There is something of an urban legend that Boeing deliberately used the Sonic Cruiser to trick Airbus into building the A380 and pouring billions of dollars into a project that was doomed to huge costs and moderate sales. I came across it most recently doing an online Strategic Management course from the Copenhagen Business School. The course director, Robert Austin, mentioned it as a classic example of a strategic ploy by one company to trick another, despite it by his own admission not having been confirmed by either side. Which got me thinking, could it be really true?
The Case for it being a Trick
For those who don’t know, the Boeing Sonic Cruiser was going to be a mid-sized high-subsonic speed aircraft, cruising around Mach 0.98. It featured a daring design and was seen as the next big thing from Boeing. Here’s the launch video:
I find the video interesting for four reasons:
- Mulally seems to lack enthusiasm and conviction while launching a new innovative multibillion dollar programme
- The civil aerospace industry is somewhat risk-averse. The development costs for new aircraft are in the billions of dollars and the returns typically come after years of production. The most innovative civil airliner ever, Concorde, was a financial catastrophe. Yet here is the Boeing CEO calmly betting the future of his company to develop a bizarre looking aircraft for an unproven market need (greater speed).
- At 2:01 he even says “will it be of interest for the next couple of years”, why is he thinking so short-term?
- Finally he mentions that “the engine-technology” needed for the project has finally arrived. This is ironically the inverse of what is true- the engine technology has been around for years. Just look at Aerion’s original plans to build a supersonic business jet using JT8Ds engines from 1960s subsonic airliners. What was missing (and still is) is any desire by an airline to pay more for an aircraft that only flies 15% faster.
Clearly all is not what it seems. Was Boeing trying to fool Airbus into committing to the A380? Boeing abruptly cancelled the project a few months after A380 production started and went on to develop the more conventional 7E7 (eventually 787), which has outsold the A380 about 4:1.
What Doesn’t Square
What no proponent of the ploy theory can explain is exactly how the Sonic Cruiser was meant to push the A380. The Sonic Cruiser and the A380 are very different aircraft and it is difficult to see the launching of one as directly influencing the launching of the other.
Although Airbus and Boeing have had differing predictions of how many aircraft will be sold and of what size, both forecast high future sales in the mid-sized airliner market. The Sonic Cruiser and 787 both lie in this mid-size sector, along with several other established Airbus and Boeing types, and the normal reaction to a new aircraft is to develop a direct competitor (A350 for the 787, 737MAX for the A320neo etc.). It is therefore unclear why Boeing’s new push into the well-establish mid-sized market would induce Airbus to build an aircraft as large as the A380.
Surely if Boeing wanted to trick Airbus into investing into the A380 the best way would be to announce it was also considering a similar plan (to spur Airbus forward), or to leave an obvious gap in the market by announcing plans to scale back production and support of the larger Boeing aircraft?
However the final blow to the ploy theory weighs 488T and is 76m (250ft) long. Even before completing the 787, Boeing launched the second largest passenger plane in history, the Boeing 747-8 in 2005. If Boeing thought the A380 was such a bad idea, why did they build their own “superjumbo”? The 747-8 has sold even worse than the A380, managing just 51 passenger version sales (more for the freighter) and Boeing subsequently announced a $1bn write-down on the programme.
So What is Going On?
I think many people correctly see that the Sonic Cruiser was never meant to be built, but misunderstand at who it was aimed. With the launch of the A380, Boeing was for the first time cast out of the media-spotlight by its younger competitor. The Sonic Cruiser was a ploy for the world media to cover a natural gap in new programmes at Boeing and hold world attention with a project that demonstrated Boeing was an innovative company that was not being outpaced by its rival. As soon as the technology to launch the 787 was ready the Sonic Cruiser “programme” could be (and was) called off. But the idea that Boeing pushed Airbus into building the A380 with the Sonic Cruiser is a step too far, which lacks evidence and plausibility when closely examined.