Airbus ready to axe A380 if fails to win Emirates deal

The A380 is really built for hub and spoke systems which is one of the reasons Emirates uses it so much. Emirates almost exclusively goes through Dubai and so they're able to, for example, load up a plane from London to Dubai and then Dubai to Singapore. The airline industry started moving away from that and toward more point-to-point routes in most cases. A 787 lets an airline serve a route that just wouldn't fill a 747 or A380 and provide customers with a better experience. For most airlines, that's a win.

The A380 isn't just a 747 competitor. It's a bet that the 747 didn't go far enough and that what airlines really needed was something huge. Boeing's bet was that a fuel-efficient twin that could serve point-to-point routes (rather than hub-and-spoke) would provide the economics for better, more customer-friendly routes, better utilization due to fewer empty seats, etc. Airbus didn't build a 747 competitor, they wanted to one-up it.

It is true that some airports have constrained slots, but is this mostly a London Heathrow problem? A slot-pair at Heathrow can go for over $50M. By contrast, the DOJ valued 12 slot-pairs at JFK at $44M or $3.7M a piece. American sold 17 at LaGuardia and 52 at Reagan for $381M or $5.5M a piece. That's certainly money, but it seems like the problem at Heathrow is an order of magnitude worse. When you move down from the most congested markets (and DCA kinda counts due to artificial restrictions), slot constraint seems a lot less interesting. Is the A380 a plane to solve the problems of a few airports? Is solving that problem enough?

If you're Emirates, London -> Dubai might be your most important route and the A380 means you can service it for a lot of people. Of course, that's where most of the A380's support is coming from. For airlines that don't operate such a hub-and-spoke model, who use less constrained airports than London Heathrow, etc. it seems that the 787 has been a lot more attractive.

You're right that when they started the A380, it wasn't clear that the market would turn the way it did. Honestly, if Airbus had made a 747 competitor instead of something much larger than a 747, it might have fared better. But the number of routes that can fill an A380 is small, the number of airports where landing slots are unduly expensive is small, and customers like the convenience of point-to-point (and the larger windows, better headroom, better humidity, less noise of a 787).

The A380 isn't a complete bungle, but it was a bet that not only did airlines like the 747, but they wanted something larger. Boeing bet that if they could have something a bit smaller for a lot of the routes the 747 was on, they'd like that. The A380 found a big customer in Emirates, but the 787 has much broader appeal. That doesn't mean the A380 doesn't have utility and is certainly useful for certain routes that are popular and slot-constrained, but the 787 seems to be more useful for a larger number of situations.

Boeing has built and sold over 1,500 747s [1]. It first flew in 1969 and is now being end of lifed. It has been obscenely profitable over its lifetime. The A380 first flew in 2005 [2]. It has been a commercial disaster.

The 747 was a great plane for 1969. Airbus built the finest horse-drawn carriage just as the Model T came out.

> constrained slots at major airports serving the major routes

Between 30 and 40% of passengers departing from JFK or Newark will go on to a connection [3]. Consider what happens when they start flying directly to their destinations.

[1] https://en.wikipedia.org/wiki/Boeing_747

[2] https://en.wikipedia.org/wiki/Airbus_A380

[3] https://www.panynj.gov/airports/pdf-traffic/ATR_2015.pdf

Two American carriers (United and Delta) already knew this. They discontinued the 747 and their last flights were earlier this year.

https://www.usatoday.com/story/travel/flights/todayinthesky/...

https://www.usatoday.com/story/travel/flights/todayinthesky/...

The A320s and 777s (and soon A350s) are just more efficient for passenger ETOPS flights. Hell, United will probably even fly 737MAXs on Atlantic routes like they did with 757-ERs.

In the 1970s the 747 averaged 32 orders per year. In the 1980s it averaged 43 orders per year. It peaked in 1990, taking in 122 orders that year alone, but from 1992-2000 orders dropped to average 27 per year.

In 2000, Airbus approved spending €9.5B to build the A380.

In 2005, Boeing announced the 747-8 to better compete with the A380.

From 2000-2009, the 747 had 214 total orders. The A380 had 212. Between them that's 43 orders a year. The market did not grow, despite substantially better, more capable, more efficient, products.

From 2010-2017, the 747 has booked 27 orders, or 3 per year. The A380 has booked 115, or 15 per year. 18 orders per year combined is by far the smallest jumbo market since it started.

There is no doubt that Airbus hurt Boeing's profitability by building the A380. But estimates are that Airbus spent €20B-€30B developing it, most of which it will never recoup. And the bulk of Boeing's profitability is in small to medium sized jets. It mints money with the 777 and 737. It never needed the low volume 747 to "subsidize" them.

Losing tens of billions so your competitor can lose a few billion is not a smart strategy. Good business strategy is making profitable entries into your competitors most profitable niches, not hemorrhaging money in them. Airbus and Boeing were both told that point to point was the future. Boeing heeded that advice (helped by a ton of their own customer research), Airbus mostly ignored it, and the end result is that Airbus crippled themselves while Boeing is as successful as ever.

The argument about airport congestion was always a false one. Not only can and will (edit) new runways and airports be built, but the A380's massive separation requirements gives back much of it's slot efficiency benefits.

It’s not a question of competition. If all of the remaining 747 orders switch to the A380, its still a failure.

And as far as airport congestion goes, building new airports is far easier than new rail lines.

1 - Maintenance and tooling for the 747 series has been around for a long time; so moving to 380 would likely be a much bigger deal in that regard than moving to the latest 747 variant.

2 - Fewer airport options for 380 vs 747 means less flexibility of how the fleet is deployed.

The 744, which was the last update to the 747 to see large market penetration, wasn't all that cost effective either:

> with 70 percent of its seats occupied, used more than 95 percent of the fuel needed by a fully occupied 747

Yes, the A380 is more fuel efficient, and cost per seat is much lower, but I suspect with the exception of Emirates, most airlines did not need bigger planes. Other airlines such as BA, Quantas and Singapore bought A380s to replace their oldest 744s, but still have a lot of 744s in service that won't be replaced with A380s.

Airbus made one more big, big blunder with the A380: they deliberately and knowingly designed a jumbo that could never have a cargo variant or a cargo conversion. Although the 747's cargo conversion famously is due to Boeing thinking supersonic planes would take over the passenger market in the 70s (and thus the 747 needed a backup role it could take on once it had been displaced), Boeing stuck to the convertibility of the 747 through all those decades, and it's given them business both directly (through selling dedicated 747 freighters) and indirectly (through customers who bought used passenger 747s and wanted to convert, incurring all sorts of work on the airframes).

The A380 can never do this. This is not a "they don't want to" situation. This is a "the way they designed this plane, it can't be done".

First, the A380's middle-deck (the "ceiling" for the lower passenger level/"floor" of the upper level) is a structural component. You can't just yank it out of there and use the whole interior as a vast cargo space. It also cannot have a nose cargo door like a 747; the 747's upper-deck hump with elevated flight deck was created specifically to allow turning the nose cone into a cargo door, while the A380's flight deck is situated much lower to the ground for compatibility of training with the A330/A340.

Second, although the A380 is big, it's either not big enough, or not powerful enough. The increased interior volume over a 747 is large, but the increased capacity to carry weight... is not so large. In fact, an A380's payload capacity is lower than a 747's![1] Which means that if you solve the structural-deck issue, or work around it, you're getting a bunch of space that you can't use without going over the plane's weight limit.

[1] Technically, an A380 can take off and land heavier than a 747 (A380 max takeoff weight is 575,000kg, max landing weight is 394,000kg, compared to 447,700kg/346,091kg for a 747-8). However, an A380 is also heavier to begin with (by about 80,000kg), and must carry more fuel. The maximum payload for an A380 is thus about 84,000kg, compared to 132,630kg in a 747-8 freighter.

They end up going longer between service windows (reduced labor) but it also means they’re more of a known quantity and shouldn’t fall off over the Atlantic. And as we’ve discussed many times in SpaceX threads, having more moving parts may increase the likelihood of a failure instead of reducing it.

So you have bigger engines, more efficient airframes, fewer moving parts, and better maintenance records, why not fly them over the ocean with only two engines?

I think that would be the 737 MAX which is a notably different aircraft (launched in 2016) than your normal 737.

Boeing clearly made the right call, but there's an element of hindsight at play. Emirates, Etihad and Singapore have been very successful as pure hub-and-spoke airlines and there's still a vast amount of traffic going through the major hub airports.

The lead time on new aircraft designs is immense - the A3XX project started in 1994 and took the first orders in 2000. Airbus made some strategic blunders and didn't respond quickly enough to market conditions, but in some respects they were just unlucky. Boeing's 747X project failed and they have struggled with sales for the 747-8, but they avoided heavy losses by re-using old IP rather than launching a completely new platform. Both manufacturers were caught off-guard by the events of 2008.

I heard an analyst say that you have to carry a lot of fuel to carry a lot of fuel. The optimal size from an efficiency perspective is the much smaller 737 -- the more you deviate from that, the larger the efficiency penalty.

However this segment probably isn't big enough to justify such an expensive production line...

@frik - for some reason you are "dead" - no-one can see your comments since 5 days ago. Edit: now you're not! Congratulations I guess?

I agree with your first paragraph, but not at all sure about this. Current air transportation is very stratified, but some of its numerous rules could get a major rework in the next N years (N >= 10). Current setup has mid-size sweetspot when optimized on existing rules on routes, airport slots, weather requirements and in general ATC that is over 30 years old.

Even if only parts of the plans get accepted they can change optimizations significantly, e.g. if and when Nextgen allows planes fly directly from A to B (instead of along a few pre-defined segments) it might push sweetspot from mostly mid-size to a bimodal distribution: smaller for small airports, larger between main hubs. Or some other way.

Isn't the A350 already a very good contender there?

The governments of Dubai and Abu Dhabi have invested a fortune into their international hubs. The shift away from hub-and-spoke is a demise for them, too.

This is why the A380 has been a failure. It is only economical when it is full. Airlines must cram demand into a few routes, e.g. London --> Dubai, to ensure they fill their planes.

That's fine if you're flying from London to Dubai. But if you're flying to Asia, a competing flight going directly to your destination is preferable. That route has too little demand to profitably fill an A380. It might be just right, though, for a 787.

Emirates does offer at least one of these flights (NYC to Milan). Though I'm not sure if it's an A380 - I suspect it's not.

I wish I had the spare cash to fly their business class on the A380 before it gets discontinued!

The only place it would be medium + medium/long going to Asia on a gulf airlines is if you are going to far east. In which case, european airlines wouldn't fare any better, and the best route would be to go pacific with Singapore Airlines.

For me, gulf carriers always seem better route going to India as it translates to one long and one short (4 hours at most) flight.

The article mentions: "96 unfilled orders -- But based on airlines’ intentions or finances, 47 of those are unlikely to be delivered, which halves the number of jets in play."

So the actual backlog stands at 96 - 47 = 49 planes.

This page - https://en.wikipedia.org/wiki/List_of_Airbus_A380_orders_and... - shows that they've been delivering between 20 and 30 airplanes per year in the last years, which would allow a backlog depletion within 2 years. Even if they slow down, it still doesn't cover the decade gap requested by Emirates.

You seem to be under the impression that European, Middle Eastern, and Asian airlines don't fly to the United States.

I've been on the A380 at least a dozen times on the LAX-NRT route. It also flies into ATL, JFK, SFO, IAD, BOS, MIA, and IAH.

The best part of the experience is the relative calm of the small economy class on the upper deck. To be honest, other than that, I don't particularly prefer it over anything else. If I was pressed I guess I'd say I prefer the 787. Mostly I prefer whatever gets me to my destination without a layover (which, thankfully, is usually available from SFO).

The worst part is the crush of people trying to board the damn plane, spilling out all over the entire terminal.

I don’t understand this. Isn’t richness/poorness relative to something else in the same pool? What other species are you comparing us to? Because it’s a zero sum game otherwise; a pie chart where percentages count but can be scaled up or down without effect.

Maybe the huge numbers at play here change the economics, but in other industries a signal like this would often kill off all related investment.

If it's true that there are more "hubs", that means that there are also more point-to-point flights for more people. And conversely, the more point-to-point flights there are, the more you could argue some of those points are hubs.

Ultimately the issue comes down to how airlines see themselves and market their routes. Low-cost carriers like Southwest are invested in point-to-point, but in the international market, nationality regulations mean that flights are necessarily hub-and-spoke, at least in small countries. If I take a nonstop Icelandair flight from the US to Iceland, is that a point-to-point route? Or would you argue it's hub-and-spoke because Icelandair uses KEF as their hub?

Seat Width is a big factor, 18" on Emirates and very comfortable seats. I haven't yet tried the 787 though, looking forward to trying the Qantas offering.

The 777 had already made the 747 largely obsolete, and the kings of long haul flights going forward will be Boeing 787-9 and Airbus A350-900. With probably a mix of both in most long haul fleets.

It's surprising that Airbus did hit the jackpot with its A330, seemingly by accident, and yet seems to have been unable to foresee that it really was the future. Boeing built a better A330, called 787, and even though the A350 is a success, simply by virtue of being a larger plane that goes further it will probably not sell as much as the 787.

The A380 was a bet that the hub and spoke model (where passengers travel to an airline's hub in small planes and onwards from there in larger ones like the A380) would continue to rule the industry.

Instead, what happened was low cost carriers flying passenger directly to the destinations. It appears that passengers prefers that, which is why the B797 and A350 exists.

There could have been, but Airbus shied-away from a really radical design like a blended-wing-body and stuck to traditional tube-and-wings design, just on a larger scale.

There's not much margin for efficiency improvement in that case other than begging the engine manufacturers to work more magic.

As far as I'm aware, London to Dubai alone has seven daily A380 flights. More generally, Emirates have gone for a single daily A380 flight instead of more frequent flights to many destinations.