By Charles Tschaggeny, Tschaggeny Design
In 1984, Lockheed ceased production of the L1011 TriStar airplane and exited the world of commercial aircraft for good. For Lockheed, its latest passenger jet had been heralded as a technological marvel but was, in fact, a business disaster.
The TriStar is a fascinating story that clearly illustrates fundamental concepts about product development and the importance of focused innovation. It reveals how Lockheed lost sight of the principal objectives of an industry-defining tender and how leaders allowed their own goals to cloud the basic needs of their customer. Lockheed focused on impressing the entire aircraft industry with their technical wonder, but in doing so, its leaders failed to consider the market’s direction — ironically, the problem the tender was designed to address.
Until the early 1960s, Lockheed had been one of the world’s prominent passenger plane manufacturers. Aircraft such as the Constellation and the L-188 were well-liked by passengers and airlines. Technically, they were cutting-edge and led the aircraft industry into new directions. However, while Lockheed was seen to be successful in commercial aviation, it was the other side of the business — military projects — which provided its most reliable source of income.
The late 1950s witnessed Lockheed release a succession of pioneering military aircraft, including the C-130 and the Galaxy. Add to these secret projects such as the iconic Blackbird SR-71, the U2 spy plane, and the Starfighter, and it’s easy to understand why the military facet of Lockheed’s business demanded most of the company’s time, resources, and finances. So much so that, in fact, in 1961, Lockheed decided to withdraw from the commercial passenger market. This decision, however, proved to be shortsighted.
Throughout the 1960s, the landscape of the commercial aviation industry had transformed entirely, and towards the end of the decade, enormous opportunities for aircraft manufacturers started to appear. The ongoing space-race and the advent of the Jet Age in the late 1950s saw an emphasis on speed and technology. Initially, this was a glamourous period for aviation, and traveling by jet was the privilege of the few, but as costs began to lower, air travel became more mainstream. By the late 1960s, the whole industry had transformed. Airlines now prioritized efficiency and cost over glamour. They had started to move more people on shorter routes.
The industry now desired an aircraft that could carry more passengers even further, and with less fuel. Airplane manufacturers were eager to meet this demand and vied to develop and supply such aircraft. Obligingly, Lockheed threw their hat back in the ring and announced a return to the commercial aviation business.
It was American Airlines (AA) in the mid-60s that had foreseen the future need for a wide-body, medium-to-long-range airplane that could transport large numbers of passengers. This would have to be an aircraft capable of flying internationally but still use AA’s existing airport infrastructure. AA approached Boeing, Douglas, and Lockheed about designing a plane to meet their requirements.
Boeing was immediately out of the picture. AA needed an aircraft that could carry more passengers than the 737, but it needed to be smaller and more fuel-efficient than the 747. Boeing didn’t have a solution for this, and with resources focused on developing future variants of the 737 and 747, they turned down the opportunity.
Douglas and Lockheed accepted the tender, and in doing so, the DC-10 and the TriStar projects were born.
The DC-10 and the TriStar were configured similarly — not a surprise since they were responses to the same tender. They were both wide-body aircraft that could hold more passengers than the 737 but fewer than the 747.
Interestingly, both companies submitted a three-engine design. AA would have ideally preferred a twin-engine solution but understood the limitations of current-day jet-engines, in addition to the ETOPS regulations, which at that time, only permitted twin-engine aircraft to fly no further than 60 minutes from the nearest available airfield. These regulations made a twin-engine transatlantic route uneconomical and practically impossible. In addition, the three-engine design achieved a higher take-off performance, which allowed the plane to use existing runways.
So, while the two aircraft concepts appeared similar at first sight, the truth was the opposite. The development paths of both manufacturers could not have been more different from one another.
Douglas was very constrained by budget and was highly cost-sensitive, and accordingly, its design approach was very conservative. The company simply leveraged the design of its existing DC-8 to save time and cost. In essence, the new DC-10, in many ways, was merely enlarged and modernized DC-8 technology.
Alternatively, Lockheed believed its competitive advantage lay in using the most advanced technology of the day. For many, the result was magnificent. The TriStar was undoubtedly the most advanced commercial airplane of its day. The seemingly endless list of advanced technology the TriStar employed is staggering. Innovations that would set the industry’s standard for many decades to come. Some cutting-edge technologies used on the TriStar such as autopilot, direct lift control, and the actual manufacturing processes were transformative. The aircraft was powered by three technically brilliant jet engines, developed from scratch by Rolls-Royce to Lockheed’s lofty requirements.
Along with the advanced technology, the TriStar was a comfortable place for passengers, with its wide seats and large, tranquil open cabin. In addition, it featured new amenities such as an entertainment system, a portable water system, and even lounges.
However, developing these advanced technologies was highly complicated and time-consuming, significantly delaying the entire project. In particular, the development of the RB211 engines caused Rolls-Royce such severe financial problems that it resulted in the re-structure and financing of the whole company. Eventually, after Rolls-Royce had resolved these monumental issues, the entire TriStar project was certified 18 months behind schedule.
By this time, the DC-10 had already commenced service. Development delays had stalled TriStar sales for almost two years, and unsurprisingly AA could wait no longer and went with the DC-10.
That wasn’t the end of the TriStar. Although dogged with issues in the development and first production schedules, once finally launched, it went on to gain an excellent reputation for its reliability, the economy of operation, and low noise emissions and, in time, became a favorite for passengers.
However, it was expensive, and ultimately Lockheed struggled to sell the TriStar. In 1984, the company stopped production after only selling 249 planes; 500 had been needed to break even. The TriStar program had almost bankrupted Lockheed and caused it to again exit the commercial aircraft business and focus solely on military aircraft.
An alternative perspective
The TriStar’s development and ultimate demise are fascinating and have been retold many times since. It’s a tale that can teach different things and act as a warning to be cautious in relationships with suppliers. Many others highlight the innovative advantage of taking the more straightforward route to the win. Most would agree there are undoubtedly aspects of truth in all of these and, indeed, lessons to be learned.
First is a typical view, and a common mistake in most industries — that there can only ever be one winner. The thought, in this case, is that the airline industry could not support two planes competing for the same market. The general conclusion is that the DC-10 killed off the TriStar. The aircraft designed to meet the same tender simply beat Lockheed to the prize. One company beat another to win the tender.
However, there is a problem here: all these lessons stem draw their conclusions based on the same question. How did the DC-10 win the tender and kill off the TriStar? Is this even the right question? Possibly, it only represents a short-term view and doesn’t examine the broader picture.
Once production had begun, the life stories of the DC-10 and the TriStar were remarkably similar. Both aircraft were produced until the mid-80s. The cheaper DC-10 sold 386 units, while the technically superior and more expensive Tristar sold 250. There was no outright winner when you compare it to other successful aircraft. In contrast, the Boeing 747 and 737 have been in production for more than 50 years and have sold 1,600 and 11,000 units, respectively. That’s winning.
Taking this into account, we can flip the perspective and ask a far more insightful question. What led to the failure of both the Tristar and the DC-10?
For the answer, we need not limit ourselves to the U.S. but look further afield to Europe. An innovative plane from a new manufacturer, Airbus, entered the market after these two planes and eventually killed them both off. This plane was the twin-engine A300.
Airbus was either lucky or very calculated, depending on whom you talk to. The company understood that the outdated ETOPS regulations were created for a previous generation of aircraft and predicted that the reliability and performance of modern jet engines had to be recognized and the regulations updated accordingly. It gambled that ever-improving jet-engine technology, together with an exemplary performance record for the A300 for non-transatlantic flights, would lead to ETOPS certification. Airbus was right.
In 1977, the Airbus A300 became the first twin-engine aircraft to be ETOPS-compliant and certified for transatlantic flights. And that was it really for both TriStar and the DC-10. With three planes going after the same market segment, airlines went with the less expensive plane to operate and purchase. The TriStar was too expensive and the DC-10 had safety issues. Airbus may have been fortunate or remarkably smart to have the regulations to go their way. Still, the A300 was an innovative and compelling aircraft that could not be ignored — even by the American-centric U.S. airlines of the time.
What can we learn from TriStar?
When we examine the troubled origins of TriStar and its development, there are three high-level takeaways that we can learn concerning product development and the innovation process.
1. Focus – don’t get distracted. At the time of AA’s tender, it and the other airlines were rapidly expanding. They needed an economical people-mover available in a reasonably short time frame. Literally, they required the development of an off-the-shelf flying bus.
Lockheed took it on itself to undertake a research and development project and delivered a technological marvel that was neither cheaper (purchase price or operational price) nor available quicker than the competition. Specifically, AA had asked manufacturers to do a development project and quickly deliver a solution to fit their immediate requirements. It wasn’t looking for a R&D project.
This is an important distinction. Since we commonly refer to R&D as the same activity, people tend to believe they are the same activity, but of course, they’re not — the output of research is knowledge. The output of development is a product. Research feeds into development, but research does not result in a product unless the development cycle is complete.
Lockheed simply viewed AA’s tender as a way to re-enter the commercial aircraft market, and they intended to make a splash with the TriStar. Lockheed’s focus was not to provide an aircraft that would perform its job well. The company wanted to showcase its technical capabilities, and the best way to do this was to add every possible new technology to the plane. If that technology didn’t yet exist, Lockheed would invent it. And it did so at great cost, resulting in a TriStar only slightly cheaper than the much larger 747 and significantly more expensive than the DC-10.
The problem for Lockheed was that while all this technology packed into the TriStar was truly impressive, it didn’t help the TriStar differentiate itself from the competition. Range, passenger capacity, and fuel efficiency were practically the same as the DC-10.
Technology had added significant costs to the plane and delayed its release. While the aircraft was incredibly advanced, none of this technical brilliance made a substantial difference to an airline’s bottom line. The airline would have accepted and purchased a plane that was initially more expensive if it would have benefited from cheaper operating costs. However, since both aircraft were tri-engine designs, they had nearly identical operating expenses.
Lesson: Be sure to review the exact customer requirements — focus on getting your product to do the required job. Be careful to not get too creative and add features for the sake of features. Focus on the target and don’t look beyond the mark. Remember, research and development are separate steps in the product development process. Don’t get caught up in making unnecessary research and development loops in your product development cycle, creating features that were never requested — and which your customer may not want to pay extra for.
2. Suppliers – you’re dependent on them. Lockheed’s desire to supply cutting-edge technology led them to choose Rolls Royce to develop a completely new motor for the TriStar. The RB211 engine Rolls Royce developed was indeed pioneering, producing more thrust and yet was smaller than other motors of the time. However, the development needed to achieve such advanced innovation was extremely difficult, costly, and time-consuming. So much so, in fact, that the development of this motor forced Rolls Royce into receivership.
Already, it was too late for Lockheed to change motors or suppliers because the TriStar had been practically designed around these motors, and Lockheed was too advanced in development to contemplate a redesign. While Lockheed had faced other lesser problems during development, uncertainly, Rolls-Royce’s financial woes were a substantial factor in the two-year delay in bringing TriStar into production.
If Rolls-Royce couldn’t finish the development of the engine, then Lockheed wouldn’t have a plane. This implication for Lockheed was gigantic and, realistically, would have found itself in a similar financial position to Rolls-Royce. Fortunately, both the U.S. and British governments were able to step in provide the security, guarantees, and, in the case of Rolls-Royce, the funding to keep the project rolling.
Highlighting Rolls-Royce’s developmental fails and misdirected focus, it was then discovered that the prototype engines were not as reliable as desired. It was so focused on meeting performance requirements and finishing the design that Rolls-Royce had sacrificed reliability — which, in the aircraft industry, is paramount.
Furthermore, the ongoing issues had delayed the development of vital, more powerful engine variants required for heavy cargo transportation. Exasperating AA executives further, these were also necessary for some of their existing airports with stringent accessibility and take-off criteria. By this time, the DC-10, itself a year later than expected, had already been in service for seven months and given Douglas a considerable market advantage.
Lesson: You go to suppliers for their expertise and capabilities, but their problems can quickly become your problems and affect your business. Even the best suppliers can and will have issues.
3. Innovation — keeping ahead of the curve. At the same time, AA identified the need for a wide-body, medium-to-long-range aircraft. On the other side of the Atlantic, Air France had arrived at the same conclusion. Air France’s tender led to the founding of a new airplane manufacturer, Airbus, and its twin-engine A300. The concept would have the range and capacity of the TriStar and DC-10, but with only two engines, consuming 20-30% less fuel.
The two American airplane manufacturers probably didn’t feel overly threatened by this. The non-ETOPS compliant A300 couldn’t operate the lucrative transatlantic flights with only two engines. And since Boeing had nothing similar in the pipeline, they only focused on each other as the competition. In addition, with the American-centric airlines and airplane manufacturers of the 1960s, the idea that a U.S. airline would buy anything but an American-made aircraft was unthinkable.
But Airbus had a plan; its management and strategists had studied the ETOPS regulations. These regulations had been drawn up to govern aircraft from a different generation. Early jet engines and propeller aircraft from the 1960s didn’t have the reliability, durability, or power to cross the Atlantic confidently; Hence, the regulations limited the range of any two-engine aircraft to within an hour of the nearest airport. They never conceived that a large airliner could maintain a safe altitude with only a single working engine.
Airbus realized that it was only a matter of time before the reliability and performance of jet engines would get to a point where a two-engine passenger plane would force a change to the regulations and achieve ETOPS certification. Airbus also understood that in the short term, it would need to focus on shorter routes that did not need ETOPS. These were the less-lucrative markets that AA was not going after with its tender. Airbus could achieve sales and at the same time prove the airworthiness and reliability of the A300. Air France took delivery of the first A300 in May 1974.
Airbus had shrewdly calculated to intersect the trajectory of the regulations. The company was convinced that the combination of an impeccable safety record and reliable engines over the next few years would bring about a change to regulations by forcing ETOPS to recognize the safety and achievable range of two-engine jet aircraft. It took three years, but in 1977 the company succeeded in this.
Like Lockheed, Airbus viewed technology as the key differentiator. However, Airbus did not incorporate technology for technologies’ sake. It only included technologies that would increase the aircrafts’ safety, operational capacity, and profitability. As a result of this approach, the A300 was reasonably priced, fuel-efficient, and adaptable. Unlike Lockheed, Airbus did not develop a new engine for the A300. It simply used an existing, proven engine.
When the A300 came on the market in 1974, it was a safe, versatile plane that was more efficient than any medium-to-long-range wide-body airplane. Innovative technologies were integral to the high performance and safety standards, making it the first ETOPS-compliant twin-engine aircraft. A safe and reliable aircraft with only two engines was something the airline industry had craved since AA first released their tender. With its ETOPS certification, the A300 could now directly compete against the TriStar and the DC-10 for transatlantic use.
Eastern Airlines, impressed with the A300’s fuel economy and adaptability, became its first U.S. customer, going on to order 34 aircraft in total. This was a double blow for both Lockheed and American aviation. Firstly, Eastern Airlines had previously ordered the TriStar. Now TriStar was losing orders. Secondly, before Eastern Airlines’ order, an American airline purchasing a foreign-made aircraft was unthinkable. Times had changed.
This purchase opened the door for the A300. Increasing amounts of orders from both U.S. and other global airlines heralded the beginning of the end for the TriStar and the DC-10, eventually pushing the tri-engine competition out of the market altogether.
Lesson: Designs are perishable. Sooner or later, the job you are doing will be done better by someone else with a new perspective or approach. Even if these conflict with existing perceptions or taboos, a better methodology will always prevail.
Filed Under: Aerospace + defense, Commentary • expert insight, Design World articles