Managing in Troubled Times Case Study

Airbus’s A380: Stalled on the Runway

OR

Abstract:
The global civil aviation market was a duopoly between Boeing and Airbus and the competition was featured by bitter rivalry among these two companies. Though, both the companies predicted almost same growth of the civil aviation market during 2005-2010, two companies had contrasting view for the future nature of the growth. While Boeing was a protagonist of fragmentation in network and ‘point-to-point traffic’ concept and therefore, supported the development of smaller aircraft, Airbus favored the ‘hub-and-spoke’ model of operation, network consolidation and believed in the concept of larger aircraft. Airbus projected a demand of 1144 super jumbos by 2020 while Boeing predicted a demand of 320 super jumbos. In 2000, Airbus announced ‘Project A380’ to develop the largest commercial aircraft with an investment of $13 billion. The aircraft was positioned against Boeing’s 747 models in super jumbo category, and the company planned to airborne first A380 within 2005. The model was highly acknowledged by leading commercial airlines operators, like, Emirates and Singapore Airlines. But the company failed to deliver the aircraft on the stipulated date and when on 3rd October 2006, the company announced a further delay of six months leading airlines operators felt bad about the company. Leading airline operators like, Singapore Airlines cancelled the order for A380 and opted for alternatives. As a consequence of the delay of A380, Boeing marketed aggressively for its 747-8 model, which the company planned to launch by 2007. A few Airlines, like, Emirates, cancelled the order for A380 and opted 747-8 of Boeing. This case gives a glimpse of global civil aerospace market, the trends, competitive fight between two competing aircraft manufacturers and two competing models from two manufacturers. This case also provides an insight about why Airbus lacked in project management skills, why it failed to meet the deadline of the delivery of its A380 model, airlines operators reaction about the delay, how Airbus planned to make over the image, strategy adopted by Boeing to leverage the delay of Airbus and the future scenario of global civil aerospace market.

Pedagogical Objectives:

• To understand the market dynamics of civil aerospace industry
• To analyse competitive position of Airbus vis a vis Boeing
• To discuss the importance of project management in company’s overall strategy.

Keywords : Boeing; Airbus; Hub-and-spoke; Point-to-point; Project A380; Global civil aviation market; Global civil aerospace market; Bombardier; Managing in Troubled Times Case Study; EADS (European Aeronautic Defence and Space Company); Airlines operators; Boeing Dreamliner; Emirates; Singapore Airlines; BAE Systems plc; Original Equipment Manufacturers (OEMs)