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.
18 thoughts on “Did Boeing Trick Airbus into the A380 with the Sonic Cruiser?”
I cane across a video on Youtube where the narrator explains the narative of strategy as a ploy by Boeing. He begins by explaining the context at the time which was airlines were facing high costs in renting landing space in airports due to congestion – there were many aeroplanes and landing spaces were running out therefore increasing the rent.
To escape this, Airbus thought of building a larger passenger aircraft that’ll carry more passengers and reduce the number of aircrafts in circulation and in the process reduce airport rent.
Boeing, on the other end, focussed on the market need for P2P by customers. The 787 would also fly faster getting customers to their destinations much faster.
Their industry is an oligopoly (a duopoly really), this market’s type distinctive feature is the interdependence of the participating entities. In such a scenario none of the companies wants an industry change, monopolies are difficult to manage, and are very much inclined with playing the anticipating move, following each others plans in order to maintain status quo,
While this PR stunt might and should have had an impact on Airbus’ plans according to the prevailing market theory, its most relevant impact is on entertaining us with contemplating the winner, however they both already won and are now just putting on show to maintain their winning position.
Boeing might have kept their costs a bit lower by tricking Airbus to show its hand – but what’s a few billions among friends 🙂
A Very convincing argument but still can be argued otherwise.
The pace of various developments at the time were definitely favoring Airbus. It was it seems a Boeing tactic only to buy time as the 787 was nowhere near to be introduced or unveiled, thus a ploy for the world stage and with hidden innuendos towards Airbus that Boeing is still in the game. The ploy worked to some extent as it diverted attention away from prevailing shortcomings and matching developments with Airbus albeit far-fetched.
The hypothesis that ‘Boeing tricked Airbus into building the A380’ may not hold true given the fact that the Boeing had been trying to move the market to the point to point transportation model away from the traditional hub-and-spoke model which had very-large-aircrafts, like 747, as its backbone. The Sonic Cruiser as well as the 787, both had been targeted at the point to point model and in the video, Alan clearly mentions the Sonic Cruiser being targeted at the P2P transportation model explicitly. If Boeing had to trick Airbus, it would have launched an A380 size aircraft but it ultimately went for the 787 instead. Boeing did launch the 747-8 but it was intended as a 747-400 derivative incorporating some of the latest technologies developed for the 787 (especially the wing & the GEnx engines as reflected by the 747-8 designation with the 8 indicating incorporation of 787’s elements) despite weak market prospects as indicated by Boeing’s internal research with Boeing aiming at a 200 aircraft production run largely driven by the freighter market. The 747-8 was intended as Boeing’s pincer attack on the A380 along-with the 787. The A380 was largely a strategic faux pas on the part of Airbus (just like the A340 quadjet in the age of twinjets) which had been in awe of the 747 for decades and it’s ‘Queen of the Skies’ tag and the company wanted a European version of the 747 as a matter of pride. The A380, however, was a program well behind its time and paid for that with the 787 inducing the paradigm shift by taking the market towards the point to point model forever.
For a further deeper dive, one may read the book series – Airbus vs. Boeing: Strategy Perspective available on Amazon Kindle at:- https://www.amazon.com/gp/product/B08MV8FWCK?ref_=dbs_dp_rwt_sb_tkin&binding=kindle_edition
Wonderful insights for provoking thoughts about theory of “Strategy as Ploy” – though seems more like “staying relevant and a failed project” to me.
I have only just come across this article while searching for a decent photo of the sonic cruiser.. However, I can say that during a discussion I had with the late Jo Sutter, creator of the B747, that there is more than an element of truth in what is said about Boeing flying a kite to trick Airbus into making the A380. Jo told me there was never any intention to build the BSC as it was only ever a marketing ploy. He said that the company,having got ‘burned’ on the B2707 project, had little or no interest in SST projects but if they did enter the field then it would be for a full on SST and not a sonic cruiser. The reason being that costs would be marginal between the two ideas so you might as well go SST. I hope this helps.
Thanks for finally writing about >Did Boeing Trick Airbus into the A380 with the Sonic Cruiser?
Quite insightful piece. The issue of a ploy is quite debatable
Nice article! Sounds reasonable! Thanks!
strategy as ploy
So much of the discussion has centered on Boeing’s actions. How far did these impact on Airbus needs more investigation of that company. As for Mr Mullaly’s launch, I’m glad most agree that it was unconvincing. I was once an active member of Toastmasters International, and his presentation would have got a thumbs-down evaluation. Speaking of hands I was struck by his body language.
Hello: I appreciate above writing of Mr. Michael Illsley about Boeing Super Sonic Cruise. In terms of strategic management, it is truly only a PLOY. As a marketing strategist, I will suggest to CEO of Being Company, please compare the things rightly. It is really an example of a comparison between HORSE & donkey.
With best regard.
I agree with you. There is no way Boeing could know what Airbus would do, so one is not necessarily the cause of the other. As you say, it is still a ploy, for media attention, to distract shareholders, their board, to give the impression of progress. In the end, we don’t know. There still might be some cause and effect here. Competitors often look at each other to determine “best in class”, as the phrase goes.
A case of Strategy as Ploy and a Plan where courses of action are being taken while hoping to use the prevalent outcome/event/situation to determine the next courses of action.
A rolling wave planning (RWP) which is the process of planning in waves as the project proceeds and later details become clearer, plans are adjusted based on situation at-hand or as situation unfolds.
I think Boeing actually left a gap by practically abandoning the 4 engine 747 in favour of the more popular twin engine 777s.
747 s sales were flagging and Airbus was kind of failing with the 4 engine A340. In a sense large aircraft segment ( 450 + seats) were getting left uncovered by products from either of them.
Comment about engine technology is correct, which is still true.
So sonic cruiser was never meant to be.
But ploy I doubt
I would need more information on this to make a more in-depth conclusion. But, it looks as if they wanted to take attention away from their failures, and made them selves look like they were more technologically advanced than they actually are.
Very insightful, thanks for the write up!
I am with the idea that Boeing had created a ploy for the world media to cover its own faults. The fact that once the 787 was ready Boeing called of the Sonic Cruiser.