A380: a white elephant?

Emirates A380. Courtesy of airbus.com

Emirates announced that it will replace the Airbus A380 with a smaller Boeing 777 on its popular Dubai – New York route. The airline cited falling demand as a reason for the switch. The A380 will instead be deployed on the Dubai – Toronto route and Dubai – Bangkok route, commencing on 1st June. Toronto will be the third North American city (after Los Angeles and New York), and the first in Canada, to receive the A380. When the A380 service to New York ceases, Toronto will share the honours with Los Angeles.

Editor’s note: 2nd April. Thai Airways is the latest airline to announce that it plans to delay its A380 deliveries. Thai has six of the superjumbos on order.

These developments raise some interesting questions. Has Boeing been proven right in pursuing the development of smaller point-to-point aircraft (the 777 and 787) instead of larger hub-to-hub aircraft, the path Airbus chose in the 1990’s? Falling passenger numbers (especially business travellers who are opting en masse for low-cost airlines) as a consequence of the crisis are certainly not working in the A380’s favour (the aircraft can carry as many as 800 passengers though most airlines opt for a 500+ configuration). So, will this huge aircraft become a white elephant? I believe it won’t. First of all, I believe that there is demand for both point-to-point and hub-to-hub strategies in the global aviation market. When travel demand picks up, I believe the A380 will be in the best position to transport large numbers of passengers on long-haul high-density routes, not in the least because it’s extremely fuel-efficient. If low-cost long-haul services prove successful, the A380 may also be an interesting option for low cost carriers. In addition, the current Boeing 747’s (the only other jumbo jet on the market) are old and aren’t as fuel efficient. Airlines will soon have to replace these ageing aircraft and the similar-sized alternatives are the A380 and an updated version of Boeing’s 747, the 747-8 Intercontinental (which will carry 400 – 500 passengers). Furthermore, airline slots at major airports are becoming scarce, especially at airports which have limited room for expansion. This factor, again, will work in the A380’s favour. However, until demand returns to pre-crisis levels, airlines will find it increasingly difficult to fill their A380’s. I sympathise with Emirates – they’ve ordered 58 A380’s. They now have four and another five are expected to be delivered by the end of next month. It will be interesting to see how the Dubai-based airline deploys these new aircraft and if they differ the other orders.