
Boeing and Airbus, the new ‘super duopoly’ - montrose
https://www.sfgate.com/business/article/Boeing-and-Airbus-the-new-super-duopoly-12863735.php
======
niftich
Well yeah, both the US and the EU conveniently ignore antitrust concerns when
it's their golden geese on the line.

Simply put, to each respective party, having the domestic aircraft company
have a leg up over the other is paramount, while they waffle over the other's
grocery stores [1] or delivery companies [2].

[1] [https://www.ftc.gov/enforcement/cases-
proceedings/151-0175/k...](https://www.ftc.gov/enforcement/cases-
proceedings/151-0175/koninklijke-ahold-delhaize-group) [2]
[https://www.nytimes.com/2018/02/26/business/dealbook/ups-
tnt...](https://www.nytimes.com/2018/02/26/business/dealbook/ups-tnt-eu.html)

~~~
ubernostrum
Both companies also have military divisions, which makes it a matter of
security.

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dingaling
Twas ever thus, but it's cyclical. In the 60s and 70s mainline airlines bought
jets of 90 seats up from either Boeing or Douglas. Only nationalised airlines
bought Vickers or Dassault, and pinko commies had to make do with Ilyushins
and Tupolevs.

There was a brief period of competition in the late 70s / 80s when Airbus and
Lockheed were trying to be different. Order was soon restored, then came the
90s with the regional jet fad and the rise of Embraer and Bombardier.

But now we're back to a big duopoly. Ilyushin are still around but only Cuba
still buys from them. The next shake-up will come from China; once their civil
aviation designs reach the sophistication of their military aircraft they'll
start earning orders across Asia, then Europe..

~~~
paxys
Interestingly, SpaceX is one of the very few companies that does rocket
launches but not commercial or military aircraft. And they have recently
released concept videos of Earth-to-Earth transport. How long before they make
a real jump into commercial aviation?

~~~
Robotbeat
I don't know if SpaceX will do aviation other than the long-haul Mach 20 BFR
type, but Elon Musk has expressed interest in high speed electric aviation as
well. If Tesla and/or SpaceX end up being too successful, he'll probably guide
one of them to that space.

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shmerl
_> Antitrust laws, of course, are meant to prevent mergers that substantially
reduce competition, particularly in industries such as this one where there
are already only a few competitors and high barriers for any new players to
enter. What's missing in this case, as so many others, are regulators or
judges willing to aggressively enforce those laws and adapt them to a
globalized high-tech economy where winner-take-all competition is now more the
rule than the exception._

What is the reason for it, corruption or incompetence?

~~~
rukittenme
Most likely neither. Anti-trust is a matter of political opportunism. Because
Boeing sells to multi-national corporations the government has little
political incentive to target them. After all, those corporations are wealthy
enough and sophisticated enough to take care of themselves (or so the thinking
might go).

~~~
shmerl
How exactly can those corporations prevent monopolization of airplane
manufacturers (which will likely result in higher prices and lower quality for
them)?

Anti-trust laws are there to prevent exactly such kind of outcomes, yet they
seem to be mostly broken.

~~~
rukittenme
I have limited knowledge of the industry but I know of at least four
commercial airplane sellers: Bombardier, Embraer, Airbus, and Boeing. Between
(at least) those four (and buying used planes), airlines have drastically cut
the cost of domestic flights. The state of the airplane market seems to be
"okay".

I do know that the US government did side with Bombardier (CA) from a Boeing
(US) lawsuit: [https://www.cnbc.com/2018/01/26/boeing-loses-trade-case-
over...](https://www.cnbc.com/2018/01/26/boeing-loses-trade-case-over-
bombardier-passenger-jets.html)

So it seems anti-trust is at least a "threat-in-being".

~~~
captain_perl
Airbus controls/owns Bombardier.

------
tuna-piano
A different way to think about this, which isn't presented in the article.

For every new airplane manufacturer, there are huge additional fixed costs.
Why does the world need two very similar planes, such as the Boeing 737 and
the Airbus A320? If there was only one plane manufacturer, the plane
development costs would roughly halve. And of course, if there is to be a
third manufacturer that produced a 737/A320 competitor, the worldwide total
plane development costs would increase by 50%!

To put some example numbers here: say there is a total demand for 100 planes
to be bought, and it costs $1000 for Boeing and Airbus each to develop their
own plane. That means the total fixed development costs per plane are $1000 *
2 / 100 = $20. Now let's say a third manufacturer enters the market, and each
company will get 33.3 of the 100 plane orders. Now fixed development costs per
plane are $1000 * 3 / 100 = $30. The fixed cost per plane actually increased
50% with a new competitor!

I'm not saying that we should only have one airplane company - as market
forces usually not work well with monopolies. I'm only saying that increasing
competition is not always good for consumers.

More info:
[https://www.investopedia.com/terms/n/natural_monopoly.asp](https://www.investopedia.com/terms/n/natural_monopoly.asp)

~~~
walrus01
> Why does the world need two very similar planes, such as the Boeing 737 and
> the Airbus A320? If there was only one plane manufacturer

traditional economist answer: without competing market forces, there would be
no pressure for innovation? the high efficiency engines that customers have
pressed for from the engine manufacturers, and other improvements which
resulted in the 737MAX and a320NEO would not exist if there was a single
monopoly small airplane. If there was a single monopoly small airplane people
would probably be still flying around in a level of technology/fuel efficiency
similar to a legacy 737-400.

~~~
tnzn
Well, competition isn't the only incentive that can drive innovation though.
In the case of public research, it can do quite the opposite.

~~~
da02
Can you expand on this? This sounds very intriguing.

~~~
tysonzni
It sounds like Peter Thiel's argument about how natural monopolies can afford
to invest heavily in R&D because they're financially comfortable. And how
competitive industries supposedly don't offer the same room for research. I
think he's mistaken on this but nonetheless it's a compelling argument in some
cases.

Here's his essay where he expands on it: [https://www.wsj.com/articles/peter-
thiel-competition-is-for-...](https://www.wsj.com/articles/peter-thiel-
competition-is-for-losers-1410535536)

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nottorp
Wtf is that video auto playing and jumping around the page? I could only read
the first 1/3 of the article then gave up.

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_Codemonkeyism
It will get tighter, Dassault and Airbus plan the next European fighter
together - might be a merger coming.

~~~
detritus
Unlikely - the current Eurofighter was the fruit a similar situation, but with
BAe in place of Dassault.

It's more a case of resource distribution and inter-national bridge-building.

~~~
_Codemonkeyism
Yes, but Germany-UK is not France-Germany. With the merger of French Nexter
with German KWM to build the next MBT I do think the situation is different.

~~~
kingjayy
You know i have a question about Germany and SEPA payments how easy is it to
make them from German accounts?

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pontifier
I strongly dislike Boeing.

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montrose
This is a non-paywalled version of the Washington Post article.

~~~
dang
OK, we'll merge that thread
([https://news.ycombinator.com/item?id=16924617](https://news.ycombinator.com/item?id=16924617))
hither.

