The Airbus A380 Is Not Exactly Popular - Would An Update Help Or Is There Just One Buyer?

As Airbus pushes ahead with its study of an updated A380 neo, airline experts remain divided on the concept.

Since the A380 began flying in 2007, Airbus has delivered just 153 of them, including 58 to Emirates, which has ordered 140 aircraft. Now Emirates CEO Tim Clark says he would be interested in an A380neo – and that he might order 60 to 70 of them.

When Emirates talks, Airbus listens.

The A380, the world’s largest commercial aircraft, which typically provides seating for about 500 passengers, has long been controversial, with broad disagreement over whether Airbus should ever have attempted such a project.

So it is not surprising that the possibility of an A380neo has been met with varying reactions — some less supportive than Clark’s.

A recent report by the consulting firm AirInsight is entitled “The A380neo Business Case” and concludes that “Airbus should offer an A380neo,” which would “provide an effective competitor” to the Boeing BA -0.4% 777-9, slated to carry more than 400 passengers and to be introduced in 2020.

Nevertheless, a recent Aviation Week viewpoint column by aviation consultant George Hamlin concludes that “a re-engined and updated A380 makes little sense, and from an economic standpoint, probably no sense at all.”

Hamlin says Emirates could well become the only willing customer ever, although European/Airbus politics would pressure European carriers to buy the aircraft.

“The European carriers, in particular AirFrance-KLM and Lufthansa, are probably close to apoplectic at the possibility of an A380neo,”  he wrote.

Hamlin notes that development costs are estimated at $2.5 billion. “Yes, Emirates might take as many as 100 more aircraft, which is a lot of revenue (at least at list price), but the economics do not work,” he said. “Even for a very large aircraft, a development program for only 100 units probably will not be a winner.”

By contrast, the AirInsight report was supportive not only of the A380neo but also of the A380 itself.

“The A380 may have arrived a decade before its time, but Airbus had to move when it did to ensure Boeing’s very large aircraft monopoly could be broken,” the firm said.  “Airbus has achieved that goal”

The report notes that Boeing’s 747 has had a 45-year lifespan and that market acceptance for the  777-9 has been good — indicating continuing support for very large aircraft.

Moreover, the practice of updating aircraft has been good for Airbus. “The ‘neo process’ has been a success,” the AirInsight report said. “Airbus started this process with the A320neo,” it said. And reeaction from airlines “has been outstanding and likely above even their best case scenario.

“The ‘neo effect’ saw Boeing nearly lose an order from American Airlines to update their single aisle fleet” in 2011, the report said. “The selection of Airbus for half of the order was a shock to Boeing, which had to offer an undefined solution that became the 737MAX. It could be argued that this single event was the most important of the ‘neo effect’ events to date.”

While no U.S. carrier has ever ordered an A380, Addison Schonland, a partner in AirInsight, said that could change in a domestic industry now consolidated to just three global carriers. The A380, the report says, “has the lowest seat mile costs among existing competitive aircraft;” also, London’s Heathrow Airport, the world’s third busiest with 73 million passengers in 2014, has just two runways.

“Airlines need to optimize the slots they have,” Schonland said. “Other than Dubai, Heathrow gets more A380s than any other airport daily. Moreover, looking at Heathrow-JFK, we see the American Airlines/British Airways alliance has almost hourly flights. Delta/Virgin has nine daily. Both airline groups would save money by deploying very large aircraft, like the A380 or 747-8 or in the future the 777-9 and reducing the frequencies.

“Although the US carriers are not looking at the A380 now, they may do so in future,” he said.

Font: Forbes