Pricing Factors for Boeing and Its Competitors

Case A: Pricing Factors for Boeing and Its Competitors

The world airline industry is in the midst of a serious economical crisis. Airlines across the globe are dealing with the threat of bankruptcy and an uncertain future. The effects of terrorism, rising fuel costs, labor problems, dissatisfied customers, low-cost carriers and declining passenger numbers are creating an environment that is extremely competitive. The many problems hurting United, Delta, and US Airways have spread to the airline manufacturing side of the business. The world's leading airline manufacturers, Boeing and Airbus, are forced to compete in an unpredictable industry.

Boeing is based in Seattle, Washington and was founded as Pacific Aero Products in 1916. Boeing's product line includes commercial, business and military aircraft, space systems, electronic information systems and tactical weapon systems. Total 2003 sales were approximately $55 billion and Boeing delivered 281 commercial aircraft. Boeing uses its website http://www.boeing.com to help deal with the economic and competitive airline industry. Boeing's internet site is extremely detailed and does a great job of outlining their business goals. There are links to Boeing's global customer support, spares and logistic support, maintenance and engineering services, fleet enhancements and modification services and flight operation support. The key is to allow current and potential customers easy access to technical, financial and informational support. This site offers virtual tours of all commercial aircraft - including videos and photographs. Boeing also offers information on industry topics like airport noise regulations, jetliner safety reports and world cargo forecasts. This web site also links users to airline industry magazines such as Aero Magazine and Commercial Airline News. Boeing's internet site also provides links to its subsidiaries including Jeppesen Industries, Aero Info and SBS International. The subsidiary companies are vital in providing parts and services to the aftermarket industry. Boeing's internet site does an excellent job of promoting air cargo products, replacement parts and special services. Boeing probably uses a dynamic pricing strategy due to the fact that a single Boeing airplane costs between $35.5 million and $235.5 million. Boeing will obviously base pricing on each individual business deal.

Airbus was founded in 1970 in Toulouse, France and currently employs over 50,000 people. Total sales for 2003 were approximately $22.5 billion and Airbus offers twelve models in their product line. Airbus has production operations in France, Germany, Spain and England and there are currently over 3,300 Airbus aircraft operating internationally. Airbus uses their internet site http://www.airbus.com to help compete in the challenging airline manufacturing market. Airbus uses their site to help their customers, as well as, their supply chain partners. This enables customers to stay informed on new and existing products. Their supply chain partners can use the site to help tune their scope and efficiency. Airbus offers detailed links to their operations, engineering and manufacturing divisions. Airbus also stresses the importance of having environmental friendly products (noise and emissions). The Airbus on-line magazine - Airbus 4U offers a detailed look at company history and events. Airbus offers customers an impressive multimedia gallery that includes photos, videos and scale drawings. Airbus does a great job of promoting their airplane products. They have a summary page that details each airplane model and the total orders and deliveries. The Airbus model A-300 has total orders of 589 planes and deliveries