Angelairways From United Kingdom, joined Nov 1999, 503 posts, RR: 0 Posted (10 years 5 months 1 week 2 days 13 hours ago) and read 2484 times:
Sales support, not discounting, won AirAsia order, says CEO
Dateline: Tuesday December 21, 2004
AirAsia CEO Tony Fernandes dismissed claims that Airbus won his airline's highly coveted narrowbody order through aggressive price-cutting (ATWOnline, Dec. 17).
On Friday, Boeing VP-Marketing Randy Baseler said in a global telephone briefing that Airbus was discounting its A320s by 60% to get orders. "It isn't just about discounts in our case," Fernandes told this website Sunday. "The people from Boeing are great, but to sit there and just say it's discounting is not the answer to why they are losing so much market share. It was a mixture of many factors, including the huge Airbus organizational support. [Former Boeing VP-Sales] Toby Bright ran an excellent campaign and Boeing came close--it wasn't his fault Boeing lost. It was disappointing to see how Boeing treated him. The difference was [Airbus VP-Commercial] John Leahy had the support of Airbus and they saw AirAsia's future potential."
Fernandes's comments echo similar remarks made earlier this year by Spirit Airlines President and CEO Jacob Schorr (ATWOnline, March 31).
Earlier, Boeing's management said it will not get involved in deals that are not profitable. However, the AirAsia loss is expected to have a knock-on effect, with Malaysia Airlines also expected to select the A320.
On Dec. 4, Boeing dismissed Bright from his position as the company's top salesman after a number of campaign defeats, the most recent to Air Berlin for 110 A320s. Bright, 51, was replaced by Scott Carson, 58, who has had great success as president of Boeing's Connexion product. Boeing spokesperson John Dern said at the time that "there was a feeling that the sales effort could be more effective with new leadership and that the expectation is that Carson will drive sales, performance and customer satisfaction."--Geoffrey Thomas
Mr Boeing are you listening? Or are you too busy moaning, sulking and firing good salesmen?!
Trident2e From , joined Dec 1969, posts, RR:
Reply 1, posted (10 years 5 months 1 week 2 days 11 hours ago) and read 2387 times:
I just noticed that this topic was posted 90 minutes ago and doesn't have a single reply. Where are all those Boeing lovers? I guess this time they just can't argue with the facts - an airline saying that Airbus won a large order simply by offering a better total package than Boeing.
Cedarjet From United Kingdom, joined May 1999, 8359 posts, RR: 54
Reply 2, posted (10 years 5 months 1 week 2 days 11 hours ago) and read 2349 times:
All that crap about discounting is tiresome. As I say on here about three times a week, you can buy Tu154s in good condition for $100,000, and with an interior refit no passenger would know any better. How many airlines are queueing up for Tupolevs nowadays?! Purchase price isn't a big factor, it's about operational efficiency, a full product line (even better if it's common typerated), future-proof technology (ah but Boeing are getting rid of the eyebrow window panes on the 737 - that's progress baby!), after sales support, availability of spares, etc etc.
It's a real classic that Boeing should blame the salesman when they're offering an older, less competitive product, and are famous for poor after-sales service (just ask USAirways or United). Hey ho, let's just bury our heads in the sand, like we've done for the last ten years.
fly Saha Air 707s daily from Tehran's downtown Mehrabad to Mashhad, Kish Island and Ahwaz
Trident2e From , joined Dec 1969, posts, RR:
Reply 5, posted (10 years 5 months 1 week 2 days 9 hours ago) and read 2239 times:
M27 - unless the CEO of AirAsia is a member here, you're clearly not going to get an answer to your question. However, what is beyond doubt is that customer support was a key factor in AirAsia's decision and Airbus beat Boeing hands down!
Daedaeg From United States of America, joined Feb 2003, 664 posts, RR: 1
Reply 7, posted (10 years 5 months 1 week 2 days 9 hours ago) and read 2220 times:
Cedar poor sales of the 737 has nothing to do with it being an inferior product. The 737NG is not the fastest selling airplane in history for no reason. I know you would like for us to invest billions of dollars on a new airframe just so you can have another cool plane to look at. I dont think we're at that point yet. After listening to someone in customer engineering, Boeing needs needs to create better customer support and be more aggressive with sales. The right steps have been taken to achieve that. I think 2005 is going to be a good year for Boeing.
Artsyman From United States of America, joined Feb 2001, 4747 posts, RR: 33
Reply 9, posted (10 years 5 months 1 week 2 days 8 hours ago) and read 2199 times:
Despite what is implied by the article, PRICE was extremely important, it just was not the only issue. I can assure you that had Boeing trounced Airbus on price, the benefits of "superior" customer service would not have meant anything.
At the moment, Airbus are running a more efficient business for a number of reasons, and thus can offer better prices than Boeing. Boeing is hitting a walll with these deals as they want to fight for what they deem as a fair price, and at the moment, Airbus is not holding all their decisions to price.
Superior customer relations could simply mean them saying YES to further discounts when Boeing said NO.
Cockpit commonality is not winning these LCC orders, as they only fly one type anyways, so the fact that the A380 has a similar cockpit to the A320 will not mean anything to the likes of Easyjet, or Air Berlin.
In operational number, there is not a big enough difference between the 737NG series and A320 etc to make a difference, thus the bottom line can only be price and service.
Scbriml From United Kingdom, joined Jul 2003, 13663 posts, RR: 46
Reply 11, posted (10 years 5 months 1 week 2 days 7 hours ago) and read 2161 times:
Ok, you got us! It's true - Airbus is a European job program, funded by the communist European governments, paid for by the reluctant tax payers, created purely to destroy Boeing's civilian airliner production.
Every Airbus plane is actually sold at a loss - the books are just cooked to make it look like they make a profit. Not a penny of the EU "loans" has ever been repaid, and the "repayments" are actually bribes to all the airline execs to get them to take Airbus planes.
Damn, we've been rumbled! Now what are we going to do?
Time flies like an arrow. Fruit flies like a banana!
PlaneSmart From New Zealand, joined Dec 2004, 1286 posts, RR: 0
Reply 13, posted (10 years 5 months 1 week 2 days ago) and read 1978 times:
"Boeing needs needs to create better customer support and be more aggressive with sales. The right steps have been taken to achieve that. I think 2005 is going to be a good year for Boeing."
Changing customer service goals, and achieving them, in a company the size of B, is a major undertaking.
Convincing customers that service levels have been raised, and will stay at those new levels, is a mammoth task.
And while B is doing this, A unfortunately, will not be standing still.
The cultures in A & B are poles apart. A started from zero and fought to the top. B had been at the top for a long time, in the US and World, and bought out a major competitor.
Many airlines A & B are selling to identify with the supplier. LCC's, new airlines in Europe, Asia and USA, view B as the legacy manufacturer.
If you have ever set up your own biz, or new product or division within a company, you have to fight for every sale, you attract people who have the fight, and you have to listen to every prospective customer. When you are number one by a significant margin, you don't need to listen or try as hard.
A will offer as near to a 100% complete package as is possible, including finance, insurance, spares, training, engineering support and buybacks.
This is abt minimising risk, important to execs, shareholders and financiers. Lower risk = lower finance costs. And finance / lease costs are a big part of total ownership costs.
For example, A will have offered airframe and engine maintenance (part or all) thru other customers, as part of the package. This requires dialogue with existing customers, reinforcing they made the right decision buying A product, and a chance to generate revenue. For the prospective A customer it means more options and less work req'd.
Angelairways From United Kingdom, joined Nov 1999, 503 posts, RR: 0
Reply 14, posted (10 years 5 months 1 week 1 day 18 hours ago) and read 1892 times:
let me tell you what customer support means:
I have worked at Airbus customer support in Toulouse and I am still sometimes amazed when I think of the tremendous support airlines get - especially smaller carriers. In fact, the smaller carriers get a disproportionate amount of support because they do not have sufficient resources themselves.
Airbus has a large customer airline support building in the central entity with, I estimate, 1500 - 2000 staff members. This ranges from engineering support which is compartmentalised into departments focusing on different issues (e.g. trailing edge systems, brakes and steering, cabin and interiors, air conditioning systems, powerplants etc) to training.
Apart from that they get safety support, free operational efficiency analysis, free operational audit visits to check procedures and efficiency, free courses and seminars at the training centre, local visits by airbus representatives, joint research projects, free "getting to grips" manuals on various operational subjects and of course troubleshooting in all areas. There are also many more that I can not think of right now... I can also tell you that airline staff have excellent relationships with airbus support centre staff.
That is called support, and most of it is free, except when it comes to hardware and software upgrades that are dependent on extrenal suppliers.
As Spirit airlines said when they made their order, "the Airbus people were not acting like salesmen but rather like internal airline employees helping us work out objectively what solution is best for us."
When Boeing start treating their customers like that they will see change...
Numbertwelve From Germany, joined Dec 2004, 1431 posts, RR: 9
Reply 15, posted (10 years 5 months 1 week 1 day 18 hours ago) and read 1887 times:
Angelairways, I doubt B doesn't have customer support and I guess they are working hard for it - they can't afford being careless.
They could - if they don't have competitors. So the 50/50 marketshare isn't too bad - for passengers, airlines, A, B, B and E and further letters like D ...
Widebody From Ireland, joined Aug 2000, 1152 posts, RR: 8
Reply 16, posted (10 years 5 months 1 week 1 day 17 hours ago) and read 1865 times:
Very very true angelairways, linked heavily to the fact the Boeing seem to focus solely on unit price at the time of contract, while Airbus look at the whole life of the aircraft. Boeing see aftersales as a service, something that they have to do, Airbus look at it as an integral part of successful aircraft operation over the aircraft life cycle. Hence Airbus is in the process of building a dedicated customer service campus in Toulouse, almost equal in size to their main campus, and have made customer service one of their Top 10 corporate objectives. Seems to be paying off?
M27 From United States of America, joined Oct 2004, 314 posts, RR: 0
Reply 18, posted (10 years 5 months 1 week 1 day 14 hours ago) and read 1798 times:
"That is called support, and most of it is free, except when it comes to hardware and software upgrades that are dependent on extrenal suppliers."
I saw the word "free" several times in your posts. I even saw where you said Boeing liked to charge for things. I don't know if you really read my first post or not, but thanks for confirming it. Call it customer support, call it what ever you want, but don't try to say its not part of the financial package as a whole and thus has no dollar and cents implication. In other words, it costs Airbus money to provide all of these services that Boeing charges for, and if they don't charge for that, then it becomes a part of the initial price of the airplanes, and yes it is a DISCOUNT, like it or not.
Angelairways From United Kingdom, joined Nov 1999, 503 posts, RR: 0
Reply 19, posted (10 years 5 months 1 week 1 day 14 hours ago) and read 1784 times:
Yes M27, it is part of the package but unlike simple price discounts, this is valued more by the customer yet costs Airbus relatively less to provide.
From a benefit/cost point of view, it is more valuable to both parties.
Very rough calculation - 1500 customer service employees at average 35,000€ each makes €52.5million annually. Add all overheads, expenses, and throw in a bumper margin... rounding up heavily - it costs no more than $100m annually.
Now corrrelate that to the number of aircraft sold annually -if instead this cash was given away as discounts think how much "discount" it would result in per aircraft sold... $100m divided by 400 aircraft = $250,000 per a/c
Yet to the small to medium sized carrier with tight-fisted budgeting it is way more valuable than that...