Boeing Versus Airbus

by John Newhouse

  According to Christopher Avery of Morgan Stanley in London, British Airways complained about the airplane to financial analysts, saying, “Boeing doesn’t say what they are offering. Is it subsonic, or more than Mach 1 [supersonic]? Unless it goes over Mach 1, there is no point. It’s too difficult. Mach 1 is an engineering wall. It must be exceeded.”17

  Several of the company’s most experienced and knowledgeable figures had serious reservations. One of them was Joseph Sutter, the renowned aerodynamicist who designed the 747. Choosing his words carefully, he said: “The 747 cruises at Mach .85, so you don’t save a lot of time going to Mach .98. But you’d be burning too much fuel and creating a design problem. It would have cost serious money to solve that design problem and allow the airplane to fly at that speed without the turbulence—soluble but very expensive. It took the company too long to acknowledge that.”18

  Another was Larry Clarkson, who besides having been for several years a widely admired member of Boeing’s executive council, had previously been president of Pratt & Whitney’s commercial jet engine division. “Trans-sonic is the hardest place in the world to be,” he said. “It was a dumb idea, and a waste of two years. No one seems to know what lay behind it. Confusing the marketplace is as plausible as any other explanation.”19

  “We all said the Sonic Cruiser made no sense,” said Richard Branson. “It offered only a twenty-five-minute advantage.” (He was referring to Virgin Atlantic’s transatlantic flights. Other estimates had the Sonic Cruiser shaving thirty to forty-five minutes from that journey, although passengers might have had to pay a premium of 10–15 percent.) “Phil Condit made a mistake by not stretching the 747 and thereby making way for the A380. Boeing should have done something a long time ago.”20 He meant something sensible.

  Airbus was as confused as Boeing’s airline customers. “It was another mistake,” said Gerard Blanc. “But they took it seriously. I talked to Mulally and to Walt Gillette [the Sonic Cruiser’s program director and now chief of engineering]. They argued it could be done. But why would you want to do it?”21

  Not even the Asian airlines were attracted to the Sonic Cruiser, even though they, unlike so many other carriers, were making money, and even though passengers on long-haul transpacific flights would have been the main beneficiaries of a modest improvement in speed. On December 20, 2002, twenty or so months after the unveiling of the Sonic Cruiser, Mulally told a media gathering that Boeing was canceling it in favor of a new and different airplane. “Our airline customers,” he said, “see greater potential value and need for a more efficient airplane. The remarkable enabling technologies we’ve identified pursuing the Sonic Cruiser will allow us to take a significant improvement.”22 This was no exaggeration.

  Neither would it be an exaggeration to say that the Sonic Cruiser would have embarrassed Boeing had it not led to a decision, painfully taken, to go forward with the 787. Two years after that decision, a senior Airbus executive said, “They [Boeing] have been living off our technologies for a long time. Now it’s our turn to go to school on theirs.”

  BIGGER IS NO longer better, according to Boeing people. Airbus, they contend, made a strategic mistake by failing to recognize that the market had changed direction. Airbus rejects this thinking; its case for the A380 is based on the heavy growth in air traffic it expects to see. Although Boeing, too, has been projecting heavy growth, the joint study disclosed serious differences. “It was a marriage between a cat and a dog,” says Gerard Blanc of Airbus. “It couldn’t work. What would the production line look like? The cockpit? Guys would be fighting like hell.”23

  Actually, the parties had agreed on sharing costs of production, and they had agreed that the final assembly of the aircraft would be in the United States. They also devised an approach to the antitrust problem that any joint project would have confronted.

  “By mid-1995, however, we said there are too many roadblocks,” according to Blanc. “We agreed then with Boeing that there was no market [for the superjumbo], even though we knew there was a market, and we were determined to exploit it. We felt we had the competence and this was our missing piece.”24

  Its new airplane, Airbus decided, would be just as big as the state of the art would allow. The assumption was that no airline would want another 747 if there was a bigger and newer jumbo on offer—that is, unless Boeing decided to sell 747’s at giveaway prices. Still, recalled Hanko von Lachner, a longtime Airbus board member, “we didn’t really know at that stage who was right or wrong, ourselves or Boeing. In our business case, we assumed that we wouldn’t be alone in this market for a long time. Boeing, we thought, would react with an improved 747. We even prayed they would spend their money on the wrong airplane.

  “An argument in favor of the A380,” he says, “was Boeing’s 777. It was a better airplane than our A340. But we calculated that the A380 would help to protect the A340. An airline that bought the A380 would be unlikely to buy the Boeing airplane.”25 He was referring to the advantages of commonalty, from which Airbus has benefited with its family of airplanes that have many of the same features.

  The interplay of the A380 with the A330, the A340, and Boeing’s 777 sharply pointed up the pitfalls and the unknowns that can torment any commercial aircraft program. In designing the A330 and A340—two double-aisle airplanes—Airbus took a novel step that seemed very clever at the time. It built these two planes with the same fuselage and the same wing, thereby slicing costs. The A330 would have two engines, and the A340, Airbus’s longer-range minijumbo, four engines. Boeing sat back, watched this happen, and then built a more advanced, slightly more comfortable minijumbo, the 777, one that could fly similar routes but with two fewer engines.

  With hindsight, it seems clear that instead of creating its own jumbo—the A380—Airbus could have and probably should have built a bigger A340, one with a new wing and equipped with two fewer but more powerful engines. A bigger A340 could have been the 747’s replacement aircraft, given the trend toward smaller, not larger, double-aisle airplanes. It could have bracketed both the minijumbo and jumbo segments of the market and, in doing so, have done some damage to the 777, the best airplane in Boeing’s fleet. Stated differently, an A380 with 555 seats is likely to be a little too big for the high-end market, and the 777 a little too small. In that case, an airplane that fell somewhere between those two would be a better fit for that market.

  In Toulouse, there was little if any support for launching the airplane that became the A340. Its deficiencies were seen clearly. The explanation for why the wrong airplane was built speaks volumes about the politics of Airbus—about the shoals its leadership in Toulouse must too often try to maneuver around with varying degrees of success. A big shoal in this case was Lufthansa Airlines, the major carrier of a major Airbus member state. Lufthansa wanted and got a four-engine airplane. Apropos, the A380 superjumbo is assembled in Toulouse, but the components are made in the factories of four countries and then sent there.

  Airbus insists, naturally, that the A380 is the greatest people mover in the sky. It can, Airbus says, offer airlines lower seat-mile costs than any other aircraft, an advantage that will lower ticket prices by as much as 25 percent. And the passengers—all 550 of them in a filled-to-capacity flight—will travel more comfortably than they would in any of the other big double-aisle aircraft.

  The A380, according to John Leahy, will convey a sense of being on a cruise ship. As they board, passengers will not confront a cramped galley but instead a wide staircase to the upper level, where the first-class and business-class sections are located. Each first-class seat will fold open into an ample bed. On the lower deck, the coach class will have seats that are estimated to be an inch wider than the current standard, although they won’t have more legroom. Whether a cruise-ship feel is created will depend on how much money a customer can or will invest in various refinements envisaged by Airbus. These include cocktail lounges, waterfall lounges, and private suites, some with a minibar and private closet.26


  Airbus argues that the A380 is a “ministep” up in size, as Pierson describes it, compared to the advent of Boeing’s 747, an event that occurred thirty years ago. That airplane, Pierson noted, was 150 percent bigger than Boeing’s own 707, the second largest airliner then. “We should treat the A380 as part of a normal evolution,” he said. “It is thirty-five percent bigger than the 747-400.” And in a standard configuration it would have 144 more seats. However, Pierson has worried about what he calls the big airplane’s “parameters.”27

  If the A380 had a single prophet, the distinction would probably be accorded to Adam Brown, who until his retirement in 2005 exercised responsibilities that exceeded his title, vice president for customer affairs. “The A380 is ugly. [It has a bloated, snub-nosed look.] I concede that,” he said. “It has to be, though. To be compatible with the parameters of airports, it is required to sit in an eighty-meter-square box. That box determines the geometry of the airplane. The wingspan must be less than eighty meters. Even a stretched version of the airplane will have to be less than eighty meters in wingspan.”28

  Moving that wing, which weighs thirty tons, along with fuselage sections and other components, to the final assembly line in Toulouse required Airbus to devise an entirely new transportation system. For existing Airbus double-aisle aircraft, the modules are flown to assembly sites in Toulouse and Hamburg in whalelike Beluga Super Transporters.

  However, these aircraft couldn’t possibly carry huge A380 pieces. Instead, they travel by sea, by river barges, and finally by road convoy to Toulouse. A roll-on-roll-off ship was built in China to collect modules built in Hamburg. The wing panels, which are made in Broughton in North Wales, are ferried on trucks and taken to barges in the Dee estuary. The barges take their improbable cargo to a huge cargo ship called the Ville de Bordeaux, constructed especially for transporting A380 components.

  The fuselage sections, the wings, and the tail sections are then transshipped onto roll-on-roll-off barges for the journey of ninety kilometers up the river Garonne. They navigate beneath designated and specially protected arches with the help of global positioning satellites to align the boats precisely with the use of onboard sensors and sensors under the bridges. Four barge journeys are required to transport the six very large sections needed to produce one A380.

  After debarking, the modules travel 240 kilometers on specially designed trucks to the assembly line outside Toulouse. France’s transport ministry carried out a program of road widening and removing bottlenecks along the route, which involves only rural roads and avoids motorways. The convoys move only in the wee hours, with the roads closed in extended sections to public traffic. The journey takes three days.

  According to Airbus, its five-hundred-meter-long final assembly plant is the biggest industrial building in Europe. The jigs are seven stories high. Elevators take the workers to the different levels of their workstations.

  AERODYNAMICISTS, including some of Boeing’s, regard the A380 as a major technological achievement—a marvel, some say. It can take off and land quietly, indeed all but noiselessly compared to other airliners of whatever size. Its capacity for tight maneuvers, even at low altitudes, is remarkable.

  But the issues of whether the airplane is too big for the market or for existing airports, or both, haven’t gone away. Airbus answers by stressing, first, the A380’s presumably low seat-mile costs and, second, the need to increase the size of double-aisle airplanes, since there are limits on the number of flights into and out of airports in any one day. “We can’t just keep putting people into more and more airplanes,” one is often told in Toulouse.

  For industry people with long memories, concerns expressed about the size of the A380 sound very like what was said about the 747 thirty or so years ago: how arduous and time-consuming it would be to process passengers and then unload them; how unprepared the airports would be; how the airplane’s turnaround time couldn’t be less than two and a half hours.

  One who remembers all that especially well is Clancy F. Wilde, who during much of the 1970s and 1980s ran Boeing’s worldwide marketing strategy for jet airliners and for a time was in charge of the flight testing and training necessary to introduce new equipment. “The 747,” he said, “redesigned techniques for handling people and baggage. JFK was going to run out of slots, but the 747 saved the airport because it doubled its capacity. Pan Am’s forecast for transatlantic travel was only fifteen percent of what it became.”29 With the 747, ticket prices went down, and air travel was there for more people.

  The air-travel market and the A380 make a good match, Airbus contends, in part because major cities serviced by hub airports are where most people live and where they want to go. Also, the largest population growth, Airbus notes, is occurring in these urban centers. The company predicts that in twenty years airlines worldwide will be offering twice as many daily departures as they did in 2004. Reducing costs, airport congestion, and environmental impact, the argument runs, will require very large aircraft flying between major hubs.

  “There will always be major hubs that need connecting and everyone wanting to leave them at the same time,” says Morgan Stanley’s Avery. “The time zones create a natural bunching up of flights. At midnight, for example, British Airways sends three 747-400’s from Hong Kong to London, Cathay Pacific sends one, and Virgin sends one A340-600. That is five wide-bodies leaving between sixty and ninety minutes of each other at about midnight. There is no point in leaving before midnight because that would mean arriving before the overnight curfew at Heathrow is lifted. That route cries out for A380’s.”30

  Dispatching two 747’s from one airport to another within an hour or less of each other was standard procedure prior to the falloff in air travel post-9/11. United Airlines, for example, had 747’s flying one just behind the other from Los Angeles to Tokyo. Much of the scheduling for long routes is aimed at travelers who are understandably concerned with being in bed at a sensible hour.

  A big part of the argument for an airplane as large as the A380 arises from the pressure on airports to create more slots, build more runways, hence more terminals. In their business plans, airport managers have an incentive to show a smaller number of aircraft flying in and out. Responding to the argument that the A380 will produce two or three times as much car parking and continuous immigration snarls, Adam Brown says, “The problem is not the airplane. It is the traffic.” And for support, he cites a statement by the Port Authority of New York and New Jersey: “We need to adjust not by adding flights but by adding bigger aircraft,” said Pasquale DiFulco, a spokesman for the Port Authority. In April 2004, the Port Authority predicted that the A380 would bring 1,040 jobs and $82 million in annual economic activity to JFK.31

  London Heathrow, the busiest international airport, is also promoting the A380 on multiple grounds. Its size will reduce airport congestion, and, because the airplane’s engines run so quietly, it can, unlike other aircraft, comply with Heathrow’s evening noise restrictions. “A bigger airplane that operates more quietly than two 747’s offers the carrier a win-win situation,” says Michael di Giralamo, deputy director for airport operations at Los Angeles International Airport (LAX).32

  According to BAA, Britain’s airports group, the A380 will account for one in every eight flights into and out of Heathrow—or sixty thousand takeoffs and landings a year—by 2016. It “will enable nearly 10 million more passengers to fly to and from the airport with no increase in flights.”33

  Aside from Heathrow and LAX, all of the top ten hubs from which the A380 will operate are in Asia; they include Singapore, Seoul, Kuala Lumpur, and Sydney. And of the top ten routes, only London’s Heathrow and New York’s JFK do not serve the Asia-Pacific region.34

  Twenty-two airports around the world are ready for the A380—their runway-taxiway systems, their aprons, and access to gates will be fully compatible with the airplane. Passenger holding rooms and baggage claim areas in these airports are judged equal to the challenge. Among the twenty-two ar
e most of the so-called Pacific Rim airports; some of them were recently completed or renovated and embody major design improvements. Beijing’s airport is the sole exception, although the authorities intend to have it fully compatible with the A380 by the end of 2007 or early 2008, in time for the Summer Olympics in mid-2008. The other three Chinese hubs from which the airplane will operate—Shanghai, Guangzhou, and Hong Kong—are ready. Three major airports in Japan, starting with Tokyo’s Narita, are also ready.

  Elsewhere, however, some major airports have had to scramble to prepare for the A380, and some are less prepared than others. The least set is LAX, even though it had for a time been expected to have the most A380 operations of the world’s airports. Several carriers, among them Singapore Airlines (SIA), Qantas Airways, Virgin Atlantic, Korean Airlines (KAL), Malaysia Airlines, Lufthansa, and also Federal Express, had said they would be flying into LAX. And that was hardly surprising, since it serves as the major gateway to Asia and, for Asian carriers, the major gateway to the States.

  The airplane had been expected to begin commercial life with a fully loaded nonstop flight of ninety-two hundred miles between LAX and Singapore. That changed when SIA, the aircraft’s first operator, decided that although LAX would be able to accommodate the airplane, it wouldn’t be able to do so in a way that met passenger expectations. So SIA then announced that another route—Singapore to JFK—would come first. LAX no longer figures in SIA’s planning.

  Then Virgin Atlantic, another on the short list of early users of the A380, decided to delay delivery of the airplane, partly, it said, because “real concerns still exist about the ability of airports to meet the requirements of this aircraft.” The A380’s boarding times at LAX were cited as among these concerns. In May 2004, KAL also wondered anxiously whether LAX would be ready to receive the A380.