Monday, March 19, 2007

The A380 Arrives

There was more than a touch of irony in today's arrival of the Airbus A380 super-jumbo jet in New York and Los Angeles. On its maiden flights to both cities, the massive jetliners wowed crowds and the media with its sheer size, but even the p.r. buzz and excitement can't conceal a sobering fact.

In commercial aviation's most important market--the United States--no one wants the A380.

While describing the A380 (somewhat incorrectly) as "the rock star of the aviation world," The New York Times also notes that U.S. carriers haven't placed a single order for passenger versions of the jet. In the air cargo sector, market leaders FedEx and UPS cancelled orders for A380 freighters last year, citing continuing delays in the program. That's quite a reversal from Airbus's original estimates; at one point, the European manufacturer estimated that it would sell 281 of its super-jumbos in North America alone.

Currently, Airbus has orders for at least 156 A380s, well-below the 250 sales figure that was initially touted as a"break-even" point for the aircraft. However, that threshhold was calculated before the latest round of production delays, which have cost Airbus a reported $3 billion dollars and pushed back first deliveries until later this year. More recent estimates suggest that Airbus must sell at least 412 A380s to turn a profit on the project. And with crude oil still hovering around 60% a barrel--roughly 45% higher than when the super-jumbo was conceived--the economics of a 600-seat jetliner are problematic at best, makng Airbus sales efforts all the more difficult.

Meanwhile, Airbus rival Boeing is enjoying strong sales for three models that compete indirectly with the A380. British Airways recently four additional 777s, for use on long-haul routes that the super-jumbo was designed for. The British carrier already has 43 777s in its inventory. Additionally, Air France--one of the A380's "core customers"--has also ordered more Boeing 777s, and last month Lufthansa (which operated the super-jumbo that landed at JFK yesterday) became the launch customer for Boeing's newest variant of its venerable jumbo jet, the 747-8.

Boeing has also racked up almost 300 orders for its 787 "Dreamliner," more than Airbus has for the A380 and the A350 combined. The A350 is designed to compete directly with the Dreamliner, but that Airbus program is in disarray, and first models of the European jet will enter service years behind the Boeing product. The ready availability of the American-made aircraft, coupled with projected fuel savings, make them more attractive to airlines and air freight companies alike. Passenger versions of the 777 and 787 have less than half the seating capacity of the A380, but they fuel efficiency is up to 20% higher. In the "jumbo jet" category, the 747-8 integrates easily with existing maintenance, logistics and crew training systems, eliminating some of the "overhead" costs associated with the A380.

Yet, for all its recent troubles, there was something damned impressive about the A380 sitting on the ramp at JFK. Airbus deserves credit for pulling off a tremendous engineering feat, if nothing else. But, unfortunately for the Europeans, aviation history is littered with aircraft that were technical marvels, but commercial flops. Time will render the ultimate verdict on the A380; for the near term, Airbus will soldier on with its super-jumbo, secure in the knowledge that European taxpayer subsidies will keep the project--and the company--afloat, until the A380 can turn the corner.


RussInSoCal said...

US air carriers have never been the prime markets for the largest current wide body planes - IE the 747. The only US Airlines flying the 747-400 passenger version are United and Northwest. All things considered, the 777 is probably the best value in jumbo jets to be had today. In my opinion also the best looking commercial airplane.

Doug Anderson said...

I think one of your figures is off. You showed 1560 orders for the A380 when I think that it might be closer to 156.

Unknown said...

Doug--good catch on the typo; it's been corrected.

Russ--Several defunct U.S. carriers (Pan Am and TWA come to mind) were also operators of various 747 models. In fact, one of my most hair-raising takeoffs occurred on a TWA 747-200, departing da Vinci airport in Rome, a few years after the Flight 800 tragedy. It was a hot day in Rome, the aircraft was fully loaded and we needed every bit of runway to get airborne.

Also, I agree with your assessment on the 777; beautiful aircraft, and a great ride for a long-haul flight.

Meme chose said...

The Concorde was pretty too, and technically impressive for its time, but every penny of government funding spent on developing it was lost...