The Hardest Club to Join: Why Only Two Companies Build Large Airliners

Rajkumar Agarwal20 August 20267 min read2 viewsAircraft & Manufacturing

In 1970, an airline shopping for a large jet airliner could choose among Boeing, McDonnell Douglas, Lockheed, and a fledgling European consortium called Airbus — with the Soviet design bureaus building their own parallel universe of aircraft. Half a century later, the shopping list for a mainline jet of 150 seats or more contains exactly two names, and it has stayed that way through decades in which air travel grew into a mass global industry worth close to a trillion dollars a year.

Markets that large do not usually stay duopolies. Cars, smartphones, ships, even rockets have all admitted new entrants. Large commercial aircraft have not — not because nobody has tried, but because nearly everyone who tried was destroyed. Understanding why explains a great deal about how modern aerospace works, and why even China's state-backed challenger faces a decades-long climb.

The graveyard

Start with the body count. Lockheed built the technically admired L-1011 TriStar, lost on the order of $2.5 billion on the program, and exited civil aviation in the early 1980s, never to return. McDonnell Douglas, one half of the industry's founding aristocracy, bled market share through the 1980s and 1990s as it lacked the cash to develop all-new aircraft; by 1997 it was absorbed into Boeing. Fokker went bankrupt in 1996. The Anglo-French and Soviet supersonic programs consumed fortunes. Bombardier designed the C Series, an excellent clean-sheet 110–150 seat jet, and the program's costs — combined with a trade dispute after Boeing complained about its pricing in the US — pushed the company to hand control to Airbus in 2018 for a token payment. It is now the A220, and Bombardier no longer makes commercial aircraft at all. Even Airbus, the one successful entrant of the modern era, required decades of patient European government backing before it reached parity with Boeing in the early 2000s.

The lesson of the graveyard is not that these companies were incompetent. Several built better aircraft than the incumbents of their day. The lesson is that the product being sold is not really an airplane. It is a 30-year industrial commitment, and almost nobody can afford one.

The entry fee

Consider what a would-be entrant must do. A clean-sheet large airliner costs, by most industry estimates, $10–15 billion or more to develop — the A380 and 787 each ran well beyond that. That money is spent over roughly a decade before the first dollar of revenue, on a product that then loses money on every early delivery, because aircraft manufacturing has one of the steepest learning curves in industry: the hundredth airframe costs dramatically less to build than the tenth. Boeing famously booked tens of billions of dollars in deferred production costs on the 787 before the program approached break-even on a unit basis. Programs commonly need many hundreds of deliveries to repay their development — which, at achievable early production rates, means decades.

Then comes certification. A new large aircraft must satisfy the FAA and EASA across tens of thousands of requirements, from bird-strike tolerance to evacuation demonstrations, in a process that consumes years and has grown more demanding since the 737 MAX crashes exposed the costs of regulatory shortcuts. Certification is a moat within the moat: the incumbents have thousands of engineers who have done it before and regulators who know their design organizations intimately. A newcomer has neither — one reason COMAC's C919, launched in 2008, first flew in 2017, entered Chinese service in 2023, and as of this writing still holds no FAA or EASA type certificate, confining it to markets that accept Chinese certification.

The moats behind the moat

Suppose an entrant survives all that and delivers a competitive jet. The duopoly's defenses are only beginning.

The installed base. Airlines do not buy aircraft; they buy fleets. A carrier operating 200 A320s has hundreds of pilots type-rated on the family, mechanics trained on it, spare parts pooled for it, and simulators bought for it. A common type rating across the A320 family — or across 737 generations — means a new variant slots into that ecosystem at minimal cost, while a new manufacturer's jet demands duplicating all of it. This is why both incumbents have spent 40 years re-engining and stretching 1960s–1980s designs rather than starting fresh: the derivative is worth more to customers than a better airplane would be.

The support network. A jet earns money only when it flies, and the incumbents maintain global spares distribution, AOG (aircraft-on-ground) desks, and field representatives that can put a part in Nairobi or Anchorage in hours. Building that network requires a large fleet; getting a large fleet requires that network. The C919's near-total confinement to Chinese operators so far reflects this chicken-and-egg as much as certification.

The supply chain. Perhaps the least appreciated barrier: Airbus and Boeing do not so much build aircraft as orchestrate them. Engines come from a handful of firms — CFM, Pratt & Whitney, Rolls-Royce, GE — and avionics, landing gear and structures from a concentrated tier of suppliers, most of whom are capacity-constrained serving the duopoly's record backlogs. A new entrant must persuade these same suppliers to allocate scarce capacity to an unproven program. Tellingly, the C919 depends on Western systems, including CFM LEAP-1C engines — meaning China's challenger flies on the same engine family as the 737 MAX and A320neo, and remains exposed to export-control politics.

Escape velocity via backlog. With both incumbents sold out roughly a decade ahead, their revenue is effectively booked into the 2030s. They can price new campaigns aggressively when threatened, because the marginal campaign is not survival — for the challenger, it always is.

Why governments keep trying anyway

Given all this, the rational move is to not enter — which is precisely why every serious attempt is state-sponsored. Large commercial aircraft sit at the summit of manufacturing: they anchor high-wage employment, drag entire supplier ecosystems upward, and carry strategic weight. Airbus exists because European governments in the late 1960s concluded the continent could not cede the industry to America, and were willing to fund losses for decades; the ensuing subsidy fight produced the largest disputes in WTO history, with both sides found at fault before a 2021 truce. China's calculus with COMAC is the same, with an added motivation: at current fleet forecasts China will need thousands of new aircraft in the coming decades, and Beijing would rather not buy all of them from Toulouse and Seattle.

COMAC is therefore best understood not as a company attempting profit but as a nation attempting entry. It has the one asset no failed entrant possessed — a protected home market large enough to absorb hundreds of aircraft while the manufacturer climbs the learning curve — plus a state balance sheet indifferent to decade-scale losses. What it lacks is everything else: Western certification, a global support network, an independent engine, and the production rate (still a trickle beside Airbus's dozens of A320s per month) that makes aircraft manufacturing economic.

A duopoly by exhaustion

The likeliest future, then, is not a triopoly but a slow regionalization: Airbus and Boeing splitting most of the world while COMAC gradually takes share inside China and in politically aligned markets, using its home demand as the subsidy Airbus once got from treasuries. Even that scenario runs on a 20-year clock.

The deeper point is that the Airbus–Boeing duopoly was never a conspiracy or even entirely a choice. It is what remains after the market ran a 60-year experiment in which every configuration was tried — three American primes, national champions, brilliant startups, Soviet industry — and the economics eliminated all but two survivors. The barrier to entry in large airliners is not any single moat. It is the requirement to cross all of them at once, for ten or twenty years, while losing money the entire way. Very few institutions on Earth can sign up for that. At the moment, the list has two and a half names on it.

Sources

#Airbus#COMAC#duopoly#Boeing#aerospace economics
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