Why Boeing is Superior than Airbus
BERLIN (Reuters) – Boeing Co. sold more aircraft in 2006 than rival Airbus for the first time in five years, the Financial Times Deutschland reported on Tuesday. The newspaper said in an advance of an article to appear on Wednesday that Boeing has published data showing 904 new orders as of December 20 versus 714 for Airbus, a figure including 635 new orders at end November plus new orders published in December. A spokeswoman for Airbus was quoted in the advance text saying 2006 will be “the second best year in the company’s history for orders and deliveries” regardless of the end of year ranking.
Boeing last sold more aircraft than Airbus in 2000. According to company Web sites and Reuter’s calculations last week, Boeing had 875 new orders by December 21 against Airbus’ 694. We should agree that B747 jumbo and the A380 superjumbo by nothing that by focusing on these two aircrafts, we ignore the impact of the latter’s launch on other long range wide-bodies, of which the A330 and the A340 are of the most interest from Airbus’ perspective.
This runs somewhat counter to the conclusion from the discrete choice random utility model estimated by Irwin and Pavenik  to infer the structure of the demand for differentiated airplane offering: they conclude that the entry of the A380 will indeed toughen price competition and reduced the 747’s market share, but that the cannibalization of the A330 and the A340 will be even greater (although Airbus’ aggregate share, including the A380, will increase).
Their results seems to be driven, however, by their assumption that cross-price elasticities are the same across all products within the long-range segment – an assumption that most analysts and industry executives would reject – and by their focus on the market share changes that ensure if incumbent products can adjust prices in response to entry: the price of the 747 falls significantly, so that its market share loss is limited, while the prices of the A330 and 340 optimally do not, so that they experience greater market share losses.
Remember that the 747 is both more profitable, prior to the launch of the superjumbo, than the A330 and A340, and closer in product space to the new product. Or to make the same point in a different way, even if the A380 does significantly cannibalize the A330 and the A340, that simply decreases the financial attractiveness of the superjumbo from Airbus’ perspective; if Boeing continues to have a sufficiently larger amount of market value at stake on its key product, the 747, the puzzle as to why Boeing didn’t preempt persists.
As it merged with McDonnell Douglas in 1997, Boeing abandoned a market-share strategy to focus on producing airplanes that were sales successes. Mulally quickly whittled down Boeing’s lineup, eliminating the poor sellers from the McDonnell Douglas stable, but also pulling the plug on some of Boeing’s best-known aircraft that were past their prime. As a result, Boeing now has three main aircraft families, the 737, 777 and upcoming 787.
Each distinguished itself this past year: the 737 by introducing the -900ER–a long-range, growth version–to counter Airbus’s A321; the 777 by dominating sales in the heavy-lift portion of the mid-size market segment, and the 787 by posting an order book so strong it has forced Airbus to abandon a me-too response and completely revamp its competitor, the A350. As Airbus emphasized seating size, Boeing concentrated on the middle market. It was willing to wait 10 years for advances in engine technology to build a third-generation 747 for the ultra-large market.
Powered by the General Electric GEnx, the 747-8 isn’t going to change the world the way the original did. But for Mulally, that was OK. Boeing expects to find profits in the 747-8, but regards sales of 450-plus-seat aircraft as only a niche market. 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, too, 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. If Airbus appears to covet recognition in the Guinness Book of World Records, Boeing seems predisposed to making a favorable impression in airlines’ inventories. To date, carriers have ordered 159 A380s, and almost twice as many 787s. Second, and even more importantly, Boeing’s 787 represents an appealing alternative.
It’s based on a fundamentally different vision, and it is radically different by design. Airbus responding to Boeing’s argument The two aviation companies who have been competing each other for a long time. Years ago Boeing made its B-747, which remained the biggest aircraft for decades. Then, Airbus made its A-380, which is the most luxurious and most spacious aircraft. The 747 will still have a faster sprint speed than the A380, with 747-8 being able to do a max cruise of . 89, and a max mach number of . 92, as compared to a max mach on . 89 on A380, but only by a shade, they’ll cruise pretty close to each other.
The 777 can run at near 747 cruise, but again, lacks 747’s full sprint ability. The 787 will cruise at roughly 748 speeds, though its sprint capabilities are yet to be seen. The Airbus A380 super-jumbo is a plane for the annals of aviation history. When it goes into service later this year, it will be the biggest, airliner around, capable of ferrying from 550 to 800 passengers (depending on configuration). With its two full-length decks and the promise of amenities such as sleeper cabins, cocktail lounges and a gym, it is sure to capture the public’s imagination.
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, then onward to the next hub on giant airplanes. 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. Both Airbus and Boeing have a hedge in their back pocket.
To compete directly with the A380, Boeing’s 747-8 uses fuel-efficient engines like the 787 to carry 450 passengers. To counter the 787, Airbus is offering a white elephant called the A350, which has been widely derided as out of step with the changing times. In response, the A380 is far more technologically advanced than the 747. Recall, the 747 has been continually modified over 4 decades since its launch in the 1960’s, and the basis of its structure is virtually unchanged whereas the A380 is a completely NEW 21st century design.
Further, the power plants and avionics are LEADING EDGE. In fact, the engines deliver more power to weight ratio and can deliver 12% cost savings on fuel alone. And this is out of the box figures so to speak – no tweaking. Given that the A380 is MUCH larger and HEAVIER than a 747, seats more passengers, offer more comfort and brings us into the next level of air travel, one’s neurons would not be taxed when contemplating how the A380’s 12% fuel saving came about or? – yes, by embracing superior technology to produce a better design.
The 747 was a wonderful aircraft for its time but it really cant compare with the fabulously engineered A380. Its important to remember that the larger the aircraft the more problems you have to overcome. For example, how to keep wings that large from sagging under their own weight while at the same time keeping them flexible enough for flight. The only aircraft thats more impressive is the super-heavy-duty An-225 with its titanium load floor, great range, and load capacity, and ability to land on dirt, snow, or rough, unprepared run-ways.
Then again the Russians have always been the best airframe designers. Boeing versus Airbus is one of the most hard-fought, closely watched marketing battles out there. It’s also one of the most fascinating. Not long ago, it appeared as if Airbus had gained the upper hand. If Boeing succeeds in winning this battle –and it appears to be well on its way–it will amount to one of the great reversals of business fortunes. It will also serve as proof of the wisdom of understanding the marketplace well enough to lead, rather than follow.
The year 2006 saw Boeing take in some 25 percent more orders than its European rival Airbus, according to a report in the “Financial Times Deutschland newspaper”. According to an annual report issued by Boeing, the Chicago based company had 904 orders in the year up to Dec. 20 versus 714 for Airbus, a figure including 635 new orders at the end of November plus new orders published in December. Boeing’s new, more fuel-efficient 787 “Dreamliner” jet and 777 aircraft proved to be the prize attractions. Why should we conclude in favour of Boeing
Boeing is focused now on pressing the five-year lead it enjoys over Airbus in delivery of the 787 vs. the A350. Airbus finally launched the A350 this month but won’t deliver it to airlines for 6-? years. Boeing’s new airplane, the first passenger plane built entirely with plastic composites, is scheduled to enter service in 2008. So 2007, when the first 787s are assembled and tested, really begins a new era. The A380 — the largest airliner ever — will be two years late because of severe, unresolved production problems.
A new chief executive hired in July to fix the mess, Christian Streiff, resigned abruptly in October. He criticized the company’s unwieldy transnational organization and said a massive restructuring was needed. Boeing’s strongest argument is that the air-travel market is fragmenting. People want to travel direct to their long-haul destinations, not squeeze into huge planes before changing later to smaller ones at crowded hub airports in order to reach their final destination. The success of the 747 was ensured by the fact that its huge wings and fuel tanks allowed it to fly farther than any other plane.
But smaller widebody jets half the size of the new Airbus can fly as far as the A380. These planes open up the long-haul market while reducing the airlines’ risk, because they need to fill fewer seats to cover the trip cost. AIRBUS’S long-awaited Superjumbo will bounce back from its current difficulties and take the aviation world by storm, according to a leading industry expert. Now, keeping in view all above information and all the claims of Boeing and Airbus, the current market situation witnesses the lead of Boeing against Airbus in the industry.
As for instance, American freight carrier FedEx has cancelled an order for 10 A380s and switched to rival US manufacturer Boeing due to the delays. Virgin Atlantic Airways has also deferred delivery of the first of its A380s until 2013. Meanwhile Emirates, the programme’s biggest customer with 45 planes, is sending auditors to France, where the aircraft’s construction has been held up, to make sure Airbus can stick to the latest schedule. Editor of Air International Malcolm English predicted the company’s A380 Superjumbo, whose wings are made in Broughton, North Wales, would crush competition from the likes of rival airliner Boeing.
His words will provide some comfort to Airbus bosses and thousands of Welsh workers who have had to contend with a steady stream of bad news since the two-year delay to deliveries of the A380 because of wiring problems was announced. As of Dec. 20, Boeing (NYSE: BA) posted 904 net orders for the year, while Airbus has recorded 713, based on total orders as of Nov. 30 plus the number of orders published during December. Boeing’s 787 Dreamliner continues to outshine Airbus’ A380 superjumbo jet on the order books. Boeing took in 147 Dreamliner orders during the year.
Airbus found itself announcing delays in the A380 program and is faced with few new orders for the 555-seat jet. At the same time, current customers, such as Emirates Airlines, threaten to cancel orders or demand financial compensation for late deliveries. According to Boeing, the 787 is the result of over a decade of focus groups and scientific studies to gain a better understanding of passenger comfort and how the design of airplane interiors can make flying a more pleasant experience. If Airbus made comparable efforts, we are hard-pressed to find the evidence. What Boeing needs to maintain superiority
Boeing Commercial Airplanes combines a strong focus on building the highest quality airplanes with the development and application of new and innovative technologies that continuously improve safety, passenger comfort, operational efficiency and environmental responsibility. “We apply pioneering technologies to our airplanes and services based on the needs of the marketplace,” said Randy Tinseth, director of Product and Services Marketing, Boeing Commercial Airplanes. “These investments mean more value for our customers and passengers, which is why Boeing leads the industry with exciting new airplane developments in every size category.
” The central focus of Boeing product development efforts is the study of new technologies that can be applied to the full line of Boeing jetliners, as well as the 7E7 “Dreamliner. ” The keys to the development of the 7E7 “Dreamliner” are the same as the initiatives that are being pursued across the board: airplane efficiency, economics, passenger comfort, reduced emissions and quiet operations. Boeing investments in the future must not be limited to just new airplanes, they also must continue the enhancement of current product line, incorporating appropriate new technology and more capability, Tinseth said in an interview.
“This means more value for our customers, as we work with them in leading the industry with exciting new airplane developments in every size category. ” The work that Boeing and their technology partners have conducted, including the examination of new configurations, propulsion, manufacturing processes, flight-deck technologies and advanced materials and systems, will provide incremental benefits as they are incorporated into new airplane variants.
“With the 7E7, Boeing continues the tradition of leading the way – using innovative technology to advance the future of flight with revolutionary new products,” Tinseth said. “The 7E7 will be the next great advancement in flight, offering a new world of possibilities. It will be a new sensation for passengers, a new model of success for airlines, and an environmental leader. ” Resources. DW staff (jen), “Boeing Overtakes Airbus in New Orders for 2006” http://www. dw-world. de/dw/article/0,2144,2291760,00. html Marc E. Babej and Tim Pollak 05. 24.
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