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  • Writer's pictureDoug Howarth

Assumptions vs. Observations: The A380

Assumptions are what we don’t know we are making. Douglas Adams Launched in 2000, the Airbus ceased its A380 (A) production in December 2021, as the 251st unit rolled off the line.  That’s lots of big jets. But, their 20-year goal was 1250.  How did it go so wrong? Assumptions are what we don’t know we are making – Douglas Adams Launched in 2000, the Airbus ceased its A380 (A) production in December 2021, as the 251st unit rolled off the line.  That’s lots of big jets. But, their 20-year goal was 1250. How did it go so wrong? Many pundits claim they knew it wouldn’t make its target.  Most appeared when the program floundered late in its lifespan.  What would it take to predict its future in advance? Projects often use 1) business case analyses and 2) customer polls to “verify it pencils out.”  That works if 1) analysts conceive those cases fairly and 2) buyers convert at or above a target sales figure. What if we don’t have to rely on those techniques? To forecast the next 20 years, study the last 20.  As B reveals (summing all model types to base versions), the airliner market had a poorly correlated (Adj R^2 0.458) yet statistically significant (P-Value 0.035) Demand Frontier over that period.  Airbus’s target was nearly ten standard deviations past it. The A380 took €25B to develop. It didn’t recoup its investment. Take time to model markets in advance. See what a market did to bound what it will do. You may not like the answers, but it beats losing billions. #A380 #demandfrontier #hypernomics
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