The battle for a greater market share is fierce between aviation stalwarts Airbus (NASDAQOTH:EADSY) and Boeing (NYSE:BA). Boeing leads in the wide-body segment, while Airbus is the winner in the narrow-body market. The European aero major forecasts that around 70% (20,242 planes) of the total demand for aircraft over the next two decades will be for the single-aisle variety. So we can expect to see plenty of action there. It'll be interesting to see whether Airbus' A320 can manage to retain its position as the segment leader. Let's uncover what makes it the world's most popular narrow-body plane and find out whether Airbus can maintain its lead in this category.

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Airbus A320neo. Source: Airbus.

Hitting the skies
Airbus developed the most successful single-aisle aircraft family in aviation history, the A320, in the 1980s. It's the third plane the company built after the A300 and the A310. Though it had toyed with the idea of making the long-haul A330 or A340 before the A320, it decided on the latter because of the growing popularity of medium-range 130- to 170-seater aircraft.

Building a smaller aircraft involves fewer risks, and any corrections come in much cheaper compared with bigger aircraft. The A320 solidified Airbus' presence in the narrow-body segment and has emerged as the preferred choice of airline operators around the globe. The family includes the game-changing A318, A319, A320, and A321 planes. 

Air France was the launch customer of the A320, taking its delivery in March 1988. Since then, the company's delivered 6,171 units and had orders for 4,754 more as of July. In the past 12 years, Airbus dispatched 4,255 units, which made up approximately 78% of its total deliveries. In 2013, the aero major made a record 493 deliveries as demand for fuel-efficient aircraft soared.

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Data source: Bloomberg. Chart by author.

Side by side with Boeing 737
A discussion on A320 is incomplete without a comparison with its arch rival. The Boeing 737 arrived in 1968 and was the undisputed narrow-body champion for the next two decades. But things changed after the A320 hit the skies. Boeing started feeling the heat as the 737 kept losing business in the face of strong competition from the A320 that continued outshining the former in terms of size, range, and pricing.

One key reason that Airbus has sold huge numbers in this segment is its popularity in the Asia-Pacific region, where there are bunches of low-cost carriers, or LCCs, that demand more narrow-bodies. The LCCs love the A320 family aircraft, as they offer faster turnarounds because of their spacious aisles, efficient service doors, and larger cargo area, which is easy to access. They also offer the most cabin baggage space in their class.

Airbus' market share in terms of seat capacity has grown phenomenally here, from 2% in 2003 to 25% currently, with Southeast Asia leading at 58%.

"This market heavily partners with Airbus," says COO John Leahy. True enough. In 2013, around 82% of the orders placed by Asia-Pacific airlines (68% in terms of value) came to Airbus. And this region is expected to flourish massively, driving future growth. Airbus estimates the Asia-Pacific region will absorb more than 33% of single-aisle deliveries in the next 20 years. 

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Data source: Bloomberg. Chart by author.

Raising the successor to the throne
While Airbus is constantly on its toes to maintain its narrow-body lead, Boeing is equally energized to bridge the gap. So the two giants are reengineering their smaller workhorses.

In December 2010, Airbus announced the A320neo program. Offering both CFM International's LEAP-X and Pratt & Whitney's PurePower PW1100G engines, the modified aircraft would offer 16% better fuel consumption and cut carbon dioxide and nitrous oxide emissions.

Every action in a duopoly sees an instant reaction. James F. Albaugh, former CEO of Boeing Commercial Airplanes, originally said the company intends to build an all-new aircraft by 2020, though it eventually took to reengineering the 737. In August 2011, Boeing declared that it planned to add new engines to the 737 successor and called the derivative plane the 737Max. Boeing claims that the plane, powered by LEAP-1B engines, would save 14% on fuel and lower carbon dioxide emission. 

Airlines around the globe eagerly await both of the narrow-body planes, but A320neo has established a lead over 737Max. Orders for A320neo run over 3,000 units, with the plane scheduled to enter service in 2015, a couple of years before the 737 Max. Boeing 737Max is bucking up with firm orders for more than 2,100 planes.

Last word
Airbus and Boeing are fighting it out with their bleeding-edge technology. In the long term, the market has enough demand to absorb the duo's offerings, but it would be interesting to see how the two stack up against each other in this battle of narrow-bodies. Though it's too early to say who will emerge as the leader over the coming years, Airbus definitely has the first mover's advantage with the A320neo.

ICRA Online and Eshna Basu have no position in any stocks mentioned. Nor does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.