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Aircraft Industry Study

Global Industry Analysis: Commercial Aircraft Industry
Introduction
Commercial Aircraft Industry Defined
This report will only focus on the medium to large commercial aircraft industry. Therefore, the commercial aircraft industry will be limited to the manufacturing or assembling of complete civilian airplanes for the purpose of carryingover 100 passengers. The definition is meant to include medium to large aircraft for use by the commercial airlines to generate revenue from transporting its customers. Additionally, modified airframes for the purpose of carrying commercial cargo will also be included. To limit focus, this definition is intended to exclude the business of manufacturing smaller regional, commuter, and business aircraft that cannot carry 100-plus passengers. However, the regional jet producers are beginning to provide aircraft that carry over 100 passengers and that aspect of their business is significant to the commercial aircraft industry, as defined, and will be included as part of this analysis. Armed with this definition of what the commercial aircraft industry is and is not, let us turn to the key economic, political, and cultural trends shaping this industry.
Current Situation.
Overall, as provided in the introduction, the commercial aircraft industry has faced a challenging decade resulting in failures, mergers and acquisitions that has resulted in an industry this is characterized by competition between two main competitors (Boeing and Airbus) sharing approximately equal shares of the market, low profit margins, huge capital investments, cyclical demand, high risk, and an interplay with politics (De Bruijn & Steenhuis, 2004, September). However, regional jet manufacturers Bombardier and Embraer are moving into the lower end of this market space 100-150 passenger range. All four of these companies see the current business environment possessing the challenges of a weak global economy and demand, high and volatile fuel costs, a...