-T / T / +T | Comment(s)

Sunday, May 1, 2005

Editor's Notebook

Matt Thurber, Editor


The Sporty Game, Circa 2005

Boeing and Airbus are diverging in their philosophical approaches to the marketplace. The evidence is not just in the airplane types that both companies are betting on--the giant Airbus A380 and the long-range Boeing 787--but also in the two companies' market forecasts.

Boeing's forecasts are based on an interesting historical trend, which Boeing shows as a graph of the size of airline airplanes during the past few decades. Surprisingly, airplane size in terms of passenger capacity has dropped, not grown, and Boeing believes that to build large airplanes in opposition to this trend would be foolish.

Naturally, Airbus disagrees and forecasts a sizable market for its A380, for more than 1,000 of the behemoth airplanes.

It's been said that the people who run the giant airplane manufacturers engage in a "sporty" game when they decide which new programs to pursue. Until recently, sporty was a euphemism for the next big airplane. But aerospace is bumping up against some natural limits in airplane size, and it's hard to imagine anything larger than the A380. So now, the sporty move, or to put it more accurately, the big risk is launching any new airline airplane program, especially given the current state of the airline business.

Boeing is betting big on its analysis of the marketplace and feels certain that the trend of airplanes growing smaller is a key opportunity. The opportunity is for airlines--new and old--to launch new routes that are point-to-point instead of hub-and-spoke. It's almost as though Boeing is predicting the Southwest Airlines model will work outside the U.S., and if this is true, it could spell a huge demand for the 787.

Certain variants of the 787 will be able to fly so far that there will be hardly any two points on the Earth that the airplane won't be able to serve. That means that 787 operators can serve reasonably sized markets with an airplane that is designed to carry slightly more than 200 passengers. Previously, a much larger airplane was needed for ultra-long routes, but there weren't always enough people who wanted to fly those routes except for large hub-to- hub markets.

Why should passengers fly to London if they want to fly directly to Hannover? This is the fundamental question behind Boeing's strategy. Indeed, Southwest Airlines has proven that there is a large market for people who want to fly directly to their destination and not through a useless hub. Why couldn't this work all over the world?

Sure, there are government barriers yet to be overcome and passengers to retrain on a more logical way of traveling, but Boeing is betting big on this trend. It will be interesting to see how this plays out. There are some new airlines launching with orders for the 787, so the marketplace seems to be grasping this idea.

Airbus, meanwhile, seems to be hedging its bets by building the big A380 for the long-haul hub-to-hub market and having also recently announced the A350, which will compete with the 787.

There's a another wrinkle in all this sportiness: not only is Boeing bucking the big-airplane battle with the 787, but that airplane is also going to be made primarily of composite materials (See story page 12). So who is playing the sporty game this time? Airbus, with a risky gigantic airplane or Boeing, with a smaller, faster, more efficient airplane that is the company's first nearly all-composite airliner?

The sporty game is alive and well.

[X] Dismiss Ad
Live chat by BoldChat