Airbus A3Xx Case

1983 WordsOct 17, 20098 Pages
Executive Summary In fierce competition with Boeing, venture into VLA segment – as a rather neglected segment by Boeing – could pose as a strategic opportunity for Airbus which it could utilize to build a competitive advantage combined with its technological resources and capabilities. However, its assumptions of a drastic increase in VLAs demanded in next 20 years along with its ability to satisfy most of this are too optimistic. Provided that these assumptions (inc. breakeven points, initial order requirements) are normalized, A3XX is a project worthy to pursue for Airbus in order to exploit a neglected spot on the perceptional map – long-haul + big capacity. When we hold the market itself continues to grow as proposed in the case, this…show more content…
Cutting the cost of current 747’s is not a feasible response since this response is an indicator of accepting the threat and so the supremacy of A3XX. Besides that, it is estimated that Asian airlines would shift to VLA segment because of high fixed costs. Therefore in order not to be deprived from Asian market, Boeing should response with an incremental solution (not a new-from scratch one, not to have financial risks). The main customers of aircraft companies are airlines, which have a highly competitive industry that is both capital and labor intensive. The recent emergence of low cost budget carriers (EasyJEt, Northwest etc.) have put high pressure on traditional long haul carriers, who are the biggest customers for large capacity aircrafts, manufactured mainly by Boeing and Airbus. Therefore cost has become the main concern of airlines. Therefore, most possibly airlines would buy the A3XX for its operating advantages and passenger appeal.In addition, Airbus felt confident in its analysis that capacity increases would eventually prevail. Due to the huge growth of air traffic over the years, the congestion problem along many routes and especially at major hubs will worsen indirectly supporting the need for the A3XX. While the customers of the A3XX airplane are the major airlines, the actual consumers are airline travelers. In this respect Airbus provides options to segment the consumers into 2 or 3 classes based on services and different comfort

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