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Why did the Airbus 380 fail?

Summary:
Above, I show how Airbus "won" the game of chicken between Airbus and Boeing by seizing the first-mover advantage, and began building a jumbo jet, which deterred Boeing from building its own jumbo jet.  Here is the rest of the story from two students: The A380 was designed to fly point-to-point (bypassing hubs) with more people but less frequently (it was suppose to disrupt the hub-and-spoke model). This Forbes article supports the idea that this strategy was not as profitable as the existing hub-and-spoke model nor did it serve what the market actually wanted – more frequent routes with more options. On a side note, it looks like there was a lot of political pressure by EU political leaders for AirBus to build the A380 (can anyone say jobs program).I also think it’s interesting

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Why did the Airbus 380 fail?

Above, I show how Airbus "won" the game of chicken between Airbus and Boeing by seizing the first-mover advantage, and began building a jumbo jet, which deterred Boeing from building its own jumbo jet. 

Here is the rest of the story from two students:

The A380 was designed to fly point-to-point (bypassing hubs) with more people but less frequently (it was suppose to disrupt the hub-and-spoke model). This Forbes article supports the idea that this strategy was not as profitable as the existing hub-and-spoke model nor did it serve what the market actually wanted – more frequent routes with more options. On a side note, it looks like there was a lot of political pressure by EU political leaders for AirBus to build the A380 (can anyone say jobs program).

I also think it’s interesting that at the same time AirBus was pursuing the jumbo A380, Boeing was actually planning the phase out of the 747 by replacing it with the existing 777 fleet (a smaller more efficient aircraft that can still handle transoceanic routes) which can still operate within the domestic and international hub-and-spoke model.

If this is true, perhaps Boeing actually wanted AirBus to build the A380 and sink a bunch of money in a project that Boeing felt was doomed to fail because they already knew the 747 jumbo jet didn’t work well within the more profitable hub-and-spoke model. The more I think about this, I don’t think Boeing would have built a larger jet regardless of what AirBus did. I think they were planning to go the opposite way all along.

Quotes from the Forbes article:
“…news reports followed the company line that the A380 was designed to disrupt the airline industry’s hub-and-spoke model of airline operations…”

“…the A380 program will be remembered as a massive money loser. It did, however, achieve its political masters’ goal of employing lots of European aerospace workers and keeping the Continent relevant in the high tech aviation manufacturing world.”

“….But given the power of hubs to collect hundreds and hundreds of travelers a day to funnel into multiple profit-making hubs, airlines weren’t about to abandon that successful operating style….. High frequency service aboard multiple mid-size planes was the model that they believed would continue to produce the most revenue and profits because it better fit what travelers actually wanted – lots of access and relatively low prices – than limited access service on one big plane each day in each market. The economic power of the hub was too obvious for airlines to throw it all away in pursuit of Airbus’ grand vision of a mega-plane flying once a day on major international routes.”

HT:  Sam and Rick

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