STRATEGIES
“Over the past twenty years, Airbus invested far more heavily in research and development than Boeing” (Newhouse 222). But then in recent years made a decision to take on a revisionist strategy of building a super jumbo jet A380. Airbus' mission is to provide the aircraft best suited to the market's needs and to support these aircraft with the highest quality of service. The Airbus A380 super-jumbo is a plane for the chronicles of aviation history. It is considered the biggest airliner around, capable carrying 550 passengers. According to John Newhouse book, “Airbus insists, naturally that the A380 is the greatest people mover in the sky. It can offer airlines lower seat-mile costs than any other aircraft, and advantage that will lower ticket prices by as much as 25% (pg 256) But for all its promise of innovation, the A380 represents a bet-the-house wager on one of the most disliked same-old models of air travel: the hub-and-spoke. The A380 is built around the assumption that airlines will continue to fly smaller planes on shorter routes (spokes) into a few large hubs. It also presumes that passengers will want to put up with the hassles of changing planes in exchange for the privilege of traveling in a jet-powered cruise liner.
Boeing's 787 represent an appealing alternative. It's based on a fundamentally different vision, and it is radically different by design. Boeing doesn't take the current hub-and-spoke model as a given. Marty Bentrott, vice president of sales, marketing and in-service support for the 787, says that since 1990, the numbers of city pairs more than 3,000 nautical miles apart served by the world’s airlines have doubled, the numbers of frequencies offered by the airlines have doubled, and the numbers of available seat-kilometers have doubled. (Company Website) Clearly, customers prefer more point-to-point flights, flown more frequently, on smaller airplanes. Marketplace insight is at the core of 787 product development. "Our strategy has been to design and build an airplane that will take passengers where they want to go, when they want to go, without intermediate stops; do it efficiently while providing the utmost comfort to passengers; and make it simple and cost-effective for airlines to operate," (Company Website). Rather than seek economies through scale, the 787 will deliver economy through technological innovation, making the most of newly designed, fuel-efficient twin engines and lightweight composite materials. The 787 offers a very different take on the flying experience, focusing on comfort rather than perks that could be eliminated by airlines: more standing headroom, larger windows and bathrooms, and higher humidity--all features that will benefit passengers regardless of seat configuration.
Other strategies both companies have used are outsourcing. Boeing is out-sourcing more and more of its work, even detailed design and engineering as part of their strategy. Outsourcing is a possibility for Airbus but they will only outsource what it does not consider to be a core competency. “In recent years the strategic thinking of both Airbus and Boeing was driven by the Asian market, starting with China; most industry watchers assume that sooner rather than later China will become the largest market for both long-haul aircraft and those designed for domestic use” (Newhouse 42). For the time being, the fact that both companies are in a reviving and evolving market, and that both enjoy the benefits of a strong market position, may outweigh the differences between them and short-term shifts in sales.
STRATEGIES “Over the past twenty years, Airbus invested far more heavily in research and development than Boeing” (Newhouse 222). But then in recent years made a decision to take on a revisionist strategy of building a super jumbo jet A380. Airbus' mission is to provide the aircraft best suited to the market's needs and to support these aircraft with the highest quality of service. The Airbus A380 super-jumbo is a plane for the chronicles of aviation history. It is considered the biggest airliner around, capable carrying 550 passengers. According to John Newhouse book, “Airbus insists, naturally that the A380 is the greatest people mover in the sky. It can offer airlines lower seat-mile costs than any other aircraft, and advantage that will lower ticket prices by as much as 25% (pg 256) But for all its promise of innovation, the A380 represents a bet-the-house wager on one of the most disliked same-old models of air travel: the hub-and-spoke. The A380 is built around the assumption that airlines will continue to fly smaller planes on shorter routes (spokes) into a few large hubs. It also presumes that passengers will want to put up with the hassles of changing planes in exchange for the privilege of traveling in a jet-powered cruise liner. Boeing's 787 represent an appealing alternative. It's based on a fundamentally different vision, and it is radically different by design. Boeing doesn't take the current hub-and-spoke model as a given. Marty Bentrott, vice president of sales, marketing and in-service support for the 787, says that since 1990, the numbers of city pairs more than 3,000 nautical miles apart served by the world’s airlines have doubled, the numbers of frequencies offered by the airlines have doubled, and the numbers of available seat-kilometers have doubled. (Company Website) Clearly, customers prefer more point-to-point flights, flown more frequently, on smaller airplanes. Marketplace insight is at the core of 787 product development. "Our strategy has been to design and build an airplane that will take passengers where they want to go, when they want to go, without intermediate stops; do it efficiently while providing the utmost comfort to passengers; and make it simple and cost-effective for airlines to operate," (Company Website). Rather than seek economies through scale, the 787 will deliver economy through technological innovation, making the most of newly designed, fuel-efficient twin engines and lightweight composite materials. The 787 offers a very different take on the flying experience, focusing on comfort rather than perks that could be eliminated by airlines: more standing headroom, larger windows and bathrooms, and higher humidity--all features that will benefit passengers regardless of seat configuration. Other strategies both companies have used are outsourcing. Boeing is out-sourcing more and more of its work, even detailed design and engineering as part of their strategy. Outsourcing is a possibility for Airbus but they will only outsource what it does not consider to be a core competency. “In recent years the strategic thinking of both Airbus and Boeing was driven by the Asian market, starting with China; most industry watchers assume that sooner rather than later China will become the largest market for both long-haul aircraft and those designed for domestic use” (Newhouse 42). For the time being, the fact that both companies are in a reviving and evolving market, and that both enjoy the benefits of a strong market position, may outweigh the differences between them and short-term shifts in sales.
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