Airbus A3Xx Case

1990 words 8 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
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The main competitive advantages of airlines are its unique technological capabilities such as “fly-by-wire” technology and “cross crew qualification” (CCQ).
Despite the gains in market share, if Airbus do not develop a model in VLA segment, they would lose a big competitive advantage since they are also behind Boeing in small and medium sized aircraft segments. The 747 family constitutes a monopoly in the large aircraft segment, in which Airbus doesn’t exist. The Boeing 747 can currently provide non-stop service in the same routes that A3XX can do, therefore Boeing saw VLA market as unnecessary. The lack of attention by the main competitor is an opportunity for Airbus, since it can gain the first mover advantage without any stress of being second in this strategic move.
The capability of accommodating baggage, cargo, and/or passenger amenities is an important advantage for A3XX compared to B747’s since better passenger satisfaction can be managed with this kind of comfort attributes in long routes.
As for Boeing possible retaliation, Boeing would likely respond in one of four ways: it could develop a stretch version of the 747 (the 747X), cut prices on the 747, develop a competing super jumbo jet, or ignore the potential threat. Boeing could respond Airbus’s attempts with introducing a stretch version of the 747 (the 747X, that has over 500 seats) that has similar properties with A3XX. This launch would