Emirates Airlines Order Saves Airbus A380 Superjumbo
John Leahy, the "trillion-dollar man" of Airbus sales, has done it again. Just a week before his (once-again) supposed retirement, the 67-year-old sales chief (his official title is Chief Operating Officer of Airbus Customer Services) and his allies at Airbus pulled another rabbit out of a hat
This time, after threatening to shut down A380 production, the magician produced the long-elusive sale to the airline Emirates that will keep the line going for the foreseeable future.
The order isn't as large as Airbus had hoped. Instead of buying 36 to 38 A380 jetliners outright, a deal that fell apart at the Dubai Airshow in November, Emirates has reportedly placed a provisional order for 20 planes, with an option for an additional 16.
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But as Britain's Daily Mail breathlessly reported, "Superjumbos are saved!" Emirates airline's chairman and CEO, Sheikh Ahmed bin Saeed al-Maktoum, said: "We've made no secret of the fact that the A380 has been a success for Emirates. Our customers love it, and we've been able to deploy it on different missions across our network, giving us flexibility in terms of range and passenger mix."
With the deliveries of the new aircraft scheduled to begin in 2020, it would seem A380 production could stretch to 2030 or even beyond. The reported $16 billion deal (the plane's list price is $446 million, but actual numbers are a matter of conjecture) will save thousands of jobs at Airbus and keep the production line and research going.
Ultimately, the deal buys time for Airbus so it can attempt to persuade other airlines that the A380 can be a profitable addition to their mix of aircraft. Yet the sale to Emirates shows just how unbalanced the A380 program is. Emirates, the flag carrier of a country of 10 million people, already operates almost half (101 of 217) of the A380 aircraft in service. The last non-Emirates order for the A380 was in January 2016, when the Japanese carrier ANA ordered three.
So the most important order for the A380 may not be the "lifeline" thrown to it by Emirates, but the next one. A new order from China might show that Airbus' argument, that use of the 555-passenger A380 can reduce congestion at Asia's crowded airports, is finally gaining traction.
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Hong Kong Airlines, for example, recently announced aggressive plans to serve markets in New York, London and San Francisco, in addition to its Los Angeles service. The scarcity of takeoff and landing slots at near-capacity Hong Kong Airport would seem to make it the perfect fit for the A380's massive passenger capability. However, so far it looks like the airline will serve the routes with the 21 A350-900s it has on order from Airbus, a plane capable of seating 325 and flying up to 9,500 nautical miles.
This is an example of the real question that faces the giant plane: Who really needs it? While the plane has been a success for Emirates, it is not because of a clamor among the general flying public to fly on the A380. Instead, Emirates, long accused of taking massive government subsidies, has been said to use the A380 to offer low fares, like the current $454 Newark-to-Athens round-trip offer. As a Hong Kong newspaper noted on the arrival of the A380 to the local market, "Emirates’ low-fare strategy has already caused much anger and frustration among rival airlines in Asia, Europe and the United States."
Although the Emirates sale keeps the production line going, the problems with the A380 usage case remain. Wide-bodied twin jets from Boeing and Airbus itself are cheaper to operate and easier for the airlines to fill than the A380.
Worse, Airbus and the airlines have so far not succeeded in marketing the A380 as a "must-fly" experience, like the Concorde and the 747 were in their time. Only Singapore Airlines (and Emirates and Etihad, to a lesser extent) have successfully marketed the A380 as a luxury experience, with a bar, fold-out beds and the like.
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The European countries that build the A380 have so far not successfully marketed it as the luxurious flagship of their national airlines. Lufthansa operates only 14 A380 aircraft, British Airways 12 and Air France 10. The fourth Airbus partner, Spain, which appears set to become the second-most-popular tourist destination in the world, operates none.
The plane is not seen as an aspirational "must-fly" by most Americans, largely because they are unfamiliar with it. Ironically, Leahy, the Airbus super-salesman and a native New Yorker, has yet to sell an Airbus A380 to a single American carrier.
A future for the A380 has been guaranteed by the latest sale to Emirates. Now it's up to Airbus to convince the airlines, and the traveling world, that the great plane is truly the queen of the skies, not just another niche aircraft.
