ANALYSIS: Asia’s magically shrinking superjumbo orderbook

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The termination of Skymark Airlines' order for six Airbus A380 aircraft, and the reclassification of 10 A380s due for Hong Kong Airlines, has cut the Asia Pacific region’s orders for very large aircraft by one third.

The last half of July should have been a triumphant one for Airbus in the Asia Pacific, with Korean Air taking delivery of its tenth, and final, A380. Meanwhile the brand new A350-900 performed a series of high profile flight tests between Singapore and Hong Kong after its blissfully smooth development programme.

Unfortunately these two feel-good stories were overshadowed by two feel-bad stories involving the A380 at two North Asian carriers. The most significant was Airbus’s decision to terminate the six A380s Japan’s Skymark was due to start receiving at the end of 2014.

The Skymark news was not exactly a shock: the initial order in 2011 came as a big surprise to industry observers. It was never clear how Skymark would generate sufficient feed to profitably operate the type on the competitive Tokyo Narita-New York JFK route. Moreover, Skymark’s A380s would have had just 394 seats, the lowest density configuration in the world.

The Japanese low-cost carrier has been trying to move into the premium market with its A380 and A330 orders following stiff competition with the entrance of three LCCs into Japan in 2012.

Airbus, which has long been an underdog to Boeing in Japan, clearly had to make a tough decision with Skymark, but it likely was the correct one.

Hong Kong Airlines also likely lacks the sheer scale to fill the A380 day after day, week after week. Hong Kong Airlines’ main local rival, Cathay Pacific, has long looked askance at the A380.

“Airbus likes to talk about the A380’s low cost per seat, but the challenge for airlines is filling all those seats,” says one industry executive.

Prior to the Skymark non-bombshell, and Airbus’s stealthy reclassification of the Hong Kong Airlines deal, the region’s order book for very large aircraft stood at 48 aircraft: 31 A380s and 15 Boeing 747-8Is – the region’s first 747-8I for the region will only be delivered to Air China later this year.

Flightglobal’s Ascend fleets database shows that Airbus’s recent A380 travails, which came to light after the conclusion of the Farnborough air show, have cut firm A380 orders in the Asia Pacific to just 17 aircraft, which is but a quarter of the 60 A380s already delivered to carriers in the region. If 747-8I orders are included, regional firm orders for VLAs are just 32 aircraft.

Asia Pacific orders for Very Large Aircraft - 32 total

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Ascend

As if the Skymark and Hong Kong Airlines news isn't bad enough, the quality of the A380 orderbook for the region is also questionable. Having received two A380s, Asiana Airlines is due to take four more between 2015 and 2017. Ascend shows that Singapore Airlines is also due to take five more in 2017.

The nine Asiana and SIA deliveries are all but certain to happen. Unfortunately the remaining eight are with Qantas Airways, whose international operations remain under intense pressure, despite the carrier’s alliance with Emirates. Moreover, the delivery of Qantas’s next A380s aren’t planned until the 2020-2023 timeframe - an eternity in the airline business. Qantas has deferred A380 orders in the past, so the outlook for its eight firm orders is open to doubt.

Publicly, Airbus remains committed to the A380, and sees significant demand in the Asia Pacific for VLAs, but late July will be two weeks the European airframer will want to forget.