Airbus Expansion: Forecasting, Markets, and Operations

The Role of Forecasting in Aircraft Manufacturing

Forecasting is important to the financial success of both aircraft manufacturing and passenger airline businesses, and it is one of the most important strategic tools that Airbus has employed. Without forecasting, Airbus would not have clarity on which countries were best to expand into, what airlines would want their products, or what adjustments were needed to keep moving forward (Airport Technology, 2009). Forecasting fits into the aircraft manufacturing business because those who make airplanes must be aware of how many will be needed and when those particular aircraft might be wanted by various companies (Airport Technology, 2009).

In order to accomplish this, aircraft manufacturers must be aware not only of trends occurring in the aviation industry but also of how each individual airline is faring and how much business it is doing. It is also helpful to know the age of the planes those airlines are using and approximately how often they decide to purchase new ones. By knowing how many planes most airlines purchase and how often, aircraft manufacturers can ensure they have enough materials on hand to meet demand without carrying so much inventory that they spend too much money on storage and fail to recoup costs through sales (Airport Technology, 2009).

For Airbus to expand properly, forecasting is essential (Airport Technology, 2009). Holding a large amount of idle inventory is costly. However, it can cost even more if planes are needed and Airbus does not have the parts to build them in a timely manner. In that scenario, Airbus could lose the contract and the opportunity to build the planes entirely. Fortunately, Airbus has become very skilled at planning and forecasting, which has helped the company continue to grow and expand without incurring undue costs. Airbus has grown in the United States, China, Japan, Europe, and India in recent years, despite the economic difficulties the world has experienced (Airport Technology, 2009).

Forecasting also fits into the passenger airline business, because passenger airline companies must have a sense of the demands that will be placed on them and how many individuals are going to be flying, so that they can maintain enough planes. They also must set schedules that allow passengers to fly where they want, when they want. A traveler who needs to fly to a specific destination will likely choose the lowest fare, unless time or schedule constraints lead them to select the airline that best meets their needs. Forecasting helps passenger airlines better meet consumer demand and also helps them know when to contact companies like Airbus to begin production on additional planes (Airport Technology, 2009).

Competing in Asian and European Markets

In order to remain competitive in the Asian and European markets, Airbus must continue to consider factors that may not arise in the American market, while also recognizing the similarities that apply across markets. Airbus must be aware of how many passengers fly and how frequently airline companies in the Asian and European markets require new planes. It must also remain attentive to the ongoing actions needed to stay competitive in those regions (Airbus, 2005).

For example, Airbus might make certain concessions related to seat design and other features built into the airplane at the time of manufacture. Even something as seemingly minor as the color and design of the interior may affect purchasing decisions made by airline companies considering a new aircraft (Airbus, 2008). Airbus must study its competitors — such as Boeing — and also study the preferences of customers in the Asian and European markets if it wishes to remain competitive (Airbus, 2008).

Safety Records and Passenger Confidence

Passengers who are concerned about travel risks will examine different aircraft and airlines to review safety records and determine which plane and carrier may offer the best safety profile (Hinton, 2009). Personal safety is a significant concern, and it would likely lead many individuals to pay more for a ticket rather than fly on a plane with a known structural or mechanical flaw. By maintaining an exemplary safety record, Airbus can expect to receive more orders from airline companies — and this advantage can hold even if Airbus is not the least expensive competitor (Hinton, 2009).