Airbus scored an unquestionably lopsided win in this year's Paris air show order race, but the week-long flurry may be more of a tactical success than a strategic breakthrough in the competitive airliner wars.

Airbus entered the show with a relatively new product, the A320NEO (new engine offering), and plenty of momentum as airlines emerge from several years of retrenching and address deferred fleet planning, especially in the face of escalating fuel costs. Boeing, by contrast, is still contemplating how to evolve its single-aisle strategy, which in part explains its comparatively anemic order intake for 87 narrowbodies.

But Airbus failed to convince a long-time Boeing customer to abandon the Boeing 737 for the A320NEO. That would have been a knock-down punch, in the view of officials at Airbus and elsewhere in the industry, that might have forced executives in Seattle to expedite their decision. Boeing is expected to choose by year-end whether to launch the New Small Airplane—an all-new 737 replacement—or re-engine the 737. Despite efforts by Airbus's chief operating officer for customers, John Leahy, to entice SAS Group officials to portray their purchase of 30 A320NEOs as such a deal, executives at the airline demurred and couched it merely as the outcome of one competition without broader implications for their future fleet.

Nonetheless, Airbus received plenty of positive customer feedback that increases pressure on Boeing, including backing for its own message that the A321 is the best candidate in the market to serve as a Boeing 757 replacement.

From a competitive position, perhaps the most important deal for Airbus was Republic Airways' commitment to buy 40 A320NEOs and another 40 A319NEOs, launching the re-engining of that version. But in this case, the pressure is on Bombardier rather than Boeing. The A319NEO is the most direct rival to its CSeries.

Republic has placed orders for 40 of the Canadian narrowbodies and it is insisting they will not be canceled. Airbus officials, though, indicate they believe the CSeries deal will not survive. If nothing else, the A319NEO order adds incentive for Bombardier to ensure the CSeries development does not suffer delays, which could give Republic an elegant way out of the contractual commitment it made in February 2010.

Despite Airbus's huge order advantage over its rivals, Boeing still managed to secure an edge in the widebody realm. At the air show here last week, Boeing's 777-300ER was the strongest-selling widebody, garnering 27 orders. But perhaps more critically, Airbus has effectively extended the life of the existing 777 with its decision to delay until 2017 the in-service date of the A350-1000.

Although Airbus promises the delayed aircraft will be much improved and a more formidable 777 rival, the extended time frame gives Boeing not just an increased window in which to secure 777 sales, but also further time to determine how to respond. And maybe more importantly, it buys the U.S. aircraft maker time to sequence the series of product upgrades it is working on: the 737 evolution, the Boeing 787-10 and the 777 update, easing strain in Seattle on scarce engineering resources.

Another issue that is clearly in focus for the two big aircraft makers is the dwindling number of production slots available for new orders on some key products. Boeing and Airbus booked orders for only a few 787s and A350s, respectively. Huge order intake in years past means airlines will have to wait for some time for an available production slot, contributing to the recent dearth of new commitments.

Although there were expectations that new market entrants may begin to dent the long-established large aircraft duopoly of Airbus and Boeing, this year's industry gathering here failed to deliver. Neither Comac's C919 nor the Russian MS-21 narrowbody secured a single order. And Bombardier's CSeries order total was not enough to worry its rivals.

But the tally of orders does provide clues about the market forces shaping the airline business (see p. 51). What is striking about this year's orders is how dominant carriers in the Asia-Pacific region have been compared with other markets. Even though those airlines have been an engine of growth for commercial aircraft makers for some time, they typically have shared the limelight with carriers in the Middle East, but the level of activity among that region's airlines this year was meek by comparison, perhaps reflecting turmoil in the area that has created uncertainty among smaller Middle East carriers. Moreover, in November, the region will host its own air show in Dubai, where airlines could place further deals.

With commercial aircraft makers largely looking to digest their raft of orders, the military side remains focused on how to deal with budget austerity. Few in industry underscore the wide gulf between military and commercial fortunes as clearly as EADS, which has made balancing the company between the two sectors a key priority. With Airbus securing deals at a rapid clip, it is very difficult for the defense side to catch up. “We need to add $2.5 billion in revenue per year to keep up with Airbus,” let alone working to draw even with the commercial aircraft maker, says EADS's chief strategy and marketing officer, Marwan Lahoud.

Efforts at cooperation are pivotal to making do with less. For instance, A400M buyers have decided to work together on in-service support, hoping to generate savings. French and British defense officials are continuing their dialog to extend bilateral cooperation, too, although there is concern in Europe that the Anglo-French tie-up may leave others on the outside (see p. 55).

Given flat or contracting defense budgets in Europe and the U.S., much energy was spent here on making inroads into new markets. India remains a hot prospect across a breadth of market niches. Sikorsky officials, for instance, are hoping their CH-148 Cyclone, now due to enter service after a series of development programs, will build the company's reputation in that country.

But some promising export markets present concern as well. Brazil is seeing high inflation, which creates worry that the government will retrench from major defense acquisitions for a few years.

While there are few defense growth areas on the near-term horizon, the air show highlighted increasing industry interest in selling lower-end weapon systems. Air Tractor is looking for more orders for its AT-802U light attack aircraft for which the United Arab Emirates is the launch customer, with 10 units.

Similarly, the interest in providing lower-cost systems, with an eye on homeland security needs, is what has driven Airbus Military to team with Israel Aerospace Industries' Elta division on the C-295 airborne early warning (AEW) system. The goal is to field a system less costly and complex than it rivals, including IAI's own Gulfstream G550-based AEW offering.

But these needs do not mask concern about the longer-term viability of the defense industry if cutting-edge development programs are no longer affordable in the European and U.S. home markets that fund them.

“What we're seeing right now, with no new starts in the [U.S. Defense Department], is that we are losing our ability to do detailed design and we are losing our capability to transition engineering into production,” notes Boeing Commercial Airplanes President and CEO Jim Albaugh, who previously ran the company's defense operation. “I am very concerned about the defense and space industrial base.”

With that in mind, the U.S., is launching an extensive industrial base assessment to determine where cuts can be made. U.S. Deputy Defense Secretary William Lynn says recommendations should be ready in the fall. Similarly, the U.K. is finalizing a defense industrial strategy to help set priorities at a time when tough decisions are needed.