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Boeing’s Commercial Airline: Next Generation Case Study

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Updated: Jun 19th, 2020

Boeing was founded way back in 1916 in Washington State. It is currently the market leader in the manufacturer of commercial and military aircraft. “In its earliest days, the company built military aircraft for use in World War 1 (Yenne 87). It began to prosper in the 1920’s and 1930’s, when the civil aviation market expanded, primarily because of the demand for mail carrying.” In 1969, the company implemented a New Airline Program with the sole purpose of learning from previous experiences where it had failed to reach a desired outcome. This program was in some aspects also a launch pad for Boeing to create the next generation commercial airline.

It already had a fleet of successful 707’s, 727’s, 737’s, and 747’s in its portfolio. But the company wanted to launch a product that was not only superior to its existing fleet, but would be also technologically advanced, with a state of the art cockpit, dynamic exterior as well as interior, fuel efficient, and most importantly could easily accommodate long distance flights.

At the time of the 767 development, a number of the major airlines had substantially capitulated to union demands that “all future transport airplanes would be designed for three crew members”. Interestingly, the techniques of airplane system design for simplicity of operation had significantly improved. For instance, microprocessor-based system controllers had increased functional capability and made redundancy more ‘friendly’.

Microprocessors also made it possible to automate functions previously considered too complex to apply to commercial aircraft. The cathode ray tube displays now offered new opportunities to improve situational awareness of the flight crew. These changes promised to significantly improve the operational efficiency and reliability of the airplane. They also reduced the small amount of useful workload that could be assigned to a third crew member. In the tight knit flight deck environment, occupying a crew station with a member that has little useful work to perform would be an invitation to distraction and, contrary to the intent of the labor unions, could actually cause a decrease in the safety of operations.

In addition, Dr. Frank Ruggiero from the Boeing Flight Deck Technology group correlated the extensive psychological literature on dyads and triads to the operation of a flight crew. This rich field of study provided strong evidence of much more team complexity in 3-person groups as compared with 2-person groups. Issues related to coalition formation, distraction, and the need for more extensive verbal coordination in 3-person crews were shown to have the roots in normal human behavior that starts with childhood and continues, with far greater sophistication, through adulthood. From the viewpoint of the psychologists the best crew size was the absolute minimum number of people it took to complete the work.

The launch of the customer-757 airplane which comprised of the Eastern Airlines and British Airways following the 767 by only a few months specified a two crew member design. In response, the Airline Pilots Association bypassed the collective bargaining environment and made a petition directly to President Reagan to require three crew members in all future transport designs. Secretary of Transportation, Drew Lewis, appointed a special task force headed by former FAA Administrator John McLucas to investigate and make a final determination on the relative safety of two and three crew member flight decks. In addition to Dr. McLucas, the task force included Fred Drinkwater from NASA and USAF General Howard Leaf. Dr. John Lauber headed a support team of NASA experts who assisted the Task Force.

The task force did a thorough job of getting relevant information from labor unions, local and foreign airlines, and manufacturers. The final testimony was presented at a public hearing in Washington D.C. but was preceded by visits to multiple sites in the US. At the request of its customers, Boeing converted the last 767 test airplane to a configuration similar to the 757 and completed the crew complement certification with the same rigor that had occurred in the 737. The 767 airplanes in the factory were completed with their three-crew design flight deck, and modified before delivery to the two-crew configuration.

No 767 was delivered in the original three crew configuration, and only one customer (Ansett Australia) operated their 767 with a hybrid three person crew configuration derived by moving panels from the overhead to the side panel of the airplane. Interestingly, Boeing was able to deliver all early 767s substantially on schedule, a major engineering, manufacturing, and modification accomplishment.

The first 30 or so airplanes for which 3-crew flight deck components were in the supply pipeline were factory completed in a 3 crew configuration so that the airplane functional testing could be completed. They were then rolled into a special mod center where the flight decks were gutted and rebuilt in the 2-crew configuration. This project received great recognition and became a Harvard business school case study that was used for many years to illustrate how creativity, industrial engineering, and highly motivated corporations could respond to a rapid change in market direction.

Problem Statement

  1. In August 1981, Federal Aviation Administration rendered 2 person cockpit as safe as 3 person cockpit for wide bodied aircraft.
  2. Before 11 months of first scheduled delivery of 767 air craft Boeing has to take a decision for changing cockpits from 3 person to 2 person for 30 planes, which were in advanced stage of production.
  3. Two viable options were:
    1. Make changes in-line without removing planes from original flow of production.
    2. Make changes off-line, by retrofitting 2 person cockpits in separate area once original production was completed.

Analysis and Recommendations

Thornton was faced with two choices: Does the production of the first thirty 767 airplanes get interrupted in order to introduce the cockpit modifications; or, does Boeing finish the full production of these planes and then make the changes after the planes are finalized and tested (Yenne 106). The main issue at hand is how risk is managed with respect to program cost and delivery schedules. This decision not only affects the current lot of thirty airplanes, but it will also affect the quality, cost and schedule of all upcoming 767 airplanes in the production line. The basic summary of the two choices is as follows:

First Option: Complete the planes, then modify later

The advantages of this approach are that all the subassemblies of the plane will be individually functionally tested and the entire airplane will go through quality tests and be finalized. Any subsequent issues introduced by the later modifications, can then be easily narrowed down to areas where changes were introduced, therefore the issues will be isolated and easier to troubleshoot. Since the production plan is not modified, the existing learning curves will be intact as well, which is a great advantage for lowering costs for the subsequent units.

This option is also the less costly one of the two, estimated to cost at about one (1) million labor hours, however there are some downsides to this approach; Due to the post production and post release modifications, configuration management of these changes can be very complicated and tricky. In addition, the newly introduced features and changes would require to be tested and new tests would have to be developed to ensure full verification of these changes. After the changes are made, the entire plane would also have to go through a complete qualification and flight tests.


  1. Neither learning curves nor schedules would be disrupted by attempts to modify airplanes during the assembly process.
  2. The option is comparatively cheaper requiring only one million additional labor hours.
  3. The modification program would be exclusive of the normal manufacturing process. A separate tightly controlled activity and specific teams of modification experts skilled at parts removal, modification and repair would be assigned to it.
  4. The flaps, landing gear and other airplane systems would be functionally tested during the final assembly process as originally planned. So as a result, problems will be identified and corrected on the spot rather than hidden or disguised by subsequent assembly activities.
  5. All the problems after the installation of the two-crew cockpit could be isolated and be further researched and improved upon.
  6. The production would not be delayed as the normal flow is not disrupted.


  1. Potential loss of configuration as the overall design of the airplane might be compromised after installing and replacing the cockpit parts.
  2. If the modification was not done carefully, many of the plane’s operating systems might get disrupted.
  3. There was not enough space within the factory to accommodate all the 30 planes while modification. Any accommodation in the space would violate fire regulation, so special control plans and waivers would be necessary.

Second Option: Modify the production plan, incorporate changes

This approach modifies the existing production plan in order to modify the thirty airplanes in the production line, so no parts will be installed then removed. The advantages are that no removing and modification will be performed later on and the existing production facilities can be utilized to build these plans. This approach is estimated to cost twice as much as option 1, at a total of two (2) million labor hours. Learning curves will be disrupted, since the resources at each production would be changed to accommodate the modifications and installation of the new parts at each stage and this approach could also make troubleshooting issues much harder down the line since some sub-assemblies and modules will not be tested until later on at the system level.


  1. No part would be installed only to be replaced later. So the configuration was more likely to remain secure.
  2. Since modification would occur during production, all activities would be controlled by normal management procedures rather than a separate specialized programmed.


  1. Design changes to be incorporated in the normal flow of production would create bottlenecks as the panels instruments and switches that were associated with the three person cockpit had to be identified and their installation need to be halted. All the cockpit work would be deferred until the engineering drawings and the parts for the two-crew cockpits were available.
  2. Learning curves will be disrupted as number of additional workers would have to be added temporarily at selected work stations to complete the modification of the first 30 planes.
  3. The plan would require addition two million labor hours, which are quite expensive.
  4. Test procedures had to be changed because all cockpit work would be deferred until complete plans and parts were available.
  5. Problem diagnosis will be much more difficult since the problems might well be hidden by the systems that were installed later. As a result of this problems might not be detected and corrected immediately.

Short Term Recommendations

After reviewing the two options presented, we are of the opinion that the first option, complete the planes, then modify, is the best option. Before the first 30 planes can be reconfigured after completion, space needs to be identified where the work will take place. If not all 30 planes fit in Boeing’s facility in Seattle, more space must be found to house these giant airplanes. It may even mean work will take place far from the Boeing factory. Specialized workers also need to be lined up to work on these planes as they come off the assembly line. Since the workers are already skilled in disassembly, this work won’t require much additional training. The flaps, landing gear, and other airplane systems need to be tested while this modification is taking place. If needed, the crews specialized in this testing need to be located near the cockpit work.

Long Term Recommendations

While the first 30 planes are being modified after their production is complete, the main assembly line procedures must be changed before the 31st plane gets to the cockpit assembly stage of production. Steps need to be taken to ensure the long-term work of building the 767 is not disrupted needlessly. The learning curve already in place may drop since procedures and parts will be different. Slow speeds will have to be overcome, and this will take the production of multiple planes before workers are comfortable with their new roles.

Another important recommendation will be to try and push customers to the 2-seat cockpit assembly. It will be easier to have one assembly team in place rather than two once the production line has changed from a 3-seat cockpit to a 2-seat cockpit. Less floor space will be required for the parts, as well as less outsourcing for having the different cockpit materials for each design on-hand. This will help keep the learning curve in place, ensuring the 767 family of planes becomes profitable for Boeing.


The inception of Boeing series in 1916 marked a major beginning in the revolution of aircraft industry. As it stands now, Boeing leads the way in the production of military and commercial airplanes with special focus on the latest technological platform. It is pertinent to mention that the company has grown by leaps and bounds since the First World War (Yenne 107). Several airplane programs have also been implemented by the company with the aim of improving its aircraft system. In spite of the stiff market competition and myriads of market challenges in the aviation industry, Boeing is still a profitable company.

Even when there was union demand for a 3-crew member airplane, Boeing complied almost immediately by designing new systems. In fact, the company had already made significant advances beyond just a 3-crew member compatible aircrafts after customers requested for the changes. There were also calls by the aviation authority for the change in design.

Although the company implemented several changes after the Boeing 767 series, it did not interfere with the production process. The 3-crew configuration was manufactured continuously without any interruption. Nonetheless, the company began to experience a number of problems from the beginning of August 1981 when the 2-member configuration was considered to be safe by the Federal Aviation Administration.

However, the 3 –person cockpit would now be reserved for airplanes with wide bodies. This implied that the company was supposed to make necessary adjustments from a three to two-person cockpit. Although viable options were already in place, any slight change from the older configuration would translate into monetary losses. Perhaps, the best line of action to take would be to complete the manufacture of the 767 series and later begin the modification process. This option would not interrupt production schedule or learning curve. However, any modification would most likely lead to significant loss of configuration.

Additional space was to be made available at the factory premises in order to accommodate all the 30 aircrafts. The company could also opt to modify the production program and later integrate the necessary changes. Nevertheless, it is crucial to underscore the fact that any of these options had its merits and demerits (Yenne 63). In a nutshell, the company could still adopt both short and long term recommendations in order to comply with the new aviation requirements. For instance, a separate manufacturing location could be established so as to create sufficient space for modifications. The company will also be expected to expedite the production process by hiring additional staff.

Works cited

Yenne, Bill. The Story of the Boeing Company Updated Edition. New York: Zenith Press, 2010. Print.

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