Randy's Journal: Archives
06 June 2006
On-time arrival
I'm sure everyone's noticed all the media coverage speculating on what Airbus is going to do about the airplane currently known as the A350.
It's a meaningful discussion because it centers on the important "middle of the market" - around 200-400 seats. In the Boeing forecast, that's actually about 90% of the passenger widebody market.
So with all the talk swirling around about what Airbus may or may not do, I thought this would be as good a time as any to re-emphasize where Boeing is right now.
And it goes back to how we've looked at the market, and how it's evolved, especially since the early 1990s when we saw a significant shift in where the market was going.
Boeing Commercial Airplanes came up with a product strategy based on the opening up of new routes due to liberalization, new competition thrust upon airlines, and the demands of passengers who want to save time and reduce connections.
Boeing's widebody strategy is to provide 5 sizes of very efficient airplanes from 200 seats to 450 seats, all having about 8,000 nmi range or more. Airbus is now responding to the success of the 787 and 777 with the 4th iteration of the A350 - which could be more than 4 years late to the market.
These factors resulted in the BCA widebody product strategy that we've been executing for a number of years now: five sizes of airplanes having a range of 8,000 nautical miles or more.
This is a proven strategy, reinforced again and again with the introduction of the 777-300ER and 777-200LR, the fantastic market response to the 787 Dreamliner, and most recently, last fall, with the launch of the 747-8 program. Airlines need multiple sizes of fuel-efficient airplanes that take passengers where they want to go, when they want to go.
We continue to see validation of this approach as airlines add more nonstop flights and frequency growth. We see no sign of consolidation. In fact we're seeing quite the opposite.
So, whatever Airbus decides to do or not to do in response, we feel our products and product strategy are solid. There's no reason for any significant shift in our approach to the marketplace, because we're responding to what our customers and the marketplace are telling us. On the other hand, what Airbus is responding to is Boeing's success in the marketplace.
Of course we continue to monitor what the competition is doing. They remain a very capable and formidable competitor. But the question you have to ask is: will the new Airbus offering arrive too late? In the discussion of airplane programs and product strategy a lot is often made of the concept of "timing." So will this latest "A350" concept arrive "on time?" Or will the market have pulled away by then? And what does this strategy shift and significant resource commitment do to Airbus' long-term product strategy?
Lots to think about. And no doubt we'll be hearing and talking much more about this as we lead up to the Farnborough Air Show in July.