Boeing 787: Dreamliner's market


The Boeing 787 Dreamliner is the youngest family from Boeing, it is an important project for Boeing's attempt in regaining it's dominant market position with it's major manufacturing competitor- Airbus. (Refer to the introduction of the B787 for basic information)

This page investigates the market of the B787, which reflects Boeing estimation of the future air travel trend and how the new aircraft is especially designed to meet these market expectations; the latter part of the page investigates the obstacles that Boeing has come across in its production process that had affected its actual sales market figures. It is concluded from this study that although there have been reduction in orders due to various delays of the aircraft roll-out, the design and proposed technology of the B787 still accommodates with the future trend of air travel; therefore the market of the B787 is still optimistic in the future.

B787's Timeline

(Image by Wan, 2009, based on information from Boeing)

By observing the order patterns against the key timeline of the B787 production, it is shown that there had been a dramatic decrease in orders and increased number in cancellations after the event of failing to launch the aircraft on it’s original launch date in 2007.

There had been a change in the attitude of airlines towards the delay of delivery. During 2007, airlines such as ANA and Qantas announced that the delay would give little or no impact to their business plans, and that the delay was within the expectations, despite the many unexpected technical problems that had been encountered, where other airlines had remained silent about the delay. (Hayasha & Neely, 2007 2)

From 2008 onwards, the attitude of airlines towards the late delay had gradually changed. Airlines such as Qatar Airways, Air New Zealand, Air India, Qantas, and even the major customer ANA had intentions of cancellations or claim for compensation against their loss caused by late delivery. (The New York Times, 2008 5; Irish, 2009 3) Major reasons of cancellation were due to loss caused by the delay where airlines needed to push back their business and marketing plans. The late delivery was caused by staff strike, sourcing problems at earlier stage and technical problems Boeing encountered during the developing process.

B787 and its customer Market

The key marketing strategy for the B787 was the cost-efficiency. It is clear that Boeing is lead to drive down the operational costs for its customers to attract business. From the design initiatives of the aircraft we can see how Boeing sees the future market of air travel to be.

1. Speed but not Size

The B747 era had come to an end as the air travel demand is no longer increasing at such rapid rate, with the ease of demand incremental the new aircraft mustn’t aim to be larger, as it will only cause more empty seats, which means more lost to customers. In contrary, aircraft can be downsized as long as the efficiency is improved.

If we look at the market demand of aircraft in general, the best selling and most common aircraft by airlines nowadays are the A320 and B737, both being mid-sized aircraft. The industry has not gone for extending their point-to-point services; instead, hubs and spokes is still the general idea. This had been reinforced by the global economy turndown and the rising of low-cost carriers where many full service airlines cannot afford the investment in developing new routes but simply want to increase their capacity on their current routes and expand their network by connecting flights with partner or alliance airlines.

2. The decreasing demand in First Class

Many business travellers nowadays are much more price sensitive than they were a decade ago. As business travel makes up the majority of an airline’s revenue, the travelling preferences of business travellers and the frequency of short haul business travel had increased as to the common trading within regions and many businesses that expand their scope across their neighbouring regions. Where shorter flights become more common, there is less need to a luxurious flight due to the shorter travelling time; efficiency will be more important for business travellers in this aspect. Moreover, the rapid development of communication technology eliminates the need to a lot of long-distance travelling and allows a timely trade between businesses.

In line with the decreasing demand in long-haul business travel, the preferred degree of luxurious has decreased as well as businesses are more conscious of how much it will cost to send their staff over for the trade nowadays. Therefore many airlines have ceased their First Class services and replaced their top class with Business Class where there is great degree of comfort at a lower cost; and in between Business and Economy the new Premium Economy emerged for extra comfort at a little extra than economy fares. In fact, the three classes remain the same; where the Business class product in many airlines are not any less luxurious than First Class, there are lie-flat beds, premium entertainment systems and extra storage space, etc.; the lowering of class is simply the lowering of airfares by airlines with a clever marketing strategy to give the illusion that “First Class” no longer exists. In order to be able to offer the range of products at a lower cost, airlines will need to cut costs in other areas, having a cost-efficient fleet that give airlines flexibility to alter their aircraft configuration to match their operational needs takes an important role in achieving this.

3. Low-cost carriers

Since the no-frill travelling mode is already widely accepted worldwide, and by the wider audience, it is likely that the way conventional airline can adapt to the market is to offer better value for their fares, by either lower fares or an improved product that can be comparable to low-cost carriers (Refer to low cost carriers for basic information). For many full service airlines, it is impossible for them to lower their operational costs to the same extent as low-cost carriers; thus price slash is often not the long-term solution.

The B787 will be a popular option for low-cost carriers as it has the configuration flexibility and the cost efficiency. The major use of secondary airports suggest that large aircraft are not suitable as these airports often do not have the facility to accommodate large sized aircraft; a light-weight but mid-sized aircraft would be perfect for the longer distances, such as some low-cost international travel which is getting more and more popular nowadays.

Although the B787 appears to be suitable for low-cost operations, it will however be even more advantageous to full service airlines in being able to offer a more flexible type of service, to create more unique differentiation, to have more control on how their brand and product is delivered. As the future of low-cost carriers is bright, this will likely to positively influence the B787 market demand as well. Airlines can choose to offer their economy cabin at a more low-cost like mode if they like, and still have their premium area with the luxurious seating and facilities. The moodlight function allows differentiation of cabins without physical walls; therefore although there may be two or three distinctive cabins, the aircraft still has a spacious perception if desired.

B787 and its Competitor

The B787 is often compared against the A380 jumbo jet as the time that these concept were released were relatively close, and it was thought by many that it is Boeing’s competing weapon against the A380 to regain Boeing market position. After the not so successful launch of the 747-X supersonic concept, Boeing had realised that it needed an aircraft that would meet airliners needs. The B787 was the opposite of the A380 in the sense that Boeing saw the need for efficiency and cost saving in airlines, instead of aggressive expansion and optimistic forecasting in travel demand. Apart from the many technical innovations, the B787 is also sold at a fraction less than the A380. (Boeing, 2010a 1)

In 2005, Airbus launched the maiden flight of its jumbo jet- the A380. The capacity was even greater than the previous
jumbo jet B747. This revolutionary aircraft had totally changed the possible ways of operation in the commercial airline industry, as it would allow airlines to meet their rapid growing demand in a much more efficient and effective way- by carrying more passengers per flight. The aircraft could travel longer distances, allowing less stopover and transits, more direct point-to-point routing, and the extra room in the cabin to develop a more comfortable travel experience for travellers. At the point of development, it was commented by many that it would be the trend of future travel.

In contrary, the B787 was a downsized aircraft from Boeing’s previous model B747; it promoted the spokes-and-hub system instead of encouraging long-haul point to point services; the cabin was not designed to carry more passengers at once, but to more efficiently carry existing demand as Boeing saw the aviation market to be diminishing in demand due to various environmental reasons such as the slowdown in economy; many markets being mature and have settled down in the flying population; the raise of low-cost carriers that encourage use of smaller airports which do not accommodate for larger aircraft, etc.

Here the two aircraft are not compared against each other for it specifications or performance, as they are totally different aircraft categories and sizes; the comparison is to the different perspectives that the two manufacturers have taken against the future travelling trends in the airline industry. Where the Airbus has taken the optimistic expansion approach to the airline industry’s future; Boeing has approached their near future with a perspective closer to reality, where airlines can use this aircraft as a tool to improve their product on current services without breaking the bank. Boeing is seeing the next period of air travel to be more of a recovering period for most airlines, and more importantly adapting their designs to current market needs with some creative innovations more than trying to create a new market all together.

B787’s Technical difficulties

Apart from the late delivery, the B787 also failed to offer as much as they had promised with the new aircraft making technologies. It appeared that the major reason of delay was because the aircraft had difficulty achieving it’s weight target and the increased efficiency did not make a significant difference. Although there were massive reductions in fastens and aluminium sheers, it did not seem to help. As a result, the manufacturer proposed to it’s customers a 10-15% reduction in the aircraft range for early deliveries, and the aircraft woult still be 8% overweight (Thomas, 2009 6)

In addition, the composition factor had promised the first major structural examination to be at the aircraft’s 12th anniversary, as it had less concerns over corrosion. However, as suggested by Lawrence and Thornton (2005 4) a more severe matter is that corrosion in metal is easy to be noticed, and much more is known about the fracture mechanics of metal pieces than composition; and the complexity of investing to evaluation composite structures will be a labour-intensive and expensive job for it’s customers. However if the composite material proves to be a more enduring and reliable material, it is likely that there will be increase usage of the material and the above concerns should gradually diminish as the knowledge to maintenance improves.

B787 Discussion

Despite the multiple technical problems that had struck the delivery roll out of the B787 Dreamliner, its innovative and ground breaking technology that promotes to enhance cost saving for airlines is still a major advantage of the aircraft. The global economical downturn had also favoured the concept further as airlines struggled financially and needed methods to cut costs. The trend is obvious that airlines are turning towards a more cost-effective way of operation, and is likely to stay so at least for the foreseeable future. Therefore, here it is concluded that the Dreamliner has gained itself an important contribution to future air travel trends. The B787 has secured it’s position to both low-cost and conventional airline business modes by offering a flexible configuration in favour to fully utilise the aircraft to meet their market needs on top of cost-saving, be it the customers wish to carry more cargo or passengers, have three cabins or one.

1. BOEING (2010a).Commercial airplanes- Jet prices.Retrieved from Boeing on 20 March 2010
2. HAYASHA A & NEELY J (2007).Airlines play down impact of Boeing 787 delay.Retrieved from Reuters, 11 October, 2007 on 20 March 2010
3. IRISH J (2009).Update 2- Qatar Air says Boeing 787 delay affects expansion.Retrieved from Reuters, 11 January, 2009 on 20 March 2010
4. LAWRENCE PK & DW THORNTON (2005). Deep stall: the turbulent story of Boeing commercial airplanes. Ashgate (Cornwall), 2005.
5. NEW YORK TIMES (2007).Airlines seek compensation over delay of the Boeing 787 Dreamliner.Retrieved from New York Times on 22 March 2010
6. THOMAS G (2009).Bernstein Research sees further 787 delays, bigger range shortfall. Retrieved from ATW Daily News on 18 March 2010

Want to know more?

KEMP K (2006). Flight of the titans: Boeing, Airbus and the battle for the future of air travel. Virgin Books (London, UK), 2006.
This book takes an interesting approach to comparing the A380 and the B787; it presents the facts in a more novel/ story way where it is informative yet a joy to read.
NEWHOUSE J. (2007). Boeing versus Airbus. Alfred A. Knopf (New York, United States), 2007.
An interesting and informative book about the competition between the world’s two largest aircraft manufacturers. From company history, to market share, business strategies, product differentiation, and market trends.

Contributors to this page

Authors / Editors

Amber WanAmber Wan


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