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A380 Sales Essay

1850 words - 8 pages

Actual Performances vs Forecast / Benchmark 787- Jumbo
The closer approximation to the A380, from either the technical side as well as the type of market served, is the Boeing 747 “Jumbo”. In terms of size the two giants are comparable. Both over 70 meters in length two decks and targeting long distance routes (for both the maximum distance above 8000 nautical miles). Given those similitudes it will be interesting to compare the performances in sales and market penetration. However one caveat would be taking into consideration the different market characteristics of the prosperous markets of 60s and 70s compared to the actual stagnant scenario.
Sales
We compared the sales of the two ...view middle of the document...

In this new view the advantage in sales of Boing is consistently eroded. Overall in the timeframe considered we calculated 262 Airbus vs 281 for Boing.
Given this two prospective how we can consider the actual performances of A380 then? A pivotal point of view would to understand how performances on the total life of the product would look like. The forecast of sales of big twin aisle airplanes for Boing in the next 20 years is 600 units vs the 1,300 calculated by Airbus. Below the detailed figures:

The difference in view is related to the type of hub and spokes model (with more and more people moving in urban areas) vs a more regional setting. In conclusion it is true that A380 sales aren’t performing well as much as its direct competitor. However the success or failure of the venture is tightly related to the market outlook as well as to the speed and willingness to adopt infrastructures to the requirements introduced by the new European very large aircraft. Given this statement are the technical differences among the two airplanes enough to justify the airbus success?
Development and Tech specs
In the 70s 80s and 90s the airplane industry was booming as well as intercontinental flights. The development of Boing was relatively short. Advanced design started in the 1965 and by 1969, following an incredible project schedule, the first airplane has been delivered. Differently to Boing the A380 had a troubled genesis. Ironically the first product development in 1991 included also Boing. Airbus proposed a JV to develop a conjunct study on Very Large Commercial Transport (VLCT). The motivation behind that request were the huge cost of designing a plane from scratch as well as leveraging the experience gathered by the Seattle manufacturer with the 747. Boing decided to stop the collaboration in the 1993. What was the strategy behind that decision? First of all the future A380 would have been a direct competitor of the 747, cannibalizing the internal sales of Boing. Second the market forecasts indicated that the entire industry was moving out from an hub and spoke system to a more capillary infrastructure. This new model would have required less mega planes and more regional planes. Finally the story taught that entering such a niche market with two competitors automatically would make the venture a high risk. The market wouldn’t be big enough to generate enough profits for two players. In the past the introduction of similar planes, Douglas DC-10 and Lockheed L-1011 Tristar, targeting the same niche market killed the performances of both companies.
In the end the A380 was developed independently by Airbus. Without the technical support of Boing Airbus had to design from scratch the aircraft. This venture ended to be incredibly expensive (total cost raised from $10.6B to $15.6B). The soar in cost was linked to an increase in terms of complexity.
Following we reported the main technical figures of the two carriers:
Column1 | A380 | 747...

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