Failure startup for Airbus
Aviation industry has begun with Wright brother’s first flight back in 17 December 1903 back in Kitty Hawk, North Carolina, United States (Mackersey, 2004) – giving that Boeing is incorporate back in 1916 (D’Intino et al, 2008), thus providing Boeing 90s years head start with initial government funding in research and development of airplane of both military and civil (Francis & Pevzner, 2006). The failure attempt of all European base airliner manufacturers has failed in their attempt to enter the global civil aviation market (Irwin & Pavcnik, 2004). Campos (2001) identifies that these aircraft had been designed too closely around the requirements of the national airlines, BEA (British European Airways) and BOAC (British Overseas Airline Corporation). It is safe to say that Airbus A300 would be no difference from its European predecessors.
By the 1960s European states recognized that their respective national aviation industries had dwindled to next to nothing in the world commercial aviation market against the mighty Americans. This recognition led four leading western European state to coalesce and form a consortium. The consortium of Airbus Industry GIC was led by France and supported by Germany, followed by Britain whom played a major role and Spain who had a smaller role. For Europeans, the rise of transnational research and development projects become the preferred means of gaining sufficient resources to compete in global aviation, where Francis and Pevzner (2006) points out that Airbus survived only through the subsidies of the participating consortium members. Subsides can be key to understanding the aircraft industry’s very nature.
For 18 months from December 1975 Airbus entered into what became known as its “Black period” when virtually no deals struck and the number of “Whitetails” – aircraft built but sold – begun growing in Toulouse (Airbus, 2009a). Airbus continue with their efforts to sell the A300 with the help of financial support from the supporting Governments (Campos, 2001), concentrating heavily on markets in the far east – Japan, Korea, China – while continuing their assault on US airlines (Airbus, 2009a).
The so-called “Silk Road” strategy that Airbus applied paid off (Airbus, 2009a). A deal with Thai Airways International for two A300s (Thai Airways, 2006) with two options finally broke the sales deadlock in May 1977. Airbus’s CEO Bernard Lathière travelled to Bangkok to complete the deal (Airbus, 2009a) despite an attempted coup in the country (USATODAY, 2006). Both buyer and supplier are relatively new to the international aviation market, providing that the two are the some level of creditability enable the deal to materialize and others to follow.
But another big breakthrough when Lathière persuaded Frank Borman of Eastern Airlines to lease four A300s for six months and then decide whether to purchase option (Airbus, 2009a), or so-called rent-and-own (Anderson & Jaggia, 2009). This enable Eastern Airlines to try Airbus’s highly advance engineering, a product and effort of the European consortium. If they decided against buying, Airbus would simply take them back. It would prove to be a brave gamble, and one which did succeed. After trying out the A300s and finding they were even more economical and efficient than had been expected. Borman therefore ordered 23 of A300B4s with nine options in March, 1978. It was the first contract Airbus had signed with a US airline. In contrast, Anderson and Jackson (2001) argue that the contract contains many option-like features which are valuable for such customers. This consequently empower the successfulness of the contract that Airbus landed with the American airline.
The final part is that the aviation industry was roughly controlled by the US for such a long period of time, giving them the foothold that they required. This impose the need for the four strong powering European states (Francis & Pevzner, 2006) to confront the airliner manufacturing industry with it full might in technology and innovation in order to prove their existence in this monopolistic market. If Airbus did not secure the financial support that they required in marketing their product through their flying road to the US (Airbus, 2009a) and giving lease and purchase option support to customers at an initial state of their own existent, thus we would not have seen Airbus today.