Why Is Airbus Interested in Building the A3xx?

Case Study – Airbus A3XX

Why is Airbus interested in building the A3XX?

Initially, both Boeing and Airbus collaborated to search for a possibility of producing a huge aircraft. However, Boeing considered the project to be risky and expensive so that it withdrew the project. In the meanwhile, Airbus continued the idea and started to develop the draft design. There are several reasons for the company to keep working on the project.

First, Airbus expected the future demand of huge jumbo jet to increase so that the project might help it to gain more market shares. The company already ordered 20 aircrafts from different companies based on the optimistic forecast of A3XX in the future. The future demand has been expected to be 1500 aircrafts over the next 20 years of the project. Management of Airbus believed that the breakeven point was at 250 aircrafts and that the company could sell 750 aircrafts over next 20 years, which meant the potential profit of this project is very considerable.

Second, Airbus could enter a new segment called VLA, which has an optimistic outlook at receiving orders for VLA aircraft owing to it capture of more than half of the VLA market in terms of orders.

Third, increasing point to point route frequency is not a solution as it leads to congestion. A3XX could support large range of travel without any stopovers, which is the key point in the purchase decision making.

The capacity of the aircraft will be substantially more than that of the existing aircrafts in the industry, increasing customer satisfaction. This would also create better operating economy – 12% more to operate as compared to 747s but has 35% more space, leading to the lower cost per passenger. Besides, A3XX would have more sources of revenue due to increased space.

Last but not least, A3XX will be equipped with four engines as compared to the usual two engines in Boeing 747, increasing the safety factor and attracting more customers. A3XX would also become the king of the air that any premium airline would feel the need to have it.

What are its objectives?

First, to compete well in the market especially with its main competitor Boeing, the introduction of a new model with significantly better facilities than that of its competitor. This would give Airbus a competitive edge over Boeing and would also maintain the company’s reputation of being innovative in its design and technology.

Second, the potential profit of this project is huge based on the forecast of the company. To increase the profit of the company, new projects are to be considered continuously. Therefore, the company is planning to be successful in the project when it already knew that its competitor is out of it, and hence can bring back significant returns to the company by creating the competitive advantage.

Last but not least, as one of the two leading players in aircraft manufacturing industry, the success of the project would definitely help in improving company’s position against its competitors and giving Airbus the opportunity to be the market leader.

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