Are you ready for boarding?

October 29, 2007
By: Tim Heston

Last week Chew Choon Seng hosted a symbolic event in aviation history. The CEO of Singapore Airlines threw a party more than 30,000 feet in the air, where he strolled the aisles in his company"s new crown jewel: the Airbus A380. After years of delays, the thing is finally airborne.

From Singapore"s Changi Airport direct to Sydney, Australia, the inaugural voyage lasted seven and a half hours. The flying behemoth has a wingspan of more than 260 feet, about 50 ft. wider than Boeing"s 747-400. Technologically, it"s an engineering marvel.

Many believe the A380 represents a gamble in an aviation environment moving away from the hub and spoke model conducive to large aircraft; the future will see more direct flights and smaller airplanes. That"s the future Boeing has put its money on with its midsize 787 Dreamliner. Last week the Seattle Post-Intelligencer reported the U.S aerospace giant had more than 700 orders.

The materials themselves may serve as a harbinger of future demand from aerospace suppliers. Alongside healthy doses of aluminum, titanium, and steel, composites make up about half of the 787"s construction and about a quarter of the A380"s airframe.

Predictions aside, one thing"s for sure: It"s a good time to be in the aerospace business. Both Boeing and Airbus, which together virtually form a duopoly of large, commercial aircraft, are enjoying robust demand. In its latest financial statement released last week, Boeing reported a 61 percent surge in third-quarter earnings, despite delays in delivering the 787.

To be sure, aerospace suppliers have felt the benefitincluding metal fabricators. Take Windsor, Conn.-based Barnes Aerospace, a company offering metal fabrication, welding, along with machining and grinding. Its parent, the Barnes Group, reported a 58 percent increase in net income for the second quarter. Evidently, times are good.

This makes aerospace shimmer like a star in today"s relatively dim economy. Housing sales are in the dump, and the credit crunch continues. Meanwhile, more of us than ever herd through airport security; flights are full, usually delayed. A report released last week by the International Air Transport Association predicts that by 2011 the world"s airlines will need to handle 2.75 billion passengersa 620 million increase from 2006 numbers.

In the years I"ve been a frequent flier, I"d say the experience has gone from pleasant to tolerable to downright distressing, and I believe many people would say the same. One would think such bad service wouldn"t bode well for the airlines.

And yet we keep filling up their airplanes.

Why? In a way, it boils down to getting face time in a global business world. Mike Streit, vice president of advisory services at American Express Global Business Travel, told Reuters, "Even as economies cycle, the demand to be with your customers and the demand to meet with your colleagues is just a given fact in this economy."

Considering this, one has to wonder about the face time Boeing spends with its huge supplier base. The company has pushed more engineering and design functions down the tiers. And that supplier base has become truly global, particularly with Boeing"s 787 (the wings come from Nagoya, Japan; the horizontal stabilizer from Foggia, Italy; and the list goes on). All this requires some serious collaboration. Imagine the frequent-flier miles earned during this project alone. (And with the project delayed as it isreportedly due to supplier issuesone has to wonder how many hours project participants spend sitting on the tarmac.)

Perhaps this is the price company managers pay to get lean, and for a supply chain that"s more integrated than ever. Customers have demanded more; their needs change quickly; and everyone up and down the supply chain must coordinate to meet those demands. Often that probably entails hopping on a plane. And so, despite e-mail, digital work flow, video conferencing, and all the other high-tech tools now available, companies still need that all-important face time with the customer.

Call it a case of the lean frequent flier. Are you ready for boarding?

Tim Heston

Tim Heston

Senior Editor
FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-381-1314