Boeing is viewing Asia as key battleground in rivalry with Airbus

U.S. plane maker is trying to prevent European foe from gaining market share

January 01, 2003|By James Wallace | James Wallace,SEATTLE POST-INTELLIGENCER

The Asia-Pacific region, and Japan in particular, will be the key battleground for the Boeing Co. and rival Airbus in 2003, as the two airplane makers fight harder than ever to fill their diminished order books during tough times.

As the gloom of the airline industry's worst-ever downturn settles in for a second year, Asia is one of the few bright spots. And what happens in that part of the world will likely determine if Boeing or Airbus has a successful year in 2003.

Boeing will also be wooing potential Asian customers for its all-new super-efficient jetliner, while holding discussions with Japanese industry for what could eventually be a major part of the manufacturing work for the new plane.

Boeing will be trying to keep Airbus from establishing a bigger foothold in the region for its new A380 super-jumbo jetliner.

"We literally have opportunities with every major customer in Asia," Larry S. Dickenson, senior vice president of Boeing commercial jetliner sales, said of the 2003 orders for which Boeing is competing.

"There are significant opportunities in every major country we work in," Dickenson said. "We are going to pursue them relentlessly."

No one at Boeing, or Airbus, knows this market any better than Dickenson, who is entering his 18th year as Boeing's point man in the Asia-Pacific region.

And no one knows better than Dickenson just how much is at stake in 2003, when total orders won by Boeing and Airbus are likely to be even lower than they were this year.

Boeing is dominant

About 77 percent of all planes now flying in the Asia-Pacific region, which includes China and Japan, were made by Boeing or by McDonnell Douglas.

"My job is to keep it that way," Dickenson said.

Early last week, when much of Boeing's commercial work force was off celebrating the Christmas holidays, Dickenson was hunkered down in his office at the company's nearly deserted commercial headquarters near Renton, Wash., preparing Boeing's strategy for the new year.

"I'm here today because I'm worried about next year," Dickenson said then. "We are going to hit the ground running."

Dickenson will be spending much of his time over the next six months in Japan.

Airbus is going all out to win a greater share of the Asian market.

Last year, the European airplane maker launched a Japanese subsidiary, saying its aim was to win 50 percent of the Japanese market over the next 20 years, or about 300 orders. The Airbus market share in Japan is now about 18 percent.

Two key Japanese airline campaigns this year could set the stage for a major change in market share there should Airbus win.

The first is already under way at All Nippon Airways for as many as 45 narrow-body planes.

Airbus is offering its A320; Boeing its next generation 737. All Nippon has a long relationship with Boeing for the bigger 777 and 747 jets.

All Nippon was one of the initial customers for Boeing's new longer-range 777-300ER that will enter service in early 2004. But its subsidiary, Air Nippon, operates a fleet of about two dozen older Airbus A320 and A321 jets as well as some older 737s.

All Nippon is looking at replacing those older jets as well as acquiring planes for growth.

Given that Air Nippon's subsidiary already has A320s, Airbus may have the advantage. Boeing has seen what can happened when Airbus is determined to win a critical order.

Airbus is willing to offer discounts that Boeing won't match. This strategy paid off in 2002 when Airbus won the year's most heated competition to supply low-fare carrier easyJet of the United Kingdom with 120 planes. EasyJet had been an all-737 operator. But Airbus made the airline an offer it could not refuse.

A victory over Boeing for the All Nippon order could be a watershed for Airbus in Japan.

Boeing, Airbus and All Nippon have said little about the competition, and Dickenson said he could not talk specifics.

But he did say that Airbus has mounted a "very vigorous campaign."

"We are working very diligently with our friends at ANA to understand their requirements, and it's our goal to be very competitive to win this, just as we have with other orders from ANA over the past 15 to 20 years," Dickenson said

A decision by All Nippon could come during the first half of this year.

Boeing's biggest advantage may be its long relationship with the Japanese airlines and industry. The aerospace giant in 2003 will be celebrating its 50th year in Japan.

"One of the secrets of this relationship is never taking each other for granted," Dickenson said. "They know us. They trust us. Often, it's not about what people can do for each other in good times, it's how the relationship survives during the bad times, during adversity. ... We have been in that situation in the past with several Japanese customers. We worked with them, they worked with us. And we helped each other."

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