What is Airbus and Boeing doing to stop Chinese rivals?


China becomes a threat to the international aviation industry and producers of aircrafts. Airbus and Boeing are teaming up with smaller regional rivals to boost sales at the lower end of their $100 billion-a-year commercial plane duopoly, posing stiff competition to China’s efforts to grow its presence in the sector, said industry analysts.

US planemaker Boeing Co and Brazil’s Embraer SA said on Thursday that they were discussing a “potential combination” widely assumed to focus on jetliners, confirming a report in the Wall Street Journal.

News of the talks comes just two months after Boeing’s European arch-rival Airbus agreed to buy a majority stake in Bombardier Inc’s 110 to 130-seat C Series jets, the Canadian rival of Embraer’s biggest E-Jets.

Lin Zhijie, an aviation industry analyst and columnist at Carnoc.com, one of China’s largest civil aviation web portals, said: “The potential combination of Boeing and Embraer or the potential purchase of Embraer’s narrow-body aircraft business is likely to pose a more severe challenge to China and hurt prospects for its C919 aircraft.”

“Earlier, Commercial Aircraft Corp of China, Bombardier and Embraer were in competition for market share and would have competed with Boeing and Airbus for the same,” Lin said.

“However, with Airbus acquiring the C Series of Bombardier and Boeing further improving its product portfolio, their advantages will get further strengthened,” he added.

Both Embraer’s E-Jets, which generally range between 70 and 130 seats, and to a greater extent Bombardier’s C Series, overlap at the margins of the big-airplane portfolios of Airbus and Boeing, but the products are mainly seen as complementary. Boeing and Airbus’ smaller planes start at around 125 seats.

Such commercial tie-ups allow plane makers to offer package deals and expand opportunities for generating revenue and profit, a person familiar with the C Series deal said.

Boeing now appears to be a convert to this approach after initially-at least in public-dismissing the deal between Airbus and Bombardier, analysts said on Thursday.

But the proposed alliances, neither of which is finalized, are not simply about tacking on revenue and cash flow, analysts and industry sources said.

First, they could quickly lead to technical overlap. “If Boeing begins to collaborate with Embraer, you could imagine them creating commonality in the Boeing cockpit,” said consultant Jerrold Lundquist, managing director of The Lundquist Group.

Others see similar benefits at Airbus.

More importantly, they broaden the battlefront for the next round of developments in 2030 and beyond: one in which Western jet makers will be up against growing competition from China and Russia and could rely on their new partners to spread the risk.

Previous articleBali-Mumbai: Garuda airline announces direct link
Next articleQatar Airways Group Chief Executive Akbar Al Baker meets Governor of St. Petersburg
Juergen Thomas Steinmetz has continuously worked in the travel and tourism industry since he was a teenager in Germany (1979), beginning as a travel agent up through today as a publisher of eTurboNews (eTN), one of the world’s most influential and most-read travel and tourism publications. He is also Chairman of ICTP. His experiences include working and collaborating with various national tourism offices and non-governmental organizations, as well as private and non-profit organizations, and in planning, implementing, and quality control of a range of travel and tourism-related activities and programs, including tourism policies and legislation. His major strengths include a vast knowledge of travel and tourism from the point of view of a successful private enterprise owner, superb networking skills, strong leadership, excellent communication skills, strong team player, attention to detail, dutiful respect for compliance in all regulated environments, and advisory skills in both political and non-political arenas with respect to tourism programs, policies, and legislation. He has a thorough knowledge of current industry practices and trends and is a computer and Internet junkie.