Introduction
When examining whether UAL should proceed with 787s or 380s, it is important to examine the current market features of the Japanese market in order to determine which particular type of aircraft would be the most effective. Based on the article “From Large to Small” by Mecham, Perrett, and Wall (2010), it can be seen that there is a current predilection within the Asian region for utilizing wide-bodied twin-engine aircraft such as the 787 (Mecham, Perrett, and Wall, 68-69). In fact, Mecham, Perett, and Wall (2010) indicate that this is a trend that began at least five years ago when there was a dramatic shift in the region towards planes with small frames (Mecham, Perrett and Wall, 68-69). The reason behind this can actually be connected to the rise of several Asian budget airlines within the region whose business models emphasized affordability rather than a luxury.
Not only that, as the effects of globalization within the Asian region continue to expand various regional hubs have developed that service a variety of far-flung destinations resulting in budget carriers being the plane of choice for travel to such areas. As a result of such events, budget airlines within the Asian region have outstripped the growth of network carriers resulting in more airports having structural frames designed for receiving planes like the 787 rather than massive monstrosities like the A380.
This is particularly important to point out due to the fact that while the open skies deal would enable the UAL to potentially access the regional airports of Japan the fact remains that if the UAL fleet to be used coming and going from the various regional airports were composed of A380s this would result in considerable expenses for these airports in terms of tarmac and station modifications to accommodate an airplane of the A380s overall size and configuration which may jeopardize the open skies deal due to perceived costs on the part of the regional airports (Schofield, 26-27).
Strategic Options
The UAL can proceed under two potential strategies when examining what particular type of plane to purchase:
- Since the UAL places an emphasis on business class passengers the larger space on, an A380 would enable far more spacious accommodations as compared to the 787 and would enable the airline to seat far more business class passengers
- The 787 is a far more fuel-efficient and cost-effective plane which is a popular model currently utilized within the Asian region. By utilizing this popularity, UAL could possibly expand to more regional hubs and locations in the future due to the fact that their airports could easily accommodate the 787 with few problems if any at all.
Market Examination
When examining the current Japanese market, it can be seen that wide-body two engine planes dominate a large percentage of the airplanes currently being utilized. As mentioned earlier, this is due to the rise of various low-budget airlines that have grown within the past five years. As such, the entry of the much larger A380 into this current market sparks several questions regarding compatibility with several of Japan’s regional airports (Perret and Guy, 24-25). On the other hand, what must be taken into consideration is the fact that in terms of long-range capability and overall passenger accommodation the A380 far outstrips the 787 but in terms of fuel efficiency and compatibility with Japan’s regional airport infrastructure, the 787 would be a better contender.
On the other hand, Sparaco (2010) in his examination of the A380 and its place in the future of aviation indicates that as the number of airline passengers per year in the world reaches an estimated 16 billion within the next 40 years this is indicative of massive growth potential within the upcoming years (Sparaco, 69). Utilizing planes such as the 787, while affordable, will definitely set UAL back in terms of being able to handle increased passenger capacity and as such would cause the company to lag behind its rivals that have focused on increased capacity rather than fuel efficiency and compatibility with airport infrastructure.
Catering to Business Class Passengers
Based on the presented data for this study, it can be seen that the primary consumer segment that the UAL is trying to target for entry into the Japanese market are the business class. Taking this into consideration, it can be seen that the A380 with its far more spacious interior and its ability to accommodate more amenities by virtue of its size makes it an attractive option for catering to business class clientele. The interior of the 787, while large, is still quite small when compared to the interior of the A380 and as such can have only limited amenities in comparison. On the other hand, interior modifications can be made on the 787 to fit the desired amenities that the company ordering may require however this of course sacrifice the number of people that can be seated.
It must be noted though that the recent financial crisis has negatively affected carriers in such a way that many are reluctant to shift into the A380 model. Issues such as cost reductions, maintaining current fleet status as well as the practicality of using such aircraft were taken into consideration and as such delays in their construction were actually welcomed. While it may be true that sales for the A380 have increased within the Middle East and Europe, the fact remains that the Asian markets which UAL is trying to expand into call for another approach rather than the A380 at the present.
Effect of the 2011 Tsunami and Nuclear Radiation Leakage
An examination of the airline market going in and out of Japan cannot be sufficiently completed without at least a brief mention of the recent tsunami and the nuclear radiation scare from the Fukushima dai-ichi nuclear power plant. After the this tragedy occurred and up till the presented, nearly 50% of all foreign tourism within the country has stopped. This also involves various business class consumers as well and as such is indicative of the fact that large capacity passenger aircraft such as the A380 should not be implemented into fleet going into Japan until such a point that flights increase.
Conclusion
When examining the various factors that have been shown in this paper so far, it can be seen that focusing on the A380 at the present would be a terrible idea for UAL due to problems related to overall structural compatibility with regional airports in Japan. On the other hand, this is not to say that A380s should not be used at all, Narita has a sufficient enough infrastructure to accommodate the A380. It must also be noted that based on the Sparaco (2010) article which mentioned growing passenger increases within the next couple of years it would be advisable to have at least some A380s in service. As such, it is recommended that UAL increase its fleet capacity to accommodate at least 20 787s and 10 A380s with the A380s primarily flying to Narita or Tokyo international airport with the 787s flying to the regional hubs instead. This ensures a sufficient split in operations enabling the company to accommodate a variety of business class passengers while at the same time enabling it remain compatible with local airport infrastructures.
Works Cited
Mecham, Michael, Bradley Perrett, and Robert Wall. “From Large to Small.” Aviation Week. (2010): 68-69. Print.
Perret, Bradley, and Norris Guy. “Fit check.” Aviation Week. (2011): 24-25. Print.
Schofield, Adrian. “Open Skies.” Aviation Week. (2009): 26-27. Print.
Sparaco, Pierre. “In the Beginning.” Aviation Week. (2010): 69. Print.