A Battle Between Equals

For over three years now, ever since Air India invited offers to bid for fleet upgradation, Boeing and Airbus have left no stone unturned to create a better impact about their individual products. Repeated presentations to anyone "" in Air India and the ministry of civil aviation "" who cared to listen, an advertisement blitz, and publicising the respective products, have been the hallmark of this intensely fought sales campaign.

Aviation watchers in India are surprised that Boeing and Airbus should adopt a do-or-die attitude in their Air India sales campaign. After all, it could only be a five to 10 aircraft order upgradable to another 10 or 12. This hardly represents 5 per cent of either company's order book for the Boeing 777 or the Airbus A340. So why are they going to such lengths to bag the order? The answer lies in the way the aircraft are made. Each 777 or A340 is the result of thousands of expensive tests and development hours. The cost has to be amortised over a production run spread over years.

For a plane costing $100 million to $120 million, the profit percentage is around 20-30 per cent. And this is a lot of money. With each additional plane manufactured, the development cost comes down and the profit percentage rises. Then there is the problem of jobs, a very sensitive issue in the US and Europe. Highly skilled aerospace jobs, like what is needed to produce a modern jet, are few. On a rough estimate, the Air India order should keep Boeing's or Airbus' factories running for a couple of years in terms of the manhours generated.

Over the years, Boeing and Airbus have developed a relationship similar to Coke and Pepsi or Nike and Reebok. One company simply cannot stand by and watch its rival get away with business. Airbus, despite its European parentage where the rules of business are much more conservative than in the cut-throat US environment, has adopted a very American work culture. Aggressive marketing, wooing key decision makers, running down rivals are the standard company buzzwords. Traditional European business ethics seem to have been cast aside.

At the 1995 Paris Air show, Jean Pearson, the cigar chomping chief executive of Airbus Industrie was asked by a journalist:Why do perfectly respectable companies (Boeing and Airbus) stoop so low as to run each another down at every opportunity? Mr Pearson, gesturing like a streetfighter, launched into yet another anti-Boeing tirade with the message: They started it first.

The Air India campaign is nothing but a condensed version of the Airbus-Boeing fight at the global level. Boeing has an old hand, a Maharashtrian, Dr Dinesh Keskar, the victor of many a sales campaign in India. Airbus, realising the importance of an Indian tag to their executives, has sent across Dr Kiran Rao, a young Bangalore-born aeronautics engineer to counter Boeing's India card. Mr Rao was earlier in Canada as part of the team that successfully sold a batch of A320s to Air Canada against stiff competition from Boeing, which jealously guards its backyard. So he has tasted blood.

Both the companies have put in all they could into the India campaign. Thanks to the multiple levels of decision making in India, the two companies have constantly been on their feet trying to better the other's offer.

Last heard, Boeing and Airbus had offered a package that discounts substantially on the original price, besides, giving part manufacturing business to Hindustan Aeronautics Ltd.

Between now and October, Boeing's Mr Keskar and Airbus' Mr Rao will be spending sleepless nights because if the order goes in favour ofone of them it would put a question mark on their marketing skills.

Though Mr Rao took over the campaign towards the fag end, he has got his teeth well into the job and has matched his more experienced rival in all matters of the campaign.

He does have one problem though. Air India has been a traditional Boeing customer. Barring a few A300 and A310s, the bulk of Air India's fleet comprises various variants of the Boeing 747 range. The brand equity for Boeing is high among Air India engineers and air crew. Also Airbus has adopted a sales line that has not gone well with Air India executives. It says that Air India will not need the marginally higher capacity Boeing 777 as the airline is not able to fill its seats. This may be a statement of fact but it amounts to saying that the airline is unable to sell all its seats.

Boeing, in a smart manoeuvre, has however said that if Air India does not buy the 777, then it will be at a disadvantage against competing carriers which have the US aircraft with extra 30 seats over the Airbus A340. In a full sector scenario, Air India will accommodate fewer passengers than its rivals. This argument could hold good for Airbus too. After all, Airbus has nearly as many A340s in the air as the 777. Airbus it seems would like to remind Boeing that the difference between the two in a standard three-class configuration is a mere 14 seats, not 30, as being claimed by the latter.

This war of words could go on and on and may well continue even after Air India makes a choice. Technically, as reports from airlines which fly MCLRs indicate, both aircraft deliver exceptional performance. They are the result of the latest and the best that civil aircraft engineering has to offer. The Boeing plane is slightly larger but very noisy thanks to two engines which are so huge that a fuselage of a Boeing 737 or Airbus A320 can be accommodated in their outer casing.

The Airbus plane, though smaller, has sufficient space for up to eight passengers in a row to move about freely. Itfont>