The emergence of new rivals in the aircraft production business has industry veteran and EADS CEO Louis Gallois thinking about how to avoid the upstarts doing to Airbus, what low-cost carriers have done to network carriers.
The rise of the low-fare carriers has been a huge boon to both Airbus and Boeing, driving a large part of the narrowbody order surge seen in the last decade. But after listening to IndiGo founder Rakesh Gangwai, who this week committed to buying 180 Airbus A320s, Gallois has become pensive about what whether the market evolution on the customer front could translate to his own business.
“We cannot become a legacy airplane manufacturer,” he tells reporters in discussing the approaching competition from new aircraft makers.
“We could have, in front us, airplanes that are less sophisticated, but a better prices. A bit like low-cost airlines against legacy airlines,” he notes.
Like Airbus CEO Tom Enders, Gallois is betting that technical developments will hold the key to keeping Airbus ahead. “Our main trump cards are innovation, quality and services”, he argues. But, he adds, “we have to be very careful to be good on price, also.”
The first place the battle will likely play out is in the narrowbody segment, where Gallois sees potential for six competitors. In addition to Airbus and Boeing, China’s C919, Russia’s MS-21, Bombardier’s CSeries, and a possible Embraer entrant could crowd the field. That is more offerings than the market can sustain, he believes, and will eventually drive a realignment.
Gallois has long argued that there will be a need for some of the competitors to partner – last year there was much buzz that Airbus and Boeing might try to enlist a partnership with Embraer. Gallois has not dropped the idea. “We are going to have associations between competitors.”