ANALYSIS: How can Airbus widen the appeal of the A380?

This story is sourced from Flight International
Subscribe today »

Airbus sensed it could be a long haul, but almost a decade after the world’s largest airliner took to the skies for the first time, A380 sales remain underwhelming.

Although, at 324, orders are edging towards acceptability seven years after entry into service, the A380 has yet to become a game-changer in the long-haul market the way the Boeing 747 was in the 1970s and 1980s.

One airline, Emirates, has put the A380 at the heart of its fleet strategy. But for other blue-chip carriers, from British Airways to Singapore Airlines, the quadjet remains a niche product, filling a role on the densest trunk routes.

Some see Emirates’ faith in the A380 as a good thing for Airbus – the Dubai-based airline has stuck with the type even after cancelling a deal in June for 70 of Toulouse’s other big widebody, the A350.

Emirates’ commitment for 50 more superjumbos at November 2013’s Dubai air show takes its total orders to 140 – more than four in 10 of all A380 sales, and well over a quarter of the backlog. However, sceptics view the Gulf carrier’s unique business model as evidence that the A380 will struggle to replace even the dozens of 747s still in service – let alone find customers in new market segments.

For Airbus, the great hope is that passengers wowed by the roomy environment – and not just the novelty – of the airliner will convince existing A380 operators, and possibly their competitors, to place further orders.

“Every CEO [whose airline operates A380s] says it is their most popular airplane,” enthuses Airbus chief operating officer for customers John Leahy, who claims passengers are deliberately choosing airlines and services that use the superjumbo. “People are going out of their way to fly in an A380,” he says.

However, people power might not be enough. Operating economics are likely to be foremost in the mind of any airline chief financial officer, and here Airbus believes the message is getting across also.

In February, British Airways’ parent group IAG said the UK flag carrier’s four A380s were performing ahead of expectations. The aircraft – of which BA has eight more on order – were delivering economics “in line, if not slightly better than [the airline] would have expected”, with a “significant reduction of seat costs” compared with the 747-400s they replaced.

Central to these economics, however, are the load factors and revenues airlines can squeeze out of their A380s. In the early days, Airbus and airlines hinted at the potential of using its spacious twin decks to add bedrooms, bathrooms, bars and lounges.

Some airlines remain believers, with Emirates looking at introducing a bedroom product for first-class customers on its A380s as well as its Boeing 777Xs. Emirates’ next-door rival Etihad has unveiled a three-room “residence” which will be offered to premium passengers on the 10 A380s it has on order, the first of which arrives at the end of this year.

However, the emphasis these days appears to be on increasing the capacity of the superjumbo. London-based lessor Amedeo has proposed a 590-passenger, four-class configuration – with 11- rather than the standard 10-abreast seating in economy – for the 20 A380s it will begin taking delivery of in late 2016 (albeit with no customers yet announced). Chief executive Mark Lapidus says the modification – which he is discussing with Airbus and may include the raising of the main deck – “clearly makes the economics of the aircraft even more fantastic”.

Tom Williams, Airbus’s executive vice-president of programmes, admits Toulouse got “a bit carried away” with how it promoted the space opportunities of the A380. He says existing operators, or those with the A380 on order, may look at revising cabin layouts, adopting premium economy cabins or increasing the passenger count in economy. “We have people asking us to look at a more optimised layout to get the seat count up,” he says. Leahy, meanwhile, says Airbus specialists “can easily go in and put 50 more seats in the airplane”.

Of course, the gamble for Airbus in pushing up the capacity of the A380 is that the aircraft’s biggest selling point to passengers – the roominess of its cabins, which have wider 10-abreast seats than the Boeing 777 – could be sacrificed.

It is a risk of which Airbus chief executive Fabrice Bregier is aware. Speaking to Flightglobal at a press event in Toulouse in June, he said it would be “dangerous” to compromise the “perception of space” that passengers experience when they walk onto a superjumbo.

Another option for Airbus – albeit considerably more expensive and complicated – would be to stretch the A380.

The superjumbo was originally touted as a family of aircraft, but freighter and -900 versions – with a notional capacity of 1,000 passengers – were quietly and quickly dropped due to lack of market interest, leaving the baseline -800 as the sole model.

There appears to be little appetite at Airbus to resurrect the -900. “If you are going to do a stretch, you would have to look at what the business case would be,” says Williams.

A more likely route for Airbus is an “A380neo”, where one or both of the current engine suppliers – Rolls-Royce and the General Electric/Pratt & Whitney Engine Alliance – would take on the burden of delivering efficiencies without Toulouse having to significantly alter the airframe.

Emirates is this proposal’s biggest advocate. “There’s a distinct possibility that the A380neo, if built, would give us an improvement in economics of up to 10-12%, so that is definitely worth having,” president Tim Clark said in June. “I’m hoping to move on that fairly soon.”

Airbus admits a re-engined A380 is being looked at. Leahy notes: “When your biggest customer asks for something, you study it.” However, Williams is more circumspect, saying: “I don’t feel any rush for us to make a decision. We still have plenty of A380 campaigns out there. We’d have to be convinced it would be something significantly better.”

With the A320neo and A350 to bed in – and a possible re-engined A330 to launch – Airbus might feel it has enough on its plate already.

It would also depend on at least one engine manufacturer being prepared to take the risk.

Amedeo’s Lapidus agrees an A380neo is not necessary. “It’s a huge investment for something that’s perfect already,” he said in June.

Whether Airbus can convince enough other airlines the type is “perfect” remains to be seen. LEK Consulting forecasts demand for another 300 A380s through to 2024, based on an analysis of routes where traffic growth and lack of other constraints make the A380 viable. John Thomas, head of the firm’s aviation and travel practice, says the biggest opportunity is on 3,000nm [5,560km] to 6,000nm routes, where the A380 has a market share of only around 3%.

So, whether it is hotels in the sky at one end of the spectrum or high-density, low-cost transports at the other, Airbus certainly has not given up hope for its largest product. And neither has Lapidus, whose firm has yet to place any of its A380s with airline customers. “We will expand and broaden the base for this aircraft – and it will happen this year,” he says.

Additional reporting by Edward Russell in New York