• Sat
  • Aug 2, 2014
  • Updated: 3:17am

Airbus and Boeing fly different routes to cutting costs and greater comfort

PUBLISHED : Tuesday, 08 September, 2009, 12:00am
UPDATED : Tuesday, 08 September, 2009, 12:00am

It is easy to forget that the Airbus A380 started as a co-operative development between Airbus and Boeing.

Both companies believed that the future of commercial aviation lay in transporting ever-larger volumes of passengers, up to 800 at a time, from one giant dispersal hub to another.

Thus was born the A380 - albeit after a long, troubled and painful gestation that cost the proud parents about US$6 billion more than expected. But by then Boeing had bought out of the vision. The planemaker agreed that passenger numbers would continue to rise but why fly everyone into mega-hubs that were already hopelessly oversubscribed?

The solution was to design a flexible family of smaller aircraft (but still 250 passengers per plane and up) that could fly over short or long ranges into regional airports, which were closer to travellers' final destinations, but easier to access and cheaper to land at.

The new Boeings would also be cheaper to operate thanks to the use of lightweight composites for up to 50 per cent of the aircraft. They would be cheaper to make, too, by laying off Boeing's unionised in-house machinists and making extensive use of subcontractors.

And so the concept of the B787 Dreamliner took flight. Unfortunately for Boeing, the flying part is the one thing the Dreamliner has still not managed to do. There have been six separate delays to the programme, the latest pushing the maiden flight back to later this year.

And the latest delay has revealed a potentially serious weakness in the structural design of the fuselage, probably closely linked to the use of composites.

Boeing will, of course, remedy those failings and produce a safe, reliable and popular aircraft.

In terms of their contrasting interpretations of future market requirements for passenger aviation, Airbus and Boeing face very different challenges, particularly with the profitability of their aircraft.

One of the A380's strongest selling points is its ability to save money for airlines by allowing them to combine two flights on the same route using smaller aircraft into one full and profitable A380. This is a fine principle when those two smaller flights are flying full and Airbus can cite some good examples of it in practice.

But only recently Emirates pulled back from using the A380 on its Dubai-New York route due to lack of passenger demand, and airlines such as Qantas and Virgin have delayed delivery of new planes by up to four years.

Thai Airways even tried to cancel an order for six A380s, but was ultimately persuaded to accept a deferred delivery schedule instead.

Fortunately there is good news for Airbus: Etihad recently confirmed an order for 10 A380s and the total order book stands at about 200.

However, Airbus confirmed that it needed to sell 420 A380s to break even on the aircraft, with each costing in the region of US$200 million.

The challenge for Boeing is twofold. First the good news. The B787 concept has been extremely popular with airlines. Nearly 1,000 have been ordered and, for the most part, those 1,000 planes will all be required to either replace ageing fleets or to expand new ones.

Now the bad news. The subcontracting adventure has largely failed. Boeing is having to hire back machinists, which means dealing again with the unions it was so eager to wash its hands of. That in turn means hardball negotiations over wages and conditions, and almost certainly extra cost.

And then there is the A350. Airbus has its own smaller wide-bodied family in development, which will ultimately compete directly against the Dreamliner.

The A350 has the same commitment to lightweight composites, makes similar claims for fuel and operational efficiency, and has already won more than 300 orders.

It is worth noting that the A350 programme has the same commitment to outsourcing, too. Some industry insiders believe that Airbus has gone to school extensively on Boeing's negative experience and taken steps to avoid the same mistakes, but it would take a brave gambler to bet against delays to the A350 - particularly given the industry's recent track record.

The manufacturers, then, each face challenging times, but they can at least take heart from the fact that they do not have to run their customers' businesses, too.

The airline industry globally lost US$1 billion per month in the first half of this year, which includes months that are usually the most profitable.

Few, if any, see signs of imminent recovery and such losses are clearly not sustainable.

The new aircraft from Boeing and Airbus address the airlines' concerns for lower costs. They also address society's concerns for lower emissions. And they undoubtedly satisfy passengers' demands for more comfort.

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