“Airbus vs. Boeing in Super Jumbos: A Case of Failed Preemption”

jumbo jet to compete with Boeing’s 747 in the VLA market. A senior executive atAerospatiale complained: “The problem is the monopoly of the 747, which is a fantasticadvantage. They have a product. We have none.” 5In the early 1990s, Airbus and Boeing independently began to study the feasibilityof launching a superjumbo capable of holding 500 to 1000 passengers. Both agreed therewas a growing need for a superjumbo because of increasing congestion at major hubs likeNew York, Los Angeles, London, and Tokyo. Alternatives to larger planes were seen aseither infeasible, in the case of greater flight frequency, or ineffective, in the case offlights to secondary airports. What there seems to have been greater agreement aboutwas the idea that there was room in the market for at most one competitor. 6Over this period, there also appears to be an interesting attempt at preemptioninvolving private negotiations between Boeing and select Airbus members. Prior tojoining forces with Airbus to explore the possibility of collaborating on a newsuperjumbo, Boeing secretly and separately approached Daimler Benz AG and BritishAerospace PLC about the possibility of joining forces on a superjumbo jet. According toEuropean news reports, subsequently denied by spokesmen from both Boeing andAirbus, Boeing invited Daimler-Benz and British Aerospace to collaborate in a jointventure. 7In the aftermath of such denials, Boeing and Airbus agreed to collaborate on ajoint feasibility study for a VLA that could hold from 550 to 800 passengers. When thecollaboration began in January1993, they envisioned the plane would cost $10 to $15billion to develop (with estimates ranging from $5 to $20 billion) and would sell for $150to $200 million each. Their preliminary demand estimate was reported to be 500 planesover the next 20 years. 8In July 1995, however, the collaboration ended. An Airbus employee cynicallynoted that Boeing’s participation in the joint effort may have been only to “…stall themarket so that Airbus did not develop anything itself.” 9 Such inferences were bolsteredby Boeing’s apparent use of “cooperative” ventures to forestall competition in othersituations. Cited particularly frequently in this context is Boeing’s participation, in the1980s, as the foreign partner in a Japanese project to develop a 150-seat passengeraircraft that it delayed and allegedly helped derail. 105