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WEDNESDAY, JULY 23, 2025
The good old debate: Boeing or Airbus?

Thoughts

Air Commodore Dr Mahbub Jahan Khan
16 October, 2024, 06:15 pm
Last modified: 16 October, 2024, 06:18 pm

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The good old debate: Boeing or Airbus?

An airline should carry out an exhaustive analysis before choosing between Airbus and Boeing

Air Commodore Dr Mahbub Jahan Khan
16 October, 2024, 06:15 pm
Last modified: 16 October, 2024, 06:18 pm
Illustration: TBS
Illustration: TBS

Since the 1990s, the aviation industry has witnessed aggressive business competition between 'Boeing' and 'Airbus' in a duopoly market. 

This duopoly was created when Airbus came into being as a consortium of French and German aerospace firms and was later joined by Spanish and British companies, and when Boeing, to assert its dominance in the aviation industry, absorbed its former archrival,  McDonnell Douglas. 

When it comes to choosing between aircraft manufacturers like Boeing and Airbus, airlines face a multifaceted decision-making process. Factors such as existing fleet compatibility, cost implications, buyer-supplier relationships, maintenance capabilities, and long-term operational goals all play crucial roles. 

Popular aircraft of Boeing and Airbus

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Boeing's 'wide-body' aircraft like the B777 and B787 have been very successful, while its 'narrow-body' B737 (about 12,000 delivered) has dominated the international skies for over 55 years. In Bangladesh, Biman, US-Bangla Airlines, Regent Airways, and United Airways operated B737s. 

Correspondingly, Airbus has provided the aviation industry with excellent wide-body aircraft like the A330 and A350 and the very successful narrow-body A320 series, especially its NEO (New Engine Options) version. Biman has operated a few A310s, and US-Bangla Airlines has recently added two A330s. By and large, Boeing aeroplanes have dominated the Bangladesh sky. However, while procuring aircraft, an airline must have the following considerations: 

Existing fleet type and impact of diversity 

A small airline should have less diversity in its fleet, as it requires a huge investment in maintaining a wide range of human resources. Besides, it must maintain a wide range of spares involving additional costs. The pilots, engineers, and cabin crew also need very costly training to switch from one type to another. 

An airline that plans to have 60-80 aircraft (wide-body and narrow-body) and maintains two reputed suppliers offers good bargaining power, and that is why most of the legacy carriers shape their fleets from diverse sources—a mix of Boeing and Airbus. Big airlines do not like to put all their eggs in one basket. 

Buyer-supplier relationships

In supply chain management, the buyer-supplier relationship is important to secure uninterrupted supply. If an airline's relationship is too close with one supplier (Boeing or Airbus), it might become nearly captive to the supplier, and the existing supplier would do everything possible to keep the buyer away from other potential suppliers. 

Nonetheless, a close buyer-seller relationship sometimes allows the buyer to procure aircraft at a lower price and reduces uncertainties in the supply of spares. Biman's purchase of two 787-9 Dreamliners is a classic example of a good relationship.

 

Actual price offered

A non-disclosure agreement protects the actual price of any aircraft from disclosure. For example, Air India has signed a USD 70 billion (list price) deal recently to purchase 470 aircraft from Airbus and Boeing. Interestingly, the 'List Price' does not speak about the 'Actual Price'. So, the people in acquisition should maintain a strong network to get the actual or near-actual price of any aircraft. 

Importantly, in the aircraft market, 'bulk purchase at a wholesale price' also works, and the airline's financial strength (credit rating) matters. While making a selection, one must make an apple-to-apple comparison. For example, the price, service life, fuel consumption, maintenance cost, etc. of a B787-900 may be compared with those of an A350-900. 

The question arises: How can we get a good price? One may hire an expert, but there is every chance that the expert may be compromised. In the industry, there are some rules of thumb. For example, an aircraft's'monthly dry-lease rent' ranges between 0.8% and 1.0% of the aircraft price. 

So, if lease rent is known, the price can be estimated, and vice versa. Another practice is to charge a 2% annual price escalation on the previously settled price. So, an airline should do its due diligence and make a sensible decision.

  

Maintenance and component support program 

The maintenance capability of the airline must be taken into consideration while procuring aircraft. Component support programs (CSP) are supposed to provide a steady budget for component maintenance of an aircraft fleet. If there are 'hidden costs', it means a surprise. Many airlines have had bitter experiences as they have had to pay huge penalties (hidden costs) imposed by the manufacturers. 

So, an efficient CSP is a significant'make-or-break' factor for the airline. Many airlines, like Southwest Airlines, Ryanair, etc., maintain a Boeing-only fleet to secure the financial advantage emanating from one common CSP for their entire fleet. Similarly, Wizz Air, EasyJet, Spirit Airlines, etc. operate an Airbus-only fleet. Emirates, Qatar, Saudi Arabia, etc. maintain a mixed bag of aircraft (Airbus and Boeing). 

An airline in the Gulf region operates a fleet comprising the A320, A330, A350, and A380 and the B737 MAX, B777, and B787 Dreamliner, totalling more than 250 aircraft. It is a classic example of how a forward-looking company will work 'out of the box', revitalise its thoughts and considerations, and make a thorough financial analysis to secure and maintain a diverse fleet.

So, there is no "green solution" to conclude between 'Airbus' and 'Boeing'. Rather, every airline scenario is unique and requires its own distinctive solution.

 

An airline that plans to have 60-80 aircraft (wide-body and narrow-body) and maintains two reputed suppliers offers good bargaining power, and that is why most of the legacy carriers shape their fleets from diverse sources—a mix of Boeing and Airbus. Big airlines do not like to put all their eggs in one basket.

The network plan of the airlines 

At the core of an airline's 'operations and offer' is network planning and scheduling—its ability to develop flight schedules maximising profitability and reliability. It primarily aims to optimise an airline's operations and decides where, when, and how often to fly and with which aircraft. 

So, it is about identifying the right network and finding the right aircraft to serve it. Some important factors that drive network planning are demand and competition, costs and revenues, fleet and resources, regulations and policies, innovation and flexibility, alignment and integration, etc. Accordingly, an airline has to make a comparative study and select Boeing or Airbus. 

Aircraft's life cycle

The average lifecycle of an aircraft varies between 20 and 30 years. An airline primarily utilises and maintains an aircraft to generate revenue. So, the airline must have sound asset management strategies through network planning and scheduling, revenue management, technical departments, and flight operations departments to secure sustainability. The 'Maintenance' stage involves tasks like regular inspections, repairs, and upgrades to keep the aircraft in top condition. 

Parties like Maintenance Repair and Overhaul (MRO), component suppliers, logistics, IT, and service companies are mostly involved with the airline with the key objective of getting the most benefit from the aircraft. Newer technology with competitive cost of ownership will drive ageing or high cost of ownership aircraft and determine which type of aircraft to be procured by an airline. For example, Airbus 320 and Boeing 737NG are being retired in favour of more fuel-efficient Airbus 320 NEOs and Boeing 737 MAXs. 

Airbus or Boeing?

 

In 2023, Airbus delivered 735 aircraft, an 11% rise from 2022 deliveries. It has a backlog of 8598 aircraft orders to be filled. Boeing has delivered 528 aircraft in 2023 (a 10% rise from 2022). It has a backlog of 5626 aircraft. Boeing is under fresh scrutiny over production following a cabin blowout that prompted a partial new grounding of the 737 MAX-9. At face value, it may look like Boeing is losing the race. 

Not true. Boeing has been manufacturing aeroplanes since 1916 and has seen many challenges. It has the intellectual strength to overcome challenges too. Its recently employed CEO, Kelly Ortberg, has decided to be based in Seattle, close to the production facility, to ensure quality. So, one is to wait for a couple of years to see who runs it better. 

To conclude, an airline should carry out an exhaustive analysis focusing on its existing fleet, its experience in dealing with existing suppliers, passengers' comfort, network to serve, life-cycle, maintenance capability, price, component support assurance, technology, etc. to choose between Airbus and Boeing. 

There is nothing wrong with maintaining a single supplier, and there is no problem in welcoming a new supplier either. However, an airline should think twice before jumping into a new type. 

 


Dr Mahbub Jahan Khan Air Commodore (Retd) is an aviation aficionado. Email: mahbubjkjk@gmail.com 


Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.

 

boeing / Airbus

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