Not Afraid To Tell Customers "No"
Boeing has learned from
its past, and to not try to please everyone all the time. Just ask
Southwest Airlines, which earlier this year received an atypical
answer to its request for two more 737s: "no."
"No one is more important to Boeing than Southwest," said Edmund
S. Greenslet, publisher of Airline Monitor, to the New York Times.
"If Boeing is not willing to raise production and build for
Southwest, you can be sure they won’t accommodate anyone
else."
Boeing instead suggested Southwest look at two used 737s being
sold by the Ford Motor Company.
To date, Southwest has taken delivery of 477 new 737s -- the
only type in its fleet. So why would Boeing turn away their
business? Because Boeing hopes to avoid a repeat of its fortunes
during the last aviation boom at the end of the 1990s.
Back then, the manufacturer took all the orders it could...
orders it couldn't fill in the end, forcing shutdowns in production
lines.
Despite those shutdowns, the market still ended up flooded with
Boeing planes -- forcing the company to sell airliners at cut-rate
prices, which further taxed the American manufacturer. Some
20,000 workers lost their jobs... and, combined with the events of
9/11, it has taken this long for Boeing to recover.
To paraphrase "The Who"... Boeing won't be fooled again.
"In this hot market, it would be easy to be consumed with the
desire to sell anything to people walking through the door who want
to buy and push our production system to the point where you could
break it," said Boeing Commercial Aviation CEO Scott E. Carson back
in September. "It’s much harder to say, 'I’m sorry,
we’re sold out.'"
Southwest isn't the only customer who's hearing that message,
either. New customers for Boeing's upcoming 787 Dreamliner are
being told, essentially, to get in line -- as there's a four-year
waiting list for the plane. Other airliners have a two-year waiting
list.
"Frankly, we are much more disciplined than in 1997 and 1998,"
Carson said in a recent interview. "The message is, Don’t get
ahead of yourself; don’t go crazy about how we ramp up."
There's another factor helping Boeing stick to its guns this
time around -- the troubles at its main competitor, Airbus. The
European planemaker is suffering delays and production problems for
its two upcoming airliners: the A380 superjumbo, and the
Dreamliner-competitor A350. Even with its current "waiting list"
strategy, Boeing is still able to tell customers they will get
their Boeings sooner than they would either Airbus plane.
That's a 180 degree turn from 1997-1998, when Airbus was an
up-and-coming competitor. One reason Boeing committed to so many
orders back then, was its hope it could flood the market with
planes -- and take Airbus out of the game.
"It was the Khrushchev approach," Greenslet said. "Remember when
he was at the United Nations and was banging his shoe and saying,
‘We will bury you.’ It was the bury-you strategy and it
did more damage to Boeing than the competition."
That is no longer an option... as both Airbus and Boeing appear
to now agree a two-manufacturer duopoly is best for the commercial
airliner market. Of course, neither would mind having a larger
chunk of the market than the other.
For the moment, that chunk appears to be Boeing's to gain... or
lose.