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Who Will Split The A-B Duopoly?  
User currently offlineJet-lagged From United States of America, joined Mar 2002, 883 posts, RR: 0
Posted (10 years 11 months 2 weeks 6 days 9 hours ago) and read 3586 times:

Airbus and Boeing won't dominate large commercial air transport in a duopoly forever. Think a couple generations ahead.

The question is where will a third major airframe designer and assembler come from and why? Planes of 150 to 350+ pax designed and made there ,and they become world #2 in terms of revenue, not seats or frames. So one of Boeing or Airbus is #1, and one slips to #3.

Likely candidates are Russia, Japan, China, the U.S., and a European state. Possible reasons could be new technology (BWB, supersonic, commoditization), cost, national agenda, or, god forbid, climate change or war.

Any predictions?

12 replies: All unread, jump to last
User currently offlineRoseFlyer From United States of America, joined Feb 2004, 10489 posts, RR: 52
Reply 1, posted (10 years 11 months 2 weeks 6 days 9 hours ago) and read 3535 times:

I see Embraer as long term competition to B and A. Embraer is content with the regional market now, but they are expanding quickly and have the benefit of a much lower cost structure associated with Brazil. Labor contracts are significantly less and there is a decent amount of shared risk involved. They can produce a plane for less then Bombardier (proved by their profit versus Bombardier's horrible financial state). Embraer financed only 75% of the E170-190, its suppliers shared risk and absorbed the other costs. Brazil has a strongly developing economy that has the ability to produce high quality products. The business plan of Embraer is solid, and years down the line, it will probably expand up market and start to take on A and B. It is already nipping at their heels with the E195.

If you have never designed an airplane part before, let the real designers do the work!
User currently offlineCloudy From , joined Dec 1969, posts, RR:
Reply 2, posted (10 years 11 months 2 weeks 6 days 8 hours ago) and read 3415 times:

The place making the most moves in that direction is China. Chinese firms have been trying to absorb as much jetliner tech as possible for years. My guess is the next serious competition for Airbus and Boeing would be some sort of alliance between Embraer and a number of Chinese firms. Or they could partner with Bombardier. The C-Series from Bombardier is already aimed more at the lower end 737's and A320 series market than at the E170 to 195 market.

Even without a full fledged third party, Embraer and Bombardier could force Airbus and Boeing to upgrade their narrowbodies. Boeing has already said this is probably their next major project. In a pure duopoly, there is little incentive to update the narrowbody line because one's competitor will simply do the same and the profit margin will not go up.

User currently offlineZvezda From Lithuania, joined Aug 2004, 10512 posts, RR: 63
Reply 3, posted (10 years 11 months 2 weeks 6 days 7 hours ago) and read 3397 times:

RoseFlyer is quite right and now in my respected users list.  Smile

User currently offlineJet-lagged From United States of America, joined Mar 2002, 883 posts, RR: 0
Reply 4, posted (10 years 11 months 2 weeks 6 days 3 hours ago) and read 3295 times:

I'm interested that you mentioned Embraer. When I made the first post, I considered 'Brazil', but didn't include since it is a relatively small economic fraction of the world. They would have to work extra-hard to build distribution and sales contacts in Europe and Asia, and I'm not sure how successful they could be to build the design capacility to move up in size. I would be happily impressed to see them succeed though.

User currently offlineJeb94 From United States of America, joined Oct 2004, 637 posts, RR: 4
Reply 5, posted (10 years 11 months 2 weeks 5 days 14 hours ago) and read 3100 times:

The EMB-170/190 family is larger in general than a true regional jet. I think they are a sign that Embraer has big plans for the future. As for distrbution and sales contacts, they're already developing them with the EMB-170/190. Notice how, unlike the 135/145 series, Embraer doesn't call their new planes RJs. China is a real good possibility as well. I believe a Chinese company already has an order for 22 license built MD-90s. Its only a matter of time before they start building their own designs. The real question there is, will they go with western engine and avionics manufacturers (a good possiblity) or try and build their own. If they go with their own then they will face the same stigma that current Russian and Ukrainian manufacturers are fighting to overcome. Japan, to dedicated to other industries so not as likely to break into the large civilian transport business anytime soon. Europe is pretty well covered by Airbus and most companies there are quite content to be a cog in the gears of Airbus, with strong encouragement from the EU I'm sure. Russia and the Ukraine already have solid manufacturers building good products but having trouble getting by the old Cold War stigmas they've been unfairly saddled with of inferior products. Thats my take anyway. Oh, unless the US Military demands it, don't expect to see a BWB aircraft anytime soon. (It appears Boeing dropped it.)

User currently offlineTavong From Colombia, joined Jul 2001, 864 posts, RR: 4
Reply 6, posted (10 years 11 months 2 weeks 5 days 13 hours ago) and read 3017 times:

I also think that in the long term Embraer would have a key role in the 150+ planes market, there is also Russian aircraft they are slowly changing thier desings and making their planes more and more "efficient" and more according to the Airbus or Boeing standars, you can see for example the IL-96, i is an excellent plane but got to carry with the "fame" that russian aircraft has, anyway the russian industry can be a medium term competitor in the 150+ passengers planes and then Embraer in the long term.


Just put me on any modern airliner and i will be happy, give me more star alliance miles and i will be a lot more happy.
User currently offlineAither From South Korea, joined Oct 2004, 983 posts, RR: 0
Reply 7, posted (10 years 11 months 2 weeks 5 days 12 hours ago) and read 3001 times:

If both Airbus and Boeing play well the commonality concept -especially Boeing- Embraer may have difficulties to enter the 120+ seater market operated by non LCCs.

About China, when we see how their airlines fleet are managed i doubt they could make jet before long, at least for western markets.

Jeb94, your comments on Europe are just nonsense, just look at the fleet deliveries, orders and launch customers, and compare the data to the Airlines in the States.

Never trust the obvious
User currently offlinePlanemaker From Tuvalu, joined Aug 2003, 6759 posts, RR: 34
Reply 8, posted (10 years 11 months 2 weeks 5 days 11 hours ago) and read 2936 times:

Think a couple generations ahead.

If by a couple of generations you mean 60 years, then without a doubt Russia, China and possibly India will have entered into the 150+ single aisle market, at the very least.

People underestimate China but remember that China has already put a man in orbit and has an extensive and growing aerospace industry. Furthermore, China has already announced a 150-seat follow on project to the ARJ21.

Russia is also underestimated, as pointed out in other previous posts. Just remember, without them the Space Station would be Space Junk! Russia already has an established background of large aircraft design and manufacturing experience with some novel and innovative designs. Going forward, they are already working with Boeing on two civil fronts - the 7E7 design and the RRJ.

India has a more modest civil aviation background at the moment but has considerable military aviation manufacturing infrastructure and is also on the verge of putting a man in orbit. Currently India is churning out the highest number of engineers in the world - so in far less than sixty years I don't see why they won't have every engineering capability for a doemstically designed and manufactured airliner.

All three countries have certain competitive advantages that could certainly guarantee future domestic airliner success (if not international):

1. Population
2. Geography
3. HR/Labour/Cost
4. Economic growth
5. Raw materials (Russia)

A further note, Boeing has mentioned several times that it is getting out of aircraft manufacturing and becoming an aircraft integrator. And they are already well on their way with the 7E7 - after the sale of the Mid West plants, the only 7E7 part that Boeing will be manufacturing is the V/Stab (and even that may be farmed out).

You can certainly forget about Bombardier - they will not be in the civil airliner business. Embraer won't be building 150+seatess in 2 generations but I do believe that future Embraer developments over the next 5 years could possibly include one more stretch of the E195 (an E200  Big grin )to take the family seat range up to just below the 73G/A319, and to give the E170/190 family trans continental range.

Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
User currently offlineRoseFlyer From United States of America, joined Feb 2004, 10489 posts, RR: 52
Reply 9, posted (10 years 11 months 2 weeks 5 days 10 hours ago) and read 2893 times:

Well Brazil is a powerhouse in its own way. With a GDP of $1.31 trillion it exceeds Canada at $980Billion and Russia at $1.28 Trillion. It is often overlooked, as much of South America is, but it has the ability to have big impacts because it has one of the largest economies in the world. There are many Brazilian companies associated with Embraer. The cost structure of Brazil associated with the strength of the company proves that they have the ability to compete full scale. 10 years ago no one would have thought Brazil could produce a plane that was competitive with "westernized" cultures, but they have and can support their development accross the western hemisphere. The true test of the company will be if it can sell planes in the Asia/Africa/Australia. If they can, they will be a global company that will easily fight A and B. And since so many airlines already fly Embraer planes, commonality will still hold true. Airlines like B6 are willing to give the E195 a try, so maybe in 10-15 years they will begin to replace/supplemant their A320s with bigger and better Embraer planes.

If you have never designed an airplane part before, let the real designers do the work!
User currently offlinePlanemaker From Tuvalu, joined Aug 2003, 6759 posts, RR: 34
Reply 10, posted (10 years 11 months 2 weeks 5 days 9 hours ago) and read 2840 times:


You have a... "rose" tinted view of Embraer - "a global company that will easily fight A and B."  Big grin Their current success is more due to good fortune than strategic planning.

Embraer lucked into the E170/190 program when FD stopped accomodating Crossair, which then became the launch customer for the E170/190 (at the time called ERJs). As Embraer will tell you, the Crossair order was completely FDs, and without getting the Crossair order by default, there simply would not have been a E170/190 program - it would have followed the BRJ-X program onto the shelf.

More good luck followed in that the original program called for only 2 aircraft but the "fortuitous" well-timed Brasilian currency devaluation allowed Embraer to develop 4 aircraft instead.

Even more good luck followed with the demise of FD, and their subsequent absence from the AC/Star Alliance fly off.

But Embraer is about to enter a period where good fortune won't always fall into its lap anymore. ERJ production is almost at a standstill, and orders are now being cancelled. And other than B6 and Copa, the E-jets are entering the doldrums - Alitalia's future does not look promising, US Airway deliveries have been halted, UAL is still in Chap. 11, etc. The only "rosy" part is that Bombardier is in much, much worse shape.

To go from building 35-to 50-seat RJs and 70- to 110-seat jets (a narrow niche with no competition from 80- to 110-seats), to building a family of airliners that competes across the 737/A320 seat range is really quite another thing in terms of development budget, engineering resources, sales & marketing, product support and aircraft sales funding. Not only would Embraer not be able to generate the cash to fund such an ambitious venture within 10 years, but both Airbus and Boeing will have already developed 737/A320 replacements within that time frame, thus leaving any possible Embraer design on the drawing board.

By the way, B6 has ordered the E195. Also, there is no commonality between the ERJs and the E-jets; and there would be even less if Embraer would develop a 150-seat aircraft.  Smile

[Edited 2004-10-25 06:00:42]

Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
User currently offlineJet-lagged From United States of America, joined Mar 2002, 883 posts, RR: 0
Reply 11, posted (10 years 11 months 2 weeks 4 days 1 hour ago) and read 2686 times:

Thanks for the very thoughful posts. I still feel hesitant about expecting Embraer to take the leap with a new, larger fuselage for a 'big' plane, a widebody. What I do think might happen is a JV between a Chinese concern, and Embraer, probably with the money coming from the China side. Combine the existing intellectual capital and distribution organization of Embraer, plus a growing components base and large gauranteed market.

User currently offlineJeb94 From United States of America, joined Oct 2004, 637 posts, RR: 4
Reply 12, posted (10 years 11 months 2 weeks 3 days 19 hours ago) and read 2585 times:

Ok, if my comments about Europe are incorrect, name me one manufacturer, just one or a seperate consortium besides Airbus that is making any movement to go it alone outside of Airbus and hasn't failed, like Dornier. We are talking manufacturers besides Airbus and Boeing right? Not airlines? I'm not saying European airlines are only buying Airbus. I'm saying European aerospace companies are currently, and will continue for the foreseeable future, be suppliers of Airbus rather than try to get into commercial aviation on their own. I have looked at orders and deliveries. Guess what? There are no other European aircraft manufacturers that build airliners seperately from Airbus that are still in business now. The only exception being ATR which seems quite content to build turboprops. They will hardly break the duopoly.

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