Competition Dynamics and Market Power: Analysis of the Duopoly Between Airbus and Boeing in the Civil Aircraft Manufacturing Industry

The aircraft manufacturing industry has a long and complex history, shaped by advancements in technology, geopolitical forces, and the rising demand for global air travel. Initially, the industry was fragmented, with numerous manufacturers competing for military and commercial contracts. However, by the late 20th century, it consolidated into a duopoly, with Boeing and Airbus emerging as the dominant players. Boeing, founded in 1916 in the United States, initially specialized in military aircraft before expanding into the commercial sector. The introduction of iconic models like the 707 and 747 solidified its position as a market leader. Airbus, instead, was founded in 1970 as a European consortium aimed at creating a competitive alternative to challenge the American dominance in aircraft manufacturing. With innovative models such as the A300 and later the A320, Airbus rapidly gained market share, challenging Boeing's supremacy. Both companies have benefitted from substantial government support which has been a subject of international trade disputes, especially regarding subsidies. The competition between Airbus and Boeing has defined the industry’s landscape, influencing technological advancements, global trade policies and economic strategies. Today, the civil aircraft manufacturing industry remains largely a duopoly, with these two firms vying for dominance through technological innovation, strategic partnerships, and a deep understanding of market needs. The core objective of this thesis is to conduct an in-depth analysis of the duopolistic civil aircraft manufacturing market, composed by the two dominant firms: Airbus and Boeing. The study will trace the historical development of both companies, analysing the path that led them to establish themselves as leaders in the global aviation sector. Following, a thorough market analysis will explore the current competitive dynamics and key strategic factors that shape the industry. The analysis will include a detailed examination of stock performance to assess the growth trajectories of both firms and the underlying factors that influenced their financial outcomes. Furthermore, the thesis also dedicates significant attention to the issue of government subsidies, providing an in-depth exploration of the disputes between Airbus and Boeing over Government financial supports. These conflicts, which initially began as economic competition, have escalated into broader political and diplomatic issues, affecting international relations and trade policies. The study will investigate how these disputes evolved into a political struggle and examine their implications for global diplomacy and economic governance. Through this analysis, the thesis aims to provide a holistic understanding of the dynamics driving the civil aircraft manufacturing industry.