I am one of those people who may be few in number and I haven’t yet even flown on one, (though I have friends who have who loved it and hated it in equal measure), that love the A380. Personally I believe it to be an engineering masterclass that will be around for 30 years though we may never see anything like it again. I actually think it has its own inelegant but refined look. Whales are not exceptionally pretty, but they are exceptionally efficient, smart and good at what they do.
The A380 was conceived some might say in a moment of erroneous if not poor judgement. Airbus assumed the market would grow by 5% per year with up to 30% increase – 4 billion annual passengers by 2030 – yes 4 in 7 of the population in equivalence would fly annually. It was a global figure accepted across the industry.
Boeing decided that a mid range new technology jet of mid size was far more essential. Point to point not hub to hub and frequency would be the model. Indeed that is how the US domestic market has gravitated and developed. There is no doubt it has also been the predominant model globally. They went for the 787.
Airbus decided that the answer was bigger aircraft flying long distance and that the flying public would be there to fill the seats. They staked $25 billion on the development of the A3XX as it started out.
They weren’t alone. Boeing wasn’t going to be completely outdone and spent billions itself on developing the total commercial failure that is the 748i and the barely successful 748F. Both are great aircraft but their markets are few and buyers fewer.
By the time the delayed A380 flew a year late, the world was a very different place. The second Gulf War and 9-11 had laid waste the aviation industry landscape and barely a year into operations the financial collapse of all financial collapses crashed every market to the ground and sent airlines into a tailspin coupled to ballooning fuel price rises and steep taxation in hard pressed economies.
Airbus managed to gain a good start on order banks, but even then, if you take one customer out of the equation, they would barely have sold 150 aircraft. Indeed even with Emirates the break even point has only been reached at the end of 2014. Profits will be illusive as to sell what they have to sell and deliver 30 a year Airbus can sell it basically at cost, some $300 million. The profitable asking price is really $400 million+. As an example of what that sort of money can buy, a 50,000 ton Liquid Gas Tanker costs around $200 million.
Aviation analysts love to point out things like the fact that nobody has ordered an A380 in a long while. Mark Lapidus of Amadeo leasing has ordered 20 but as of yet hasn’t placed one of them with a customer though he insists he will. His oft stated belief is that UNITED or Delta are ideal customers, if they could see the benefits – but they don’t. The CEO of Delta made it perfectly clear that the A380 was in effect an aviation abomination, “and only something a state owned airline can afford” – (a poorly educated comment if ever there was one as he clearly targeted the Middle East Carriers, plenty are independent operators), something Virgin Atlantic who have 6 ordered they’ve repeatedly delayed cannot have failed to notice. Delta owns 49% of the airline and it has to decide to proceed or not with the A380’s once and for all by October 2014. I believe Virgin should go for it, there are plenty of places they could use them from slot constrained Heathrow they could always lease them from Amadeo!
Lufthansa trimmed its number of A380’s ordered – but it also slashed the total of 748’s it ordered from 25 to 19 then made that worse by stating they would be withdrawn within ten years. Air France has delayed its final pair of A380’s, Skymarks of Japan had their order cancelled by Airbus who clearly didn’t want to face the dire prospect of an airline being driven to bankruptcy by buying aircraft it could no longer afford to pay for (indeed should never have ordered in hindsight).
Turkish Airlines on the other hand is looking at both the 748 and the A380 – the logic has to be the A380 as the 748 just doesn’t have the capacity to make it viable over the 777-300ER’s and the 777X.
So for most airlines, from BA with its 6 delivered and 6 on order, Lufthansa with its 12 operational, Air France with 10, Korean Air with 10 (and 10 748’s on order, the only other ‘big’ 748i customer), plus Singapore, Qantas, Malaysia, Asiana, Thai, Qatar, Etihad. What does it do for them?
It takes a good number of people and it puts them in slot constricted spaces profitably and in otherwise impossible to expand airports. From Heathrow to Frankfurt, Paris CDG, Dallas, Washington, San Francisco, JFK, Hong Kong, etc etc etc. And it works. A380 has a “want to fly on it” factor that hasn’t been since since the early days of the 747. If there is a choice, people will take the A380. Airlines like Lufthansa deliberately mark flights on their sales pages as being “A380”.
Yet leasing companies avoid it like the plague. Amadeo may prove why, but I don’t think so. Mark Lapidus has an amazing track record. If anyone can sell them he can.
Am I surprised that none of the big US majors have not bothered with the A380? Not in the least. Most don’t have or ever operated the 744, never mind the 748i which has no US customers either. What 744’s there are are being phased out of Delta and United’s fleets slowly and they are a tiny handful in the vast numbers of aircraft the airlines operate and only used for International routes to slot constrained airports in peak season (sounds familiar?). The US market is about convenience. Plenty of smaller flights but frequently. The days of huge domestic aircraft are gone.
Yet the A380 story would not be complete without the mention of its one unstinting, vociferously loyal and unswerving customer. The customer that has spent billions on aircraft, billions on terminals solely for the A380 and will be spending billions more.Emirates has made the A380 the centre of its business plan. It starts by sending in 777-200’s or A330’s, when the market matures it moves up to a 777-300 then a year or so after that it moves up to A380. It has ordered 150 of them – nearly 50% of all orders. The latest orders are intended to replace the earliest aircraft that by then will be 15-20 years old.
Sir Tim Clarke, Emirates CEO whose mother was an economist and worked his way up from the ground since 1986 to the top of the airline, is convinced the A380 is the answer. It works for Emirates and he has been quoted as telling the industry that he always tells Airbus never to loose faith, the A380 will be seen right, just let the global economy pick itself off the floor and those orders will come.
He also wanted Airbus to develop a 900 version, stretched by another 5 meters. Ironically the wing was designed to cope with a 900 and 1000 version and it was oft touted as a freighter. Somehow I don’t think Airbus will go there. It will however need to think about some midlife refinements – Emirates is adamant it wants more aircraft and it needs better fuel economy and other upgrades in the future.
The A380 has had a few technical problems too. The near catastrophic Qantas engine failure that was effectively poor QC at Rolls Royce. The wing root cracks that required massive complex repairs to existing aircraft, subframe modifications to in-production aircraft and re-design of new parts, cost a great deal of money. Lately leaky doors, water escapes and noisy cabins, never mind Qatar’s refusal to take delivery in June-July 2014 until the cabin fit problems were resolved all make for bad press. Against the 787-8 however, it seems pretty minor.
Is the A380 a success commercially? Not yet, but it will at least break even. Will it be deemed a long term success and a farsighted choice with a success story as yet untold? I’d say the odds on that are a fraction better than 50-50, but only just. It will not however dim my enthusiasm for it. It has a place, not the place it wanted perhaps, but its value is seen and recognised by those who have it. The key is getting others who don’t have it to see the light.