ACTION LEARNING

PROJECT
BOEING VS. AIRBUS

ORGANIC INDIA
ECO 701 – CLASS 2 – TEAM 2

ORGANIC INDIA
M. Sameer Kumar

Niraj Kumar
Ravi Dusad

Prashant Srivastava

M. Sameer Kumar Shantanu Ray

ORGANIC INDIA
Uttam Kumar Sarkar Vaikunthan Swaminathan

M. Sameer Kumar Shantanu Ray

Uttam Kumar Sarkar Vaikunthan Swaminathan
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QUESTION NO:1) COMPARE SPECIFIC DATA ANALYS ES ON SIMILAR DATA I N THE

TWO REPORTS THAT CON TRADICT EACH OTHER/ ARE LEAST SUPPORTIVE OF EACH
OTHER.

AIR TRAFFIC GROWTH:

AIRBUS:

 As per the above trend World Annual Traffic (trillion in RPKs) of Airbus from 1965 to 2016,

following are the primary key factors which have been considered:

1) Oil crises,

2) Gulf Crises,

3) Asian Crises,

4) WTC Attack SARS

5) Financial Crises.

 Since last ten years’ air transport has grown at the rate of 60%.

 After 9/11 attacks on World Trade Centre, RPK has doubled.

ALP – ECO 701 – CLASS 2 – TEAM 2

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BEOING:

 As per Boeing, long-term demand with an average RPK growth rate of 4.7% would be

achieved per year for over 20 years.

 In the coming two decades, the domestic market in China would be the largest in the world and

traffic in Asia would be the largest travel market.

 Location of Middle East which is located centrally makes them link may places in the world with

one stop flights, resulting in higher than average growth.

 In recent times, markets belonging to North America and Europe, domestic growth rates are

below the global average and connections to emerging markets will provide opportunities for

growth.

ALP – ECO 701 – CLASS 2 – TEAM 2

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JET FUEL PRICE:

AIRBUS: (US$ per Gallon)

 Oil and jet fuel prices are an essential component in airline operating costs, with their relatively

low levels, while not the whole story, playing a large part in the developed airline productivity

during the period.

 In short to medium term, predictions suggest that oil and jet fuel prices will improve over time,

though they may not reach the highest levels of the past.

 Air passengers benefited from oil prices which remained relatively low, with airlines able to

choose between stimulating the market through lower yields and therefore ticket prices, and

their margins.

 The support given by low oil prices has helped to have continued focus on cost, along with

maintenance and improving revenue through ancillary revenues.

ALP – ECO 701 – CLASS 2 – TEAM 2

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BOEING (US$ per Barrel):

 Oil prices today are in the $50 to $60 per barrel range. In the early 2000s, the cost of oil was

in the $30 to $40 per barrel range in today’s dollars. In that environment, the 787 was initially

developed, and the business case for replacing older aeroplane models with the 787 was still

compelling.

 Fuel is a significant share (20 to 30 per cent or more) of an airline’s operating costs, and

volatility in such a major cost component creates uncertainty in the airline’s profitability outlook.

By reducing the requirement for fuel, newer, more efficient aeroplanes can act as an effective

operating hedge on the airline’s profits.

ALP – ECO 701 – CLASS 2 – TEAM 2

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EVOLUTION OF FLEET I N SERVICE REGION WISE:

Both AIRBUS and BOEING have documented and forecasted the existing and upcoming demand for all

the regions across the world separately. If we take the example for ASIA – PACIFIC region:

AIRBUS BOEING

By going through the above two graphs of AIRBUS and BOEING, we can interpret the below points:

 For AIRBUS in this region, they have 6,139 aircraft are in service, and by 2036 it would be

16,977. Out of which new deliveries itself will be 14,276 and replacement are 3,438.

 Coming to BOEING, in the same ASIA PACIFIC region they have 6,830 aircraft which are in

services, and it would be 17,520 by 2036. Unlike AIRBUS they have not bifurcated regarding

numbers which would be getting replaced or the new deliveries.

 BOEING has separately given the details regarding the new deliveries in their annexure.

PASSENGER AIRCRAFT
Region Start Fleet 2017 End Fleet 2036 20-year new deliveries Remaining
Africa 598 1,529 1,055 474
Asia-Pacific 6,139 16,977 14,276 2,701
CIS 762 1,605 1,203 402
Europe 4,463 7,721 6,820 901
Latin America 1,330 2,784 2,666 118
Middle East 1,176 3,186 2,526 660
North America 4,422 6,318 5,620 698
World 18,890 40,120 34,166 5,954

ALP – ECO 701 – CLASS 2 – TEAM 2

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QUESTION NO: 2) WHICH ANALYSIS IN YO UR VIEW IS MOST CRUC IAL FOR BOEING
AS WELL AS AIRBUS TO SECURE A LARGER MAR KET SHARE?

Out of various segments for which AIRBUS and BOEING have presented in their CMO report we feel

that analysis which they have shown for the respective regions across the world plays a vital role in

having more focus for the areas in which they would like to improve.

Few graphs shown by AIRBUS for ASIA PACIFIC region are:

 Concerning seven regions Asia Pacific GDP seems to be in higher of about 4.1%, followed by

Africa of 3.6%. Regarding the Traffic part, the Middle East is in the first position of about 5.9%,

followed by the Asia Pacific which is around 5.5%.

ALP – ECO 701 – CLASS 2 – TEAM 2

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 The evolution of fleet in service for the Asia Pacific is having vast potential for new deliveries by

2036 around 14276 fleets, followed by Europe which is about 6820 fleets.

 The new deliveries by segment part the Asia Pacific and Europe on top orders. In total RPK

Traffic growth in the Middle East, the Asia Pacific and Africa are in high orders followed by

other regions.

 Domestic and Intra Regional service part Asia Pacific, Africa and the Middle East are in top

orders.

 If we see the Service demand forecast for the MRO values, new pilot and new technicians’

requirements the Asia Pacific and Europe are in top orders.

Few graphs shown by

BOEING for ASIA PACIFIC

region are:

ALP – ECO 701 – CLASS 2 – TEAM 2

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 Concerning seven regions Asia Pacific GDP seems to be in higher of about 3.9%, followed by

Africa of 3.5%.

 Regarding the Traffic part, Africa is in the first position of about 5.9%, followed by the Asia

Pacific which is around 5.7%.

 Fleet in service evolution the Asia Pacific is having vast potential for new deliveries by 2036 is

around 16050 fleets, followed by Europe which is about 7530 fleets.

 New Deliveries by segment part the Asia Pacific and Europe on top orders.

QUESTION NO: 3) IDENTIFY SEGMENTS IN BOTH THE REPORTS THAT COULD BE

IMPROVISED FURTHER B Y INCLUDING ADDITION AL DATA ANALYSIS/MOD ELLING
OF SOME SORT:

 Below are the various segments in which analysis can be devised further – AIRBUS:

1. World traffic growth (RPK) along with multiple fleet types which were used can be shown in

correlation with external shocks like oil crises, WTC attacks etc.,

2. Evolution of different fleet sizes across various regions for 2017 Vs. 2036.

3. Forecast of demand for passenger carriers’ vs freight carriers’ region wise for the duration

of every five years along with an individual share of the overall market.

4. The growth of passenger traffic YoY across various regions for the past 20 years.

5. Growth / Usage of various fleets which are in service for the past 20 years.

6. Status of passenger traffic (RPK) for the past 20 years between important countries like the

US to India, the US to the Middle East, the US to Africa, US to CIS etc.,

7. Top 10 cities with the most significant visitor growth since past 20 years.

8. World passenger load factors region wise (Eg: Asia Pacific, North America etc.,)

ALP – ECO 701 – CLASS 2 – TEAM 2

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9. Traffic captured by wide bodies on short-haul sectors region wise (Eg: Asia Pacific, North

America etc.,)

10. The growth of LCC (Low-Cost Carriers) in various regions and their usage of fleets.

11. In analysing the demand for all the regions examining of below parameters are also crucial:

a. The growth of RPK from past 20 years across all the countries in the region.

b. Growth and expected forecast of prominent tourism locations in the countries

belonging to the region.

c. Topmost emerging routes from one country to another country in different regions.

12. The evolution of freight carriers of various capacities in different regions.

 Below are the various segments in which analysis can be improvised further – BOEING:

1. The trend of emerging markets across all regions against forecasted GDP.

2. The Comparison of growth between RPK Vs. ASK Vs. CO2 between all the regions for the

past 20 years.

3. The share of LCC along with usage of various fleet models across all the regions.

4. The analysis of top 20 long haul airports region wise.

5. Region wise growth of passenger traffic (RPK) for the past 20 years.

6. Forecast of the fleet should be region wise.

7. Topmost 20 emerging tourist locations with their respective growth rate across various

regions should be analysed.

8. Usage and share of various freight carriers across all the regions and its forecasted

demand.

ALP – ECO 701 – CLASS 2 – TEAM 2