable were issues with its fuselage, windows, and pressurization. By the time de Havilland improved this, Boeing had launched the improved, and ultimately much more successful, 707 jet aircraft.
De Havilland became part of Hawker Siddeley in 1960, which later became part of BAe Systems. BAe Systems, of course, is still going strong today, and is one of the largest defense and aerospace companies in the world. British Aerospace (the forerunner to BAe systems) developed the BAe 146 regional airliner, and this has carried on with the Avro RJ.
McDonnell Douglas
After the shift in focus of Lockheed, McDonnell Douglas was the largest remaining competitor to Boeing and Airbus. It was a successful company, and could easily have further challenged Boeing and Airbus. But it was not to get the chance.
As discussed earlier, it merged with Boeing in 1997 in one of the most significant mergers to date in US history. Many of its aircraft continued to be produced (and are still operated today), but it no longer threatens the duopoly.
Bombardier
The Canadian manufacturer Bombardier expanded into civilian aircraft in 1986, after establishing itself in the rail transportation sector. It began with the Canadair Regional Jet (CRJ) program. This program did well, leading to the development of the CRJ700 in 1997. It also expanded with acquisitions, including Learjet and De Havilland Canada (with its Dash 8 aircraft, previously owned by Boeing).
In the 2000s, Bombardier launched larger aircraft, the CRJ900 and CRJ1000, and then the 110-130 seat C Series. Sales of the C Series were slow (some say due to insufficient marketing, as well as developmental delays and increased costs).
The situation got worse when a large order from Delta Air Lines led to a petition for dumping being filed for Boeing. The duties imposed by the US Department of Commerce gave little option for Bombardier, and Airbus took over the C Series program in 2018.
The increased funding and marketing ability boosted sales of the C Series (now known as the Airbus A220) but to the detriment of Bombardier. It sold its remaining stake to Airbus in 2020.
Bombardier has declined further since then. Simple Flying looked in more detail at the problems, which included financial fallout from the C Series program and declining sales of CRJ aircraft, increasing competition from Embraer, and costly LearJet development.
Embraer
Along with Bombardier, Embraer has been a leading manufacturer in the regional jet market. It was founded in 1969 in Brazil, and today is the third-largest civilian manufacturer.
It has excelled in the production of mid-size regional jets. According to a statement by the company in 2018, at that time, it led the market of sub 150 seat aircraft, with 100 operators of its ERJ and E-Jet aircraft. It has pushed new developments larger, with the E195-E2 offering a capacity of 120-146, firmly competing against aircraft such as the A220.
In 2019, Boeing announced a $4.2 billion deal to take an 80% stake in Embraer. In a similar move to that with McDonnell Douglas, it would control its aircraft, rather than compete.
2020 has been an interesting year for Embraer. The deal with Boeing fell through in April 2020. With blame on both sides for the failure, it is unlikely it will happen again any time soon.
Simple Flying looked at the company’s prospects in 2020. It has not seen the same delays as Boeing and Airbus in production, and its aircraft have returned to the skies much sooner. In August 2020, Embraer stated that 90% of its E175 aircraft in the US were flying, compared to 61% in the widebody market overall. And many operators have moved smaller Embraer aircraft onto routes previously operated by 737s and A320s.
The company will now head in a different direction without Boeing. The crisis in 2020 may play well for their offering of smaller aircraft. And there may be another deal lined up with a different manufacturer. But apart from a small push into the lower sized end of the market, this is unlikely to affect Boeing and Airbus dominance.
Who leads the pair?
There is no clear leader in the Boeing vs. Airbus race. Both manufacturers are successful, and the ‘lead’ swings between them. Simple Flying took a detailed look at the state of this competition, how both companies have responded to each other’s moves, and the current success across different types.
In the narrowbody market, the battle is clearly between the Boeing 737 and the Airbus A320 families. Boeing is ahead in deliveries (the 737 is still the most delivered aircraft to date), but Airbus has moved ahead in orders. This may change once issues with the 737 MAX are fully resolved.
The situation is more complicated in the widebody market. At the top end, Boeing is surely ahead with the 747. It was developed earlier, sold better, and remains in production. But Airbus developed a great aircraft with the A380, and perhaps would have had more success had it launched earlier, or if a freighter version had been successful.
And with the A330 vs. 787, Boeing is clearly ahead in sales. But the A330neo is cheaper and is still a great aircraft.
The 777 vs. A350 battle is also hard to call. The A350 has sold well and will be tough to beat, but Boeing promises significant advances with the new 777X. Of course, the slowdown in 2020 will have an impact on this, too; only time will tell who wins.
Will the duopoly continue?
There have been few challenges to Boeing or Airbus since Airbus began manufacturing in the 1970s. Other companies have either moved aside or been absorbed into the duopoly. With the failure of Boeing’s acquisition in 2020, Embraer remains a large, separate competitor. But it is not planning any moves to develop larger aircraft.
The rise of competition from China and Russia
Several countries, most notably Russia and China, have tried to compete in the larger aircraft manufacturing market. There is a strong possibility that efforts in this area will start to threaten the duopoly, possibly within 10-20 years.
Chinese manufacturer COMAC has already launched small and mid-size regional jets. In the larger narrowbody market, it offers the C919. This has the capacity and range to take on the Boeing 737 and the Airbus A320, and it likely will do so. The grounding of the 737 MAX has undoubtedly helped this, but any significant changes are still some way off. But as China’s aviation market grows, a Chinese built alternative will be a popular option.
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The 737 MAX beats the current C919 offerings in several ways (including capacity, range, and cabin size), but this will likely improve with future variants. After all, Boeing has had over 50 years to perfect the 737.
Competition in the widebody market is further away. The first aircraft under development is the CRAIC CR929, a joint development between Russian and China. This will take on the Boeing 787 and Airbus A350, with a capacity of between 261 and 291 passengers and a range of around 12,000 kilometers.
The CR929 was due to be launched by 2025, but this may be postponed. Not least, there are delays in sourcing engines. CRAIC has stated that it hopes to take 10% of the widebody market within 20 years. It will be some years before we see if this happens, but it is a well-funded operation that could be popular in the growing Asian market.
What about supersonic aircraft?
And as a final thought on breaking up the duopoly, don’t forget the potential return of supersonic aircraft. Europe, of course, developed Concorde, and Boeing, at one point, had plans for the supersonic Boeing 2707. Concorde was retired in 2003, and Boeing dropped plans for the 2707 in the 1970s.
A new company, though, Boom Supersonic, is leading the development of a new supersonic aircraft. It has developed a prototype (the XB-1), due to start test flights in 2021. And following this, it will begin to work on the Boom Overture, a 55 seat aircraft operating at Mach 2.2 with a range of 8,300 kilometers.
Boeing and Airbus may start to look again at supersonic, of course, if it proves viable, but it may also give others the chance to get ahead and moved it’s their dominant space.
Would you like to share any thoughts on the Boeing and Airbus duopoly, or discuss any other manufacturers we have not covered? Do you think we will see any changes to this duopoly in the coming years?