In the 1960s, Boeing introduced the world's first jumbo jet. This met two key needs of global travel. The Boeing 747 could carry 450 people and it could fly vast distances such as crossing the Pacific. For decades, the only way to connect two cities seven or more thousand miles apart wast a jumbo jet. Over time both 747s and various wide aisle twin engine planes extended their range, but jumbo jets were the only solution to the direct flight over vast distances.
Both Airbus and Boeing project global passenger growth at or near 5% a year for the next two decades. This would require both more available seat miles and airports that could accommodate the growing passenger throughput. Airbus and Boeing made different strategic decisions about how their customers, the world's airlines, would respond to meeting this growth. Airbus decided the global air carriers would continue their hub-and-spoke systems and overcome the resulting choke points at those hubs by flying a yet bigger jumbo jet. Thus they committed to building the A380, the world's largest jet, which, in one configuration, can seat 950 people. Boeing figured airlines would increase their international point-to-point flights garnering more business travel with its higher revenue per passenger mile. thus they bet the company on building the boeing 737 Dreamliner, a largely composite (thus more fuel efficient and less costly) plane with a long range and 350-450 seats.
Who is winning?
in this November 9th, 2015, Wall street Journal video, the Journal's Dipti Kapadia wonders if "The Jumbo Jet Era Is Coming to an End?"
Jet Deals Fall at Dubai Air ShowConcern about slowing aircraft sales has risen in recent months
Showing posts with label Airlines. Show all posts
Showing posts with label Airlines. Show all posts
Monday, November 09, 2015
Tuesday, December 23, 2014
Will Airbus Give Up on the A380?
Two strategic bets
When Boeing committed to the Dreamliner (AKA the B787), it made a very different strategic bet from Airbus which had made its own huge bet on the A380. Both manufacturers forecast world traffic growth of near 5% per year over twenty years. The demand for planes is a demand derived from air travel. Thus the straegic question: How were the duopolists' customers–the world's airlines–going to meet a doubling of passenger miles/kilometers in less than two decades?
Two different answers
Airbus decided they airlines would move more people through the key international hubs with a bigger jumbo jet that would increase those hubs' throughput capacity. Their solution was the A380 which could both fly 8-10,000 nautical miles and hold up to 950 people. The massive size of the plane would also allow it to be marketed with a smaller seating capacity and hitherto undreamed of luxuries like an airborne gym, three cocktail lounges, and other amenities.
Boeing predicted that the world's airline would meet the growing demand with more point-to-point flights. The Dreamliner would have a similar long range, but would hold only 250-350 passengers. Boeing bet the airlines would try to attract their most lucrative customers with direct flights maximizing the time value of flying executives rather than the luxury that also required large numbers of the unwashed masses to meet load factors. Boeing also committed later than Airbus and may have gone to school on the European's putt.
With hindsight is there a winner?
So are the results in yet? No, but there is preliminary evidence Boeing may have made the better bet.
So far Airbus has failed to get a single new buyer this year. And now in this video, Bloomberg's Benedikt Kammel suggests Airbus's might discontinue its A380 superjumbo as soon as 2018.
Has Airbus misjudged the market?
(Source: Bloomberg, Dec. 11)
When Boeing committed to the Dreamliner (AKA the B787), it made a very different strategic bet from Airbus which had made its own huge bet on the A380. Both manufacturers forecast world traffic growth of near 5% per year over twenty years. The demand for planes is a demand derived from air travel. Thus the straegic question: How were the duopolists' customers–the world's airlines–going to meet a doubling of passenger miles/kilometers in less than two decades?
Two different answers
Airbus decided they airlines would move more people through the key international hubs with a bigger jumbo jet that would increase those hubs' throughput capacity. Their solution was the A380 which could both fly 8-10,000 nautical miles and hold up to 950 people. The massive size of the plane would also allow it to be marketed with a smaller seating capacity and hitherto undreamed of luxuries like an airborne gym, three cocktail lounges, and other amenities.
Boeing predicted that the world's airline would meet the growing demand with more point-to-point flights. The Dreamliner would have a similar long range, but would hold only 250-350 passengers. Boeing bet the airlines would try to attract their most lucrative customers with direct flights maximizing the time value of flying executives rather than the luxury that also required large numbers of the unwashed masses to meet load factors. Boeing also committed later than Airbus and may have gone to school on the European's putt.
With hindsight is there a winner?
So are the results in yet? No, but there is preliminary evidence Boeing may have made the better bet.
So far Airbus has failed to get a single new buyer this year. And now in this video, Bloomberg's Benedikt Kammel suggests Airbus's might discontinue its A380 superjumbo as soon as 2018.
Has Airbus misjudged the market?
(Source: Bloomberg, Dec. 11)
Friday, December 06, 2013
Jet Blue Speaking Arabic?
FlyDubai Sets Out Stall with Boeing Binge
Boeing was a big hit at the Dubai Airshow, but it was not just 777s that it sold. FlyDubai committed to buy up to 100 737 MAX 8 airplanes and 11 Next-Generation 737-800s (Boeing's single-aisle jets.) Presumably much of these will be made here in Wichita by Spirit AeroSystems. Hubbed in Dubai like Emirates, FlyDubai's strategy is as a low cost, shorter haul flight airline as it tries to capture destinations (particularly in the Arab/Muslim world) currently not being served by Emirates Airline, the regional powerhouse.In this video, WSJ's Rory Jones looks at where the company is headed and what might be some of the challenges it faces:
Photo: Getty Images
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