Sometimes I travel to where the media is, and sometimes they pay me a visit here in Seattle. This week, I got to talk with a couple of international reporters without having to go any farther than the lobby of our offices.
First, I heard from Gerald Braunberger, a business editor at the Sunday edition of FAZ, one of Germany's leading newspapers. Turns out he's writing a book on the Boeing and Airbus competition. So I was more than happy to give him my point of view during a telephone discussion. (I guess that's no big surprise - I'm always ready to share my opinions!)
Mr. Braunberger asked me about the differing commercial airplanes strategies and market scenarios of the two companies. And I told him that while Boeing has been saying for the past 15 years that twin-engine airplanes are the most efficient way to fly passengers, Airbus has pursued a "four engines for the long haul" strategy for far too long. And that they're playing catch-up with their A350 offering, having now essentially thrown out the "four engines" philosophy.
Another interesting question was what do we expect from U.S.-based network airlines in terms of airplane orders in the coming years? Well, I noted that this current buying cycle is interesting because it's been absent - so far - the traditional big U.S. carriers, as well as the big flag carriers of Europe. We have been observing recently on the U.S. side, that carriers are starting to get their revenues up. And as long as the U.S. economy continues strong, probably by the end of this year, the U.S. carriers could be realizing an operating profit. And it's likely they'll be entering the order cycle late in 2006 or early in 2007. We're also likely to see the big traditional European carriers entering the market later this year or early in the next.
I'll be curious to see the book that Mr. Braunberger produces as a result of his research.
Chatting on camera with GloboNews on Monday, in the lobby of BCA's Seattle offices.
I also took part in a week-long Seattle visit by a crew from Brazil's GloboNews, TV Globo's cable news channel. Globo is one of the world's largest television networks, so their visit here to see a variety of Boeing sites and videotape a number of interviews is something of a big deal.
Reporter Rodrigo Alvarez asked me a very pointed question about our market strategy vs. Airbus: "Why are you right, and they're wrong?" And my answer, simply put, was that it's not a matter of "they're wrong." It's more accurate to say that we have two distinct views of the market. We believe that airlines ultimately respond to what passengers want. And what passengers have been asking for is more choices - more opportunities to fly where they want to go, when they want to go. So airlines are responding by providing more frequencies and more city pairs.
And I told Mr. Alvarez that's the foundation of our market strategy. We are designing and building airplanes that allow airlines to provide more frequent service to virtually any city pairs around the world.
On the other hand, Airbus has built its strategy on the belief that there's going to be a significant shift in airplane size. In fact they say airplane size is going to grow 20% over the next 20 years. So they've heavily invested in a 550-seat airplane.
The real question, I pointed out, is which of these strategies is correct? We may not know for another 10 years or so.
The GloboNews reporter wanted to know, is it possible to have shops and lounges on an airplane, as we've seen in some of the publicity for the A380? Well, it's certainly possible. But is it economical, given the cost of "real estate" inside an airplane?
I pointed out that if you think about the most expensive real estate in the most expensive city on earth, the space inside an airplane would still probably be hundreds of times more expensive! So the question is do you want to fill it with revenue-generating passenger seats, or with lounges and bowling alleys? The answer: the space will be occupied by whatever produces the most revenue!
Globo TV is working on a documentary project which will also include Airbus and Embraer. It will potentially be seen by tens of millions of viewers throughout Latin America. So it's certainly a privilege to have the opportunity to share some of what we're up to in Seattle with news viewers in this dynamic region of the world.
