the aviation sector is not exactly the
most competitive sector in the world basically two companies dominate the
market Boeing and Airbus two heavyweights two giants that control
more than 90% of all aircraft sales worldwide we’re talking about a sector
that is also rapidly expanding as you can see in this chart over the
next 20 years the number of air passengers is expected to grow at a rate
about five percent every year and between this growth and the need to
replace old fleets the forecasts suggest that over the next two decades at least
39,000 new aircraft will be required it’s a huge demands that will largely
come from developing countries and don’t forget what we already told
you in a previous video that I’ll link to in the description the aviation
sector of the future is going to change a lot in the coming years many of the
so-called dense routes based on gigantic hubs will be replaced by new thinner
routes by direct routes with longer flights operated by smaller aircraft and that shift together with
increasingly demanding environments or regulations explains why Airbus and
Boeing are in the process of adapting to these new paradigms but let’s not get
distracted the fact is that a lot of this promising future is particularly
centered in Asia and I’m not only referring to China but also to other
interested parties who are already making a strong impression look at this the sweepers can afford to fly India
opens 34 airports in 18 months as aviation market booms The Washington
Post but here’s the question what does this
all really mean well given the juicy growth forecasts in the aviation sector
the increasing importance of smaller aircraft and the emergence of China as
the technological and economic power we’re now starting to see some companies
that want to become the new players in the aeronautical industry that is there
are relevant manufacturers making a bid to compete with the larger ones the
question is all they managed to achieve this or will it just be yet another
frustrated attempt in this video we’re gonna tell you about what’s new in the
world of aviation so listen up in the aviation sector we find two
important pieces of news on the one hand China’s emergence in the
aeronautical industry bends on the other the demise of former regional aircraft
manufacturers but let me start at the end this time and tell you what happened
to Bombardier and Embraer the world’s two largest small commercial aircraft
manufacturers well the facts canada’s Bombardier with its CRJ series is built
more than 1,800 aircraft and Brazil’s Embraer even more about 2,700 in this
way between the two companies they have controlled most of the regional aircraft
market in the world in recent years however it is not been easy for them
during this period both Bombardier and Embraer have had serious difficulties
reinventing themselves adapting to a mature and very different market than
existed when these companies first began to exploit their business that is their
planes simply stopped selling well and the companies were financially hamstrung
as they made Titanic efforts to keep up to date we’ll see the reason for this
later but for now let’s just stick with our story the blow was especially hard
for Bombardier which saw its star program the CRJ series that came into
operation in the 1990s ending in collapse with losses of approximately
600 million dollars in 2018 brazil’s embryo also began losing money about 180
million dollars in that year alone and of course these financial blows coupled
with increasing pressure from Airbus and Boeing to control the regional aviation
segments and thus get rids of the few competitors still standing created the
ideal scenario for the big fish to gobble up the small ones Airbus made the first move by announcing
the purchase of the CSeries program the latest aircraft model developed by
Canada’s Bombardier and soon after that Boeing announced its merger with
Brazil’s Embraer a merger or rather a purchase that is set to be completed
this year 2020 Airbus has taken over and renamed the
Canadian jet that Boeing tried to keep out of the u.s. Business Insider Embraer
soars in South Paulo as bolson arrow approves Boeing deal bloomberg now did
he think that the changes in the aviation sector would end here well
though nothing could be further from the truth in fact this was just the
beginning any idea where the main action will be taking place exactly I’m sure
many of you have already guessed it it’s of course China our China with their
fingers in just about every pie but it’s not just about the big Asian giant it’s
also about its neighbour Japan who is making a bit however these two cases
represents two models and two ways very different ways of doing things you see
on the one hands we have the Chinese state-owned manufacturer Commack which
is trying to compete directly with Airbus and Boeing in the short and
medium-haul aircraft market this is a really consolidated market we’re trying
to compete is a challenge that takes real entrepreneurial boldness and on the
other hand we have Japan’s Mitsubishi Heavy Industries one wing of the former
Mitsubishi Ambar that today is engaged in the construction of ships aircrafts
and large industrial assemblies such as nuclear reactors but hold on just a minute is it
realistic that these companies start competing from scratch in 2020 do they
really have enough capacity to develop aircraft capable of competing with the
fleet’s of two aviation giants because at the end of the day if Boeing is
having so many difficulties with its Jynx 737 max project a subject which we
covered in a previous video imagine how much more complicated and must be to
start practically from scratch and the best example is probably the case of
China’s carry Mac you want to know how things are going for the Chinese and
what we can expect from this risky venture well listen to this Cormack
bogged down by toun ambition if there’s one hazard that’s common to any business
venture it’s that sometimes aiming too high can mean shooting yourself in the
foot before you’ve even begun and this is precisely what might be happening to
Commack let me explain to date the Chinese state manufacturer has
introduced two different aircraft models the arj21 and the c919 the first of
these co max AR j21 is a 90 seat plane intended for regional routes after a
decade of delays in commissioning and six years between the first test flight
and its eventual entry into the market the arj21 is already crossing the skies
with some Chinese airlines in fact there are just over 20 planes currently in
service the problem is that with so many delays and such slow developments the
plane is already outdated this is why the United States and European markets
consider it far far more inferior to the regional aircraft made by Bombardier and
Embraer and it’s a similar story with the latest
and largest model the c919 a medium haul aircraft with the capacity for almost a
hundred and seventy passengers which intends to compete directly against the
current kings of the skies the Boeing 737 series and Airbus is a320 however
the reality is that it seems an almost impossible mission for this aircraft
even get certified by aviation safety agencies such as the United States’s FAA
or the European EAS a of course this is a fundamental requirement for the craft
to be able to fly in both of those regions designing developing and
manufacturing airplanes is one of the most complicated tasks anywhere it takes
an average of five years for Boeing and Airbus as new models to be certified by
aviation security agencies to imagine what the timeframe might be for a
Chinese model manufactured by a company with no track record or established
reputation today the c919 is in a very difficult position as it may never be
certified by either the United States or Europe and that’s the reality of it
in other words faced with the situation one thing seems certain Chinese
manufacturer Accomack has a chance to get ahead and compete against a Boeing
and Airbus but only in China and perhaps with a bit of lark in an Asian or
African country in other words globally the American and
European manufacturers will be able to sleep peacefully at night at least for a
few years so now let’s switch to Japan to see what is happening with
Mitsubishi’s greatest aviation adventure which we mentioned at the very beginning
of this video well by all appearances the Japanese have opted for a much safer
way forward with fewer hurdles Japan’s return to the aviation race if
mr. bushy is highlighting anything in its drive to enter the aviation market
fully it is to be much more prudence and maybe smarter too and as you’ll see in
Mitsubishi Heavy Industries aeronautical division they don’t mess around with
small change in addition to spending a whopping seven billion dollars
developing their own models that space jet series they have also splashed out
by buying Bombardier xyq Onix CRJ program which we were talking about at
the beginning of the video everything’s probably making a bit more
sense now right while Airbus purchased the C Series program it’s a vicious or
an opportunity in Bombardier CRJ program and secured it for 550 million dollars in this way Bombardier one of Canada’s
largest industrial groups has completely unloaded its commercial aircraft
business which was a real money losing machine meanwhile Mitsubishi achieves a
dual goal on one hand it will be in charge of maintaining the hundreds of CR
J’s flying around the world and on the other it manages to position itself as
the natural substitute for these aircraft went companies need to renew
their fleets and that is precisely how the Japanese company hopes to introduce
its space jet series worldwide this series is already in its final
development phase after having made nearly 900 modifications to suit the
requirements of the United States’s FAA take notes of this very important detail
Mitsubishi has prepared two versions of this model one the main one for
eighty-eight passengers and another a little smaller for seventy-six and this
is not a trivial move in fact it’s a decision that makes a great deal of
sense but why why on earth is the small
version so important well once again it goes back to
regulations and limitations that aren’t difficult to understand usually because
they are the result of political negotiations where public interest is in
the backgrounds and as you’ll see in order to make sense of these rules we
have to know a couple of things first that US law prohibits foreign carriers
for operating domestic flights on its territory that is the u.s. aviation
market is protected and reserved exclusively for US carriers and secondly
of course this ban also includes regional flights and how is a regional flight defined
well it’s a flight connecting one of the major airports the really important ones
such as New York’s JFK the George Bush Airport in Houston or Los Angeles
International Airport with other small airports that is with small airports
that do not have much passenger demand and are operated by small aircraft and
there are hundreds and hundreds of these regional local airports throughout the
United States and the thing is these regional flights usually operated by
subsidiaries and franchises of major airlines such as American Airlines or
United why because these subsidiaries are not subject to the same labor
agreements that affect large ones that is they have different working
conditions and lower wages and it is precisely for this reason to prevent
large airlines from outsourcing too many routes and traffic that the trade unions
agreed with the major airlines that the routes operated by these subsidiaries
can only be operated with aircraft with a maximum of 76 seats and 86,000 pounds
of weight in other words smaller planes than the
ones that the current market conditions would need thus if the big airlines want
to use larger aircraft with more than 76 passengers to have to operate the routes
directly by themselves so trade unions protect the jobs of employees in these
large companies which as we have already told you a subject to more generous
labor agreements and yes we’re talking about the United States not Argentina
here you see that things can be complicated everywhere the fact is that
it was for this reason the Mitsubishi continued at vital to take over the CRJ
program as well as to develop a smaller and even lighter version of its original
aircraft pretty clever what do you think in fact this is what
is allowed Mitsubishi to secure its first confirmed orders from US companies
specifically 160 aircraft and if we add the other orders from Japan and other
countries the model seems to be popular despite having been developed by a
company that has never built a commercial aircraft on its own before but it’s not quite that simple the
launch hasn’t been without problems it is actually riddled with delays to give you an idea initially the
Japanese company intended to put the plane into service in 2013 but with all
the design modifications it has had to make to obtain FAA certification the
delays have been ongoing and prolonged moreover the slowness of Japan’s own Air
Safety Agency jcav to certify the model is not helping them meet the deadlines
as it stands today the entry into service is now slated for 2021 following
the latest delay announcement at the end of 2019 all of this has increased the
cost of developing the space jet program from 5.5 billion dollars to more than 7
billion like I said developing an airplane from
scratch is neither cheap nor fast nor straightforward now arms with all of
this information what do you think is the Boeing Airbus duopoly under threat
is the arrival of new competitors feasible in the future given how
complicated it is to develop a commercial aircraft can Commack be an
alternative to traditional manufacturers in China and other parts of the world
I’ll leave your answer in the comments below and I really hope you enjoyed this
video please do hit that like button if you did and don’t forget to subscribe
for brand new videos also please do check out our friends at the reconsider
Media podcast they provided the vocals in this episode that were not mine and
as always thank you for watching if you want to learn more about politics and
world affairs and here’s some more of my lovely voice come check out the
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7 thoughts on “China and Japan: Is the AIRBUS-BOEING DUOPOLY in danger? – VisualPolitik EN”

  1. I keep saying about Boeing inspectors going to plants and terrible shabby work,they reported it to management this is the 787 and they had to become whistleblowers lost their jobs and who was the CEO.

  2. The minute trump stopped the usa and Europe flight I said that the reason was less about the virus and more about the boeing v airbus fight. Boeing is haemorrhaging money with the 737 max debacle and this is the convenience virus to kill two birds with one virus. The other bird being the 22 Trillion usa debt
    Print print print print. We have learnt nothing from the 2008 crash. See you in few years time in same predicament

  3. What this guy is saying, don't compete with Boeing or Airbus, the duopoly is too powerful! You can never bear them! Yeah, that reminds me how Nokia and Motorola were beat at their game merely 10 years ago.

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