January 18, 2005
Looks Like a Giant Guppy to Me

Making the rounds: The A380, Airbus's new super-jumbo jet, has been officially unveiled. It's about 1/3rd bigger than a 747, and the standard configuration will carry 550 people. First flight is expected some time in March.

The big two airline builders have divergent ideas about what the market wants. Boeing has decided the future is somewhat smaller (757-737 size), more efficient airliners that travel from point-to-point cheaply enough to allow discount carriers to make more profit on cheaper tickets. This is the upcoming 7E7, which should premiere some time early next year. Airbus has decided the future is gigantic aircraft that can fly so many people the per-seat cost drops and make the "spoke-and-hub" model profitable again. Hence the A380.

Airbus is already hedging its bets with an A320 derivative that will compete directly with the newer technology 7E7. Conversely, Boeing has been kicking around the idea of an "extended" 747 that will approach the A380's seat costs but will be cheaper to buy. They each have been accusing the other of cheating through direct government subsidies (Airbus) or indirect tax breaks and R&D payoffs (Boeing). If either new initiative fails outright, there's a good chance the losing company will need a bailout to survive. If either (or both) succeed, we'll have more profitable companies, and therefore more and better jobs for the people (40% of the A380 is made in the US.)

Regardless, consumers (i.e. us) will be the winners with newer, faster, safer, and more comfortable airlines.

Posted by scott at January 18, 2005 02:53 PM

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