45 ms·

This is a byproduct of the market DESIGN in aerospace. By having a duopoly rather than either a monopoly or wider competition, you're forcing the margins down t

This is a byproduct of the market DESIGN in aerospace. By having a duopoly rather than either a monopoly or wider competition, you're forcing the margins down to near zero. This means that there is always a CLEAR replacement option for every product made by Boeing or Airbus, and the customers (the airlines) know it. If you had more players (embraer, gulfstream, bombardier, china?) you could have better competition, but there are few large body jet providers in the market. Granted this problem stems from the airplane companies own strategy of trying to get airlines to go single model (all 737s for example) to save on repair/maintenance. Economic theory wise its a fascinating market issue because you have clear view of the buyers and the incentives in the marketplace (also both big players get huge govt subsidies).

dforrestwilson1 10y ago
I think you might be underestimating the impact of slackening demand. Emerging market airlines put in a ton of orders over the past 10 years, now we're seeing them slash airfare prices and/or cancel orders due to continued pressure. You can also point to state-owned/supported enterprises in the Middle East and China which are terrible allocators of capital and have therefore encouraged the glut. Nevermind the strategic imperative of the U.S. and Europe to have exclusive access to a producer of worldwide transports during times of war. There are many examples of duopolies who do just fine. I think you are ignoring the negative influence of ambitious countries in this industry.
- okreallywtf 10y ago
  Just FYI there are still markets out there [1] and Boeing is going to try to take advantage of them [2]. [1] http://www.latimes.com/world/la-fg-iran-airlines-snap-story.html http://www.latimes.com/world/la-fg-iran-airlines-snap-story.... [2] http://www.npr.org/sections/thetwo-way/2016/06/21/482955544/boeing-says-it-has-agreed-to-sell-passenger-jets-to-iranian-airline http://www.npr.org/sections/thetwo-way/2016/06/21/482955544/...
- brianbreslin 9y ago
  What are some good examples of duopolies that do well for both of the players and the market?

dforrestwilson1 10y ago

I think you might be underestimating the impact of slackening demand. Emerging market airlines put in a ton of orders over the past 10 years, now we're seeing them slash airfare prices and/or cancel orders due to continued pressure. You can also point to state-owned/supported enterprises in the Middle East and China which are terrible allocators of capital and have therefore encouraged the glut. Nevermind the strategic imperative of the U.S. and Europe to have exclusive access to a producer of worldwide transports during times of war. There are many examples of duopolies who do just fine. I think you are ignoring the negative influence of ambitious countries in this industry.

okreallywtf 10y ago
Just FYI there are still markets out there [1] and Boeing is going to try to take advantage of them [2]. [1] http://www.latimes.com/world/la-fg-iran-airlines-snap-story.html http://www.latimes.com/world/la-fg-iran-airlines-snap-story.... [2] http://www.npr.org/sections/thetwo-way/2016/06/21/482955544/boeing-says-it-has-agreed-to-sell-passenger-jets-to-iranian-airline http://www.npr.org/sections/thetwo-way/2016/06/21/482955544/...
brianbreslin 9y ago
What are some good examples of duopolies that do well for both of the players and the market?