Orders have been slow for Airbus A380

Emirates Airline Airbus A380

Emirates Airline Airbus A380 (image: Emirates)

To get a sense of the Airbus A380’s size and ambition, walk up the grand staircase of an Emirates version of the aircraft, go past the showers and the first-class suites and then pass by endless rows in business class to reach the bar at the back of the upper deck. This sleek semicircle, alluringly under lit and fully stocked with pricey spirits like Grey Goose vodka, is undoubtedly one of the defining features of this aircraft, which can hold more than 500 passengers. The plane dwarfs every commercial jet in the skies.

Since it started flying commercially seven years ago, the A380 has caught the imagination of travelers. Its two full-length decks total 6,000 square feet, 50 per cent more than the original jumbo jet, the Boeing 747. Its wingspan barely fits inside a football field. Its four engines take this 560-tonne airplane to a cruising altitude of 39,000 feet in less than 15 minutes, a surprisingly smooth ascent for such a bulky plane. Passengers love it because it’s quiet and more reminiscent of a cruise ship than an airplane.

The A380 was also Airbus’ answer to a problematic trend: More and more passengers meant more flights and increasingly congested tarmacs. Airbus figured that the future of air travel belonged to big planes flying between major hubs. “More than simply a big airplane,” one industry analyst wrote when the first A380 was delivered to Singapore Airlines in 2007, “the newest industry flagship will change forever the way the industry operates”.

The prediction hasn’t exactly come true.

Airbus has struggled to sell the planes. Orders have been slow, and not a single buyer has been found in the United States, South America, Africa or India. Only one airline in China has ordered it, and its only customer in Japan has cancelled. Even existing customers are paring down orders.

Disappointing tally

The A380 has a list price of $400 million (Dh1.5 billion), but the pressure has forced Airbus to cut prices as much as 50 per cent, according to industry analysts. So far, Airbus has received 318 orders and delivered 138 planes to just 11 airlines — a disappointing tally given forecasts that the plane would be a flagship aircraft for carriers worldwide.

Only one airline — Emirates — has made the A380 a central element of its global strategy, ordering 140 as it built a major hub in Dubai. But Emirates is unique. No one else has bet on the plane with quite the same confidence.

The A380 hasn’t done so well for a number of reasons, some merely cyclical. The plane was introduced amid a deep downturn in the airline business. Airline executives were wary of expanding their fleets aggressively, especially for a costly, four-engine fuel hog.

But critics like Richard Aboulafia, an aerospace analyst at the Teal Group, an aviation consulting firm in Fairfax, Virginia, say the main problem is more fundamental: Airbus made the wrong prediction about travel preferences. People would rather take direct flights on smaller airplanes, he said, than get on big airplanes — no matter their feats of engineering — that make connections through huge hubs.

“It’s a commercial disaster,” Aboulafia says. “Every conceivably bad idea that anyone’s ever had about the aviation industry is embodied in this aeroplane.”

Airbus spent roughly $25 billion to develop the aircraft. The plane was delayed for years because of manufacturing problems while Airbus struggled to keep the plane’s weight down and coordinate its complex design among dozens of suppliers across Europe. In 2012, Airbus discovered small cracks in supporting ribs inside the A380’s wings, an embarrassing and costly design error that the manufacturer is correcting.

While the A380 programe has been a boon for the European aerospace industry, Airbus is unlikely to recover its research and development costs. The best it can now expect is to break even on production costs, according to analysts, provided that it can keep orders going.

Steven F. Udvar-Házy, an industry veteran who is chief executive of the Air Lease Corp, which leases aircraft, calls the lack of interest in the planes “a very unusual situation,” especially among US airlines. “I’ve never seen this before in a big program,” he says.

Competing conclusions

A little more than a decade ago, the two dominant airplane-makers, Boeing and Airbus, looked at where their businesses were headed and saw similar facts: air traffic doubling every 15 years, estimates that the number of travelers would hit 4 billion by 2030 — and came to radically different conclusions about what those numbers meant for their future.

More… http://www.nytimes.com/2014/08/10/business/oversize-expectations-for-the-airbus-a380.html

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