Emerging Chinese & Japanese manufacturers are proving to be an ‘indomitable’ threat to the First World aircraft makers, says steven philip warner
Airbus & Boeing have had it for long – a clear duopoly in the aircraft manufacturing industry with a combined 98% market share. Of course, there have been small challengers (like Brazil’s Embraer and Canada’s Bombardier Aerospace), but they didn’t achieve considerable scale with time.The Asian age began with high-capacity manufacturing being identified as the USP of the Japanese clan. Then joined the Chinese warriors with their low-cost vows. Combine the two forces today and we have what we refer to in aviation terminology as – an ‘indomitable’ threat to the hitherto unchallenged First World aircraft makers of the world.
Japan’s Mitsubishi Heavy Industries is the latest potent force in this race to capture the skies. Confirming its motives, Mitsubhshi has launched a project to manufacture the country’s first commercial plane – the single-aisle 96-seater Mitsubishi Regional Jet, MRJ on March 28, 2008. This comes after thirty-four long years of its previous failed attempt with the ‘now-forgotten’ Mitsubishi YS-11 aircraft. But for those doubting its competence this time round, here’s an interesting piece of information – enough water has passed under the bridge since that failed event and after Mitsubishi commenced supplying critical parts to Airbus & Boeing themselves! The company, too, is upbeat about future prospects in the sector as Nobuo Toda, Sr. VP & Director, MRJ Project asserts, “Mitsubishi is confident that the technology and stylish passenger cabin incorporated into the MRJ will position it a notch above others.”
Surely, the fuel-efficient MRJ should prove more effective against challenges of the soaring ATF price, which at present is at $134.54/ barrel. With the range for the aircrafts reaching beyond 2,000 miles, the initiative from the Japanese appears quite logical as demand for aircrafts in Asia alone is forecasted to reach the highest levels, with Asia marking the highest CAGR in passenger and freight factors of 5.9% and 5.4% respectively. Though Honda Aviation, too, has ventured into the aircraft manufacturing space, but with Honda’s relatively narrow interests in just the Very-Light Jets (VLJ) machines, Mitsubishi still remains the killer whale from the Asian seas to contend with. As per the company, it plans to sell around 1,000 MRJs over the years.
Our analysis of the situation – even if it does that over the next 20 years, it will still capture 20% of the Asian jet market! At the moment, the project is receiving favour from all corners of Japan, with All Nippon Airways (ANA) having placed its $605 million order for 15 aircrafts that are to be delivered by 2013 and even Japan Airlines (JAL) showing interest in the same. On the other hand, other players like Toyota Motor & Mitsui are also toying with the idea of joining the fray. With things looking pretty within Japan, does the primary prerogative lie with the Japanese giants attempt to capture global skies? Well, not really, for the dragon, as would be expected, is more than prepared to unleash its fury to the hilt in this arena as well.
The two major Chinese aircraft makers – China Aviation Industry Corp I (AVIC I) and China Aviation Industry Corp II (AVIC II) are joining hands to build a domestic jet-making facility for manufacturing commercial planes with seating capacitites of 150-plus and a takeoff load of more than 100 tonne. As per an industry official, “The move is aimed at strengthening the country’s aviation manufactuing capabilities and pooling resources to carry out the large commercial airplane project.” Interestingl,y here too, both the companies have the experience of having supplied parts to Boeing & Airbus. The efforts are predicted to bear fruits by 2020 as the assembling tasks begin in earnest in the cities of Shanghai & Xi’an (China).
So what are the markets that these emerging Chinese giants will serve? “We will initially target the domestic market, but the ultimate aim is to compete with Boeing and Airbus in international skies,” asserts Jin Qiansheng, Dty. Director (Administrative Committee), Xi’an Yanliang State Aviation Industry. Fears of the Chinese resurgence are also evident from the words of Jim McNerney, CEO, Boeing who prophesises regarding the Chinese aircraft industry’s future, “The Chinese have well-trained people, a strong spirit of enterprise as well as an enormous domestic market. It would be wrong to think Boeing and Airbus always will have the large aircraft market to themselves.”
That’s a rather honest confession coming from the Airbus CEO. It shows how Asian giants are expected to do in the aircraft industry what Honda and Toyota achieved in the automotive industry – beating the First World incumbents in their own game. When the disruptors get to doing what they do best, monopolies or duopolies lose their relevance altogether.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).
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Airbus & Boeing have had it for long – a clear duopoly in the aircraft manufacturing industry with a combined 98% market share. Of course, there have been small challengers (like Brazil’s Embraer and Canada’s Bombardier Aerospace), but they didn’t achieve considerable scale with time.The Asian age began with high-capacity manufacturing being identified as the USP of the Japanese clan. Then joined the Chinese warriors with their low-cost vows. Combine the two forces today and we have what we refer to in aviation terminology as – an ‘indomitable’ threat to the hitherto unchallenged First World aircraft makers of the world.Japan’s Mitsubishi Heavy Industries is the latest potent force in this race to capture the skies. Confirming its motives, Mitsubhshi has launched a project to manufacture the country’s first commercial plane – the single-aisle 96-seater Mitsubishi Regional Jet, MRJ on March 28, 2008. This comes after thirty-four long years of its previous failed attempt with the ‘now-forgotten’ Mitsubishi YS-11 aircraft. But for those doubting its competence this time round, here’s an interesting piece of information – enough water has passed under the bridge since that failed event and after Mitsubishi commenced supplying critical parts to Airbus & Boeing themselves! The company, too, is upbeat about future prospects in the sector as Nobuo Toda, Sr. VP & Director, MRJ Project asserts, “Mitsubishi is confident that the technology and stylish passenger cabin incorporated into the MRJ will position it a notch above others.”
Surely, the fuel-efficient MRJ should prove more effective against challenges of the soaring ATF price, which at present is at $134.54/ barrel. With the range for the aircrafts reaching beyond 2,000 miles, the initiative from the Japanese appears quite logical as demand for aircrafts in Asia alone is forecasted to reach the highest levels, with Asia marking the highest CAGR in passenger and freight factors of 5.9% and 5.4% respectively. Though Honda Aviation, too, has ventured into the aircraft manufacturing space, but with Honda’s relatively narrow interests in just the Very-Light Jets (VLJ) machines, Mitsubishi still remains the killer whale from the Asian seas to contend with. As per the company, it plans to sell around 1,000 MRJs over the years.
Our analysis of the situation – even if it does that over the next 20 years, it will still capture 20% of the Asian jet market! At the moment, the project is receiving favour from all corners of Japan, with All Nippon Airways (ANA) having placed its $605 million order for 15 aircrafts that are to be delivered by 2013 and even Japan Airlines (JAL) showing interest in the same. On the other hand, other players like Toyota Motor & Mitsui are also toying with the idea of joining the fray. With things looking pretty within Japan, does the primary prerogative lie with the Japanese giants attempt to capture global skies? Well, not really, for the dragon, as would be expected, is more than prepared to unleash its fury to the hilt in this arena as well.
The two major Chinese aircraft makers – China Aviation Industry Corp I (AVIC I) and China Aviation Industry Corp II (AVIC II) are joining hands to build a domestic jet-making facility for manufacturing commercial planes with seating capacitites of 150-plus and a takeoff load of more than 100 tonne. As per an industry official, “The move is aimed at strengthening the country’s aviation manufactuing capabilities and pooling resources to carry out the large commercial airplane project.” Interestingl,y here too, both the companies have the experience of having supplied parts to Boeing & Airbus. The efforts are predicted to bear fruits by 2020 as the assembling tasks begin in earnest in the cities of Shanghai & Xi’an (China).
So what are the markets that these emerging Chinese giants will serve? “We will initially target the domestic market, but the ultimate aim is to compete with Boeing and Airbus in international skies,” asserts Jin Qiansheng, Dty. Director (Administrative Committee), Xi’an Yanliang State Aviation Industry. Fears of the Chinese resurgence are also evident from the words of Jim McNerney, CEO, Boeing who prophesises regarding the Chinese aircraft industry’s future, “The Chinese have well-trained people, a strong spirit of enterprise as well as an enormous domestic market. It would be wrong to think Boeing and Airbus always will have the large aircraft market to themselves.”
That’s a rather honest confession coming from the Airbus CEO. It shows how Asian giants are expected to do in the aircraft industry what Honda and Toyota achieved in the automotive industry – beating the First World incumbents in their own game. When the disruptors get to doing what they do best, monopolies or duopolies lose their relevance altogether.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).
Read these article :-
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
ZEE BUSINESS BEST B SCHOOL SURVEY
For More IIPM Info, Visit below mentioned IIPM articles.
1500-plus IIPM students placed across the country with 44 bagging international offers
IIPM set to beat economic slowdown
IIPM, GURGAON
IIPM - Admission Procedure
IIPM awards four Bengali novelists
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
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Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
» IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...
domain-b.com : IIPM ranked ahead of IIMs
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