Comments on: The Fatal-Flaw Myth http://www.micromotives.com/2006/08/the-fatal-flaw-myth/ The Science & Art of Decision Making Wed, 07 Jan 2009 02:34:28 +0000 http://wordpress.org/?v=2.6 By: Michael Franco http://www.micromotives.com/2006/08/the-fatal-flaw-myth/#comment-1117 Michael Franco Tue, 10 Oct 2006 06:27:34 +0000 http://www.micromotives.com/2006/08/the-fatal-flaw-myth/#comment-1117 I am surprised that this article implies that the current difference in Boeing & Airbus situations boils down to an Airbus "one bad bet" vs. a Boeing "one good one".?! It amazes me that most observers have never once noted the one constant that over time has separated Boeing from others. For decades Boeing has made good to very good major product decisons, or what airplanes to go ahead and build. Douglas (MD-11 three engines) and Airbus (A340 (four engines) both took the safe road while Boeing risked it all on the 777, which contues to be a huge sucess and dominate its class. The 777 pioneered twin engine operation over long distances (including oceans). Certification for such operations (ETOPS) did not exist until Boeing made it happen. Airbus followed later with the A330. The 747 changed aviation and still sells and makes money. The 737 and its derivitives will pass 6,000 deliveries soon and has a growing backlog. The Airbus A320 model family continues to enjoy sales sucess and has since its launch.The other relatively young Airbus model, the A330, while a good airplane requires a major redesign soon to stem its shrinking sales market share. Based on overall sales the A380 so far appears to be a poor product decision, design and production problems aside.The limited customer base so far indicates a small market segment for that airplane. I am no expert and know little about the workings of Airbus, but I do know that every time Boeing launches a new model aircraft it literally is betting the company on its sucess. New models today can run to or over $10 billion in total nonrecurring costs. As for Boeing would "not have risked the ivestment...for the 787"..."had Boeing"not been in such straights in 2003"... Well, I think it had everything to do with the fact that a very good new model called the A330 was clearly a more modern, better seller than the more middle aged 767. Boeing could sit on the sidelines and let that market segment just go to Airbus, or go win it back. The 787 represented the right choice, not just an updated 767 or A330 design but a real difference-maker. So far airplane buyers are confirming that decision was a good one. Airbus will recover. This is a tough, expensive, risky business. There are reasons why there are only two producers of +100 seat commercial aircraft. But do not lead others to believe that the ups and downs are simply the result of a bad patch or bad bet here and there. Every decade or so Airbus and Boeing and others get to make multi-billion dollar product decisions. Good ones bring sucess, poor ones bring failure. I am surprised that this article implies that the current difference in Boeing & Airbus situations boils down to an Airbus “one bad bet” vs. a Boeing “one good one”.?! It amazes me that most observers have never once noted the one constant that over time has separated Boeing from others. For decades Boeing has made good to very good major product decisons, or what airplanes to go ahead and build. Douglas (MD-11 three engines) and Airbus (A340 (four engines) both took the safe road while Boeing risked it all on the 777, which contues to be a huge sucess and dominate its class. The 777 pioneered twin engine operation over long distances (including oceans). Certification for such operations (ETOPS) did not exist until Boeing made it happen. Airbus followed later with the A330. The 747 changed aviation and still sells and makes money. The 737 and its derivitives will pass 6,000 deliveries soon and has a growing backlog. The Airbus A320 model family continues to enjoy sales sucess and has since its launch.The other relatively young Airbus model, the A330, while a good airplane requires a major redesign soon to stem its shrinking sales market share. Based on overall sales the A380 so far appears to be a poor product decision, design and production problems aside.The limited customer base so far indicates a small market segment for that airplane.

I am no expert and know little about the workings of Airbus, but I do know that every time Boeing launches a new model aircraft it literally is betting the company on its sucess. New models today can run to or over $10 billion in total nonrecurring costs.

As for Boeing would “not have risked the ivestment…for the 787″…”had Boeing”not been in such straights in 2003″… Well, I think it had everything to do with the fact that a very good new model called the A330 was clearly a more modern, better seller than the more middle aged 767. Boeing could sit on the sidelines and let that market segment just go to Airbus, or go win it back. The 787 represented the right choice, not just an updated 767 or A330 design but a real difference-maker. So far airplane buyers are confirming that decision was a good one.

Airbus will recover. This is a tough, expensive, risky business. There are reasons why there are only two producers of +100 seat commercial aircraft. But do not lead others to believe that the ups and downs are simply the result of a bad patch or bad bet here and there. Every decade or so Airbus and Boeing and others get to make multi-billion dollar product decisions. Good ones bring sucess, poor ones bring failure.

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