Dear Fellow Big Idea Fans,
According to some, the decade has just ended. For our industry, it was an exciting one. The world’s two big jetmakers spent the decade taking very different paths, a marked divergence in outlook and strategy. Yet strangely, they’ve come back to the same place.
Airbus took the lowbrow road. They ignored all known technological, economic, and market trends. They did this for their own lowbrow reason: no global trends justified development of a 550-seat metal clunker, but thanks to pride, nationalism, and hubris, they really wanted to build one. This, and other monstrously incompetent programs like the A400M, brought the company close to ruin. Management learned exactly nothing from this. Top Airbus executives still give speeches lauding the A380 and decrying “so-called experts,” displaying a distaste for rigorous thinking that makes Sarah Palin look like Simone de Beauvoir.
Boeing, by contrast, took the highbrow road. The company carefully surveyed all macro and micro trends driving change in the world, and in the transportation industry. They listened to every expert, guru, futurist, and tea leaf reader with a manifesto. They decided that the most promising new technologies would best be adapted to create a mid-market long-range plane. This happened to fit perfectly with the superior pricing power associated with international long-haul point-to-point routes. As air travel networks continued to fragment, these point-to-point routes would further proliferate.
Leveraging new technology to pursue this promising segment would give them maximum pricing power, helping them escape the weak margins of a static duopoly. At first, Boeing espoused the Sonic Cruiser, which was odd, but at least it was forward-looking. Then, they launched the 787, a brilliant riposte to the pointless, low-tech, retrograde A380. The 787 was the thinking person’s plane, and by extension Boeing was the thinking person’s planemaker. But all this brilliance has dug the company into a hole.
The problem is that the assumptions behind the three biggest enablers of the Dreamliner – composites, a more electric configuration, and using a global design network to achieve lower costs – have proven partly or totally wrong. Boeing failed to properly verify them before embracing them.
Composites sounded brilliant and still offer benefits for aircraft in this class, but they bring new complications to manufacturing and aircraft certification and will take much longer to mature than assumed. The same goes for the 787’s brilliant-sounding more electric aircraft design approach. A fleet that still hasn’t resumed certification flights two months after the electrical panel fire shows that this concept was embraced without analyzing the possible complications. The global design partnership concept, which sounded brilliant, is a complete fiasco (see my July 2009 letter for more on this).
As a result, the nonrecurring cost assumptions have proven completely wrong. All recurring cost assumptions look set to be proven wrong too. (end of excerpt)
Click here for the full article, on the Blue Sky News website.