Boeing crisis is a new frontier of US-China competition

Once the pride of American aviation, Boeing keeps making headlines for regretful reasons. Boeing has lost nearly $30 billion over the past five terrible years.?

Boeing enjoyed a near monopoly on the commercial market, with a roughly 90% market share. This is because Boeing invented the jet-powered commercial planes we know today.

In the 50s, Boeing decided to invest in jet-powered commercial aircraft. It was the era of the Cold War and Boeing received a wave of defense contracts to produce jet-powered planes for the US Army. Soon, they realized they could use their unique expertise and assets established from these projects to develop commercial jets cheaper than it would cost Boeing’s competitors.

This provoked a slight unease amongst European countries. They weren't comfortable being dependent on the US for such a strategically important technology. In the late 60s, several European nations agreed to create a consortium by combining their space capabilities. In the 70s, they founded Airbus, Boeing’s one and only rival.

Since then, these two titans dominated the global commercial market. In the wish to have a bite of the fast-growing commercial travel demand, many countries and companies have tried to break into this duopoly. Canadian company Bombardier and Japanese company MHI are probably the most recent and famous examples. However, none of them were able to secure a market share to maintain their production line.?

The fundamental challenge for the commercial aircraft business is that it requires an enormous amount of costs and decades of zero return to enter the market. Also, planes are one of the most complex platforms ever built by mankind and customers prefer to buy from companies they’ve dealt with before. Finally, there’s also a complex regulatory wall. Flight compliance requirements are extremely complicated and also conservative so newcomers can hardly meet them.

However, due to Boeing’s never-ending crisis that created a big gap between supply and demand, the market has started to wonder if global aviation is on the verge of swift from duopoly to tripoli.

So, who can possibly fill in the gap created by Boeing?

The biggest threat to the duopoly is China’s state-owned company commonly known as COMAC. The company started to develop a 737-sized plane named C919 way back in 2008. The plane is one of the key objects set out by the China 2025 Initiative. The plane was delayed multiple times but finally started its commercial services in 2023.

Nonetheless, it will take a while for C919 to pose a real threat to Boeing and Airbus. The plane is inferior to its Western competitors in almost every quality and efficiency aspect. It still relies on Western companies for the most critical systems. Also, it is hard to imagine that the US and European regulators will approve C919 anytime soon regardless of its quality.

COMAC’s target is to build 150 planes a year by 2030, which may seem ambitious but would represent only 10% of the world’s total production.

But who knows? We’ve learned that history is merely a list of surprises. Who would have thought China would be the world’s largest producer of automobiles and ships? China succeeded in dominating land and sea by surpassing Western behemoths and there’s no reason China would do the same in the air. The world needs planes and it will be a matter of time before people will consider C919 as an alternative choice if Boeing doesn’t pull itself together quickly.

Boeing’s crippling crisis has become a new frontier of US-China competition that could shift the landscape of world power.