In Strategy Highlight 3.2, we briefly mentioned that the airline industry faces strong supplier power. Let’s take a closer look at one important supplier group to this industry: Boeing and Airbus, the makers of large commercial jets. Many of the factors that determine supplier power are strong, while some are moderate. The reason why airframe manufacturers are powerful suppliers to airlines is because their industry is much more concentrated (only two firms) than the industry it sells to (there are hundreds of commercial airlines across the world). Given the trend of large airlines merging to create even larger mega-airlines, however, increasing buyer power may eventually balance this out a bit. Nonetheless, the airlines face non-trivial switching costs when changing suppliers (from Boeing to Airbus, or vice versa) because pilots and crew would need to be retrained to fly a new type of aircraft, maintenance capabilities would need to be expanded, and some routes may even need to be reconfigured due to differences in aircraft range and passenger capacity. Moreover, while some of the aircraft can be used as substitutes, Boeing and Airbus offer differentiated products. This fact becomes clearer when considering the most recent models from each company. Boeing introduced the 787 Dream liner to capture long-distance point-to-point travel (close to 8,000-mile range, sufficient to fly non-stop from Los Angeles to Sydney), while Airbus introduced the A-380 Super jumbo to focus on high-volume transportation (close to 900 passengers) between major airport hubs (e.g., Tokyo’s Haneda Airport and Singapore’s International Airport). When considering long- distance travel, there are no readily available substitutes for commercial airliners, a fact that strengthens supplier power