Over the summer I made the controversial claim that the Airbus A380 is a failure. Let’s just say plenty of people disagreed with me in the comments.
As a passenger I like the plane. I love flying Singapore’s A380 in first class for sure, there’s nothing yet in the skies like the Emirates shower. And the Etihad Residence should top even that.
In August I wrote:
There are no buyers in the U.S., South America, or Africa. They’ve barely penetrated China or Japan.
In 7 years Airbus has delivered only 138 planes to 11 airlines.
Word is the plane is being discounted by 50% off list. While aircraft manufactures don’t really sell for list, that’s still a significant discount and early buyers generally get ‘most favored nation’ status where future discounted sales entail rebates to early buyers who may have paid more.
There’s clear mission-specific purpose. The plane allows British Airways to reduce Los Angeles flights from 3 to 2, saving a slot at Heathrow. But how many places does something like that work? London Heathrow is an archetypical airport for A380 operations. So is Tokyo Narita but neither JAL nor ANA is flying the plane. New York JFK might be, but no US airline has made the move. The only airline whose strategy is centered around the aircraft is Emirates but they’re hardly doing so for clear economic reasons, desperate to find places to send the plane they’re throwing it at cities like Dallas.
Airbus Group NV (AIR) raised the prospect of discontinuing its A380 superjumbo as soon as 2018, the first admission that it may have misjudged the market for the double-decker after failing to find a single airline buyer this year.
They expect to break even on the marginal cost of production (not recouping any of the plane’s $25 billion development costs, and not showing a profit even then) for 2015 – 2017. They do not expect to break even on an operating basis in 2018, and expect to have to offer new engines or discontinue the program.
There were no new airline customers in 2014. They added only a leasing company that hasn’t yet found an airline to operate the planes they’ve ordered.
Japan’s Skymark cancelled 6 planes. Air France wants to cancel its last two orders.
And the excuses begin — it’s the fault of Airbus for its marketing and being too flexible.
Chris Buckley, Airbus’s Executive Vice President, Europe, Asia and Pacific, said the company has been “at fault” in the way it marketed the aircraft, letting carriers customise the interiors in whatever way rather than pushing the high-density credentials of the double-decker.
An engine upgrade, which Emirates wants to see (and Emirates is 40% of the A380 order book), would cost Airbus ~ $2.5 billion. Without new customers for the plane they’re at a crossroads.
I’d love to see more A380s — because it’s a great ride, because many airlines put a fantastic product into the plane, and because it often goes out with so many empty seats it makes awards quite easy. None of which makes it a good move for airlines or the aircraft manufacturer.
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