Saturday, 1 September 2012

Why Boeing will not compete with the Airbus A380

The Airbus A380 can take 525 passengers with a 3 class arrangement, while the Boeing 747-400 can accommodate 416 people with a similar 3 class system.  The Airbus has displaced the Boeing as the largest passenger plane in the skies: it's bigger by every measure and is no doubt a more impressive plane.  (Out of interest, the Antanov An-225 is even larger than the Airbus A380, but the Antanov doesn't cart passengers around, it's a cargo plane).

The first question that pops to mind is: what's Boeing going to do in response to the A380?  The answer is very little.  Boeing is doing the smart thing by simply modifying the 747.  The latest iteration of Boeing's jumbo, the 747-800, can fit 467 people, reducing the gap to the A380 to 58.

Design and development costs: zero

The 747 was introduced in 1970, yes, it's a 42 year old plane.  Boeing have long since recovered all major design and development costs, and profit per unit sold will be much higher than the Airbus A380.  Airbus have to build in that massive $13.8 billion spend on research and development into the price of every A380 they sell.  At the last check, they need to sell 420 units just to break even, and will only do so by 2015.

Let's not forget the teething problems associated with bringing a new plane to the market.  With due respect to consumer electronics companies, introducing a new jumbo jet isn't exactly like bringing a new tablet to the market.  A 500 ton plane with hundreds of people on board cannot put a foot/wing wrong, ever.  Airbus have had delays, budget overruns and lost orders due to the constant hiccups associated with introducing their new model.  Reports of fractures on the A380 do no good for its reputation either, especially in the face of the proven, near bulletproof 747.  Boeing have gone through the pain a long time ago and have an intimate knowledge of every nut, bracket and circuit board on the 747.  They know with confidence that everything works on their plane, so will be very reluctant towards any major re-design.

Airbus created the A380 because they didn't have a jumbo jet.  Boeing designed a very good one a long time ago and it still does the job.  To spend billions to research a super jumbo just to add another 50 to 100 passengers to its 747 wouldn't make sense to Boeing.

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