The Concorde Saga
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Case Code: BSTR084 Case Length: 13 Pages Period: 1976 - 2003 Pub Date: 2004 Teaching Note: Available |
Price: Rs.400 Organization: British Airways, Air France Industry: Airlines, Countries : France, UK Themes: Differentiation |
Abstract Case Intro 1 Case Intro 2 Excerpts
"It will never really stop flying because it will live on in people's imaginations."
- Jean-Cyril Spinetta, Chairman of Air France in 2003.
"The airlines have clearly spoken: Commercial supersonics are just not economically -and to some extent, technically - feasible. Maybe in two or three decades, that will change."
- Todd Lecher, a Boeing spokesman in 2003.
"The costs of operating Concorde, and in particular maintenance and support, have become such that operations are unrealistic for any operator."
- Noel Forgeard, Airbus Industrie Chief Executive in 2003.
The End of the Supersonic Era
Huge crowds had gathered at Heathrow Airport in London, hours before the actual event was scheduled to take place. Heathrow had set up a grand stand with a seating capacity of 1000 people especially for the event. Those who were not lucky enough to get a seat in the stand crowded around the airport's fences, equipped with step ladders and cameras.
Some came to bid adieu to one of the biggest technical marvels of the 20th century. Others, to rejoice in the end of their bete noire. It was the last flight of Concorde, the only supersonic commercial jet in the world. British Airways (BA) and Air France (AF), the only airlines to ever fly Concordes, had announced in April 2003 that they would retire their fleet in October that year. The last Concorde flew from the John F Kennedy Airport (JFK) in New York to Heathrow a little after four in the afternoon. It was one of the three Concordes that landed at Heathrow on October 24, 2003, the day chosen to close the chapter on supersonic commercial travel. Speaking on the end of Concorde, Rod Eddington, (Eddington) Chief Executive of BA said, "Concorde has served us well and we are extremely proud to have flown this marvelous and unique aircraft for the past 27 years."
Concorde was the realization of a dream to fly faster than the speed of sound (Refer Exhibit-I). It was developed in the 1960s to bring supersonic flights out of the military spectrum and within the reach of the general public. It was to be the technology of the future and was expected to transform air travel. The aircraft itself was a technical marvel, with its needle-shaped body, a pointed drooping nose and delta-winged design, which helped it slice through air to achieve magnificent speeds. It traveled twice as fast as ordinary subsonic aircraft. In spite of its technical superiority and the convenience it offered by taking people to their destination in half the time, Concorde was a commercial failure.
It was not that Concorde operations made losses. In fact, on an average Concorde made an operating profit of £30-50 million6 a year for BA. BA reportedly earned £1.75 Billion in revenue for Concorde services against an operating cost of around £1 billion during its 27 years of commercial operation.(1976-2003). However, analysts felt that it remained a niche product, patronized by the rich and the top level executives traveling on company expense accounts. Analysts said that Concorde was a good example of a superior service with a limited market potential. It was technologically superior to any other comparable product of that time (and even in the decades that followed), but it still was way ahead of its time. The market was not ready for Concorde. People did not feel the need to travel at supersonic speeds and were reluctant to spend huge amounts on such travel. In other words, they said, Concorde failed because it was not geared to meet the needs of the market. (Refer Exhibit-II for specifications of Concorde)...
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