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Thursday, July 27, 2017

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Boeing's Sure Bet Pays Off


Back in February of 2005, I warned everyone that Airbusí big gamble on the A380 superjumbo jet was foolhardy.  Now, Airbus is in a serious doldrum, and Boeing, whose fortunes looked bleak when I wrote my former article, is basking in glory and awash in orders.  A380 is plagued by massive problems in wiring, caused by their customersí demands for numerous interior configurations, and lack of quality control.

Now, you may be thinking that this has nothing whatsoever to do with conservative political commentary.  Normally, you would be correct.  But Airbus, with its grandiose plans is government-subsidized, meaning, in essence, that the governments of the European Union are funding virtually all of its R&D.  Instead of thinking of things like saving the airlines money, they want right back to the Concorde-esque snob appeal:  "Worldís biggest passenger airplane!"  In the process, they failed to learn the lessons of September 11.  Airlines, especially now, are all about revenues per seat-mile -- versus costs.  Boeingís 787 is super-efficient on fuel, giving strapped airlines the ability to compete.  Moreover, 787 increases lucrative cargo space as opposed to the aging 767 it replaces.  Finally, it manages to make passengers more comfortable by changing the seat configuration.  The trifecta of airline success.

This shows the difference that private enterprise makes in innovation.  Boeing saw beyond the "hub and spoke" system that the economic realities imposed by the post-9/11 industry crash sent to its impending doom.  straight-line travel became preferable, and huge "cattle car" aircraft become obsolete except for a few ultra-long international runs.  747 handles most of those runs quite well.  A380, on the other hand, cannot even land at any of the worldís three busiest airports yet, because itís so heavy it would crush the tarmacs at the gates.  Not to mention, after the reinforcement is done, youíll need two jetways, one specially modified to raise up to the upper deck, to unload the plane.  In some airports, youíll need a second gate.

Airbus pictured glory and prestige, and since the customers donít really foor the bill for development, the pie-in-the-sky dreamers controlled, and created a gargantuan airplane with an extremely limited market.  A380 is the philosophical child of Concorde, another hugely impractical airplane that turned into a novelty and a status symbol for the ultra-rich.  And itís this very mindset that infects A380ís customers, who are demanding numerous custom ultra-luxury interior variations, all of which require different wiring, and itís that wiring that is plaguing the A380ís manufacture and causing delays.

Boeing, on the other hand, worked closely with its customers to give them what they wanted and needed, up-front, and in so doing limited the variations, and consequently increased the quality of, its aircraft.  They had to work with the airlines; the company depended upon the 787ís success.  And what a success 787 is becoming.  This report details the extent of that success.  Boeingís whipping Airbus, 439-117, in year-to-date orders as of July 5, 2006.  That is an old-fashioned woodshed whipping!  Why?  Airlines want to save money.  Itís cheaper to run two 787ís from New York to London than one A380, and you can get more people, and cargo, in the 787s!  Airbus is late to the game with its problem-ridden A350, which is a reaction to 787ís success, unexpected only by Airbus itself.  A350ís design is now being rethought.

This entire turnaround is a shining display of the superiority of private enterprise over governmental control, over governmental regulation, over governmental involvement at any but the most cursory levels, of business.  Necessity, not vanity, is the mother of invention.  Boeing proves the truth of the maxim, and the inherent superiority of private enterprise over government subsidy.