Monday, June 3, 2013

What keeps you from launching an innovative product?

Good morning all! I was watching on the news the other day the horrific accident of Air France's concorde (yes concorde is spelled with an -e-) aircraft which resulted in the decision by Air France and British Airways to retire their fleets.

The Concorde was, arguably, the most successful and sturdy aircraft that ever existed. During its 27 year service (!) only one accident involving a Concorde was recorded in 2000. The weird thing was that despite the fact that the accident was caused by a titanium strip that fell on the runway by an aircraft which took off only seconds before the unlucky Concorde, all airlines were quick to retire the aircraft citing safety issues. The real reason, however, was a well hidden secret.

The Concorde cost the airlines more to operate and run compared to a more conventional aircraft. It was supersonic, thus it needed a significant amount of fuel for each trip. Flying with the Concorde was only the privilege of the rich. As such, not a lot of Concordes were built during these 27 years. Some may argue that it was retired because of the operational costs.

However, when Sir Richard Branson, owner of Virgin Airways offered to buy the British Airways fleet for 5 million British Pounds, he was inexplicably denied.The fleet was retired and most of the airplanes are now part of avionic museums around the globe.

What was the reason for the retirement of such a successful aircraft? It certainly was not operational losses as BA could have sold the retired aircrafts to Virgin Atlantic. It seems that in the midst of the Boeing-Airbus war, the Concorde was a victim of economics. Carrying passengers subsonically, was found to be more profitable and profit was the punchline in the aircraft competitive market.

Even though the Concorde was ahead of its time and even though it was truly a revolution in travel even by today's standards, it was sacrificed for a higher profit. Afterall, Airbus (who was maintaining the Concorde) decided to stop maintenance and allow the aircraft to be retired.

The moral of the story? It does not matter how original or impressive a new product is. If the profit is not there, the product will be doomed to fail.

Have a great day!