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The pending end of the Airbus A380 program, announced earlier this month, could mean the skies are set to become a little less glamorous.
But overall, analysts say, travelers are winning out as a result of the replacement of jumbo jets with smaller, twin-aisle aircraft.
“For your audience, this is all golden,” said Richard Aboulafia, an aircraft industry analyst with Fairfax, Va.-based Teal Group. “The traveling public can genuinely rejoice in the demise of something that was meant to fly them into a hub and make them change planes.”
Airbus announced on Feb. 12 that it will end production of the A380 in 2021. The move was long in the making. Since 2015, the aircraft maker has taken just 25 orders for the world’s largest passenger jet, including a 20-aircraft order by Emirates last year that was viewed at the time as a lifeline for the program.
The end came as Emirates entered into a deal with Airbus to reduce its outstanding A380 order log from 53 to 14 and to instead purchase 40 A330neos and 30 A350s.
Both aircraft are smaller, fuel-efficient widebodies that require two engines rather than the four that power the A380.
“As a result of this decision, we have no substantial A380 backlog and hence no basis to sustain production, despite all our sales efforts with other airlines in recent years,” Airbus CEO Tom Enders said.
Analysts estimate that Airbus spent $25 billion or more on A380 development. But though the jet never came close to reaching profitability, aviation industry analyst Bob Mann of R.W. Mann and Co. said Airbus can sustain the financial blow.
“It was one of their signature programs, so it will obviously have an effect,” he said. “But I don’t think this was more than a formality. It was pretty clear this day was going to come — and come far short of the program reaching profitability.”
Aboulafia concurred, noting that the commercial airliner market is a more than $100 billion-a-year industry and that sales in general are strong, especially for narrowbody planes.
The manner in which Airbus ended the A380 program — by negotiating a deal to sell Emirates 70 smaller widebodies in lieu of 39 A380s — could be viewed as apropos. Emirates had sustained the A380 program nearly from its inception, having accounted for 162 of the 313 firm orders Airbus had taken on the aircraft.
But while Emirates found the 500-plus-seat planes amenable to its hub-and-spoke network — a strategy based on connecting worldwide passengers through capacity-strained Dubai Airport — other carriers had long since geared their widebody networks toward smaller, twin-engine aircraft that can serve more point-to-point routes, including the Boeing 777 and the new generation Boeing 787 Dreamliner and Airbus A350.
The Boeing 777ULR as well as Dreamliner and A350 variants can travel distances similar to the A380’s range of 9,400 miles. Meanwhile, their smaller sizes offer airlines additional operational flexibility. A 787-9 Dreamliner, for example, has a standard configuration of 290 seats. For carriers, that means there are a lot more routes on which they can fill up a plane than is possible with the much larger A380. They can also offer more frequencies, which is a plus for high-value business travelers. Further, modern, fuel-efficient engines and lightweight composite materials help improve flight economics.
“Once airlines realized they could get the operational capabilities and the seat economics of a very large aircraft on a twin-engine widebody plus the extra operational flexibility, the jig was up on the four-engine widebodies,” Mann asserted.
Indeed, despite capturing the imagination of many aviation enthusiasts due to its hulking size and the comfortable, less turbulent ride it offered, the A380 never gained traction with airlines.
That was especially the case in the U.S., where no carrier ever incorporated the A380 into its fleet.
Eleven foreign carriers currently fly the A380 on a total of 34 U.S. routes, according to the aviation industry analytics company OAG. But true to the hub-and-spoke model that the A380 was developed to support, those airlines only use the aircraft to service a combined 11 U.S. cities with nonstop service to just 12 international destinations.
Emirates plans to continue to fly A380s until the 2030s.
Meanwhile, the renegotiated deal with Emirates offers a significant boost to Airbus’ A330neo program, for which sales have been sluggish. Airbus is positioning the aircraft, which is designed primarily for medium-haul flying, to compete against the Dreamliner and the Boeing 777-200ER. Through January, Airbus had taken 238 orders on the plane, which had its launch with TAP Portugal in the fall. Delta is the only U.S. carrier to have placed an order.
The Emirates purchase, Aboulafia said, is a significant endorsement.
“It helps,” he said. “The market for twin aisles is a little bit quiet right now. Let’s just say it helps it survive.”
Source: travelweekly.com
