Discuss the development and future potential of the Airbus A380 and the competition it might face from Boeing in the over 400 seat aircraft sector.

Question

What will be an ideal response?

Answer 1

In June 2000 and Airbus announce the launch of the A380. With this Airbus entered the arena long dominated by the 747. Fifty orders were needed to launch the project and Airbus would need to sell 229 aircraft before it could earn a profit. It would have to sell 780 aircraft before it could recover the investment made by Airbus, its partner suppliers and governments. EADS was betting the company on this aircraft and they knew that civilian business accounted for 70% of the company's turnover. The A380 would be a 555 passenger jetliner and configured in all economy seats a stretched version could carry 800 people, far higher than a stretched 747. Airbus received launched aid subsidies of $4 billion which would be paid back as royalty on sales. Airbus hoped to differentiate itself from Boeing by inventing a new way to fly with the A380. The seats were wider; there was a grand staircase, an upper and lower deck with various facilities and more space for passenger amenities. The aircraft would use advanced materials like carbon composite and fly and Mach 0.85 cruise speed, with a 555 passenger capacity across two decks and would cost $216 million. The aircraft would also allow 17% saving in operating costs compared to the 747. On certain Asian routes are Airbus claimed that the A380 could save as much as 45% on operating costs.
Airbus believed that their airplane would succeed because if the air travel market grew but airport capacity did not, extra passengers could only be accommodated by flying larger aircraft. Air passenger traffic was expected to grow by 5% per year and a 127% increase in passenger numbers was predicted globally over the next 20 years. Asia would be the place with the highest growth and with concentrated populations it was difficult to boost airport capacity in these regions, and these would be the regions with the highest demand for large capacity airplanes like the A380. Airbus predicted that only 10% of the total number of planes sold with the super jumbos but they would be worth 25% of the market or $300 billion. Another factor that favored Airbus was the early-morning and late-night curfews in many European and Asian airports. It was not possible to space out a number of flights throughout the day because of this factor and larger aircraft would be needed to service these sectors. To ensure that their aircraft complied with the constraints of current airports, Airbus fulfilled international safety certification and met airport capacity and runway specifications. Passenger convenience was also taken into account and Airbus claimed that the A380 would operate on the same 90 minute schedule that the 747 used.
In response to the launch of the A380, Boeing proposed the 747X stretch program which could be based on the design of the current 747 and would seat 522 in its stretched format. Boeing did not believe that there was enough demand or large airplanes and thought that there would only be 330 500-seat aircraft in service by 2019. Boeing did not receive any orders for the 747X and decided to drop the project and launched the supersonic 20XX instead, flying at 95% the speed of sound. This development does not seem logical given that the A380 flies at 85% of the speed of sound in its current configuration. Airbus seems to have a well thought-out plan for the development, launch and operation of their new aircraft and they seem more likely to win the battle in the skies over the next 20 years.