Sometime 1990's, the two major Aircraft manufacturers in the world Boeing and Airbus took major strategic decisions on the way forward. Both based their decision on the same traffic data and projections.
The outcome was interesting.
As any seasoned Air Traveler is aware, the Airlines fly on a hub and spoke model. There are flights from hub to hub, then a changeover to the hub to spoke flights, and vice versa. Some of the major hubs are Dubai, Singapore, Colombo, Addis Ababa, Frankfurt, Amsterdam, London to name a few.
Airbus interpreted the data and concluded that the future lies in long distance hub to hub flights, that can carry more number of people in a single flight, to reduce cost. They came up with Airbus A 380, the biggest Aircraft manufactured ever, that can carry 525 - 800 passengers depending on the configuration, with adequate comfort suitable for long haul flights. The first flight was in 2005, and the Aircraft was inducted commercially in 2007.
Boeing had a totally opposite view point. Their take was that the future of Airlines is in hub to spoke, or spoke to spoke short flights, and decided to go for lesser capacity, fuel efficient Aircraft - Boeing 787 Dream liner, which can carry 230-290 passengers. The test flight was in 2007, and the first commercial flight in 2009.
I remember discussing this as a case study in 2008 while teaching Strategic Management to MBA students. We had a healthy discussion then.
A decade down the line, Airbus has found out that their strategy was horribly wrong and decided to stop the production of A 380 from 2021. They sold just 234 A 380s, and once Emirates, their major customer decided against long haul flights, the goose was cooked.
Contrary to Airbus forecast, the customer preferred direct spoke to spoke flights, even if the flight were to be smaller and less comfortable. No one wanted 3-5 hours transit in another hub, but rather wanted to get to the destination ASAP.
A costly mistake for Airbus, as it takes 20 years to develop an Aircraft, and another 20 to recover the cost. They projected that 270 Aircraft was required for Break Even in 2005, and the market size was 1000 plus. Production delays, technical glitches, inadequacy of Airports capable of handling the giant A 380 all meant the break even figures went up to 420, which they never achieved. A 380 was perhaps the Ford Edsel moment for Airbus.
Boeing, on the other hand, is doing well with 787. They have already sold 789 Aircraft. Their Break even is slightly over 1000, which they are expected to achieve. They too had a host of issues, ranging from technical problems, faulty wiring to fuel leaks to fire. And delay in production. They have appeared to overcome these issues and should at least break even in the long run.
As I mentioned in my lectures way back in 2008, an interesting case study of interpretation of data.
