Thursday, May 18, 2006

The Rest of the Story

Reading this AP dispatch from London, I can't decide if it's a legitimate news story (on the first British landng of the A380 Super Jumbo jet), or a press release for Airbus, the aircraft's European manufacturer.

The AP story is filled with fun facts on the massive size of the double-decker airliner, and the infrastructure upgrades required to accomodate the A380 at London's Heathrow Airport. There's even a description of the plane's initial flight to Britain, including a pass over the factory in Wales that builds the wings for the A380.

Along the way, the AP even takes a few swipes at Boeing, noting that the A380 will soon pass the American 747 as the world's largest passenger jet. The wire service dutifully notes that Airbus has recieved 159 orders for the giant aircraft, suggesting that the 747's era of dominance is coming to an end.

What's wrong with this story?

As we noted a few months back, both Airbus (and the A380 program) are in a bit of trouble. The super jumbo was conceived when oil prices were below $40 a barrel, and a 555-passenger jetliner made economic sense. Now, with a barrel of crude hovering in the $70 range, airlines are looking for aircraft that are more fuel efficient, particularly on long-haul trans-Atlantic and trans-Pacific routes. Instead of rolling out a super jumbo of its own, Boeing wisely opted for development of fuel-efficient jets., notably the 787 "Dreamliner." Over the past two years, the American manufacturer has racked up 291 firm orders for the 787, compared with only 259 for both the A380 and the A350, designed to compete directly with the Dreamliner.

Making matters worse, American airports appear to be in little hurry to expand facilities to accomodate the A380. A 2002 GAO study conservatively estimated that facility upgrades needed to accomodate New Large Aircraft (read: A380) at 10 major U.S. airports will total at least 2.1 billion dollars--a cost that will be borne (ultimately) by travelers and local taxpayers. At Heathrow, upgrades for the A380 have (so far) run $850 million. The two billion total for U.S. airports is likely low, and there is opposition in some communities (notably Los Angeles) to expand terminals and runways to handle the super jumbo. Without wide access to the U.S. market, the A380 is ultimately doomed; in other words, a passenger flying from Singapore or Hong Kong on an A380 would have to change planes in Tokyo or Sidney, adding time (and cost) to the journey.

Not surprisingly, many airlines are opting instead for the Dreamliner, or the latest-generation Boeing 777, fuel-efficient jets, capable of serving long-haul routes, and compatible with existing U.S. airport facilities. While the largest U.S. airports will inevitably expand to accomodate the A380, they will likely remain a rarity at U.S. terminals for years to come, and that will likely translate into fewer orders for Airbus.

Make no mistake: the A380 is a technical marvel. But so were the Spruce Goose, the Lockheed L-1011 and the B-70. Ultimately, none of those designs were successful, because they were the wrong aircraft at the wrong time. The same judgment may ultimately befall the A380.

But that sort of context is obviously missing from the AP story. Reading their account from London, you'd think that Airbus has driven the final stake in Boeing's coffin. In reality, nothing could be further from the truth. What are they teaching in journalism schools these days?


BigFire said...

Least we forget that wonderful white whale know as Concorde. A grand total of 3 airports in the world has the clearance of supporting the jet (JFK, Heathrow & Charles De Gaul), and it was never commercial viable without government subsidy. Hell, JFK's clearance was only grandfathered in.

HaloJonesFan said...

The A380 is basically another dot-com project. It was conceived back in the Era Of Limitless Growth. Boeing, who did not immediately announce a supertremendous airliner of their own, was widely derided as "too conservative" and "lacking vision" and "behind the times". I guess we'll see who laughs last.

On the other hand, the A380 and the 787 between them are literally using every scrap of carbon-fiber composite produced in the world. Yes, really. ALL OF IT. By mid-year it will be impossible to buy carbon fiber to produce anything, because it will all be in Seattle or Tolouse.

Dan M said...

Don't be too quick to pronounce the AIRBUS a bust, nor be too quick to pronounce Boeing the victor.

Boeing is playing without a net, and without any margin for error. Boeing has dropped tens of billions of dollars into her new jet, and if it doesn't work, she won't be able to fall back upon friendly governmental bureaucrats and leftists for relief.

But Airbus can. Blunders which would sink any other such project, so far haven't phased the backers of the airbus project.

It's a damn disgrace that Washington during the Clinton years tolerated the birth of the airbus project.

He could have squelched it, but that might have meant actually taking on the euro left, and Clinton wouldn't do that.

Doug said...

I think you're a bit too quick to dismiss the economics of the A380. It's misleading to compare it to the 787, since the A380 carries about twice as many passengers. The more proper comparison would be to the economics of the 747.

The relevant industry metric is "cost per seat mile". There are some routes (NYC-London, for example) where an airline really can move 600 passengers each and every day. On those routes, it will be cheaper to fly one A380 flight rather than two 787 flights.

Your larger point - false predictions of the market success of the A380 - is definitely correct though. The problem for Airbus is not so much the raw economics of the plane, as that there (a) are not many routes that need its capacity and (b) airports will require expensive upgrades to handle it.

cynical joe said...

If Boeing was the one behind the A380 and Airbus behind the Dreamliner would Spook take the same tone? I think the press report of the A380 rankles a bit, because (while its a risk) its a 'swing for the fences' and not a 'safe' choice. Which project 'seems' american and which ones seems european? It may prove to be that Boeing was correct, but that doesn't mean that the A380 isn't magnificent.

HaloJonesFan said...

The A380 is magnificent if you're an engineer who completely ignores every bit of reality except for the pretty, pretty airplanes.

I suspect that the same people who think that the A380 is great, also spend their days waxing lyrical over the A-10--a slow, heavy, overgunned aircraft that is meat on the table for any competent air-defense system.

I like the suggestion that fewer flights would be better. Doesn't it follow that it would be best to only have one single giant airliner that circles the globe in 24 hours?

What we're seeing is that the air-travel industry is finally moving away from being a bomber pilot factory. Back in the 1950s, the USAF figured that we were going to have a nuclear war with the Russians before too long. And we'd just finished a big war where one of the major operations was strategic bombing. What do you need for strategic bombing? Large, long-range, multi-engine aircraft. And those aircraft are easy to build, but it's hard to keep pilots in them; there's no way anyone would accept an Air Force with that kind of budget and manpower. So what you do is, you get the government to subsidize airlines that fly large, long-range, multi-engine aircraft; that way you get a lot of pilots with experience in that type, and when the Russians get belligerent you just draft all of them.

Wanderlust said...

All of you are forgetting one thing: Airbus has to sell - not dream - 250 of those lovely white elephants just to break even on its investment in the A380.

That's right.

Break even.

Only THEN will the A380 program begin to be profitable, with sale number 251.

Last I checked, that's 92 unsold planes to go before the program makes a profit for Airbus Industrie's shareholders.

And unless a lot more airports pony up to the $$$ infrastructure upgrades required to handle A380, the only market left is interncontinental freight, which has relatively few players.

(anyone know the mix of freight to passenger sales of A380? that ratio would be telling in itself)

Now hopefully for Boeing, it's Condit/Stonecipher shennanigans are behind it now, and its decision to aim towards "point to point" travel (long haul direct flights instead of hub-based travel, the kind that A380 must depend on, and every traveler I have ever met hates) will pay off.

And once again, AP can go kiss my a**, since it never met a story about something going on over on the Continent that it didn't try to spin as "Europe's better than you, crude, stupid, uncultured Yanks", IMHO.