Marketing of Airbus - Case Study Example

Airbus Case Study Table of Contents Table of Contents 2 Airbus: The case 3 Things to think about 4 Reference 11 Bibliography 12 Airbus: The case Howwould it feel to sit in a plane with some other 554 passengers, where you can have an ultramodern gym to burn the calories and a splendid dining area to enjoy the excellent food; the answer of this question is a reverberating yes. This feeling can now really come true with the arrival of A-380 Airbus. Airbus is a renowned aircraft manufacturer. Started in the year of 1970, it has mainly concentrated on business to business marketing by producing passenger airplanes. Apart from this A- 380, the commercial aircraft producer have produced several airbus models ranging from single aisle to wide body with passenger carrying capacity ranging from 100 to 300 (Hoovers, 2010). Airbus competes with Boeing for the number one position in global jet market. To compete with the new invention of Boeing, i.e. the forthcoming 787 dreamliner (Boeing, 2010), it has come up with the all new A350 XWB, which is expected to move the passengers in 2013. Airbus is also intensifying its business by expanding itself into the aircraft sector of military transport with aerial tankers and airlifters. Before this meltdown, in past few months Airbus was running more slickly and has been ahead of Boeing; but that does not mean that there are not any challenges ahead. The A380 model is a program in conversion. The company has put its next giant bet on A350, which is cloaked in skepticism; and the expanding of A400M military line up is in dismay. Previously Airbus had been in dilemma about the configuration of A380 which has high density in its seating arrangements. The airbus was designed to charge about 2 cents per kilometer for each of the seats to operate. Despite of being least expensive and of the increased size, Airbus was still coy about introducing A-380 to the world. Selling the airbuses was an issue for this company. The main factor was lessening customer demand, which took place for many reasons in different scenarios. To get recovered from such situation Airbus has many choices but the question is if those choices are appropriate for this company; but this is for sure that the air passengers would love to have appalling innovations from this aircraft manufacturer. Things to think about 1. What are the issues facing airbus? During the recent meltdown the airlines have seen a drastic decrease in the number of air passengers. Terrorism, war and SARS breakdown were among the many reasons for the further reduction in air traffic. In such a scenario Airbus was not very much confident to go on with productions with such a larger density. Surely the airbus will be cost effective enough to operate, but till the time only when there is an enough number of air passengers. The maintenance cost of an airbus is huge. When the number of passengers would be decreasing, it would be very much apparent that the cost per seat-kilometer would be increasing. That is the main issue to operate with such huge airbuses. Another factor affecting the purchase of new airlines is about the selling of these airbuses. The airlines, who would be buying these planes, have to do a number of research works to get accustomed to the specifications as well as the operation procedure for this plane; and definitely that means a lot of efforts needs to be given towards the purchasing. Many airline companies might be the customer of Airbus and might be using the airbuses for long; but still purchasing such huge airlines would be regarded as new purchase. Another issue is the airports are not quite capable to handle these kinds of huge planes. That means before introducing these innovations, the airports need to have the potential to bear the same, which means a huge expenditure to be attached to the extension plan for the airports to get them ready for such take off. 2. What factors are important in understanding the situation? To understand the situation, the issues which are being faced by Airbus Company, different factors need to be taken into account. Some of these factors include political, social, economical, technological, environmental and legal. As mentioned above, the airports need to be ready enough to bear these huge airlines. That means a huge cost would go in the infrastructure expenditure. Now that would depend on the respective Government if they would entertain this huge expenditure to take place. So definitely the political factors affect a lot in such a scenario. In some of the places the whole political scenario might not be stable enough to welcome these new innovations. Even the things can turn up in such a way where the government is not so favorable to their airline companies to introduce these airbuses or is not interested to invest in the enhancement of the infrastructure of the respective airports. So surely Government has to be supportive enough to let these new airbuses to get introduced in the respective nations. Factor like war with Iraq had also put an adverse effect on the whole airline business. Economic factor is one of the main factors which are affecting the issues. The recent meltdown has drastically decreased the intensity of air traffic, which is affecting the airline business quite in a negative way; hence the Airbus Company is also getting the hit of the same. Some nations are economically weak to take the responsibilities of such huge expenditures related to these gigantic airbuses. Precisely to say, now the situation is really gloomy for these huge airbuses as very few countries will be economically so strong to operate airbuses like A380 or A350. SARS breakdown has created more effect on global airline industry than that, created with the war with Iraq. Worst hit happened to the countries like China and Asia Pacific region. Flights to China were down by 45% (BBC, 2003). The affect of this SARS on global airline schedule was not unexpected but the intensity was quite staggering. This actually turned up into a social factor from just only being a health factor. Many people, unknown of all the facts, tried to avoid moving outside. The fear put an immense negative impact on the whole global jet industry. Terrorism was another important factor. For example after 9/11, people were very much frightened to board on flights and that resulted in a subsequent decrease in the numbers of air passengers. Even such kind of incidents can become social factors behind a troubled scenario. The financial turmoil has a worsening impact, that even socially. This downturn has cut the pockets of many institutions, individuals which let them to prefer the lowest possible transportation in many situations. Mainly they tried to avoid travelling by the flights to cut on their costs. This happened to be another social factor for the airbus company. There can be some technological detrimental behind such inventions or introductions. These airbuses are quite technologically different from the other models. These new models need a technologically enhanced environment to maintain and operate. Many countries might not have the expertise or technology to maintain and operate these technologically enhanced airbus models. In such a case the selling these models would be a real problem for the Airbus Company. As the company is dealing with air transportation, the precision needed in manufacturing and services is immense. The safety and quality is of utmost importance. A technical fault can transform in a number of undesirable incidents. So, these technological factors are of utmost importance to this aircraft manufacturer. Environmental issues are getting more concern now-a-days. Air pollution and hence global warming is the most concerning global issue in today’s world. Airbus Company needs to take care of theses factors to operate in scenario which is very much compatible with the global environment. Legal issues can also be there and can even affect the airline industry; and hence the airlines manufacturer. Some countries can have a high tax rate on the purchase of such airbuses; definitely that would impact the purchasing behavior of the airlines companies in those respective countries. So it seemed there are many factors, for which the Airline Company can face different issues while carrying out their operations and productions. 2. What are the choices? To recover from this troubled situation Airbus Company must look out for some options to move with; but the options need to be carefully analyzed before zeroing down on one single tactical decision. They may stop coming up with these huge airlines; which is not a practical solution and quite a hindrance on the way to innovation. Another choice is to delay the introduction of their next huge ventures. The rationale could be that the economy is recovering right now and will improve more in near future. So that would be the time when these cost effective but at the same airbuses with increased size can be introduced to the global airline industry. Within this time even the airports can get enhanced to be ready for the operation of these technologically enhanced airbuses. Another option is that the company should carry on with these operations and come up with technologically enabled innovations for the air passengers. In this troubled scenario only a leveraged ticket fare can attract the passengers. Having the cost effective airbuses can only help the airlines to cut on their ticket fares. So coming up with new innovation, while at the same time concentrating on to cut on costs, can be beneficial for this Airbus Company. In this process the aircraft manufacturer must know about their target passengers and built the airbuses keeping in kind whether the passengers are from business class or economic class. The overall circumstances can be quite unambiguous if the processes maintain the correct strategy. 4. What decision(s) do you recommend? Discontinuing innovation can not be a solution in any case. The Airbus industry should introduce their airbuses and even should innovate more like these. Discontinuing the operations or delaying those would result in more sunk costs for the company. The company should introduce these airbuses. The big airlines, which are operating through the more congested air traffics, can be the clients for these huge innovations. The number of air passengers must be high on those routes; so these cost effective but increased sized air buses can be a solution for these airlines. 5. What are some ways to implement your recommendation(s)? At first the Airbus Company must think beforehand that who are going to be their clients for the innovations they are going to invent. Other factors, taken into account, should be the expectations of the passengers. The inventions should head towards less maintenance cost as well as the total cost, simple technology and greater customer satisfaction. The rationale behind this simple technology is to get everybody accustomed to the new creations; even the Airbus Company can train people from the airline companies on the operation and maintenance for their airbuses, who would be buying out those airbuses. One other thing which the company can implement while going with the innovation is that the company can move into a contract within the countries or airline companies who would be buying out the upcoming airbuses. So in this way the company can remove the uncertainty from the way to innovation. It is preferable that the company should invent such airbuses and keep the technology as much as compatible with the current technical capabilities of the airports. 6. Despite of such issues how Airbus Company will be able to maintain its position ahead of Boeing? The company has introduced carrier which is much ahead of the Boeing innovated 747. This and some other reasons will help this company to be the market leader in near future. The operating cost for A-380 model is around 15-20% lower than that of the Boeing 747. Emissions have been lessened to a great extent with less noise. The seat capacity has been stretched from 555 to a number of 800. The density is going to be immense (Verghese, 2010). Fuel efficiency Moreover airbus is now producing and marketing bulk carriers (Centre For Asia Pacific Aviation, 2009). Reference BBC. June 13, 2003. Sars hit airlines more than war. [Online]. Available at: http://www.centreforaviation.com/news/2009/01/21/airbus-a380-rewrites-the-mass-market-rules-airbus-now-marketing-seriously-low-cost-aircraft/page1 [Accessed on January 29, 2010]. Boeing. 2010. Boeing 747 Dreamlifter Fact Sheet. [Online]. Available at: http://www.boeing.com/commercial/787family/dreamlifter_fact.html [Accessed on January 29, 2010]. Centre for Asia Pacific Aviation. January 21, 2009. Airbus A380 rewrites the mass market rules. Airbus now marketing seriously low cost aircraft. [Online]. Available at: http://www.centreforaviation.com/news/2009/01/21/airbus-a380-rewrites-the-mass-market-rules-airbus-now-marketing-seriously-low-cost-aircraft/page1 [Accessed on January 29, 2010]. Hoovers. 2010. Airbus S.A.S. [Online]. Available at: http://www.hoovers.com/company/Airbus_SAS/cfhjji-1.html [Accessed on January 29, 2010]. Verghese, V. 2010. Mirror mirror on the wall. [Online]. Available at: http://www.smarttravelasia.com/AirbusVsBoeing.htm [Accessed on January 29, 2010]. Bibliography Whitefoord, A. April 08, 2004. Branding: Design Choice - Airbus A380. [Online]. Available at: http://www.marketingmagazine.co.uk/news/207440/Branding-Design-Choice---Airbus-A380?DCMP=ILC-SEARCH [Accessed on January 29, 2010]. Airbus. January 26, 2010. Airbus signs MOU on aircraft financing solutions with Chinese partner. [Online]. Available at: http://www.airbus.com/en/presscentre/pressreleases/pressreleases_items/10_01_26_clc_mou_financing_leasing.html [Accessed on January 29, 2010]. Read More