It’s an emotional week in aviation. Airbus’ long-anticipated announcement that it will end production of the A380, made on Valentine’s Day in the week following the 50th anniversary of the 747’s first flight, couldn’t be more poignant.
It seems that big planes are going out of style. But, even after 50 years, Boeing’s 747 program has some life left in it. The much younger A380, by comparison, never really got a chance to prove her worth.
The A380 program was a long shot from the beginning. It was designed based on a prediction of where the aviation market was heading that has largely proven to be correct—that there would be many more passengers flying and that they would fly long routes between the world’s largest hubs. So why hasn’t the A380 enjoyed the same success as the 747?
Lufthansa’s CEO Carsten Sphor suggested today (in a backhanded compliment) that the A380 is a remarkable aircraft with unfavorable economics.
“The Airbus A380 is a fascinating and in many ways outstanding aircraft. A technical innovation and a masterpiece from Europe,” Sphor, a former pilot, said in a statement on Twitter. “However, it has been shown that a profitable use of the A380 is only possible on the extremely popular routes. We are delighted that we can continue to use the Airbus A380. Our customers and crews love the aircraft.”
Lufthansa is also delighted to still fly the 747-8.
A380 loses, A330 and A350 gains
Though it was Emirates’ decision to ramp down on A380 orders that ultimately marked the end of the program, the airline was gracious in its disappointment, signing an order for 40 A330-900 aircraft and 30 A350-900 in a deal, valued at $21.4 billion at list prices. These will be delivered starting in 2021 for the A330s and 2024 for the A350s. Emirates also agreed to take delivery of 14 more A380s through 2021, which will help Airbus with the process of ramping down its operations. With these last 14 aircraft, Emirates will have ordered 123 A380 aircraft and remains the aircraft’s most ardent supporter.
“While we are disappointed to have to give up our order, and sad that the programme could not be sustained, we accept that this is the reality of the situation,” said Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group. “For us, the A380 is a wonderful aircraft loved by our customers and our crew. … The A380 will remain a pillar of our fleet well into the 2030s.”
Out of Time
Airbus CEO Tom Enders expressed regrets over the timing of the A380 program, saying, “There has been speculation that we were 10 years too early; I think it is clear that we were 10 years too late.”
But it was closer to four decades too late, or perhaps three decades too soon. There was not enough demand for an aircraft that size by the time the A380 rolled out in 2005, as proven by the aircraft’s inability to attract sizeable orders in its brief lifetime. The 747 has lasted five decades and still maintains a sizable share of the very large aircraft market with over 1,500 units built since 1969, more than 500 still flying, and more orders left on the books when you count the freighter version (and you should).
The Airbus A380 netted 313 units sold as of January of this year and had delivered 234. Worse, ten-year-old aircraft leaving service have found no after-market demand and been scrapped for spares.
The end of the jumbo era
The Airbus A380 and Boeing 747 share a common drawback: their size. Smaller aircraft are more appealing to airlines for their operational efficiencies.
But the 747 is still leaner than the A380, and offers more flexible operations with more airports around the world designed to support the aircraft. The 747 was designed to outlast its usefulness for passenger services, from the beginning. It was always imagined as a freighter and has ample room to carry cargo in the hold, even on the passenger version.
For airlines, this is an important consideration. When passenger yields are down on a route, cargo can help make up the difference. The A380 was designed to carry more passengers but it lacks that freight capacity, with most of the space available taken up by passenger luggage.
Airbus had pitched the A380 as an aircraft ideally sized for the future.
“With more seats than any other aircraft, the A380 offers solutions to overcrowding; needing fewer journeys to carry 60% more passengers, making it the perfect solution to airport congestion, fleet plan optimization and traffic growth,” Airbus states on its A380 product page.
There may still be something to that, with IATA projecting that passenger numbers will reach 8.2 billion in 2037. Some routes may become too congested. Air Traffic Control may not be able to keep up with higher frequencies and larger numbers of small aircraft flying. Jumbo aircraft could be the right-sized solution, but the A380 won’t be around.
Though the Boeing 747-8’s utility for cargo operations and VVIP jet service may keep production going long enough for aviation to figure out the impact of this future passenger crunch. It may be easier to Boeing to ramp up for a return of 747-8 passenger service at some future date.
But even if the era of the jumbo is at an end, Boeing’s new 777X shows promise and could fill a gap in capacity. Airbus has its own aircraft to compete with—the A330neo and A350—and can also claim success in the narrowbody market with its A320 family. But Boeing’s legacy of making planes that are right-sized for the industry—for decades—remains intact.
Suppliers are hungry for a new plane
Ambitious aircraft programs, like the A380, aren’t just risks for the airframe manufacturers. They also involve risk for parts and component suppliers, who absorb many of the costs of research and development and offer favorable terms on the promise of a spot on the coveted SFE (supplier furnished equipment) list. These manufacturers may still see some spares business from airlines that fly the A380, but unit levels were never high and the prospect of spares is now very limited.
The industry’s shrinking list of suppliers were hungry for something else to come around which would spur fresh innovation, and promise production stability, before the A380’s production stop was announced. They will only be more hungry now.
“New aircraft SFE is quite important to an awful lot of companies because it is bread and butter for our business,” aircraft interiors industry analyst, Ben Bettel of Counterpoint, said at an interiors innovation conference in Hamburg this past December. “It’s a stable part of any company’s business to actually have something that is a constant flow—a constant monthly production. If the OEMs go up—or if they go down—it’s over a five to six month period. So if you’re in manufacturing it’s easier to plan what you are doing on the ups and on the downs. It’s good daily business. However, if there are no new programs, SFE is going to take a back seat for an awful lot of players..the prospect for business is going to be somewhat frustrated.”
Boeing might decide to take advantage of this hunger now, and take a chance on the so-called 797 NMA (new midsized aircraft). For its part, Airbus has a stomach-full of taking chances and no new plane models on the drawing board.