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European economics



on 23 March 2013

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Transcript of European economics

AIRLINER WARS Airbus vs. Boeing VIDEO making airbus in 2 minutes Hub & Spoke Transit System of connections arranged like a chariot wheel.
A hub is the central airport.
Spokes are the routes that planes take out of the Hub airport. Advantages Saves airlines money.
Wide range of cities served.
Passengers have an access to an array of destinations and timings. Disadvantages Longer flying time
Longer waiting time as larger planes have to wait for all the feeder planes to arrive. Point to Point Transit The plane travels directly to the destination.
Passengers do not need to change to another plane as in case of spoke hub transit system. Advantages Disadvantages Shorter flying time
Works best between popular routes Lower frequency of flights
Passengers do not have luxury of a range of timing and destinations
Half empty flights results in airlines losing money Future Trends Spoke-Hub Transit system will gain precedence in future
Airbus and Boeing are focussing on larger planes.
However, Point to Point transit will be important for busy routes
Important to keep a good balance between the two What makes a network Point to Point or Hub-based is ultimately the ability to connect to one flight or another. How does it look like? Trends about the market share of the two rivals Airbus steady increasing until 2001 ->
1970-5%, 1980- 13%, 1991- 30%
in 2001 first operator on the market of the commercial airplanes before Boeing
in 2000 market-advantage in the segment of smaller airplanes
after A380: became the leader jumbo-jet manufacturer Boeing 1997- 70% market share
2000- 50%
Airbus' market dominance, Boeing's product diversification started to tend to defense industry, telecommunications systems
in 2000 leader position in the segment of airplanes with wider fuselage
after 2000: prefers to produce smaller airplanes Expectations on the Asian market main actors: China and Japan
increasing share in useing of commercial aiplanes
outsourcing->techological trasfer
Own company? (unlikely in case of Japan)
-> cost cutting due to lower labour costs
-> Chinese airlines are expected to triple their fleet adding 2300 aircrafts worth $200 billion in the next few years
-> huge market and potential China -> certain parts of A320 are made in China
-> assembly plants in Tianjin
-> two-third of aircrafts delivered to China in 2004 were by Airbus is asking for manufacturing technology in exchange for his market AIRBUS BOEING -> plans to shift more of the design and manufacturing of future aircrafts to China
-> has 70% of China’s share for airlines with 100 seats or more And the risks? need for improved quality control for US and International certification
such quality control can be expensive
china’s industry must achieve credibility which will involve lots of money and commitment
long term prospects for manufacturing in China is uncertain Ankit Bhawsinka

Natalia Mackowiak Airbus Industrie •began as a consortium of European aviation firms to compete with American companies such as Boeing, McDonnell Douglas, and Lockheed
•formally established as a Groupement d'Interet Economique (GIE) in 1970
•employs around 57,000 people at sixteen sites in four European Union countries: Germany, France, the United Kingdom, and Spain
•final assembly production is at Toulouse (France), Hamburg (Germany), Seville (Spain) and, since 2009, Tianjin (China) The Boeing Company •founded by William E. Boeing in Seattle in 1916 as "Pacific Aero Products Co.
•during World War II, Boeing built a large number of bombers (over 350 planes were built each month!)
•merging with McDonnell Douglas in 1997
•largest exporter by value in the United States
•its stock is a component of the Dow Jones Industrial Average Competition •Boeing- cooperation with Japanese suppliers
•Airbus- production of A320 series airliners in China •Boeing- extensive use of composite materials, automating the flight engineer’s functions, first two-man flight crew
•Airbus- digital fly-by-wire controls Airlines prefer to have a choice of two engines from the major manufacturers (General Electric, Rolls- Royce, Prat & Whitney).
Manufacturers prefer to be single source •Both companies price aircrafts in dollars
•Airbus funds its operations in euros •Boeing- argued by Airbus to receive illegal subsidies from US
•Airbus- subsidies from EU Outsourcing Technology Engines Influence of currency Subsidies Airbus A380 National origin: Multi-national
First flight: 27 April 2005
Introduced: 25 October 2007 with Singapore Airlines
Status: In production
Primary users: Singapore Airlines, Emirates, Qantas, Air France
Produced: 2004 – present
Number built: 41 as of January 2010
Unit cost: US $317.2 - 337.5 million Boeing 787 Dreamliner National origin: United States, with international partners
First flight: December 15, 2009
Status: In development, early production
Number built: 2
Unit cost: US $161.0–171.5 million Several visions for the future References www.wikipedia.org
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