Fairbus or Unfairbus? A case study of Airbus through five questions
Résumé de l'étude de cas
In this study we will try to briefly answer fivequestions relqted to Airbus by using concrete and recent examples and clear economic mechanisms. We will use the Airbus case to learn about the origins of the aeronautical industry in Europe, about fair or unfair competition with Boeing, about the launch of the A380 new project, and about the industrial policy of Europe.
Sommaire de l'étude de cas
I) Why (Q1) and how (Q2) did European countries build a new industry (New Technology) like an Airbus industry in 70's in Europe?
II) Question number 3: Is it fair competition between Airbus and Boeing or unfair competition?
III) Question 4: Now Airbus is a part of EADS, with a new project A380. What are the opportunities and difficulties with this new plane?
IV) Question no 5: Learning from airbus case about the industrial policy of Europe
Extraits de l'étude de cas
[...] Answer to Q2: The major reason why European countries can build a new industry like Airbus is the integration of European Union (European community). The Airbus building ways are as following: Based on the previous failed experience (Concorde), European countries used the different way to manage the company, single management team in order to have a better defined corporate objectives and exercise total management control. However shareholders are also subcontractors and they are stated owned companies from France, Germany, Great Britain and Spain. [...]
[...] However the fact that suppliers can only supply one producer as well as the fact that costumers may be ?locked because the costs of changing manufacturers are too high, have a real impact on the market and may be considered as unfair trade. Question Now Airbus is a part of EADS, with a new project A380. What are the opportunities and difficulties with this new plane? Opportunities Niche market: large passenger jet for long distance flight The jet has 555 seats in a typical passenger layout, with a range of up to 15,000 kilometers. They can increase passenger flow through airports without increasing the number of aircrafts. This is likely to enhance efficiency of airports as well as minimise unit costs. [...]
[...] The demand for air travel increased dramatically between 1962 and 1969 per year in revenue passenger miles). The growing market attracted European countries to focus on, and there are new opportunities in this market (the Niche market, i.e. Airbus A300 and A320). II. European countries did not want American companies to settle the global market price for civil aircraft. Actually, Boeing was in a monopolistic position; by creating an European aircraft industry, European countries would be able to brake Boeing's monopoly in the long run and have an influence on carriers' price (bringing them down) , and get more consumer surplus. [...]
[...] Critics of Airbus argue that this is typically political intervention in the market. One can bring arguments to support the fact that Boeing is not suffering from unfair competition. By the end of the seventies and beginning of the 80's, Boeing was in a quasi monopolistic position, as it was detaining 62% of the global market share. Its closest competitor McDonnell Douglas was far behind with a 24% market share. According to macroeconomic theories a situation of monopoly may increase welfare loss. [...]
[...] BAE have considered selling off its Airbus stake to EADS. Damage of reputation The multiple delays and the issues of insider trading have damaged the reputation of Airbus and its sales numbers, as some airlines have cancelled their orders. Political considerations in play No American passenger carrier has signed up for orders, and two long-haul airlines, United and Northwest, are not likely to do so, according to Chris Avery, a J.P. Morgan analyst in London. Considerations from the point of Industrial Policy Positive arguments A380 represent a symbol of the economic integration of Europe and a success of a European industrial policy. [...]
À propos de l'auteur
Tudor I.étudiantManagement organisationFairbus or Unfairbus? A case study of Airbus through five questions