Competitive Stances Breed Competitive Stances
The two biggest world aircraft producers are Boeing and Airbus. These companies have enjoyed a duopoly for the past twenty years, according to Ryanair ’s chief executive, Michael O’Leary. Ryanair currently operate 275 Boeing aircraft. The airline is the largest low cost airline in Europe. O’Leary changed Ryanair ’s traditional business model to a low-cost model based on Southwest Airlines. He has since refined that model and famously trails what seem at the time to be outrageous ideas before implementing them and seeing them become part of the traditional way of doing business (scratch cards, paying for drinks and food on board the aircraft, credit card charges and the like).
He is a notorious “hard ball” negotiator. In December 2009, he pulled out of negotiations with Boeing for a new contract, starting in 2013 for the supply of new 737 aircraft. He fired some bait in the direction of Airbus but its chief executive, John Leahy, was dismissive saying, “I would have no problem selling aircraft to O’Leary at reasonable prices, but I have not seen anything reasonable from him” (CAPA 15 December 2009).
Both Airbus and Boeing have been slow to introduce new, more economic models in the single-aisle 200-seater market, preferring instead to milk profits from the Boeing 737/Airbus A320 variants currently on sale. To be fair, both companies have had their fingers burned recently with new product launches, the Boeing 787 and the Airbus A380. Neither company is willing to bet its future on a new product when both have tried and tested products already in the marketplace. Ryanair, as well as other airlines – most famously perhaps Easy Jet, has been frustrated by this lack of product development.
What was initially seen as a negotiator’s ploy – threatening an existing