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Aviation Strategy - Assignment Example

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Boeing launched the largest passenger aircraft in the world in the year 1970 and since then it has dominated the aviation sector. The monopolistic rule of the Boeing was challenged in early 2001 by Airbus with its launch of A380 that became the largest passenger aircraft with the capacity to seat more than 550 people. …
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Aviation Strategy
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Aviation Strategy

Download file to see previous pages... The ongoing rivalry between the two players in the aviation sector became the focus of many research studies and economic debates. The end of the monopolistic era of Boeing was seen as a turning point in the history of aviation since Airbus changed the rules of the game that was so far dominated by the supremacy of Boeing. The demand for new aircrafts is directly proportional to the estimated demand in the commercial aviation sector. The strategic perspectives of aircraft manufacturers focus on the estimated demand and growth potentials that can trigger the demand for aircrafts. The improvement in seating capacity has now emphasized the significance of long haul services in improving market shares and revenues for airlines operators. Both Boeing and Airbus have contradictory views on this perspective. While Boeing focuses on point to point services, Airbus believes in the hub-to-hub strategy. The viability and potentials of each of these strategic options are examined through this paper to provide a deeper insight into the strategic dimensions of both Airbus and Boeing. The paper explores these perspectives and analyses the strategic planning of these two players to provide conclude on the viability and future of the long-haul market. Organizational vision and strategic perspectives The Boeing Airbus has got two visions for its operations with the Boeing787 operate from point to point and the bigger airbus A380 having a hub to hub strategy. Boeing787 was quite successful with their strategy of point to point where their strategist were of the idea that passengers do not want to travel from hub to hub and will always prefer a nonstop direct flight to their respective destination. It is true that passengers from secondary cities have to travel more as they do not have a direct flight where they stop over in some transit hub and then proceed to their destination. This means that the cost is more both for the passenger and the aircraft company as they have to travel more and incur more expenditure. The success of Boeing787 was based on the strategy of travelling point to point from where they got a huge response with passengers opting for them as they had the convenience of reaching their destination at the shortest possible time and within affordable rates. Boeing had a second school of thought where the aircraft manufacturing giant came up with the Airbus A380 which was bigger aircrafts with more space, more passengers but operating on a hub to hub basis. The strategists for the Airbus A380 were of the view that bigger aircrafts would have the space and the higher capacity to take in more passengers which means more business at reduced costs. There is a 10-15% reduction in costs per seat in the Airbus A380 which is of principal two reasons. One is for the technologies being used for the airbuses were the aerodynamic performance has increased along with the engine performance which has a direct effect on the fuel consumption which has been reduced considerably. Second is the bigger the space of the aircraft, more the number of passengers and seats can be accommodated whereas the cabin crew, pilots and maintenance costs remains the same. Apart from the cost factors, the airbuses operate from hub to hub. The principal reason to do that is the airbus A380 travels long distances and operating from hub to hub is a better option. The second factor on its strategy list is that given the size of the aircraft, the aircraft terminals needs to be modified with runways and the boarding bridges, luggage handling etc comes into the picture which is generally not available in the smaller airports. Therefore the operation strategy of the Airbus A380 is always suited for the ...Download file to see next pagesRead More
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