Even the Best Plans Fail

On November 26, 2003, a British Airways Concorde touched down at London’s Heathrow Airport. It had completed the journey in just under 3 hours. It would be the last commercial flight of a Concorde and marked the end of an almost 30 year run of supersonic travel. Having cut the travel time from seven hours to three, the Concorde quickly became favorite method of travel for the worlds rich and famous. In the end, due to high fuel costs and low demand, the Concorde was scrapped in favor of traditional jets that could carry more passengers, far more efficiently.

While the Concorde was in no doubt a feat of engineering, it was in most respects an ill-fated plan from the start. Foresight and planning would have tipped off company executives that the cost of fuel, and the relatively small passenger load, would make it extremely difficult to make a profit. In short, the economic viability of the plane, was doomed by factors that could have been foreseen from the start.

The initial three-hour flight of the Concorde was perhaps one of the most remarkable feats of engineering to date. Just 40 years prior, passenger aircraft were incapable of making the journey at all. The trip took seven days and was made by boat. In 1939, Jaun Trippe, cut that time down to 22 hours.

As many readers will know, Juan Trippe was the man behind the great Pan American Airways. His airline had come to dominate the Americas with a network extending from Canada to Chile. Throughout the 1930’s Juan Trippe had his eyes on another frontier. Transatlantic travel. In the 1930’s he began collaborating with Boeing on an aircraft that could make this journey possible.

In 1936 crossing the ocean was a far more complex problem than it is today. In fact, modern airplanes can travel about 4 times that distance without stopping to refuel. In 1936, the most sophisticated airplanes had a range of about 1,500 miles. To get more range out of an airplane it needed to carry more fuel. That fuel made the plane bigger and heavier, and required more engines. Which required more fuel. Which made the plane bigger and heavier. Which… you get the picture.

By 1936 Engineers at Boeing had come up with a plane with a maximum range of 3500 miles. In theory, that was just enough distance to make the hop from NYC to London. When the Concorde made that trip, it cruised at 60,000 feet. Above the clouds, and with very predictable conditions. In 1936 there was no such thing as a pressurized cabin. Airliners cruised at around 5,000 feet. At that altitude pilots were forced to deal with storms, winds, and ever-changing conditions that were very hard to predict. With a range of 3500 miles, even the smallest headwind would leave a plane trying to cross the Atlantic short of fuel and ditching in the ocean.

The solution to this problem was quite simple. The plane would need to stop for fuel. The route plan that Pan Am designed included stops in Newfoundland, New Brunswick, and Ireland. With those stops, even in the worst weather, the airplane would have plenty of fuel to safely reach its destination.

Juan Trippe looked over the plans for his transatlantic passenger service and started to work out the numbers. Fuel costs would be high, and the planes themselves would require paying a crew of eleven people to fly, navigate, communicate, and maintain. The ticket price would need to come in at about $13,000 in today’s dollars. But being that it reduced the travel time by 85%, he was confident the worlds wealthy would pay, and his plan may work. If not for one problem.

Big planes need big runways. New York and London had runways like that. But New Brunswick Newfoundland, and Ireland, did not. Large concrete runways are expensive. If they are shared by dozens of airlines operating hundreds of flights a day, it works. But if it is operated by one airline. Operating a flight twice a week. It will never break even. Trippe new this. Actually, he knew that before the project ever started. That’s why he was not working on developing a plane. He was developing a boat. A boat that could fly.

The Boeing B-314 Clipper was quite possibly the most luxurious aircraft ever made. Passengers were treated to seven course meals in the dining room, and had their own berth that converted to a bed for the overnight portion of the journey. It was also utterly astounding to be seen. Even years after its inaugural flight, it was common for crowds to gather and watch it gracefully touch down in the harbors of New York, Southampton (it never actually flew to London), and Foynes. It reigned as the Queen of the skies until 1942, when World War Two put an end to travel.

Trippe’s plan for flying boats was the result of years of planning. To his credit, he and his team did an excellent job of analyzing all of the data they had and formulating a plan for profitable transatlantic flight. Their outside of the box thinking had led to a solution for the cost prohibitive runway problem. However, as happens to all of us, their well laid plan was eventually undone by unforeseen events.

You see, from 1939 to 1945 the Boeing also built bombers. Lots of big, heavy bombers. And many of those bombers were destined to head to Europe to help with the war effort. Just like the clipper, the bombers couldn’t make it to London in one go, they had to stop. So, the US Government built runways in Newfoundland, New Brunswick, and Ireland. Runways big enough for big, heavy aircraft. When the war ended, many of the bombers stayed right where they were. Unfortunately for the clipper, so did the new runways. Those runways spelled the end for the clipper. It never flew again.

Even the best laid, most thoughtful plans can be completely undone by unforeseen circumstances. Your investment portfolio is no different. Careful planning, precise asset allocation, and hours of research, can be undone by say, a global pandemic. An investment in a stock into which you have poured days of analysis can quickly turn south due to unknown corporate fraud. Unforeseen events happen. While by definition it is impossible to plan for them, we can prepare for them, by having emergency funds, cash reserves, and insurance.

There are some circumstances that can be planned for. Executives at British Airways and Airfrance could have modeled the difficult path to profitability Concorde would face. Just like them, you have an opportunity to analyze the data you have in front of you. Good financial planning, careful investment allocation, and attention to detail can help you avoid many of life’s pitfalls. Most importantly, when those unforeseen events happen, as we talked about last week, take a breather, think, and remain calm.