LGMT 420 research paper Turbulence in the Skies
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Turbulence in the Skies: A Case Study of the Airbus A380 Production Challenges
Embry Riddle Aeronautical University
LGMT420 Management of Production & Operations
Professor Michael Davis
October 1, 2023
Abstract
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Innovation led to the creation of the first aircraft in 1903 by the Wright brothers and has led the aviation industry to dumbfounding inventions such as the Airbus A380. An extraordinary placeholder in modern aviation engineering, the A380 faced many difficulties with production and operations challenges that impacted its manufacturing and supply process. This unfortunately led to the demise of this super jumbo spectacle, where production came to a halt in 2021. Understanding the 10 strategic operations management decisions, and how they apply to the production and operations management issues faced by the A380 could help readers understand what led to the unfortunate fall of this industry.
Turbulence in the Skies: A Case Study of the Airbus A380 Production Challenges
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Airbus is a European aircraft manufacturing company that was founded in 1970. They are
one of the leaders in the aircraft manufacturing industry with over 20 different models of Airbus planes. Airbus is not unfamiliar with setting and maintaining the benchmark in aviation, having been the first to release a wide-body jetliner with only two engines, the A300. This inception aircraft design was first entered into service in 1974 (Britannica, n.d.). Fast forward to 2005 and many plane models later, the A380 was released with impressions set from the start with its double-decker design. With its launch costing $12 billion, the Airbus A380’s innovative design choice permits the seating of over 550 passengers per flight, which is more than any other aircraft in the world (Airbus, n.d.). Airliners such as Emirates, Singapore Airlines, Lufthansa, and
Qantas are the primary users of the A380 fleet. The uniqueness of the A380 created great interest in the product, but ultimately, issues with demand and production led to the fall of this incredible
addition to the aviation industry.
Strategic Operations Management Decisions
Operations management (OM) is an accumulation of activities that create value in an organization through planning, organizing, staffing, leading, and controlling processes (Heizer et al., 2022, p.7). It is one of the major functions of an organization that helps to create efficiency and profitability through a proper understanding of the ten strategic OM decisions. These decisions include the design of goods and services, managing quality, process and capacity strategies, location strategies, layout strategies, human resources, supply chain management, inventory management, scheduling, and maintenance (Heizer et al., 2022, p.8). Applying all ten strategic OM decisions to the fall of the Airbus A380 program will help conceptualize how and why the aviation industry will no longer witness the production of this extraordinary superjumbo jet.
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Design of Goods and Services
Much consideration is taken into the planning process for the design of goods and services. The design of a product is one of the most important components of the production process. Product design determines the lower limits of overall costs and expenses of a new product (Heizer et al., 2022, p.8). Since the baseline for the costs of materials for a new product is dependent on the design choices, this lower limit could either be inexpensive or very expensive, depending on how unique an organization wants its product to be. This also leads to the idea that design choice also determines the upper limits of quality (Heizer et al. 2022, p.8). All of the design considerations create the competitive advantage to make a profitable product.
Airbus had a clear idea of what they wanted for their design choice for the newest member of their fleet of aircraft. Keeping in mind that safety is the most important aspect of the design of aircraft, it is almost expected that the design of an innovative product consists of materials and resources that will come at a premium cost. Airbus describes this aircraft as the most spacious aircraft with a relaxing environment because of its two full-length decks with widebody dimensions (n.d.). Materials such as advanced aluminum alloys and composite materials were resourced to make up the fuselage and wings of the A380 (Airbus, n.d.). Aluminum alloys are aluminum metals mixed with other types of metals to create a strong and durable combination. This caused a slight issue with the design and production process because since the A380 has such an enormous build of an aircraft, measuring 73 meters long, 24 meters high, and with a maximum takeoff weight of 560 tons, suppliers would have to manufacture a great capacity of this metal (Lufthansa, n.d.). This led to some delays because sourcing materials and combining them into ready-to-use components is a design step that requires extensive time and money.
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Managing Quality
Managing quality is something that was briefly mentioned previously, but in this sense, it refers to the overall experience of the customer when engaging with the product (Heizer et al., 2022, p.8). Quality is a large component in creating a loyal customer base. One of the main goals
of Airbus was to ensure that their superjet airliner was more exclusive than any other aircraft on the market. Due to its larger size, customers would be introduced to a more unique experience where they would be more comfortable than ever, with plenty of room to stretch and move about the cabin (Airbus, n.d.). In addition to this, the addition of state-of-the-art interactive display systems
for each and every seat available would allow passengers to ride comfortably with their entertainment readily available. For pilots and cabin crew members, advanced flight management systems and improved navigation created greater reliability and ease during flight (Airbus, n.d.). One thing to note is that the 4 million individual components that help create this ultimate
finished product are produced by over 1,500 companies in about 30 different countries (Prisco, 2021). This leads to discrepancies that can exist in the quality of a finished A380. Too many suppliers can lead to issues with quality in the sense that it is difficult to regulate what actually occurs at the management level of each individual organization (Brevig, 2021). This can then lead to more unscheduled maintenance, which will drive up the costs of purchasing and maintaining an Airbus A380 for an airline. Not that it would change the current state of the A380 today, but if Airbus could manage to localize their suppliers to create more quality control, they could mitigate issues related to quality output. Process and Capacity Strategies
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The process and capacity strategies determine the cost and quality of the production process (Heizer et al., 2022, p.8). When considering the physical capacity and the design capacity for Airbus’ manufacturing of A380 model aircraft, there were many issues that existed. When the A380 was initially released, there was a lot of excitement and an increased level of demand. However, over time, Airbus found itself in a large deficit, with more orders than it could
produce. The company was at one point able to produce 30 jets in a year, and in consecutive years, that number dropped to 12 units (“Airbus will stop building its A380 superjumbo jet: AIRBUS A380”, 2019). The company was at a loss because too much capacity meant a loss of customers, which is exactly what happened to Airbus (Heizer et al., 2022, p.304). They were unable to keep up with their demand for aircraft which led to multiple airlines and companies like UPS and FedEx cancelling their orders.
Because of the large size of the A380, most of the “finishing touches” actually took weeks to complete. When it came time to paint the aircraft fuselage and wings, it was reported that over 950 gallons of paint were required to paint the 38,000 square feet exterior (Prisco, 2021). This process alone was at least two weeks long with the painting and the proper time required to dry. Location Strategies
The objective of location strategies is to maximize the benefit that location decision offers for an organization (Heizer et al., 2022, p.336). Airbus is a European company that assembles its final A380 models in Toulouse, France (O’Hare, 2020). This is convenient for
them considering that all of their users are located on the east side of the Atlantic Ocean. No American airliner jumped on the A380 wave, mostly because of the strategic inability to
fill seats for a single trip on the superjumbo jet. In addition to this, not all airports have the
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appropriate runway configuration to be able to handle this aircraft, so it automatically limits the locations where the A380 could operate (Prisco, 2021). Runways have specific weight limitations that do not meet the 560-ton weight capacity. Only 140 airports worldwide are compatible with the A380, not including airports that are accepting the A380
for diverts (FAA, 2022).
Layout Strategies
Layout strategies refer to the decisions behind the placement of machines, offices, or centers that serve or produce a good or service (Heizer et al., 2022, p.366). Regarding the layout capabilities of airports in supporting the Airbus A380, some airports had to adjust their facilities to safely home these giant aviators. Because of the large size, minor adjustments had to be made for spacing and ramp coverage at departure and arrival gates. For example, at the Munich Airport
in Germany, custom doors were built to be able to close hangar doors around the tail of the A380 (O’Hare, 2018). This presents the idea that airports and airliners must invest more money outside
of the costs that already exist to own one of these planes (over $450 million at the time).
Human Resources
Human resources are the ability to recruit, motivate, and retain personnel who possess the
required skills to accomplish a task relative to an organization (Heizer et al., 2022, p.8). As mentioned previously, Airbus outsources its resources from various companies and companies that were a part of the supply chain to source various materials required for the final build of the A380. However, if viewing this strategic OM decision from the perspective of the airline and the operation of the aircraft, the A380 has created many jobs for professionals in the engineering, mechanic, crew member, and pilot industries. Aside from the pilots, three crew members in the cockpit and 21 members in the cabin all make up the workforce for a single flight (Airbus,
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2019). This ensures that all passengers are properly attended to and taken care of, especially in an aircraft that is considered to be extraordinarily spacious. The manufacturers have even gone as far as creating a private space for the crew members with their own private bathroom on the jet. This can boost morale and the feeling of worth within the cabin crew because they have designated areas that belong only to them. The preflight briefing is another component that is heavily emphasized, which gives crew members the feeling of preparedness when encountering over 400 passengers at a time on a single flight (Airbus, 2019). Supply Chain Management
Integrating the supply chain is one of the most important aspects of any organization that is fully dependent on the suppliers to be able to sell their product (Heizer et al., 2022, p.8). Similar to the issues associated with quality management, Airbus experienced a lot of supply chain issues that led to the demise of the A380 production program. The sourcing of numerous suppliers creates a gap in effective communication which leads to incomplete orders or misunderstood expectations. However, due to the complexity of each individual component, it was as if this was the only way that Airbus could effectively source its materials- through various
organizations from different nations. Overall, issues within the supply chain management lead to production delays, decreased quality of products, and it becomes more costly because of the additional maintenance that will inevitably have to take place.
Another thing in supplier chain management that created delays in the A380’s production is that many of their buyers were customizing aircraft interiors. Singapore Airlines purchased an A380 with a customized cabin to cater to their first-class passengers with exclusive suites (Airbus, 2017). While this was a benefit to the individual airlines and great for building
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relationships with buyers, it ultimately contributed to the delays because more time was spent customizing a newer cabin instead of producing a standard layout of the A380.
Inventory Management
Inventory management takes into consideration the ordering and holding of units to optimize customer satisfaction while considering supplier capability and production schedules (Heizer et al., 2022, p.8). A lot of this was discussed earlier with the process and capacity strategies. This was one of the biggest failures for Airbus because of how much money was lost in unfulfilled orders due to the lack of inventory. It is fair to state that the lack of inventory created many issues with many customers, including the more regular customers such as Emirates and Singapore Airlines backing out on their orders. Many agencies felt as if the wait was longer than they desired or ended up switching to another large airliner such as the Boeing 747.
Scheduling Scheduling considers the intermediate and short-term schedules which aid in effectively utilizing resources to meet customer demands (Heizer et al., 2022, p.8). Airbus has intentions to maintain a consistent schedule of about 30 aircraft a year. Unfortunately, due to other logistical issues, they were unable to accomplish this, and ultimately all of their scheduling plans were overrun by delays and issues with production. Due to these delays, the A380 was delayed over 6 months. Another thing to consider is that the plane was scheduled to launch in full effect in 2007,
a year before the market crash which heavily affected air travel, and then affected the desire for airliners to purchase more of the jets. Maintenance
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Maintenance is an essential component of any organization, especially when considering the production demands and personnel necessary to maintain a standard process (Heizer et al., 2022, p.8). In the aviation industry, more specifically in the aircraft building industry, it is perhaps one of the most important components. Regular maintenance for the Airbus A380 was a standard considering the unique physical nature of the superjumbo jet. Maintaining the aircraft at
optimal condition is imperative in ensuring the safety of upwards of 400 passengers and crew members.
Considering reliability, if any single function of a system is deficient, the entire system can collapse (Heizer et al., 2022, p.675). In 2010, there was an incident where thankfully no lives
were lost, but one of the engines of the A380 gave out about 4 minutes after take-off (FAA, n.d.).
It was discovered that the reason why engine 1 went out was because of a manufacturing error regarding an internal oil feed stub pipe. While this is not necessarily a maintenance concern, the safety concern is everyone’s responsibility and if this was something that fell under the maintenance check, then the problem could have been caught sooner. The point of this is to emphasize the importance of scheduled maintenance and Airbus encourages this activity. Since no lives we lost in this accident, it did not create such a distaste for the superjet, and many airlines continued purchasing more jets for their fleet and passengers continued flying on the A380.
Conclusion
Since the inception of the Airbus A380, its airline carriers have been able to accumulate over 800,000 flights, safely transporting over 300 million passengers (Airbus, n.d.). 2021 marked
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the end of the incredible journey of the Airbus A380 program, with the last and final jet having been built in 2021 for Emirates Airlines. Many issues led to this inevitable end including issues with design, manufacturing, inventory, demand, and more. Airbus overanticipated the success and demand for the aircraft, where only 39% of the aircraft they predicted to sell actually sold. Understanding how the deficiencies in 10 strategic operations management decisions led to this helps individuals reason with this outcome. While this does not mean the end for the Airbus A380 because a handful of airliners intend on flying them until the 2030s, it is the end for the production of these marvelous superjets. References
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Airbus. (2017). Singapore Airlines receives the first A380 with its customized cabin
. https://www.airbus.com/en/newsroom/news/2017-12-singapore-airlines-receives-the-
first-a380-with-its-customised-cabin
Airbus. (2019). The unique A380 experience: Cabin crew perspectives
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cabin-crew-perspectives
Airbus. (n.d.). A380 Unique passenger experience
. https://www.airbus.com/en/products-
services/commercial-aircraft/passenger-aircraft/a380
Airbus will stop building its A380 superjumbo jet: AIRBUS A380. (2019). EFE News Service
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Brevig, A. (2021). Is Having Too Many Suppliers Slowing Your Company Down?
Procurement Cube. https://procurementcube.org/is-having-too-many-suppliers-slowing-your-company-
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Britannica. (n.d.). Airbus S.A.S. summary
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FAA. (2022). Modifications of Standards (MoSs) for A380s/B747-8s/New Large Aircraft
. https://www.faa.gov/airports/engineering/nla_mos
FAA. (n.d.). Airbus A380-842. https://www.faa.gov/lessons_learned/transport_airplane/accidents/VH-OQA
Heizer, J., Render, B., & Munson, C. (2022). Operations Management: Sustainability and Supply Chain Management
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Ed.). Pearson
Lufthansa. (n.d.). AIRBUS A380-800
. https://www.lufthansagroup.com/en/company/fleet/lufthansa-and-regional-
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O’Hare, M. (2018). Munich Airport builds custom doors for world’s biggest passenger plane. CNN. https://www.cnn.com/travel/article/airbus-a380-doors-munich-airport/index.html
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