Airbus vs Boeing

Airbus vs Boeing [The Economics of Long-Haul Flights]

If you have been alive for the past ten years, you surely have heard about two planes

  • Airbus a380
  • Boeing 787 Dreamliner

These two planes have dominated the news cycle worldwide because they are both intensely Innovative a 380 Is the largest passenger plane ever existed, While the Dreamliner is the most efficient and It has an unrivaled focus on passenger comfort.

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Concealed by the fanfare, however much deeper story on economics, innovation, and how the Airline industry works. So believe it or not, the airbus a380 started working in 1988.

Airbus Vs Boeing

More people were flying than ever, and airports were not getting much more significant. Airbus eyed the success of Boeing 747 and needed the bigger aircraft to compete.

At first, Airbus considered making a super-wed jet by placing two a340 fuselages side by side but later opted for the design we see today-a fully double-decker jet.

An a380 can hypothetically carry as many as 868 people in an all-economy configuration. Although the densest in practice is 615 seats, that is more than double that of the 787.

Airbus decides to focus on making high capacity aircraft because they believed in the hub and spoke model of aviation.

Large Airlines’ Business Model

With the hub and spoke model, passengers travel from small airports, we will Hartford Connecticut as our example- to a long haul destination, such as London, England, and will need to connect through the hub.

In the case of Hartford, passengers would likely take a short flight to New York, Atlanta, or Chicago to catch their transatlantic flight to London.

This is inefficient for passengers. On almost all routings, the Hartford and London, passengers have to fly away from their destination to catch their transatlantic flight. However, for airlines, there is conceivably an advantage.

Let say just for the sake of explanation that there are only six airports in the United States – NewYork, Boston, Dc, Los Angeles, San Francisco, and Seattle. If an airline had one flight from every destination to every other destination, they would need to run 16 routes.

airlines business model

If they just have one hub airport on each coast, we will say Newyork and LA. They just need to have one route from each secondary airport to one hub and one transcontinental hub to hub route.

The hub and spoke model was also popular in the past because the airlines believed that it was more cool cost-efficient to fly fewer flights at a higher capacity. It’s simple economy economics, really. Doing a lot of one thing together is cheaper than doing a lot of one thing separately.

It’s efficient at that range, Boeing made such a relatively small aircraft because they believe in an entirely different model of aviation, the point to point model.

In this model, to get passengers from Hartford to London, airlines just run a direct flight between Hartford and London. Obviously, demand would be lower, but there is still demand.

In the past, to fly a route like this, and the airline would have had to use an aircraft with higher capacity than demand because smaller airplanes could not fly such a distance nonstop.

Given that, airlines resorted to the hub and spoke model to concentrate all the demand on specific routes where they could fill large, long-haul planes. Now with the aircraft like the Dreamliner, airlines fly long routes with less demand while still being efficient.

The Economics of Long-Haul Flights

Obviously, there will be a quite high demand on the one transcontinental route, so airlines can put a large aircraft such as a380, on that route to fulfill its desire. Since its release, the a380 has been placed on those long-haul, high demand routes known as trunk-routes.

The second busiest long-haul route in the world, Dubai, to London, sees eight a380’s a day. And that’s an addition to five smaller planes that fly that route.

The Dreamliner serves a very different purpose. It’s a pretty modest size plane. It can only hold around 220 passengers in a typical configuration.

Its composite construction makes it extremely light and fuel-efficient, which helps reduce operating costs. In the late 1990s, Boeing started to see slower sales on their large 747’s and 767’s and began to consider what to build next.

They initially looked at creating a plane called the Sonic Cruiser, which would have had the same fuel efficiency as conventional aircraft, while flying 15% faster just under the sound barrier.

Airplane Money Making Model

Airlines were initially enthused; however, after the attacks on September 11th and the rising cost of fuel, airlines were more interested in fuel efficiency rather than speed.

The 787 deliver on that promise by reaching up to 102MPG per seat compared to the a380’s paltry 74 MPG per seat. The Dreamliner also has an enormous range of up to 8000 miles, and better yet.

It’s economies of scale except that it doesn’t extend to the airline industry. For a larger aircraft, you need more ground stuff, more flight attendants, more check-in agents, More fuel, more of pretty much everything.

That only cost that stays the same is pilots, and that only ones reduced are gates and take-offs. When you are now doing more flights at the most substantial, most expensive, you end up spending more money.

Airports like Hartford, Connecticut, cheap labor is cheap, take off fees are cheap, everything costs than at JFK or Newark. There are just fewer flights to compete with.

Not only that but flying direct flights costs a ton because the airlines only have to pay off our flight costs that I talked about a lot in my’ why flying is so expensive’ video once, rather than twice.

Route Choice and Efficiency

United Airlines was a major innovator of the point to point model with their new Newark hub. Newark is an airport Suited to serve smaller planes, so United took the opportunity to open up direct flights to a smaller destination on British sales using narrow-body planes stretched to the upper limits of their range.

United primarily uses the Boeing 757 smaller destinations like Shannon, Ireland, Belfast, Northern Ireland, Glasgow and Edinburgh, Scotland, and Manchester, Newcastle, and Birmingham, England. Often the United flight from Newark is the only translation flight serving these airports.

How airlines choose the route

United can operate this route because the East Coast of that US and British isles are just close enough together to reach with a narrow-body plane. With the 787, Airlines can open even longer routes between smaller destinations. Courses like these are called long and skinny long distance, but the skinny demand.

These include routes like Tokyo to Seattle, London to Chennai; India, Wuhan; China to San Francisco, Beijing to Boston, Nairobi, Kenya to Paris; Santiago, Chile to Madrid; Warsaw, Poland to Beijing; Doha to Edinburgh, Scotland, the list goes on.

The efficiency of this plane also has allowed for an entirely new class of airline budget. The three leading players in this category are Jetstar airlines based in Australia, Scoot airlines based in Singapore, and Norwegian airlines based in both Scandinavia and London.

Wrapping Up

Short-haul airlines have been possible for a while because of efficient short-range airplanes, but this is the first time there has been such a capable long-haul airplane, so these three lines use the reduction in operating cost to offer significantly lower ticket prices, while also using the principles of budget airlines that I outlined in the ‘How Low-cost Airlines Like EasyJet and Ryanair Works‘ article, what’s even more exciting for us consumers in the upcoming Boeing 737 max.

This plane quickly redeveloped version of the long-existing Boeing 737 featuring a more substantial capacity, more extended range, and higher fuel efficiency. This means that we could conceivably see super low demand routes like Manchester to Cleveland. Lyon to New York and Belfast to DC operated in the near future.

Norweigan airlines have already hinted add plans to use today 737 max to open up an auxiliary transatlantic hub in Edinburgh-a relatively small City.

So the A380 was a failure. Airbus has not received a new order these years, and it recently announced that it would be cutting back it’s production do only 12 a year.

Meanwhile, the 787 has amassed almost 1,200 orders. Point to point flying has always been better for the consumers, but with these recent innovations, it’s now better for airlines too. Given that, it’s clear that point to point flying is genuinely the future of every aviation.