Commercial Aircraft Industry Background
The last decade has seen the commercial aircraft industry dominated by two manufacturers: the Boeing Commercial Aircraft Company and Airbus Industries, with McDonnell Douglas, a distant third. Lockheed has not built any new aircraft since 1984, although there are still many L-1011’s flying the skies. Airbus Industries is a relative newcomer, but it has quickly provided much competition to Boeing, surpassing McDonnell Douglas and Lockheed. Airbus Industries is a consortium backed by the British, French, German and Spanish governments. The great, and many say unfair, advantage that Airbus has over the competition is government subsidies allowing Airbus to operate in the red. Thus, Airbus can afford to develop new technologies without having to worry about passing on the costs to the customers and can price their aircraft competitively to lure away airlines from Boeing.
The effect of the changing airline industry resulting from deregulation in 1978 are still being felt in the commercial aircraft industry. The competition among airlines for passengers has resulted in a greater emphasis on cost cutting leading to mergers and bankruptcies. In addition, airlines modified their routing systems since they were not limited to certain routes, as was the case before deregulation, changing their buying patterns for aircraft accordingly. Airlines were now less concerned with having a technologically superior airplane and more concerned about the cost and efficiency of that airplane.
