CactusA319
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Boeings Big Bet

Fri Oct 20, 2000 4:19 am

Boeing's Big Bet
By Richard Miniter. Mr. Miniter, a Journal editorial writer, edits the
Business Europe column.
The Wall Street Journal


Why is Phil Condit smiling? The Boeing Co. chairman dropped by the Journal's
Brussels office last week to explain why his company has no plans to match
Airbus Industrie's latest headline-grabbing venture -- a bold plan to build
the world's largest passenger plane. "I'm very comfortable with Boeing's
position," he says. He flashes another grin.

If you believe the press clips, Mr. Condit should look like a deer in the
headlights. Airbus's superjumbo jet, known as the A3XX, would theoretically
push aside Boeing's 747-400 as the biggest passenger bird in the sky.
When -- or rather, if -- it is delivered in 2006, the new giant will be able
to carry almost 600 passengers -- 150 seats more than the largest aircraft
today. That means that airlines that fly into crowded hubs, like London's
Heathrow, would be able to sharply expand sales without a corresponding
increase in costs. Airbus brags that the "flying ocean liner" will have
bars, gyms and spas -- even as the low-fare passengers in the back of the
Airbus will have more legroom.

The A3XX seems to be a threat to Boeing even before it is off the drawing
board. Airbus says it has at least 32 orders in hand for the superjumbo
plane, including an order for 15 planes from Singapore Airlines Ltd., a
bellwether plane buyer and the world's fourth largest operator of Boeing's
747 series jets. If Airbus gets just 18 more orders, it will have enough
sales to begin development of its flying luxury liner.

Meanwhile, Boeing's attempts to offer a competing plane -- the so-called
"747X Stretch" -- in the superjumbo category have not taken off. Boeing
doesn't have a single order for the stretch. "Boeing gets blown sideways,"
summed up Business Week. So why is Mr. Condit smiling? The former aerospace
engineer seems too hardheaded to smile without a reason. But he has the
smile of a poker player who is sure he is holding the winning hand, just as
his rival is calling the bet.

"It is more than a private bet," Mr. Condit says quietly. Boeing is assuming
that the air travel market is not going to embrace the superjumbos in a big
way. The case for the Airbus behemoth is a static one; the air travel market
will look just as it does today only with a lot more passengers. Maybe. But
as Mr. Condit puts it: "competition is made up of the opportunity to be
wrong."

Boeing believes that passengers will continue to drift toward point-to-point
travel. "The market is fragmenting," Mr. Condit says. He points to the North
Atlantic market, where more traffic is direct rather than through hubs in
London, Frankfurt or Paris. That means that on many new, popular routes,
such as Air France's Cincinnati-Paris run, carriers are going to want
smaller planes that are cheaper to operate than the superjumbo. That is
essentially the argument for the Boeing 777. Air France's chief operating
officer, Pierre-Henri Gourgeon, recently told the Avmark Aviation Economist,
a respected airline industry publication, that he saw a lot of "traffic flow
fragmentation" and the need for more Boeing 777-type planes. So even Air
France, one of Airbus's biggest customers, seems to be hedging its bets.

But here's the biggest reason why Mr. Condit is smiling. Although he is too
polite to say it, the more one looks at the Airbus superjumbo, the less
sense it makes. There are reasons to fear that the A3XX might be a bit like
some other heroic projects of the past. The Soviets, remember, once boasted
the world's largest tractor. Just don't try to plow any fields with it.

Consider all of the problems facing Airbus' plane. Less than a dozen of the
world's airports are actually crowded enough to justify the expense of
reconfiguring themselves for the leviathans. So the market is small.
Heathrow, Europe's busiest airport, is one of the few good candidates for
the bird. But the airport authority has yet to get approval for its plans to
build a new terminal to accommodate the superjumbo. The jetways to load and
unload passengers have not been built yet, let alone installed. And
operating the jetways will be tricky because they will have to look like an
octopus with 12 or more different tentacles reaching out to the
double-decker plane. And what happens when 600 hungry, impatient people mill
about in the terminal?

The promised amenities of the superjumbo probably won't materialize. Forget
about the onboard gyms and spas. The original 747, delivered in 1969,
promised bars and dining rooms, too. But within a decade, the upstairs
lounges disappeared. The airlines wanted to pack the plane with seats.
Instead, the Airbus A3XX will probably be packed with unprofitable cargo --
the voluminous luggage of the small town it is carrying through the sky.

But what about all of those "sales"? Those, too, look downright Soviet.
Airbus' board has not given the green light to sell the plane. So their
salesmen cannot offer any "buyer" a purchase order, let alone ask him to
sign it. So what Airbus has are merely expressions of intent to buy -- in
short, a glorified pledge card. Little-old ladies collecting canned goods in
the church basement know that pledges are not real money.

The famous Singapore Airlines order might not be profitable even if it were
real. Airbus says that it needs a minimum of $225 million per plane to break
even on the A3XX. While "there's a monastic vow of silence" surrounding the
deal numbers, "those planes were probably sold at a loss," says Daniel
Solon, a consultant at Avmark International. Informed speculation, by Mr.
Solon and others, puts the price somewhere south of $160 million. Airbus has
not released any sales figures or characterized the sale in the press or in
public statements as "profitable" or "unprofitable." (As a rule, Airbus, a
consortium organized under French law, does not issue detailed financial
statements to the public.)

Mr. Condit was probably alluding to these rumors of Airbus's bargain prices
when he said that the sales probably " were more hype than reality" and that
Singapore Airlines "probably got a great deal." By contrast, he repeatedly
said that Boeing "aims to be profitable on every single product line."

Mr. Condit, of course, could be guessing wrong and Airbus could be guessing
right. But he knows that his biggest competitor is about to embark on a $12
billion adventure to build a possibly unprofitable superjumbo -- while he is
collecting real orders for real planes that become cheaper to build every
day. It's hard to argue with his logic.
 
Guest

RE: Boeings Big Bet

Fri Oct 20, 2000 4:57 am

Good article. It's reassuring to know that somebody sees the light on this issue.

Wait until the Airbus people see this... you are going to get roasted, Cactusa319.

Pat
 
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RayChuang
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RE: Boeings Big Bet

Fri Oct 20, 2000 5:01 am

I think what Phil Condit is betting on is the fact that A3XX's will only be sold for use on very long, heavily-travelled routes. Because of the increasing emphasis on point-to-point service, this will result in lots of sales of the 777-200ER, 777-200LR and 777-300ER, plus sales of the 767-400ER and the upcoming 767-400 Longer-Range.
 
philb
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RE: Boeings Big Bet

Fri Oct 20, 2000 5:19 am

I've read the article twice now and am still looking for a more than just a tiny scintilla of unbiased journalism.

Comparing Airbus and the A3XX to "Soviet" style "achievements" is pandering to the most base of American instincts.

I wonder who paid for lunch after Mr Condit's visit to Mr Miniter's office - not the Wall St Journal's Business Europe's budget I'll bet. No that one will end up in an auditor's tray in Seattle.

Boeing is bound to want more point to point services. The US aircraft industry has never benefitted from the Hub System as the greater percentage of aircraft used to feed hubs have been European or Brasilian.

Unwrap the "spin" and what this article really says is that Boeing can make money from its current series of airliners and doesn't want/can't afford to pitch into the super jumbo league at present.

Great, and long may they be successful with smaller aircraft (at least until the airspace becomes overloaded), but why does such a respected journal have to "rubbish" a non-American product in such a craven and mealy mouthed way, especially when Airbus offer so many US produced components on all their aircraft?
 
Guest

RE: Boeings Big Bet

Fri Oct 20, 2000 5:27 am

PhilB,

What kind of idiot expects an editorial piece to be "unbiased"?

 
 
WorldTraveller
Posts: 594
Joined: Sun Jun 06, 1999 3:47 am

RE: Boeings Big Bet

Fri Oct 20, 2000 5:33 am

I can't take this article seriously, really.

Boeing itself claims that there is a market for at least 750 VLA's in the next 20 years, so if they don't build a competitor Airbus will get that market alone, making the the A3XX a hugely profitable investment. What is Condit thinking??

Sorry, but I can't help to feel myself reminded of the days when Airbus unveiled its A320 plans....you know, the "no-market at all" claims from all over the U.S. industry.

Sorry guys, Airbus knows its way into the future...

Regards
the WorldTraveller
 
caetravlr
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Joined: Mon Oct 16, 2000 8:19 am

RE: Boeings Big Bet

Fri Oct 20, 2000 5:35 am

I, for one, hope he's right. Will definitely be interesting to see how this fleshes out!
A woman drove me to drink and I didn't have the decency to thank her. - W.C. Fields
 
JR737
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RE: Boeings Big Bet

Fri Oct 20, 2000 5:36 am

Congratulations,

This is a real good article.

João Roque
Portugal
 
thomacf
Posts: 525
Joined: Tue Sep 05, 2000 9:11 am

RE: Boeings Big Bet

Fri Oct 20, 2000 5:45 am

I agree with Boeing on this issue 100%. They are in the drivers seat because it will probably be cheaper to just expand the 747 if this superjumbo is a success. (it won't be though) The one threat could be if airports like Heathrow stop airlines from flying small planes in from more destinations. This will probably not happen but it could down the road. In that case the superjumbo could then fly strictly from places like L.A., N.Y. or D.C. If Boeing is right, this could break Airbuses back. I think that Boeing is in a win win situation. If it's a flop then they win if not they will build a bigger 747 to compete and long time Boeing fans would buy it instead. There still can't be that much point to point traffic yet. Most of the international routes from smaller cities are using 757's and 767's. Ther is still time to expand into more 777's and 747-440's. Then way in the future maybe a superjumbo.
 
philb
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Joined: Mon May 24, 1999 5:53 am

RE: Boeings Big Bet

Fri Oct 20, 2000 6:04 am

Shinseki,

The sort of idiot who knows the difference between good journalism and blatant jingoism, the sort of idiot who knows the difference between editorial and advertorial and the sort of idiot who expects major organs such as the Journal to provide the world with objective comment and untarnished news.

There is every reason for Mr Miniter to push Boeing's case as reportage of the interview with Mr Condit.

There is absolutely no excuse for encapsulating it in a perjoratative attack on Airbus based on half truths and fantasy which I'm sure he didn't get from Mr Condit, or anyone else at Boeing.

As a commentator on items of aviation Miniter, on this showing, knows as much about aviation as the moth that is currently trying to get into my office window.
 
wingman
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RE: Boeings Big Bet

Fri Oct 20, 2000 6:27 am

This entire debate, for now, is pointless. Airbus will get its 50 orders and they will officially launch the A3XX. What really matters then is how much money Airbus will spend to deliver what they've promised and how many units they sell above and beyond the inital batch. I have no doubt that this plane will be amazing. Let's face it, Airbus and Boeing make damn good planes. And the newer the technology the better. What I do have my doubts about is the future health of Airbus as a company. I think there's a 50/50 chance this will be a smash hit. The other 50 is the largest corporate bailout in history. We'll all have a much better idea in 8-10 years.

Now let's turn our attention to the usual brain bashing that results whenever this topic come up.
 
morecy
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RE: Boeings Big Bet

Fri Oct 20, 2000 6:30 am

What cracks me up about all this is how we Europeans are portrayed as these bumbling idiots who don't know one end of a plane from another. Boeing builds a 747 and they're great innovators while Airbus forges ahead with the A3XX and they're the village idiot.

The Aviation world has more than enough room for a Boeing and an Airbus to thrive in. Boeing makes great planes and I love them and you know what... Airbus makes damn great planes too and the growing market share proves it. I for one am very pleased to see both Boeing and Airbus succeed because we all benefit from the competition. I guess all the rhetoric is just an integral part of the competition factor.

 
fqtv
Posts: 138
Joined: Mon Oct 02, 2000 9:01 am

RE: Boeings Big Bet

Fri Oct 20, 2000 6:32 am

This article is a load of crap. I especially didn't like the "why is Mr. Condit smiling?" thread. He's smiling, because he's being interviewed by a member of the press. You can bet he wasn't smiling when Singapore made their A3XX order known.
I don't prefer Airbus or Boeing, I think they're both good companies. I do however, think that Airbus have a good product with the A3XX - if Mr. Condit is smiling because he sees Airbus developing a product with no market, then why is Boeing offering it's 747X for that market? Sure, it will cost alot less than the A3XX's $12 billion, but $5-$6 billion is still alot to invest in a 747 program if the market is fragmenting as Boeing says.
The reporter talked about the 777s and newer 767 that are ideal for point-to point operations. He didn't even mention the A340 or A330, which makes me think that it wasn't a free lunch that the reporter got. It was dinner, followed by a show.

Cheers, fqtv

P.S. I'm not partial to Airbus (I've only actually ever flown in an Airbus 3 times). I just hate biased journalism - even in an editorial, you have to weigh up the pros and cons of yóur argument before you draw a conclusion. You can't just wittle on about the pros.
 
EVA744
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RE: Boeings Big Bet

Fri Oct 20, 2000 6:39 am

Morecy--
It is just nationalism, you have to support the country and businesses that you grew up with. 747 was the only plane for a lot of children because that was all the movies portrayed in the US. Euros love the Airbus, Americans (US citizens) love Boeing. Simple.
EVA744
 
philb
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Joined: Mon May 24, 1999 5:53 am

RE: Boeings Big Bet

Fri Oct 20, 2000 6:43 am

Wingman,

Almost spot on but the success, or otherwise, of the A3XX and its effect on the overall Airbus picture may not be known for 25 years or more.

First, the sales of the other Airbus types, if maintained at the current healthy levels, will help offset any short term losses during the early development and in service period.

If the travel market continues to boom, the aircraft will sell well and the more "user friendly" versions will come along, especially when the impacts of the airspace bottle kneck and "green" policies kick in and restrict the number of flights.

Where Airbus will be really vulnerable, in the short term, is if there is a major downturn in airline fortunes due to crises, oil price hikes and labour costs.

These hit airlines at times in the 1970s and 1980s and caused some heart stopping moments for Boeing 747 production at a time when the company needed orders, cashflow, and to maintain its experienced labour force.

If airlines slow down their orders, even for a short time, Airbus will have to be very careful. Then there may be the need for a massive bailout.

All things being equal, the aircraft should sell well, should be a 25-35 year build programme and, only in the latter stages will we see the real effect on Airbus (and the aircraft manufacturing industry as a whole).
 
Guest

RE: Boeings Big Bet

Fri Oct 20, 2000 6:59 am

PhilB,

Oh dear, corporate ethics less than pure as driven snow. Shock and horror! What is the world coming to...   This just in...objective news organizations don't exist.....

Its called capitalism baby and Noel Forgeard can take Miniter out to lunch tomorrow and get his dribble some equal time. Whether or not he chooses to do so is quite another matter.

This "blatant jingoism" as you call it is hardly limited to aviation and is common to editorial pages everywhere. Don't like it, don't read it.
There are choices out there.
 
philb
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RE: Boeings Big Bet

Fri Oct 20, 2000 7:14 am

Shinseki,

Don't teach your grandmother how to suck eggs.

I probably have had more experience of capitalism, the effect of corporate ethics (or the lack of them) and jingoism in any one year of my business life than you have had in all of yours.

Try running balanced international conferences for a living and making a success of it.

Objective news organisations may not exist but editorial in major international business journals are supposed to give some balance. You seem to be saying you accept as normal output which equates all news organisations to Pravda under the Soviets or the organs of Saddam Hussein or any other dictator you can think of.

The piece is total crap journalism which doesn't deserve the ink and paper wasted on it - not because it gives a biased view purporting to be from the perspective of one company (known as advertorial) but because it is full of errors and, as I said before, unwarranted perjoratative comments.

You may be happy to put up with such pap, but when it is presented as backing for an unproven case (i.e. Boeing has got it right, Airbus is wrong), it deserves hammering.
 
wingman
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Joined: Thu May 27, 1999 4:25 am

RE: Boeings Big Bet

Fri Oct 20, 2000 7:28 am

Here's my attempt to defuse what will inevitably turn into another flaming thread from hell.

This is just an editorial piece. The writer is simply trying to paint a scenario that would prove Boeing correct in its assumptions. The writer is not slamming Airbus, Russians or anyone else. We can't even be sure he's an American. Besides, it doesn't matter what nationality the writer is. Businessweek is also a US-owned publication which is refernced in this piece as saying "Boeing is being blown sideways". Nationalism is not part of the equation. Anyone that knows US-owned business publications like the Journal, Fortune, or Businessweek knows that they routinely attack US companies. Where companies are from has nothing to do with anything. This writer probably doesn't give a rat's ass about Boeing or Airbus. He just wants to write a piece that will get noticed.

So let's not turn this into the usual ignorant arrogant American bullshit and just focus on the issue. Is Boeing correct or is Airbus correct? We won't know the answer for 8 or 10 or even 25 years. Simple as that.
 
AA-SAN
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RE: Boeings Big Bet

Fri Oct 20, 2000 7:29 am

I just love listening to adults sound like total fools arguing over something as stupid as this!!! Keep up the good work, and I'll keep on laughing  
 
Guest

RE: Boeings Big Bet

Fri Oct 20, 2000 7:32 am

PhilB,

I can't imagine what's worse...putting up with your tedious drivel another minute or devoting a life to putting together balanced international conferences (i.e. free vacations for airline execs)

Feel free to take up your greivance with the WSJ itself. I don't particularly agree with the piece either but I do recognise the right of the newspaper and its author to print it, however biased.

 
philb
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RE: Boeings Big Bet

Fri Oct 20, 2000 7:44 am

If you think informed comment and the expression of a desire for balanced reportage is tedious drivel I suggest you go back to the wonderland where you live (where airline execs treat conferences as holidays) and continue to revel in the ignorance you so obviously enjoy.

When I see an informative, balanced and productive argument from you, supported by facts and references I will treat your posts with some respect. Until then I will assume you are just another nerd haunting forums like this for an argument.
 
Guest

RE: Boeings Big Bet

Sat Oct 21, 2000 7:06 am

DON'T YOU THINK YOU ARE BREAKING COPYRIGHT LAWS, YOU IDIOT!
 
Guest

RE: Boeings Big Bet

Sat Oct 21, 2000 10:54 am

I just finished reading this thread, and PhilB, let me put it to you this way: You are doing the exact same thing! So PhilB, 'when I see an informative, balanced and productive argument from you, supported by facts and references I will treat your posts with some respect. Until then I will assume you are just another nerd haunting forums like this for an argument.'
 
Philly Phlyer
Posts: 356
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PhilB - Lowfareair Is Correct

Sat Oct 21, 2000 12:32 pm

PhilB:

Lowfareair is correct. Read some of your comments above and think about "balanced" and "informative" comments.

In your first or second post, you stated that "US manufacturers have never benefited from the Hub system." I assume that you've never been to Atlanta Hartsfield, Cincinnati, Dallas/Fort Worth, Chicago O'Hare to name a few. Delta and American have some "modest" hubbing operations at these airports at which the use a few of their 737s, 757s, 767s and MD-80s. Continental has fair sized hubs in a few places using the same type fleet. Last time I checked, Northwest, United and US Airways still flew a few 737s, 757s and DC9s out of their hubs. It sounds like the US manufactures have profited a little.

That comment and others that followed did not show much balance. If someone disagrees with you, that doesn't make them an "idiot" or "ignorant" as you so delicately put it. It only means they have evaluated the situation differently.

Airbus and Boeing both have made their decisions. Boeing's risk is that it may concede a market that is bigger than it believes. Airbus' risk is that it will invest $12 billion (or more) in R&D in a market that will not be as big and in the process, let the A320/330 lines age another 5 years without significant improvements (all significant R&D will be in the 3XX). Only time will tell who is correct. The fact of the matter is that both manufacturers are loosing out on the fastest growing market (RJs).

Take a Prozac, calm down and get a good nights sleep.
 
philb
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Joined: Mon May 24, 1999 5:53 am

RE: Boeings Big Bet

Sun Oct 22, 2000 2:41 am

Lowfare air,

When I was a child of your age, I was taught to treat my elders with respect.

To quote my own riposte back to me and accuse me of not backing my statements with facts and sources proves either that you have read very few of my posts or that you don't understand what you are reading.

Philly phlyer,

As a matter of fact I've been to all the major and many of the minor US hubs, with the exception of Chicago.

You obviously don't know the history of the hub and spoke network.

Whilst Boeings and MDD aircraft obviously fly the trunk sections hub to hub and now fly many of what were the "lighter" spokes, my contention is correct as the aircraft feeding the hubs through the eighties and nineties, with the exception of the odd DC3, CV580, Gulfstream 1 and M4-0-4, (neither of which were ordered of the production line for hub and spoke service) have all been produced outside of North America.

Find a US built aircraft in this lot:

ATR42, ATR72, BAe J31, J41, Casa212, Canadair RJ, DHC6, DHC7, DHC8, EMB110, EMB120, EMB135, EMB145, F27 (Ok the odd Fairchild built version), F28,
SAAB b340, Short 330, Short 360.

These are the aircraft around which the hub and spoke system was built, without which it could never have operated and (Fairchild F27 excepted) not one of them produced a bean for a US airframe manufacturer.

I hope you understood that because, reading the rest of your post, you haven't understood the thread.

It was Shinseki who, a whole two days after joining the forum, called me an idiot in his first post. I have not called him an idiot.

You also don't understand the use of the word ignorance.

To quote the Oxford English Dictionary:
want of knowledge; lack of wisdom; lacking in manners.

It was the last meaning which I used in my post - totally justifiably given the language Shinseki used.

As to your medicinal suggestions, please prove your medical qualifications and I might listen to you, until then, please keep your advice to yourself.
 
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fanoftristars
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RE: Boeings Big Bet

Sun Oct 22, 2000 3:55 am

OK, I want to change the subject a little. PhilB: I have a question for you because I respect you frame of thought and your knowledge of the industry.

With the fragmentation that Phil Condit is talking about, do you think that LHR will become less of a super hub that airlines make connections through? It seems to me that the British couldn't be filling up all the planes that fly through there, and that there is a lot of connecting traffic. So, if increasing fragmentation does happen, then is it safe to say that traffic will more or less stay the same in LHR and that in the future, I won't have to connect through JFK if I am on my way to CDG? For instance, I'll be able to fly SLC-CDG without connecting? Am I making any sense? Your comments apprecited.
"FLY DELTA JETS"
 
AA-SAN
Posts: 134
Joined: Mon Apr 24, 2000 10:09 am

RE: Boeings Big Bet

Sun Oct 22, 2000 4:07 am

PhilB:
You have an argument, please exclude the "I'm an adult and you're a child, respect me or else" bull. I have gone out of my way to not check user info's because I don't want to ever disrespect somebody just because of their age. I figure that if that's the only thing that I have on somebody, they must have a pretty good point.
 
philb
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RE: Boeings Big Bet

Sun Oct 22, 2000 6:41 am

Fanoftristars,

A very interesting question.

BA reckon up to 60% of their longhaul traffic is interlining through Heathrow but a breakdown on which is UK and which is overseas generated is harder to come by. I have seen figures that show on some BA longhauls ex LHR 45% of traffic is non UK and it was on this that they based their various "World Airline" ideas.

I heard some figures on the radio the other day which were obviously erroneous, that 30 years ago there were 25 million UK passengers using British airports and that has increased to 150 million today. That would mean every man, woman and child in the UK would be making 2.586 flights per year but I'm not sure how you tell the number of UK based passengers. I use UK airports, have a British passport but live in Ireland and am accepted as "UK" - and domestic passengers are not checked for nationality anyway.

Without compiling the stats for each UK airport operating air transport flights (as opposed to general aviation) I can't give a true figure of overall use, but it is true that there has been an enormous growth in the use of air transport through the British Isles.

Boeing are correct about the current demand for more direct services - and that goes for everywhere.. That is why we have Continental 757s roaming Europe and the threat (   ) of their 737s as well.

The great draw of London, Frankfurt and, once upon a time, JFK was they were all major gateways to their hinterlands as well as being major cities in their own right. The airlines capitalised on this and used these cities as major connecting points when airlines like, for instance, Gulf Air or Singapore or Egyptair didn't fly to the USA, or US Air (in its Allegheny guise) or Piedmont didn't fly to Europe. Airlines are like sheep. If they see a successful use of an airport they will look to serve it if there is a chance they can be as successful. The instances of this are legion.

Heathrow, particulaly, benefitted because in the 1950s it was about as far east as you could go without refuelling, it had the old "Empire" links and provided connections eastward and was on the edge of Europe. Singapore has a similar position in the Far East today.

In addition Britain still liked to play the super power game and it had a base of industry that attracted major business travel and an educational base which attracted worldwide travel, both in and out.

The many cities served from these gateway airports were provided with good connections, increased traffic and the eventual increased desire to, at first transfer to a flight to as near to home as possible, later for direct flights.

In theory, therefore, the end of this should be the growth of direct routes to "provincial" airports to the eventual detriment of the gateway.

To some extent this has happened in the US. In the UK Heathrow has been protected by Governments manipulating route applications whilst, in Germany, Munich and Dusseldorf have built a number of direct long haul routes and a mass of inter European routes.

But, as I have written many times before, this will rapidly become unsustainable and a retrenchment will come sooner rather than later.

Much larger aircraft, running a less frequent schedule will ply the major routes.

In Europe rail will regain some of, not only, its dominance, but its real attraction for business travellers by offering fast city centre to city centre times.

It would require massive infrastructure development to do the same in the USA - akin to the building of the Interstates, but who's to say what will happen when people finally accept what they already know - the chips are nearly down.

Boeing will build then what it can to make money, as will Airbus. Bombardier were building trains before they bought Canadair and De Havilland Canada.

So to sum up, Government interference apart, there will be some loss from Heathrow in the coming years as both European and UK "provincial" airports develop more long and medium haul links of their own.

But all the reports out of EUROCONTROL and, despite the efforts of EATCHIP (European ATC Harmonisation Implementation Project) and other bodies to maximise airspace use, airspace will become more crowded and rationing will militate for superhubs once again

 
philb
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Joined: Mon May 24, 1999 5:53 am

RE: Boeings Big Bet

Sun Oct 22, 2000 7:02 am

AA-SAN,

The post from Lowfareair was extremely rude, innaccurate in its direction and I wouldn't take that type of comment from my 26 year old married daughter or any of her friends (all of whom know how to present a case and make a point).

I didn't used to look at the User Info pages either until a few posters on here were continually writing either downright nonsense as fact (as opposed to opinion) and were berating people, often rudely, who were postulating first class ideas that did not match their own.

Unfortunately the bulk of those who transgress, not only the rules of politeness and good debate but of this forum, tend to be in the 13-25 year old age group.

That is NOT attacking all in that age group. Many of the younger people on here are interesting, present good ideas and want to learn.

I've spent all but 8 years of my life either interested in aviation or working with the industry. I have held a number of high profile posts, not just connected with aviation. Some of my background is in PR and Marketing so I know exactly where Mr Miniter's article was coming from.

His article was presented to attack the pro Airbus lobby on this forum. Had it been a reasoned, balanced and factually based piece, I may have commented, I may not. As it was, it was a piece of poorly judged journalism, full of perjoratative terms and overblown innaccuracies - I wonder where he gets the idea of 600 hungry passengers from, for instance.

For giving a critical view I'm called an idiot by someone with 2 days on the forum and also cheeked by a 13 - 15 year old.

Sorry AA-SAN, I was brought up to respect ideas, opinions and beliefs of others and to argue if I did not agree, not insult and cheek. At my age, I know I cannot demand respect from younger people the way my elders did but please don't make the error of supporting people who think they know it all at under 15 and expect to be treated as equals by those who have knowledge, experience and are quite happy to share what they know to help others in this wonderful industry and hobby.

 
Guest

RE: PhilB

Sun Oct 22, 2000 11:49 am

PhilB; If you want me to respect my elders, then respect young-middle age people. Like said before, an editorial is an opinion, not fact. And of course you know this author HAS to be stupid when you say so b/c you run balanced international confrences successfully. Well my uncle owns a travel agency successfully, and he thinks that the A3XX will never be profitable. In an answer to what you noted above, I don't think that I know-it-all, but I DO know that all you say is that the article is unbiased journalism, and you act in a stereotypical and prejudiced manner when you say, and I quote "Comparing Airbus and the A3XX to "Soviet" style "achievements" is pandering to the most base of American instincts." Please show me proof that this statement is true.
 
AA-SAN
Posts: 134
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RE: Boeings Big Bet

Sun Oct 22, 2000 1:06 pm

PhilB, you completely misunderstood the point of my post. I do agree with you that there are a lot of cheap shots being thrown around here, and most of these have little or no worth to them, but you seem to be one of the few that has a strong argument. So please keep to the strong arguement and don't play the "well you're young, so you must respect me" game. This is an open forum, so you just have to laugh at some of the young aviation-lovers when they get worked up but don't quite have the knowledge to back up what they're saying. Especially when it comes to Airbus vs. Boeing. I've enjoyed how informative and educational all of your posts have been and I have learned a lot too, but just keep to the point and don't let somebody's age get in your way. Hopefully you can remember what it was like to be a youth and having adults give you no respect just because of that fact. I know that I can, heck it was just a few years ago.
 
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fanoftristars
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RE: Boeings Big Bet

Sun Oct 22, 2000 1:22 pm

Thanks PhilB for the information and thought. For the record, I have always found your post interesting and factual, that is why I asked you for your thoughts.
"FLY DELTA JETS"
 
D L X
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RE: Boeings Big Bet

Sun Oct 22, 2000 1:42 pm

600 hungry passengers may be a slight overexaggeration, but to criticize the point borders on nit-picking. The fact is, there could be 600 passengers simply waiting around the boarding area for a 3XX (or any VLA) flight. Add to the fact that most of these passengers (if Airbus is correct) will be coming from connections where the food on those planes is still the same airline food that leaves you wanting more ( ) and yes, you may have up to 600 hungry passengers in one place taxing the food services of the airport.

My personal feeling is that I could have written this article; it is so in line with my feelings of this project. Yes, the point that SQ *may* have pledged the jets for only $160M is perhaps a reach, and is rather unbalanced. I'm sure if you look hard enough, you'll be able to find an analyst (even out of context) say that the planes were sold for that little.

In the US, it is election season. Has anyone noticed that there are NO sources of unbiased information on anything related to the elections? That's something you just have to deal with. Listen to the biased arguments of both sides, and then decide for yourself which side was more believable. So far, I think Boeing's picture is more accurate. I'd be smiling too.
 
philb
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RE: Boeings Big Bet

Sun Oct 22, 2000 9:02 pm

Lowfareair,

Respect from anyone person to another, irrespective of age, is earned.

I cannot respect someone who is impolite to the point of offensiveness, bases his attack on an erroneous premise (i.e. saying I don't back up my statements with facts, references etc.).

Your latest piece continues in its mocking tone:-"of course you know this author HAS to be stupid when you say so b/c you run balanced international confrences successfully."

As to the Soviet jibes, in the eyes of the majority of the US readers of the WSJ, "Soviet" brings to mind the words, "cheap", "nasty", "poorly built" with regards to products. To liken an Airbus product to a Soviet product is a cheap crack unworthy of any writer in the WSJ.

You speak to me as if we were equal. Well, as individual human beings we may be, but in experience of life, aviation and the world of journalism, I've been fortunate to have been there, done that and got the tee-shirt. You haven't even started yet.

I wonder how you deal with your teachers and parents when you don't agree with them?

AA-SAN,

I can well remember what it was like to be young. When I was 13 I was fortunate to mix with adults who had wartime military and early post war airline experience.

They taught me to record facts for posterity, be accurate and consider various opinions, accepting the justifiable, rejecting the blatantly ludicrous and keeping council on the "yet to be proved".

One reason many people in the aviation industry don't value and foster the interest of young people in aviation (especially "spotters") is because of the statements, assertions and attitudes of young people who are too often anxious to express un-thought out opinions and "tell" the professionals what should be, rather than asking questions and learning from the answers.

I still learn everyday. Even though retired, I have aviation professionals who seek my opinion and knowledge and I seek theirs.

An exchange of views is fine, To argue (based on knowledge and informed opinion) is also OK, but plenty of people of my age group, and younger, get really fed up being told we are "stupid" "out of date" and our opinions "count for nothing" by people with little or no experience and, worse, by rude contributors whose status is still legally that of a child.


DLX

I wasn't nit picking, just highlighting one of the many erroneous and unsubstatiated items in the piece.

I agree with you about electioneering - and companies do the same thing BUT the WSJ is supposed to be a journal of record, it has always claimed balance and judgement in its editorial content.

I am not holding a brief for Airbus, their case is not yet proven BUT to write a piece which makes the Airbus management out to be fools (which is the only way you can read it) and try to back up the thrust of the piece by using half truths and poorly marshalled "threats" of problems at airports is bad journalism.


 
Guest

RE: PhilB

Sun Oct 22, 2000 9:28 pm

I didn't mean to come off that way, but when I see stuff like that happen, I get mad. I reread ALL the above posts, and see that there is a little more to your story.
I do debate hard with my teachers, as some think that they can often get away with things. For example, last year my French teacher gave a test in which the highest grade was a 68%. She said that it was because we weren't paying attention in class, but since several parts of it were not in our notes, or our text book, we kept challenging her, and then we went to the assisstant principal, showed him our case, and then he made her take out the irrelivant questions. I would have gotten a C if that hadn't happened, but we went against the system, and everything is fine now.
 
philb
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RE: Boeings Big Bet

Sun Oct 22, 2000 9:40 pm

Thanks Lowfareair,

You should keep questioning, there's nothing wrong with that and adults aren't perfect and they do take liberties with younger people - you know that already.

I'm always happy to debate with you or anyone else and answer factual questions to the best of my ability, so don't feel afraid to ask.

"Have a go" if you think I'm wrong - but please on the basis of fact or informed opinion, not personal invective.
 
Philly Phlyer
Posts: 356
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RE: PhilB

Mon Oct 23, 2000 12:41 am

I know more than a little about the history of the hub and spoke system and while the commuter aircraft are an important element for the "light spokes, the bread and butter of the system are the mid-sized aircraft. That is where the seat numbers are and is where the money is made. Initially the aircraft used on these routes were comprised of the DC9s and 727s in the 70s to be replaced by the MD80/90s, A320s, 737s and 757s in the 80s and 90s (and the DC-9s still making money at NW and US).

As to the history of the hub and spoke system, Delta has built the world's largest such system initially with DC-9s and 727s in this middle role and later replaced these with the MD90s 737s and 757s.

You state that you've been to all these hubs except Chicago (too bad, its a fun one to watch with both AA and UAL there). If that is the case, then count aircraft and seats in use. Without the DC9s, MD80/90s, A319/320 and 737s, there would be no hub operation.

To make the blanket statement that no US manufacturer has benefitted from the Hub System is not correct. To try to justify this by only considering the commuter aircraft is a weak argument. That is an important piece of the hub system, but it only is a piece. At all the US hubs, the commuter aircraft constitute a minority of the aircraft in the operation. You have shown that you can be more intelligent than this if you can get over your preconceived notions.
 
philb
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RE: Boeings Big Bet

Mon Oct 23, 2000 1:13 am

Philly phlyer,

Thanks for being so patronising.

As a matter of fact, the routes that now support mid sized aircraft are, (with exceptions where the availability of flights has led to a growth in the market) and always have been, capable of supporting mid sized aircraft as you point out in your piece.

The true reasoning behind of a hub and spoke system is to maintain and grow the mainlines and secondary lines served by the parent carrier with extra traffic from cities which would otherwise be off line or which cannot support service direct to another point on the system.

This has, in the main, been achieved by adopting smaller airlines as "partners".

All of the commuter types I listed were bought to support and grow hub and spoke operations. The medium sized jets were already in service before hub and spoke idea was established and I haven't seen any evidence that the numbers purchased since have been influenced by anything other than normal fleet replacement/growth and the downsizing of aircraft on many of the US trunk carriers' routes to offer more frequent service.


 
Kangar
Posts: 362
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RE: Boeings Big Bet

Mon Oct 23, 2000 5:24 am

If Boeing would get up off their arses and build a realistic competitor, it would suit them better. Fragmentation only works for the US, not for Europe, or Asia. They thought they could play the 747 card once more; it's failed, and now they're simply trying to undermine AI using a spoiling campaign, rather than trying to compete. The amount of crap being circulated by Seattle at the moment is enough to make one wince. But Phil's right to smile. It's really all he can do at this point. As for the lack of airport capability to handle the A3XX, this again is a falsehood, by the time the A3XX flies, there will be an infrastructure in place. Unless there's some semblance of impartiality in the article, don't waste the forum's time by posting it....Finally, they go on about unprofitability, even though Boeing attempted the same ploy to keep the A3XX out of SIA, give me a break folks...............
 
Philly Phlyer
Posts: 356
Joined: Sun May 23, 1999 12:05 pm

PhilB

Mon Oct 23, 2000 8:32 am

As to my being patronizing, I'm only taking my lessons from you - Old Jedi Master. As to your assertions, we will continue to disagree, You've made up your mind.

I also have to disagree with your "true reasoning" behind a hub operation. The reason for a hubbing systems is that it has a large economic advantage over point to point systems. The hub and spoke system allows a carrier to service a given route system with dramatically fewer aircraft than it would take to service the same route system with anywhere near the same flight frequencies. The routes that only would support one or two daily flights can support many more flights with a hub and spoke system. The obvious trade-off is the lack of convenience of no longer flying many of these routes non-stop.

After deregulation, the airlines had to switch to more efficient route systems or die. Those US carriers that could not establish strong domestic hub systems and efficient networks were driven from the skies (Pan Am, Eastern) or simply got smaller (TWA). Those that were smart grew (AA, Delta, United, etc). The common thread on those that grew was the switch to strong multiple hubs supplemented with point to point in markets that could support it.

During the time that the US domestic carriers were building these hub and spoke systems (post deregulation from late 70s to late 80s) were times of high sales and profits for Boeing and MD. These sales in the 80s were at the heart of the MD80 and 737 domestic sales (the carriers could switch to smaller jets with less range) and quite possibly saved both production lines (the 737 initially was a slow seller). Without deregulation and the move from point to point flying to hub systems, the move to smaller aircraft would not have happened in anywhere the same numbers that it did.

You are correct in stating that this also was beneficial to the commuter market (it was). I do not disagree with that. This commuter growth, however, could not and would not have happened without the other growth. To state that only the commuter manufacturers benefited while Boeing and MD did not is refusing to look at the whole picture.
 
D L X
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RE: Boeings Big Bet

Mon Oct 23, 2000 9:18 am

For those who think that fracturing only occurs in the USA, let me offer a counterargument.


Fracturing is occuring worldwide. Egyptair didn't always fly to New York. Neither did CSA. Neither did Air Afrique, Air China, Air Malta, Ghana Airways, and the list goes on. In the past, these airlines would serve Heathrow, Frankfurt Main, and CDG, and the passenger from Accra would connect to Air France to get to New York. Now, the passenger in Accra goes nonstop to New York on a plane that is right-sized for the route. That is fracturing. No, fracturing will not help individual airlines that are restricted to operate within an artificial geographical boundary. (Borders) But you better believe fracturing is occuring outside the borders of the US. Why else would Boeing make the 772LR? So that Asian airlines can fracture just like the European and African airlines are.


I would also point out that it is WAY premature to say that the 747X program has failed, just like it is WAY premature to suggest that the 3XX program is a success.

Also, Kangar, you say that the infrastructure for the 3XX will be in place when/if it flies. How can you be so sure? Chances are hi that you'll be correct in Asia, and maybe at Heathrow, but I have my doubts about it in the US. There will be so few 3XX flights to the US, and none of the US airlines will have it, so who's going to pay for the infrastructure that only foreign airlines may use?
 
Guest

RE: Boeings Big Bet

Mon Oct 23, 2000 9:40 am

I agree with DLX in that the success of either can't be measured yet. 6 months ago a lot of people thought that the 753 was a failure, but now they got 10 orders from ATA, 15 from continental, and there are rumors of NW and LH buying some. I am not sure but I think jmc might order them(I am not sure if they already ordered some).
 
philb
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RE: Boeings Big Bet

Mon Oct 23, 2000 9:44 am

Philly phlyer,

Its 1.40 in the morning here and I've just got in. I'm out tomorrow and I wantto answer you in full as you make some interesting points, though you still seem to miss the main reason for hub and spoke.

Expect me to come back to you around 13.00 EST Tuesday.

If I don't, please remind me.

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