Sunday Strategist: A380, We Hardly Knew Ye

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Airbus finally grounded its massive A380 a mere 11 years after its debut (in airplane years, that’s a blink).

The strategy on this superplane was suspect from the start. It was conceived in the late 1990s to conquer Boeing’s 747 and it did just that—in size, range and Instagram-worthy features. But when Airbus finally gave the 380 the green light, Boeing’s big bird was 31 years old and already starting its long, gradual descent.  

The lesson here is to heavily discount old rivalries when planning for the future; let the sunk costs of competition be sunk. If you are the Chicago Tribune at the dawn of the Internet, for example, consider Craigslist; don’t sweat the Sun-Times.

Of course, anachronistic ambition is forgivable. Any strategic plan is an exercise in predicting the future. Airbus executives couldn’t have known in 2000 how quickly smaller engines would gain fuel efficiency or how thoroughly engineers would figure out how to make parts out of ultra-light, uber-strong carbon fiber alchemy.

What the C-suite in Toulouse could have considered more carefully, however, were the incentives of their partners. Governments all across Europe were keen on the jobs that come with a sprawling $25 billion supply chain and were happy to kick in a little to help make it happen. Likewise, scrappy but well funded sovereign airlines like Emirates were keen to burnish their brand with aviation's latest, most lavish machine. 

Amid all the excitement, the company failed to spot its core customer. It wasn’t the glad-handing politician, the slick advertising chief in Dubai or even slack-jawed tourist maxing out his credit-card miles for a lay-flat bed to Tokyo. It was the operations executive. While the A380 may have been a marketer’s dream, but it was a logistical nightmare. Airports had to be rebuilt just to handle them, and smaller planes were required to wait longer to take off or land behind one.

It’s telling that airlines in the U.S.—where subsidies are scarce and discount carriers run riot—did not order a single A380.  Worldwide, Airbus never delivered more than 30 a year.

So when the newness finally wore off and Emirates (which had bought about half of them) dialed back its latest order, Airbus steered the machine for the scrap heap. Don’t be sad that it’s over; just be happy that the louche leviathan took flight at all. We don’t deserve bartenders and showers and waterfalls at cruising altitude anyway.

Businessweek and Beyond

Sunday Strategist: A380, We Hardly Knew Ye

To contact the editor responsible for this story: Silvia Killingsworth at skillingswo2@bloomberg.net

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