Friday, May 7, 2010
The A-380 - Stay in Production or cancel?
Analysis by: Gerard Buhrer
Summary
Canceling the A 380 will invoke more costs not less. Even if the various Gov’ts would agree with layoffs, the severance pay and other benefits would outweigh the savings. Also most of the development costs are “sunk” they cannot be recovered at all. Future production costs must be reflected in the actual aircraft selling price. Also Airbus would suffer greatly in prestige should their “Queen” disappear, plus many customers would leave Airbus and go to Boeing.
Read More: glgroup.com/News/The-A-380-- … 48240.html
at Friday, May 07, 2010
They’ve got a similar problem with the much delayed A400M, an airplane that carries 50% more than a C-130, but for at least three times the price.
(Three times the price of a C-130 is the most recent cost estimate for the A400, EADS is still attempting to wring more money out of their customers even though the aircraft were ordered for a fixed price!)
The biggest problem is there just wasn’t a market for them. Times have changed, airlines are flying smaller, more frequent flights, to give passengers more choices. I understand Airbus’s desire to compete with the 747, but just how many 747s are being bought, compared to 777 and A330/340? Now I could see a future in the large freight business, especially as cargo companies made up a large part of the initial interest in the aircraft.
There’s a market but it is very limited. My opinion is that the market is limited to long distance flights between such as the West Coast and Japan/Australia. Because people want frequency over size, I don’t see a reduction in flights between the East Coast and Europe to accommodate an A380.
One additional - and very, very limited - market are holiday charters. Cram 800 seats into the aircraft and then offer the seats for $100 each.
The problem with that is that you will be able to fill the aircraft about 3 weeks out of the year then have to keep making the full lease payments the other 39 weeks of the year with the plane either parked or flying around 1/3 full.
What about the other 10 weeks of the year (39+3=42)
So far, only Air Austral has ordered the A380. It will use them on flights between France and Reunion Island. They’ll be operating them more than 3 weeks a year.
Air Austral is both a charter and a scheduled airline.
Air Austral already flies the route with an A330 - evidently they think there’s a market for more passengers and there’s no benefit of adding a second frequency because it would have to leave at essentially the same time as the first flight.
However, when you’re talking routes like London-Canary Islands or Big US City to Florida or Vegas, then the aircraft doesn’t work year-round.
Yes, I understand that. But the major charter companies operate year round with large aircraft.
Example: In the winter they will conduct flights between northern Europe and sunny places like the Caribbean. Come summer, they’ll change their emphasis to other routes like South America or southeast Asia.
What I’m trying to say is that charter operators do operate year-round with large aircraft. They change their destinations depending upon the time of the year. Some route are also year round such as Europe/Florida.
Corsairfly, another French scheduled/charter airline, operates very large aircraft. Its 747 is outfitted with nearly 600 seats.
Yes, they are older aircraft.
The Air Austral’s A380 with over 800 seats will have very low seat mile costs so I think they can make a profit with it, even considering the price it is paying for each of them. (I believe Air Austral is buying, not leasing, the aircraft.)
