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ASA Adjudication on Boeing United Kingdom Ltd

Boeing United Kingdom Ltd

25 Victoria Street
London
SW1H 0EX

Date:

7 August 2013

Media:

Magazine

Sector:

Industrial and engineering

Number of complaints:

1

Complaint Ref:

A12-215279

Background

Summary of Council decision:

Two issues were investigated, both were Not upheld.

Ad

A magazine ad for a Boeing aeroplane was headed "THE NEW 747-8 INTERCONTINENTAL". A subheading stated, "YOUR 747-8 INTERCONTINENTAL ADVANTAGE". Further text stated, "26% cost advantage: The 747-8 has a 26% trip cost advantage over the A380. That means airlines can operate the 747-8 on a 6,000-nmi route plus six 737-800's on 400-nmi routes for the cost of operating one A380 on a 6,000-nmi route. 8% more efficient: with the new wing and new engines, the new 747-8 is 8% more fuel efficient per seat as compared to the A380 and emits 45,000 fewer tonnes of CO2 per year, which is equal to taking 9,000 cars off the road".

Issue

Airbus SAS challenged whether the following claims were misleading and could be substantiated:

1. "26% cost advantage. The 747-8 has a 26% trip cost advantage over the A380. That means airlines can operate the 747-8 on a 6,000-nmi route plus six 737-800s on 400-nmi routes for the cost of operating one A380 on a 6,000-nmi route"; and

2. "8% more efficient. With a new wing and new engines, the new 747-8 is 8% more fuel efficient per seat as compared to the A380 and emits 45,000 fewer tonnes of CO2 per year, which is equal to taking 9,000 cars off the road".

CAP Code (Edition 12)

Response

The Boeing Company (Boeing) said the ad was published in a specialised trade publication, Flight International, targeted at executive and technical experts in the aviation industry. They said the ad was the result of extensive technical analysis and presented three material, verifiable and representative advantages of Boeing's 747-8 over the Airbus A380. Boeing did not believe that the ad was likely to mislead readers, particularly the sophisticated technical experts that read Flight International. The ad advertised an extraordinarily complex machine that had a list price exceeding 350 million USD and was targeted to commercial airlines and technical experts in the aviation industry. Furthermore, any aeroplane purchase would be preceded by the distribution of extensive technical information to the purchasing team at the relevant airline.

Boeing said the ad's audience was a subset of the industry specialists mentioned above i.e. those who work for a company with a potential interest in buying a new commercial aeroplane with a capacity exceeding 400 passengers. There were fewer than 50 airlines worldwide that operated or had the capacity to operate commercial aircraft this large. Airlines in this market had only two options: Boeing's 747-8 and Airbus's A380. Boeing had pre-existing relationships with nearly every airline or entity that flew large commercial aircraft and had met with representatives of those airlines and entities to conduct detailed briefings regarding the performance and cost advantages of the 747-8. They believed that whether the ad was seen by a new reader, or merely reinforced a prior presentation by Boeing, their ultimate goal was the same: to convince airlines purchasing large commercial aircraft to choose the 747-8.

Boeing felt that to understand the impact of the ad it was necessary to understand the purchasing process for these aircraft. Well before negotiating purchase details, airlines typically spent years evaluating and forecasting their business needs. In discussions with manufacturers, airlines typically provided detailed assumptions about cabin configuration and potential routes for the aeroplane, which manufacturers used to calculate and return projected performance data. Technical teams from both the airlines and manufacturers worked on this analysis, portions of which may make their way into an eventual purchase contract in the form of performance guarantees.

Thus the ad highlighted, in summary fashion, only a few relevant performance characteristics, which should be interpreted in the context of the vast amount of technical and supporting documentation provided to airline purchasers.

1. Boeing said the A380 was larger and heavier than the 747-8, which meant higher costs, especially for fuel and maintenance. They said the 747-8 was a newer plane with a more advanced wing design and more efficient engines. Boeing used a methodology called 'Cash Airplane Related Operating Cost' (CAROC) to compare the cost of each aeroplane flying the 6,000-nmi route referred to in the ad. They submitted a table showing the cost of the trip broken into component parts. The difference between the total trip costs, 62 800 USD, was 26.36% of the 747-8's CAROC of 238 200 USD. They said the CAROC figures were produced by their long-standing and well-established competitive evaluation process. They also submitted an explanation of each stage of the CAROC process, detailing how the figures were arrived at.

Firstly, Boeing defined technical parameters of comparison aeroplanes. Due to proprietary information and aeroplane performance data being highly confidential, they worked on modelling and assumptions. They had an established process for doing this and had presented that comparison to nearly every airline and entity that might be interested in either the A380 or the 747-8.

Next, Boeing ensured consistent configuration; because aeroplanes were highly customised to fit the needs of the customer, a fair comparison had to be based on consistent configurations. To this end they used an established process called the 'Integrated Airplane Configuration' (IAC) rules. They added that whilst they began with this approach, airlines would provide the values they would use if they purchased the aircraft and Boeing would then rerun the comparative analysis with the new information.

The third step was defining the mission profile. Boeing used a computing tool to chart the 6,000-nmi route referred to in the ad. As with the above, they began with this generic mission profile, but would often also analyse specific profiles provided by prospective customers.

They then calculated the trip cost. They submitted a chart showing how this was achieved. They added that for years CAROC has been the aviation industry's accepted standard for comparing operating costs of aeroplanes and was often referred to simply as 'cost'. Boeing used CAROC because it was accepted by the industry and experts reading the ad would have understood the metric used. Nevertheless, they said CAROC likely understated the true trip cost advantage of the 747-8 because it did not take into account ownership costs such as the A380's higher purchase price, and financing and hull insurance, which were typically higher for a more expensive aeroplane.

Boeing submitted an overview of their CAROC comparisons of the 747-8 and the A380, which included fuel costs, maintenance costs, landing fees, navigation fee, aeroplane station and ground power cost, flight crew cost and cabin crew cost. The CAROC for the 737-800's shorter 400-nmi flight, used in the ad as a real world illustration of the 747-8's cost advantage, was calculated using the same methodology and a summary of this was also provided.

2. Boeing said fuel efficiency was typically measured by weight, and a gallon of jet fuel weighed 6.7 pounds. Using the fuel consumption figures referred to in their overview of CAROC, the 6,000-nmi route referred to in the ad would require the 747-8 to burn 267 029 pounds of fuel, compared to 345 144 for the A380. These figures were divided by the number of seats on a standard layout of the two aircraft; 467 and 555 respectively. The difference in the fuel burn, in pounds per seat, was 8.05%, rounded down to 8% for the ad.

Boeing said burning one pound of jet fuel created 3.155 pounds of carbon dioxide (CO2). Applying this to the above calculations meant that the 747-8 produced 842 477 pounds of CO2 and the A380 produced 1,088,929 pounds of CO2. The difference was equal to 246,452 fewer pounds of CO2, or 111.77 tonnes, produced by the 747-8. Boeing multiplied this per trip saving by 400, the number of missions flown per year by a typical airline operator, which provided an annual saving of 44 708 tonnes of CO2; rounded to 45,000 for the ad.

The annual CO2 savings figure stated in the ad was quantified by the claim, "equal to taking 9,000 cars off the road". This was based on the United States' Environmental Protection Agency's figure that, US passenger-vehicles annually emit an average of 5.1 tonnes of CO2 per vehicle. Dividing the annual CO2 saving of 44,708 tonnes by 5.1 tonnes per vehicle shows that the saving is equivalent to taking 8,766 cars off the road; rounded to 9,000 for the ad.

Assessment

1. Not upheld

The ASA noted that the CAROC calculations used by Boeing were based on some assumptions and modelling. Because the claim related to "trip cost advantage", we considered it appropriate that the comparison focused solely on the costs associated with an individual trip and did not include other costs, such as purchase price or associated insurance costs.

We considered that the intended audience of the ad, those involved in the decision-making process to purchase large aircraft, would have a high-level understanding in this area and would be familiar with the method of comparison used by Boeing. We also noted that the target audience may already have had a presentation, or further information, from Boeing regarding the aeroplane. We also considered they were unlikely to make a purchase decision without seeking a great deal more information on the potential advantages of the aeroplane, based on their own specific requirements.

In this context we considered that the calculations and supporting information submitted by Boeing supported the claims, "The 747-8 has a 26% trip cost advantage over the A380. That means airlines can operate the 747-8 on a 6,000-nmi route plus six 737-800s on 400-nmi routes for the cost of operating one A380 on a 6,000-nmi route".

Because the intended audience would understand that the comparisons were based on modelling and assumptions, would be familiar with the method of comparison used and would seek more information before making a decision to purchase, we concluded that the ad was not likely to mislead.

On this point we investigated the ad under CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising), 3.7 (Substantiation), 3.11 (Exaggeration), 3.33 and 3.35 (Comparisons with identifiable competitors) but did not find it in breach.

2. Not upheld

Airbus objected to the efficiency claim because they understood that the "fuel burn per seat" figure was based on attributing 555 seats to the A380 and 467 seats to the 747-8. Airbus said the 'seat pitch' (the spacing between adjacent seat rows) of the 747-8, for First Class and Business Class, was 61 inches (155 cm) and 39 inches (99 cm) respectively whilst the published standard layout of the A380 had an 82-inch (208 cm) seat pitch for First Class and 61 inches for Business Class. They believed that the comparison was unfair because if the 747-8 was brought up to the same comfort standards as the A380, in terms of seat pitch, it would be arranged with only 405 seats and this would significantly increase its fuel burn per seat figure.

We noted these objections, however, we also considered, as above, the familiarity that the ad's targeted audience would have with these sorts of claims. We considered that the audience of the ad would understand that modelling and assumptions would have been made and that the products' highly-customisable nature meant that any efficiency claims based on fuel burn per seat, would be subject to considerable variability depending on a customer's exact specifications.

Furthermore, we noted that the claim had not referred to comfort standards but simply to "fuel burn per seat" therefore, regardless of any difference in comfort standards, we considered it was reasonable to make the comparison based on standard seating layouts of the aircraft. We noted the calculations submitted by Boeing supported the 8% efficiency claim. However, we also noted that the calculations arrived at a figure of 8,766 for cars taken off the road as a result of the CO2 savings and that this was rounded up to 9,000 for the ad. Although we considered that the ad had overstated the CO2 saving in this regard, we did not consider that the difference was likely to change the economic behaviour of the ad's target audience.

We also considered that any prospective consumers would seek more information before making a purchase decision. For these reasons we concluded that the ad was unlikely to mislead.

On this point we investigated the ad under CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising), 3.7 (Substantiation), 3.11 (Exaggeration), 3.33 and 3.35 (Comparisons with identifiable competitors) but did not find it in breach.

Action

No further action necessary.

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