Bigger isn’t always better. And Airbus’ giant A380 double-decker airplane capable of flying 8,000 nautical miles with 555 passengers in a conventional three-class configuration or a whoping 853 in an all-one-class configuration that is almost too bizarre to contemplate, is a 277 ton primary example of that maxim.
Next week will mark the 11th anniversary of the A380's celebrated entry into commercial service. But there have been only about 230 of them delivered to airlines in all that time. And it only has orders on the books for another 100 or so. That compares quite poorly to the 875 such planes that Airbus officials in the early 2000s were predicting they’d sell by the end of 2019
And now the news is getting worse. The first four A380s delivered to airlines already have been retired and the first two of them, including the very first one to ever fly in passenger service for Singapore Airlines, have been parked at a remote airport in the Pyrenees Mountains. That’s where they’ll be gradually stripped of their parts and engines so that they can be sold on the spares market and of their metal, which will be sold mostly for scrap value. The estimated $40 million to $80 million that the parts and metal from one A380 will bring pales in comparison to the $250 million that Singapore Airlines reportedly paid for that first A380, and to the $445 million of a new A380 today.
To be sure, A380s will continue to serve and to be seen at major airports around the world for at least another decade. But after just 11 years in service the A380 program already is on the down hill slide toward its eventual, unsuccessful end. Short of a miracle comeback, the A380 will go down in aviation history as the victim of its own size - and of Airbus leadership’s stubbornly mistaken belief that the market would favor fewer flights on enormous aircraft over higher frequency service using mid-size planes on long-haul routes between the world’s most populous and/or most popular cities.
Eleven years from delivery to being sold for parts is, by any definition, a very short lifespan for a commercial aircraft. Most operate in customer service for more than 20 years, albeit often times for two or three airlines as better-performing, first-world carriers sell off owned planes or return leased planes after 10 to 15 years of service and other, less-well-off operators acquire those same planes on the used market to squeeze more economic life out of them. Many make it more than 25 years in service, or even longer, like a small fleet of 1970s-era Douglas DC-9s that flew for Northwest and then Delta (which acquired Northwest) deep into their 30s. Older aircraft do require more and more maintenance spending and tend to consumer more fuel per mile flown than new planes. But as Northwest/Delta showed, when it costs an airline little or nothing to actually own a plane it can spend more heavily on maintenance and fuel and still turn a bigger profit than it can flying brand new models the same size.
But a used A380, however, is just too big for that math to work for airlines. Worse, consumers, especially the kind of higher fare-paying business travelers who are critical to earning profits on long-haul routes, have shown an overwhelming preference for flight frequency over aircraft size. In short, they like having the ability to choose between two, three or even four flights a day on heavily traveled routes over being relegated to just one or two flights a day on the same route - even if it means flying on a smaller, less opulent plane than the A380. Worse, for the A380, airlines can fly three Boeing 787s on a typical long-haul route at a lower total cost than flying two A380s a day on that same route. That renders the A380 economically uncompetitive on all fewer than a dozen routes world wide.
Thus, it was not the old, grande dame of the sky, the 400-passenger Boeing 747 that gets the credit for undermining the A380’s business model. Its the smaller, more-efficient 240- to 335-passenger 787 Dreamliner and, Airbus's own 270- to 340-seat A350 (which just entered service earlier this year) that get the credit for that.
For Airbus, the A380 has been a painful experience. A couple of years ago company leaders grudgingly allowed that the A380 program had represented a $16 billion or so capital investment. But analysts openly mocked such claims, saying the true investment likely is closer to $25 billion to $26 billion over the program’s first 15 years of existence. Beyond that, the per plane list price of $250 million in 2007 (and $445 million today) likely never has been paid, partly because airlines rarely pay list for their airplanes and partly because Airbus has had to greatly discount the A380’s price to get the small number planes that it has sold off the showroom floor. Some experts question whether Airbus has ever sold a single A380 for more money than the cost of it's construction, let alone at a high enough price to recover the company's investment in the A380's design and tooling.
And the pain will continue. There's likley to be a very weak secondary market for used A380s because few people around the industry expect Airbus to continue building the model beyond about 221, when it’s order book runs dry. Without new planes being built Airbus will have little incentive to continue investing in upgrades or the production of major spare parts, undermining the A380s viability on the used airplane market. Indeed that’s likely a big reason why the German leasing company that owns the first two A380s delivered to launch customer Singapore Airlines back in 2007 decided to scrap those two planes rather than re-sell them once Singapore decided not to renew its leases on them. The German lessor learned, the hard way, that it can get more money out of them, and get it sooner, by scrapping them by finding another sucker to lease or buy them.
