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Where is Boeing Going?

Part 3 :  Boeing in Decline - the 1970s to 2003


Boeing partially built two prototype SSTs, but when government funding dried up, Boeing chose not to risk any of its own money and killed this futuristic project.

Part 3 of a 5 part series - click for Parts  One  Two  Three  Four  Five



In some companies, success encourages continued innovation. In others, past success freezes a company into following the strategies that initially created its success, long after the marketplace and technologies have changed, causing the company to drop behind the rest of the market.

In the early 1950s, Boeing was failing at producing commercial airplanes. It became aggressively innovative, and produced four outstanding airplane designs in little more than ten years - the 707, 727, 737 and 747.

But what did Boeing then do to protect its market leadership? Critics would suggest it became complacent and conservative, and lost its leadership as a result.


From Dominating to Dominated

The 707 first flew in commercial service in 1957. Seven years later, it was joined by the 727. Four years after that, the 737 was added (in 1968) and two years after that, the 747.

But then, no new planes at all were released during the 1970s, while Boeing sat back and enjoyed the feeling of unchallenged supremacy that its four different model jets gave it.

Indeed, twelve years were to pass before the first commercial flights of the 767 and 757 (two airplanes built contemporaneously) and another twelve years until the 777 commenced service in 1995. At the very earliest, it will be thirteen more years from then until the first commercial flight of the 7E7 (now named the 787).

The pace of development of new model planes drastically slowed since the heady days of the 1950s and 1960s.

In the years since 1983 Boeing has released only one new model plane. During the same period, Airbus has released three (the A320 then A340 then A330) and will be releasing its revolutionary super-jumbo A380 in two more years time.

Quite simply, Boeing has been falling behind the development curve, while Airbus has actively developed its aircraft lineup and now has comparable or superior planes to match or beat everything in the Boeing range.

At present, Boeing only has two passenger plane series that are realistically still selling - the 737 and the 777. The 757 has recently been discontinued, the 767 is, alas, on its last legs and hardly selling at all, and similarly, sales of passenger versions of the 747 have all but ended (as of April, 2006, there have been no sales of a passenger model 747 since Nov, 2002).

How did Boeing end up this way? The story continues with the development of another great plane, the 767.

Another Great Plane

As the 1970s passed, Boeing's designs became increasingly old and due for replacement. The venerable 707 was taken out of production in 1978, and the 727 was to be retired in 1984. This would leave Boeing with only two types of plane - the high capacity long range 747, and the low capacity short range 737. Boeing needed to add a medium capacity long range and a medium capacity short range plane to replace, respectively, the 707 and the 727 that had previously filled these market segments.

As a 707 replacement, Boeing developed the 767, using an all-new and innovative design. It was to have only two engines, which would be the first time that a long range (and over-water) plane would be sold with only two engines. Until the 767, it was unheard of to cross the Atlantic with just two engines, but by the year 2000, the 767 was crossing the Atlantic more than any other airplane type.

Another innovation (for Boeing) was using electronic multi-function cockpit displays instead of the earlier dials and gauges. The cockpit was designed for a two pilot crew - a concept introduced in the short range 737 and now extended to the long range 767 as well, although not without initial resistance from pilots!

Most noticeable from a passenger point of view was its cabin interior. It was a dual aisle or widebody plane, with coach class seating of 2-3-2. Everyone had either an aisle seat or a seat next to an aisle, and loading and unloading the plane was much easier with the two aisles. The 767 was a comfortable plane and justifiably very popular with passengers.

A Dangerous Idea?

Boeing decided to design two new planes at the same time - the 767 and the 757, and to give them similar cockpit layouts so as to make it easy for pilots to convert from flying one type of plane to the other.

This concept of a related family of airplane types was of course intended to lock airlines into buying all their planes from a single supplier (ie Boeing), and while it was successful at doing this it also created a subtle trap for Boeing. An airline would choose Boeing's best planes in preference to other manufacturers, and then would hopefully be locked into buying all other planes it needed, also from Boeing, even if some of these plane types, when compared individually, were not as good as other planes from other manufacturers.

Perhaps this meant that Boeing no longer needed to design every plane to be as good as, or better than, all competing planes from all competing suppliers. Perhaps this good idea backfired on Boeing.

Success changed the company from aggressive innovators to conservative maintainers - eg, the glass cockpit (all electronic displays), introduced by Airbus in 1978 but which took Boeing more than ten years to copy, and fly-by-wire, introduced by Airbus in 1984 with the A320 and taking Boeing five years to emulate.

And a Not so Great Plane

The 757, developed at the same time as the 767, was larger than the 727 it replaced, with 214-239 seats in a one class configuration, compared to 189 in the 727-200. However, it was built with the same fuselage cross-section as the 727, the 737, and the 707, with three seats on either side of a center aisle. This gave the 757 the dubious distinction of being the longest narrow-bodied plane in the sky (some would say it was too long for a single aisle plane), and with larger models holding as many as 289 passengers, the congestion and delays in loading/unloading were appreciable.

The plane was never very popular with passengers, but it was popular with airlines, being very efficient and economical to operate (something that is generally considered by airlines to be much more important than passenger comfort!). Some people consider the 757 to represent the absolutely worst modern passenger plane design.

Passenger comfort issues have perhaps become more prominent in the last decade or so, and Airbus have strongly sold their planes as being more comfortable - more spacious - than Boeing planes. Their narrow body planes have 7" more width than on Boeing narrow bodies, and their widebodies have 2-4-2 seating - not quite as good as the 767's 2-3-2 but definitely preferable to the 747's 3-4-3 or the 777's 2-5-2 layout. No-one is more than one seat from an aisle on an Airbus widebody, but two of every ten people are two seats from an aisle on a 747 and similarly one of every nine on a 777.

Initial sales of the 757 were slow, perhaps because the plane was just too big for most airlines and the routes they operated. But with the steady growth in passenger numbers, the need for higher capacity planes increased and the 757 became increasingly popular in the later 1980s and early 1990s.

The Death of Courageous Innovation

Boeing likes to claim that it 'bet the company' on the success of its 707 and 747 planes, and points to these events as examples of its courageous innovation.

Whether these statements are true or not (and both projects were greatly encouraged by military contracts), no-one can dispute that, since the 747 project in the mid 1960s, Boeing has never since made a major financial gamble on a revolutionary new plane :

  • It chose not to gamble on a competitor to Concorde, its 2707 SST.

  • It chose not to develop the 747X - a super-jumbo successor to the 747.

  • It chose not to develop the slightly faster than normal Sonic Cruiser.

Great Planes that Never Happened : The Boeing 2707 SST

In the early 1960s, it seemed aviation and airplanes would continue to develop into the future, the same as they had done in the 60 years before. The logical area of improvement was in the realm of speed - early jets in the 1950s flew twice as fast as the propeller powered planes they replaced; and now the expectation was to double (or more) the speed again. This new increase in speed would mean exceeding the speed of sound (about 660 mph), which brought about unique new design challenges. Full of confidence, aircraft builders in Britain, Europe, the Soviet Union and the USA all set about designing supersonic transports (SSTs).

Best known today is the project to develop the Concorde, started in 1962. But at the same time that the British and French were pursuing their plans for a plane that would fly at more than twice the speed of sound (ie 1350 mph, Mach 2.04) and carry 100 passengers 3700 miles, American companies also began to pursue designs for a bigger better SST.

National pride was involved in such a prestigious undertaking, and a Congressional Committee studied America's needs and how to develop such a plane.  It was decided that the FAA would coordinate the program, with assistance from NASA and the Dept of Defense.  A 1961 report projected sales of 100-200 SSTs, with government funding much of the development costs, and these investments to be repaid in the form of a royalty on each plane sold.

The FAA coordinated a national design competition for the best plane, and before it had even selected a design winner, it started selling $100,000 options on future planes to the airlines, with 45 orders being received within a few months of the options going on sale in 1963.  The design competition was to close in 1964, but specifications and requirements were repeatedly revised and the final results were not announced until 1967.  The US was falling further and further behind the Concorde and Russian Tu-144 projects.

Six companies submitted designs.  Boeing won the competition, with a proposal for a swing-wing plane that would carry 300 passengers for 4400 miles at 1800 mph, what it called the Boeing 2707.

The US Government's funding for the project was never very certain, and environmental groups were lobbying strongly for the project to be cancelled completely.  Meanwhile, Boeing's swing-wing design proved impractical, and its revised fixed wing design did not offer the same high performance as its earlier proposal.

Eventually, in 1971 funding was cancelled for the program.  Some $1 billion had already been spent on the project (by the government), and although two prototype planes were already partially built, when the government withdrew its financial support, Boeing gave up on the project also.  Any chance of a US supersonic plane was lost.

Competition Ebbs and Flows

In the 1960s, Boeing had two main competitors - McDonnell Douglas and Lockheed.

Lockheed never successfully transitioned from propeller planes to jets.  It only made one passenger jet - its L1011, a three engined plane similar in appearance to the DC-10.  Only 250 were produced, and the end of its production, in 1984, also marked the end of Lockheed's 55 years as a passenger airplane manufacturer.

The Douglas Aircraft Company had always been a strong competitor to Boeing.  Its DC-1, -2 and -3 effectively killed the Boeing 247 program.  Its DC-7 was the most successful plane in the 1950s.  Its DC-9 was introduced two years before Boeing's 737, and enjoyed an early 'first to market' advantage.  In 1967 Douglas merged with McDonnell Aircraft Company to form McDonnell-Douglas.  Future planes were prefixed MD rather than DC.

The DC-10, developed prior to the merger, but released after it was completed, was a good plane, but suffered some bad publicity due to accidents that weren't entirely plane related, and in general it was eclipsed by the 747.  The DC-9 program, renamed the MD-80 program, was eclipsed by the larger 737s.  A successor to the DC-10, the slightly larger MD-11, sold very disappointingly - only about 200 were produced over the course of ten years.

In 1997, Boeing merged with McDonnell Douglas, meaning that it now had no remaining North American passenger jet competitors.  But, increasingly over the previous decade, Boeing's main competitive threat was from France rather than from within the US.

The Rise and Rise of Airbus

Airbus appeared on the scene in 1969, as a merger of several individually failing European airlines.  To start with, it gave no indication of being any more successful than the companies that merged together to create the new organization.  Its first plane, the A300, sold poorly; and by the end of 1975 it had only sold 55 planes.  It then went 16 months without a single sale, and then finally it won the breakthrough it needed - an order from Eastern Airlines in the US, and by 1979, it had orders for 256 planes, and its future seemed assured.

Airbus continued a relentless program of new airplane investment, and also greatly improved its original A300 (which is still selling today in its latest form).  Boeing chose first to ignore Airbus, and then to denigrate it.  Boeing officials would sneer about Airbus and also said that Airbus was forced to 'give away' planes at prices that Boeing didn't want to match.  In other words, Boeing treated Airbus much the way that full fare airlines treated their lower cost competitors.

While the pace of innovation at Boeing slowed more and more, it seemed to be accelerating at Airbus, and its planes started to take over records from Boeing (eg the longest plane, and the plane with the greatest range). Freed from a design legacy stretching back to the 1950s, all Airbus planes were built to state of the art specifications, using state of the art techniques and materials.

Airbus built up a comprehensive 'family' of planes, ranging from smallest A318 (117 seats in an all coach configuration, comparable to Boeing's unsuccessful reworked MD-90, now known as the B717) up to the largest A340-600, carrying almost as many passengers as a 747, and of course the soon to be launched massive A380 which will be by far the largest plane in the skies.

As Airbus' product range and credibility grew, so too did its order book and deliveries.  In 2001, Boeing delivered almost twice as many planes as Airbus.  In 2002 Airbus delivered almost as many planes as Boeing; and in 2003 it delivered substantially more planes than Boeing (305 compared to 281).  Airbus' advantage continued in 2004 and 2005, and looks probable to continue in 2006 as well. - see the data in part five of this series.

Boeing is no longer the largest passenger aircraft manufacturer.  That title now belongs to Airbus.

The Danger of Success

Boeing's most successful and most profitable plane is almost certainly its 747.  For 25 years it reigned supreme as the biggest plane in the skies, and it had no competitors.  But this success carried with it a subtle cost and handicap that Airbus was quick to exploit, turning the tables on Boeing in the process.

In part four -  how Boeing tricked itself into losing supremacy, and what it should do to reclaim market leadership.

Read more in the rest of this five part series

Part 1 :  Boeing's early years

Part 2 :  Boeing's best years

Part 3 :  Boeing in decline

Part 4 :  Does Boeing have a future

Part 5 :  Key facts and figures about Boeing, its planes, and its competition

If you liked this, you might also enjoy our multi-part series 'Airbus Fires the First Shot in the New A320/737 War with Boeing'.

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Originally published 19 Dec 2003, last update 30 May 2021

You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.

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