Pacific Money

Airbus Takes On Boeing in Japan

A big order from JAL represents a significant step forward for the European aircraft manufacturer.

The epic struggles between US-based Boeing and Pan-European EADS subsidiary Airbus involve big deals, political support (on both sides of the Atlantic), trade disputes and quite a lot of headlines. In the latest case, in which Europe’s Airbus has sealed a significant deal with Japan Airlines (JAL), not only is a lot of money involved, but the aircraft order represents a significant step forward for Airbus in the Japanese market.

The Airbus-JAL deal is valued at a list price of USD$9.5billion, and consists of an order for 31 A350 aircraft. Both Japan Airlines and All-Nippon Airways (ANA) operate fleets dominated by Boeing aircraft. Although ANA does currently operate 18 Airbus A320s out of a fleet of 190 planes, the current JAL fleet will contain no European aircraft until the completion of this latest order. Hence, this latest order is a major victory for Airbus.

The A350 is considered to be a direct competitor to Boeing’s latest 787 Dreamliner aircraft, so the order has created a few ripples and generated a fair amount of attention. For one thing, the Dreamliner has been embroiled in some controversy. Delays with delivery annoyed several customers and then a spate of technical problems (some of which developed, significantly, on both ANA and JAL operated 787s) even prompted the US Federal Aviation Administration (FAA) and European Aviation Safety Agency to ground all Boeing 787s in January of this year.   

Problems have continued for Boeing. Over the summer, Qatar Airways had to give one of its 787s a “hiatus” after “a glitch” was discovered. Problems have also hit Dreamliners operated by Air India and Ethiopian Airlines. In the last few weeks, glitches on a Norwegian Air Dreamliner lead to the airline grounding one of its aircraft and even calling Boeing’s management to Oslo for “reliability talks.” 

Whilst it is unlikely that this year of trouble for the Dreamliner has not weighed upon JAL Managers’ minds in deciding to order Airbus’s aircraft, the Dreamliner remains extremely popular around the world. In fact, more than 950 have been ordered, and both JAL and ANA are major operators of the 787 aircraft, which is one-third made in Japan

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This local production angle has helped Boeing to sell its 787s to the major Japanese Airlines, and political influence over purchasing decisions (in light of this) are suspected by some of being responsible for recently bailed-out JAL’s previous decisions to go with Boeing. Now, however, JAL has gone private again, and its political rescuers are no longer in power.

With Airbus’s most recent success and its hunger for more ties with Japan’s aerospace industry, Boeing will have to up its game to ensure that it maintains its current dominance over the Japanese aviation market.