Premium 2018.15 – Disappearing Douglas

The Douglas Aircraft Company of Long Beach, California started the business in 1921. It went to build remarkable aircraft; the DC-3 is certainly a flying legend. Its commercial props were first-rate and the DC-7C could be argued to be the epitome of the type. During the period Douglas was easily as highly regarded as Boeing. Then came the jets in 1958. Douglas had the DC-8 and Boeing had the 707. Douglas fared less well than Boeing. In 1967 Douglas merged with the McDonnell Corporation to become McDonell Douglas. This company managed to stay active, even competitive, for several years. But a lack of R&D investment caught up and with a lack of competitive products, this company was merged with Boeing in 1997. The following chart shows the over 80% fleet shrinkage from 2000. The MD-82 was very popular compared to other models, primarily because American Airlines liked them and at one stage operated well over 300. It has taken that airline a long time to retire this fleet, and the last few should be gone soon. The DC-9 was also a very popular aircraft and saw service across the globe. The MD-83 was also a model that saw a strong following in the US and EU markets. McDonnell Douglas (MD) was not alone in seeing its business shrink - Aerospatiale merged into Airbus. British Aerospace did the same. Merging was the only option if the company could not deliver an aircraft the market wanted. The next chart demonstrates this. When the first 737 emerged, it was no threat to what was then Douglas. Once Boeing decided to keep the program (it was nearly sold), Boeing relentlessly tweaked the design. Here we are over fifty years later and the 737 is selling as fast as Boeing can make them. Douglas also tweaked its DC-9 but these tweaks were at the margins. The aircraft did not become increasingly capable as the 737 did. MD developed several models as the MD80 series. But these did not catch on quite the way the 737 did. MD also did not have a successful widebody program to support its R&D. Boeing "bet the farm" with the 747 and created a winner. Douglas and Lockheed developed trijets that were smaller and less capable. Both programs struggled as the 747 became a flagship product. Every airline, regardless of real needs, wanted a 747. Douglas tweaked its DC-10 but it was always trying to catch up with the 747. Boeing then developed the 757 and 767 - essentially offering airlines a selection of twins that could serve the US transcon market. MD had nothing - even though its top customer American Airlines had been asking for a twin DC-10. By ignoring the customer, MD lost out as this created a space for an EU-based upstart called Airbus. Arbus used its A300 to build a customer base in the USA with Eastern and American. Later it was able to add Pan Am. Then, once it developed the A320, Northwest and United became customers. MD did not develop the aircraft the market was asking for. It had good "paper planes" - the A380 of today looks remarkably similar to the MD-12. This 1990s era idea had merit but customers did not trust MD to actually do the project. With good reason. With no market traction, MD went with a refresh of its DC-10 and created the MD-11. With Lockheed out of the commercial business, it should have given MD room to grow. But the MD-11 turned out to be a range disappointment. This fumble gave Boeing another chance to fill a gap with their 777. A question worth pondering: If an aircraft the size of an A380 was made available much earlier than the A380, what might the market have looked like today? However, the perennial financial resource shortage at MD ensured nothing new actually came forward. The products offered were derivatives and typically fell short o what the competition was offering. MD had a strong customer base as this table shows - even after the merger with Boeing. The table lists the MD active fleet for selected years. Had MD listened more closely to these customers, it might have been able to deliver aircraft the market wanted. Considering the influence of American and Delta alone this could have been a tremendous help. There are lessons here for companies outside the aerospace sector.

No results