Saturday, January 22, 2005

Boeing and the A380

In my last post I expressed my thoughts about the A380. So whats the mighty Boeing doing about it?

I feel that Boeing unfortunately under estimated Airbus from the time Airbus was first formed. First of all I doubt they really expected Airbus to build the 380 and were convinced that no one would want to buy it anyway. They were sure that if there was a serious demand for higher capacity then it would be a lot easier for them to extend the upper deck on the 747 than for Airbus to design a double decker jumbo from scratch.

It looks like Boeing have been struggling with internal management problems etc recently and really look like they took their eye of the ball the past few years. Airbus really surprised them with their rapid growth and eventually managed to exceed sales.

By the time they realised that Airbus were actually going build the 380 and were winning lots of orders I guess it was a bit too late to offer a bigger 747. Indeed they can offer a new 747 but there probably wont be a big enough market for two super jumbos. Boeing instead started talking about the Sonic Cruiser. After a lot of money and time was spent they realised that the Sonic Cruiser was not going anywhere and finally settled on the super efficient 7E7 Dreamliner ( which is a shame because if the sonic cruiser had gone ahead then perhaps it could have acted as a catalyst for more research into a viable supersonic variant). 30 years on since Concorde and we still have no acceptable solution to the boom problem.

I can see Boeing's point and their argument that the 7e7 is something that will be popular with airlines and point to point travel is what people really want instead of the hub and spoke view from Airbus. Hub and Spoke is basically where big planes like the 747 / 380 fly to major airports like Heathrow (the hub) and then passengers take connecting flights to smaller destinations (Spokes). Boeing say people want to fly direct from A to B (often smaller airports) without having to change flights etc therefore a long range, super efficient airliner is whats needed i.e the 7E7.

I think they are both right there is demand for both types of planes. Note that as soon as Boeing started talking about the 7e7 lots of airlines showed immediate interest. However Airbus appeared on the scene yet again and annouced to the world that just because they are building the 380 doesnt mean they have stopped building other planes and launched the A350 few weeks ago which will be a direct competitor to the 7e7. I assume that as soon as Airbus announced the A350 lot of airlines that showed interest at the 7e7 probably took a small step back from Boeing and decided to wait and see what Airbus will do with the 350 before they commit to the 7e7. Even if the 7E7 proves to be the superior aircraft the A350 will still take a bite out of the 7E7 pie.

Excuse my crude language but to me it looks like Airbus have got Boeing by the balls right now and are squeezing real hard.

For the first time in the history of the two companies it is Boeing that does not have an answer to a product from Airbus. It is a fascinating battle and the victors I am sure will be the airlines and passengers as the two titans compete to build better and more efficient products.


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