Image Credit: Joao Carlos Medau
So what’s a product manager supposed to do when your biggest product has been discontinued? This is the challenge that was facing the Airbus product managers. The company had been building the massive A380 airplane that they had created in order to compete with Boeing’s 747 airplane. However, the market for that type of aircraft dried up and went away. When this happened Airbus was left with an airplane, but no market for it. This caused the Airbus product managers to have to change their product development definition and go back to their drawing boards and come up with a new plan. What they needed to do was figure out how Airbus could continue to grow and be successful when they no longer had their premier product to offer.
Why Did Airbus Stop Making The A380?
The airbus product managers did make a valent effort to make the very large A380 plane a success. They spend over two decades trying to get airlines interested in buying it. In the end, they discovered that the market for planes that had 400 or more seats was just too small to fight over. The end result of this is that they have decided to stop making the A380 and will cede this market to Boeing. Going forward, the Airbus product managers are planning on doing battle with Boeing for the market for smaller jets that are forecasted to make up the bulk of purchases that will be made for the commercial fleets.
The Airbus product managers rightly believe that their time will be best spent attempting to be more competitive in trying to capture the 95% – 98% of the market that these smaller planes represent instead of spending a great deal of time and money to go after a smaller portion of the market. Airbus walked away from building the large A380 in 2021. The reason that this plane was not successful was because airlines didn’t think that they could fill the 555 seats and the fact that the aircraft cost US$445.6M.
With Airbus stepping back from building the big aircraft, this will leave that portion of the airplane market firmly in Boeing’s hands. When Airbus was building the A380, Boeing told customers that there really was no market for planes that were this large. Now roles have been reversed and it is the Boeing product managers who are going to have to convince airlines to purchase the company’s larger planes. This is why they are now creating more energy efficient two engine models. Boeing sees this part of the market starting to become smaller and so even they are starting to wind down the production of their very large 747 model.
What Will The Airbus Product Managers Do Now?
The market for twin engine long-haul planes is forecasted to be very large. Right now, it is believed that the airlines will require 1,500 of these types of planes to fill their needs in the upcoming years. Getting a portion of that market would look good on anyone’s product manager resume. Currently, Airbus has its top-of-the-line A350-1000 model which can carry 366 passengers and has a price tag of $366.5M. The Boeing model that competes with it is the 777X and it has a price tag of $442.2M.
Boeing and Airbus are also locked into a battle over the smaller wide-body aircraft market. In this market, Boeing is offering their 787 Dreamliner and Airbus is offering their A330 and the A350-900 models. In the past, the Airbus product managers had considered stretching out their A350 model in order to add more seats to it. However, in the end they decided to not do this so that they could spend more time focusing resources on upgrading smaller models. The product managers do want to keep their options open and if market conditions change at some point in the future, they may come back and decide to stretch out their A350 model.
The Airbus product managers now have a real challenge on their hands due to the cancellation of the Airbus A380. They have to figure out ways to keep Boeing from gaining market share in the markets that they are competing with them in. Key issues that will have to be considered going forward is the fuel-burn advantage that a plane can offer on a per-seat basis. Boeing has secured orders for its larger 777X from many of the world’s airlines. However, even those airlines are willing to admit that there is limited demand in that segment. This means that the real battle is going occur in the market for smaller planes.
What All Of This Means For You
Just imagine if you were an Airbus product manager. You had been responsible for making one of the biggest planes in the world be a success. Then, when this didn’t happen due to changing market conditions, your company decided to no longer make the product that you were responsible for. Now you have to look at your product manager job description in order to find other ways to make the company successful. In the end, what this means is that you are going to have to go up against your biggest rival in new markets. This sounds like a real product manager challenge!
The Airbus product managers attempted to make the A380 aircraft a success for over 20 years. Eventually they ended up giving up and letting Boeing have that portion of the market. Instead, they decided that they could better compete in the market for smaller jets. The A380 was not successful because airlines didn’t think that they could fill the 555 seats and it was very expensive. Boeing has been saying that there is no market for very large airplanes and now they find themselves as being the only company providing these types of airplanes. It is forecasted that there will be a great deal of demand for twin engine long-haul planes over the next few years. Airbus and Boeing are preparing to do battle over the smaller wide-body aircraft market. Airbus had considered making their smaller aircraft longer, but decided against it. The Airbus product managers will now do battle with Boeing in markets that that company is currently selling into. Boeing has had success selling their larger planes, but there is forecasted to be little remaining demand in that market. Now the real competition will start.
If nothing else, the Airbus product managers can now turn their attention to where the real battle is going to be: the market for smaller aircraft. Since they will no longer be making the larger A380, all of their time and attention can now be focused on increasing their market share in these profitable segments. The two companies are on fairly equal footing with the aircraft that they currently have. It will now be up to the Airbus product managers to show what skills they have in order to make their company successful!
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: How do you think the Airbus product manager could make their aircraft stand out from the ones being offered by Boeing?
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What We’ll Be Talking About Next Time
Anyone who has a baby can tell you that they spend a lot of time giving their baby baths. When they do this, they require special products – things like baby shampoo. Surprise, surprise, it turns out that the market for baby products is huge. One of the biggest players in this market is a company that we have all probably heard of: Johnson & Johnson (J&J). They have been around for a very long time and providing baby products is something that they are well known for. However, lately their market share in this critical market has been decreasing. What’s going wrong and what can J&J’s product managers do about it?