Are some brands too big to fail?
As the Autumn budget plays out on the radio in the studio and the Growth forecast is downgraded yet again by half a percent to 1.5%, I wondered about consumer reliance on spending and dependency on brands, products and services – are some too big to fail?
Only yesterday hidden away as a very small by-line I noticed the following:
“Have We Just Witnessed The End of The Airbus A380?”
I have to come clean at this point. We work on aviation projects here at TBN. I say ‘we’ but what I meant to say is ‘I’ work on aviation projects along with the design team. Standing in my back garden in the early 70’s I’d watch BA001 (c’mon keep up… this was Concorde’s flight number) execute a bank left to make its final approach in to Heathrow and from that day on I was smitten.
To explain in nerd-like fashion, the A380 was made 15 years ago by Airbus. The first twin decked aircraft to be produced since the Boeing 747. This feat of engineering saw composite materials used for the first time in commercial aviation, two entire decks of seating giving a total capacity of close to 500 people and airlines the ability to move vast numbers of people in one aircraft (which is important for later on in this piece).
So, to continue…
Hang on a moment, wasn’t it only yesterday that this behemoth was launched heralding a new era in air travel? The comfort, the luxury, the super enhanced passenger capacity, the swimming pool and roller disco…surely this can’t be the end already?
Well, to be honest with you the more I read, alas, the more it could actually become a reality. A genius piece of aeronautical engineering, brave design, advanced environmental features, whopping passenger capacity and yes, of course, that roller disco on-board. But for some it just isn’t working.
Not many people will know a huge amount about the Dubai air show but in mid-November Emirates were expected to make an announcement there to order more A380’s to add to their fleet. They didn’t. Instead they ordered 40 Boeing 787 Dreamliners (if you really want to know, they ordered the Generation 10 787 commonly known as B787-10). The reason stated was that Emirates were uncertain of the A380’s future.
Was this a shock and horror moment? For most it wasn’t as Emirates have enough money to buy what they like, when they like and they have a policy of not having a fleet more than 6 years old. However, I bet there were some seriously glum faces at Airbus on the opening day of the show!
So why buy Boeing when you can buy the iconic A380?
Well, of the 317 A380’s sold over half are owned by Emirates. However, Emirates have now worked out that the per-seat cost is not as good as they thought it was going to be.
Let me explain. 2 x B787’s with a capacity of 236 per plane is cheaper to run than 1 x A380 with a capacity of 486. You’re flying roughly the same number of people for less and, as we all know, the economics of flying is what it is really all about.
Is this really the end? My best guess is that it might be if it weren’t for one thing. Airport congestion. More passenger journeys, more flights, more planes in the sky. It might be cheaper to fly 2 planes but 1 plane is better when it comes to congestion. Governments and airport authorities worldwide will be looking at this very carefully over the next 10-20 years. You can only get so many planes in and out of an airport in any one day!
Blimey, another icon of the skies – gone (well not just yet but it is a possibility).
The amazing A380 could become a thing of the past after only 15 years. If this happens, what lessons can be learned and why does this matter?
Firstly, don’t ever rely on one customer. So many brands we speak to want to target everyone but we always encourage them to find a bullseye audience for their product or service. However, it’s never so narrow that this becomes a potential weakness.
Secondly, that pesky competitor Boeing should have never been underestimated. Their pricing strategy, their seat-cost per passenger calculations, the joint partnership with GE on their engines — they just crept up behind Airbus and went “BOO” in the loudest of voices.
Lastly, we all depend on brands, products and services day-in day-out and some we think will never leave us – our trusted partner, our friend, our defining statements about the way we live our lives. There is some bonkers fact that more brands have been created in the last 10 years than have even been created in the 200 years prior to that. Some will win, some will lose, some may even just disappear. So, if you believe some brands are too big to fail then think again and make sure that your brand remains as competitive, relevant and agile as it’s ever been before.
Mind you a bank would never fail would it? Banks are way too big and rich to fail aren’t they… oh yeah 2007… Oops.
Words by James Acton