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Boeing vs. Airbus - Positioning their product portfolio

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  Post Number #1  
Old 25th May 2006, 07:07 PM
Sidney Vianna's Avatar
Sidney Vianna

Total Posts: 8,667
I Say... Boeing vs. Airbus - Positioning their product portfolio

I find fascinating the strategy in deciding the next generation products that Boeing and Airbus decided to develop in order to get the upper hand. A classical case where an organization has to forecast not only what customers want, but also what the end users (air travellers in this case) want.

An interesting article on this rivalry is available here.

Unsolicited Advice
Boeing Versus Airbus
Marc E. Babej and Tim Pollak 05.24.06, 6:00 AM ET
New York -
In today's marketplace, distinct differences in the way competitive products work have become increasingly rare. But functional product differentiation is exactly what the rivalry between the Airbus A380 and the Boeing 787 Dreamliner is all about: Two companies with fundamentally different products, based on diametrically opposite visions of the future, engaged in a Hatfields versus McCoys battle with billions of dollars at stake.
Each company has made a series of big bets.
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, baddest 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.
Whether the A380 will live up to the hype remains very much to be seen. Passengers may become disenchanted with the plane if it turns out to be a freighter rather than a luxury liner. When airlines can choose between more seats and a gym, out goes the gym. Sound cynical? Not to those of us who fondly remember the upstairs first-class lounge in the early 747s.
Second, and even more importantly, Boeing's (nyse: BA - news - people ) 787 represents 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 number of city pairs more than 3,000 nautical miles apart served by the world's airlines have doubled, the number of frequencies offered by the airlines have doubled, and the number of available seat-kilometers (seating capacity times miles flown) have doubled. None of these trends show any signs of abating; meanwhile, the average airplane size has actually declined slightly. 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," Bentrott says.
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.
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.
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.
The ordeals of air travel after Sept. 11, 2001, make even short flights feel like long hauls. Did people really tell Airbus that they are perfectly happy to stand in more lines in exchange for a cocktail lounge? Airbus could not be reached for comment.
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.
Marc E. Babej and Tim Pollak are partners at Reason Inc., a marketing-strategy consulting firm that works with clients in a range of categories including media and entertainment, financial and professional services, packaged goods and the public sector.

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  Post Number #2  
Old 25th May 2006, 07:40 PM
AndyN's Avatar

Total Posts: 8,459
Hehehe... Wow, who wrote that.......

a couple of Boeing shareholders or Europhobes?

While one could debate the 'hub and spoke' thing until we all sprout wings, the issue often surrounds the operators of the equipment, not the passengers. One feature of Airbus is the low cost of conversion of flight crews from one model to another. I have a friend who flys/trains on Airbus and he says they are easy (hence cheaper) to convert to since the flight deck is just about the same, with variation only coming in the number of controls - dictated by the number of engines!

I for one hope that the airlines reverse the use of small 'RJ' planes. They're uncomfortable, noisy, packed and often not connected by a jet bridge!

But these guys sound like they have a vested interest in Boeing......

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  Post Number #3  
Old 25th May 2006, 09:19 PM
Sidney Vianna's Avatar
Sidney Vianna

Total Posts: 8,667
In Reply to Parent Post by AndyN

I for one hope that the airlines reverse the use of small 'RJ' planes. They're uncomfortable, noisy, packed and often not connected by a jet bridge!
The new "Regional Jets" from Embraer - the 170 family is much more spacious than the older ones. Only a few airlines have introduced them in the US. JetBlue being one of them.

I agree with you that the article was biased towards the 787. However, if you look purely at the number of aircraft sold, the 787 has been an incredibly successful bird. With the jet fuel pricing cycles and air traveling peaks and valleys, who knows? Maybe the 380 and the 787 will "complement" each other....

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