The sky is no limit: Rivalry between Boeing and Airbus goes back a long way

It’s a strange coincidence that Air India approved the purchase of up to 50 long-range Boeing aircraft at a cost of about Rs 300 billion and at the same time its rival Airbus successfully completed the maiden test flight of the biggest airliner, the Airbus double-decker A380, an aircraft designed to carry 800 passengers.

The A380 ended the four-decade reign of Boeing’s 747 jumbo as the biggest airliner to have flown. It has taken more than a decade and approximately USD$15.55 billion to develop the A380, subsidised by European governments.

The A380 is a key weapon in the battle by Airbus to keep its edge over Boeing. However, Boeing is eyeing the market for smaller long-range airliners and probably this is where Air India could have found them more useful. The Air India order would be of 50 long-range Boeing aircraft — including 27 of the new 787 long-range jets subject to government approval.

The Boeing-Airbus rivalry is an old rivalry and Boeing wants to end the dominance of Airbus, which has outsold them since 2001. However, this competition is not merely about competition amongst two business rivals. The policies of the US and French (read European) governments have always favoured their own companies. There has always been a debate about these governments giving unfair subsidies to these companies.

In the current geopolitical context, the Boeing order could be seen as part of an overall push towards a closer Indo-American strategic alliance. Also it could be treated as a success of a US lobby ‘‘managing’’ its corporate interests in India. Naturally the Airbus group is dejected. They are irked because Air India authorities have opted for Boeing 787 in the deal fully knowing well that this aircraft will take to the skies only by 2010. Also they allege that the tender norms were changed to help Boeing. However, Air India has refuted these charges. For Boeing this is the second order coming their way in the recent past. Air Canada has placed an order for purchase of 96 Boeing 777 and 787 planes. Their assessment is that fuel burn and maintenance cost savings with induction of 787 could be of the order of 20 to 30 per cent.

These two big ‘‘catches’’ by Boeing indicate that the American government has played its cards well. Now the question is: will Boeing stop at grabbing the civil aviation contract or will it attempt to look for defence contracts in India? Boeing can offer high technology collaboration in various areas of military aviation but they would have more competitors. Much will depend on strategic and economic interests of both nations, and not merely the avionics on board an aircraft. But one thing is sure. It’s not just the sheer volume in customers’ orders — it’s the penetration deep in the heart of Airbus territory which Boeing has succeeded in achieving with this deal.