In the late 1960s, the major European powers Britain, France and West Germany came together to create the Airbus Project, aimed at ending the American dominance of the aerospace industry. After Britain dropped out initially, this was renamed as Airbus Industrie. Spain joined the alliance in 1971.
Till about 1997, Boeing was way ahead of Airbus in terms of market share. The major contributors to Boeing’s success were its fleet of 727s, 737s, 747s, 757s and the 767s. However, Boeing was plagued by problems like decades old machineries, bureaucracy, outdated information technology and growing employee dissatisfaction.
Initially, Airbus did not do too well. But, they had some of the most advanced machinery and a well qualified leadership and team. They introduced four new variants to the world and earned rave reviews. A growing feeling among the customers across the world was that Airbus was more innovative and still cheaper than Boeing.
The A-320 launched by Airbus took the world by storm and made Airbus very popular. While Boeing could offer only minor variations in its 747 and 737 as new packages, Airbus was growing from strength to strength. It offered innovations which were targeted at making the passengers comfortable as well as reducing the costs of the airlines, all using the latest software that it had at its service.
As they employed the latest technologies in their factories, they had lesser number of workers working on the aircrafts, thus having lesser employee related issues. They managed to get most of the work done by contract employees, recruiting them as and when needed, thereby not incurring additional employee expenses.
They got the various aircraft parts manufactured at various locations, thus having the advantage of cheaper end products. Airbus also used the line manufacturing method which helped in using lesser employees for manufacturing the aircrafts. All this helped Airbus to price its aircrafts lower than Boeing.