Dipti Kapadia Asks Whether the Jumbo Jet Era Is Coming to an End.direct flight over vast distances problem.

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

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)

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

What Is the 777X and Why Are the Unions Upset?

 Boeing launched its newest version of the 777, the 777X, at the Dubai Air Show yesterday (Sunday.) The 400 seat twin aisle plane is its response to Airbus's A350. Jon Ostrower gives us a peek at the plane in this Wall Street Journal video:




The 777X is the center chessboard in a match between Boeing and its unions. Boeing had built a huge new plant at the cost of a billion dollars in South Carolina. Just as it was to open it, its union brought a complaint against it before the NLRB that claimed Boeing built the plant to break the union.  With the help of a friendly NLRB, the union was able to reach a settlement with Boeing that shifted certain work to Seattle, including some from Wichita.

Now it is Boeing's move.

When it came to deciding where to build the 777X, Boeing's last big development project, it presented a deal to the State of Washington and its union with which it would build most of the 777X in Seattle.  The state offered $8.7 billion in incentives (that is a lot of money.)  It proposed a new contact to the union that would shift to a defined contribution pension plan among other concessions. However, "the 32,000 unionized members of the International Association of Machinists and Aerospace Workers, also known as the IAM, rejected the deal by a 67% to 33% margin."  With no deal, Boeing is looking around the country and the world to decide where to assemble the new jetliner and build the wings and other parts.  Molly Mullins reports in the Wichita Eagle that there is an attempt to get some of that work here in Wichita. She reported that "Greater Wichita Economic Development Coalition officials met Thursday morning to discuss going after the 777X work for Boeing’s facility in Wichita Boeing."

Read more here: http://www.kansas.com/2013/11/14/3117036/local-machinists-voted-along-with.html#storylink=cpy

Boeing says it will decide where to build the plan in the next two to three months.

Boeing Hits a Home Run With the 777X

At the Dubai airshow, Boeing launched its 777X Largest and manage the biggest launch in commercial jetliner history with over 200 orders. Emirates Airline placed a $76 billion order for 150 of the new 777X jets. In this video, the Wall Street Journal's Rory Jones reports from Dubai.