Nobody Wants the A380 and That’s Breeding Creativity

There isn’t anything quite like the A380. The airplane is enormous, and frankly, it is a true delight to fly (as a passenger, at least). The cabin design feels spacious, you can barely hear any engine noise, and it handles turbulence well. From an airline perspective, however, it’s the economics that matter most. And in most cases, the A380 just doesn’t work. With airlines struggling to offload these airplanes, some are going to have to get creative. One already has.

The idea behind the A380 was flawed from the start. Boeing bet that airlines would prefer smaller airplanes that could go longer distances. The 787 was built on that premise and has been a star. The A350 has done quite well in its own right. But the A380? It was built to carry a whole lot of people (or freight, until that model was dropped early on) on big routes. Very few airlines had that same vision, and it was reflected in the order book.

Unloved A380

The A380 has received only 319 orders. So far, only 198 have been delivered to a mere 13 operators, and it’s unlikely all 319 will ever be built. (You think Virgin Atlantic will ever take those 6 airplanes? Nope. And neither will the lessors who have committed, I’d bet.) Of those orders, Emirates is responsible for 142 of them with 85 in the air at the end of October.

For Emirates, the A380 is the backbone of its fleet, but it might regret that as travel begins to slow. Profits in the most recent report were off 75 percent on slowing demand. It’s hard enough to fill 85 A380s when times are good. How about filling 142 when times aren’t? Emirates remains bullish, saying it would order a whole bunch more if Airbus created a “neo” version with a new, more efficient engine. But that’s not likely to happen since nobody else is all that interested.

Even the airlines that have committed to the airplane don’t seem all that… committed. Some seemed to take the airplane as a point of national pride (Air France, Lufthansa). While others seemed to be playing the “me too” game (if Korean has the A380, Asiana will too). But the cold, hard reality of operating this beast has started to take its toll, and airlines are reacting. Some have it relatively easy.

Singapore was the first to fly the A380, and has the second largest fleet with 19 flying and 5 more on order. But Singapore’s first batch of A380s came on a 10-year lease, so the first one is up next year. Singapore isn’t planning on renewing that lease, and that’ll likely be the case for at least the first five of its airplanes. We don’t know what Singapore’s long term plan is for the aircraft, but clearly it’s more interested in smaller widebodies to support its growth plans.

Then there’s Air France. The airline probably felt national pressure to order the A380, and it originally said it would take 12. But after having 10 on the property, it told Airbus it wouldn’t take the last 2. It swapped those for 3 A350s instead. While the A380 often has a flagship onboard product with many airlines, at Air France it has a tired, older interior. It’s generally an airplane to avoid. Air France never quite seemed to figure out how to use the A380.

While simply getting rid of the aircraft is ideal for many airlines, it’s not always possible. There had been talk about a secondary market being out there to scoop up these airplanes. Turkish, for instance, had been expected to pick some up before the situation in Turkey deteriorated so much that traffic dropped off dramatically. That’s not likely to happen now. And Hawaiian has said it might be able to support a couple of them, likely to compete with ANA’s decision to take 3 A380s to fly to Hawai’i because it had no other choice if it wanted to snatch Skymark from Delta’s claws. But come on, that’s probably not happening either. So with airplanes coming off lease and nobody really interested, it makes it hard for those airlines that realized they’ve mistakenly ordered the wrong airplane. What can they do?

Those airlines who want to get rid of the A380 but can’t are probably watching Malaysia very closely. See, Malaysia stupidly ordered 6 A380s when it had no real use for them. The airline was on the ropes when a turnaround began, and neither previous CEO Christoph Mueller or current CEO Peter Bellew saw any place for the A380 going forward. But without being able to unload the airplanes, it was stuck.

A lesser airline might just sit there and keep flying the things, losing money as they go. But Malaysia has instead come up with a crazy scheme to farm out the A380s to a new division that specializes in Islamic pilgrimages. This airline will operate the A380 in a super high-density 700-seat configuration, at least when it can transport Hajj pilgrims.

But wait, isn’t Hajj only once a year? There’s no question that a bunch of airlines could use the A380 during that time, but what about the rest of the year? Well, for those not in the know, Hajj isn’t the only pilgrimage to Mecca. There’s also Umrah, which happens year-round. And this is no small thing. For the first half of 2016, Saudi Arabia issued over 6 million visas for Umrah pilgrims coming from outside the country. For that, Malaysia would shift to a less-dense 600 seat configuration. These aircraft can be wet-leased out to anyone who needs some heavy lift.

Is this crazy? It would be if Malaysia felt it could find a way to actually get rid of the airplanes. But since that’s not an option, this is more of a desperate move than anything. It needs to find a way to fly those A380s and lose less money than it does today. Talk about a sad state of affairs for the A380.

If this works, then maybe the market for used A380s will pick up. It seems unlikely, however. Instead, the A380 will remain a white elephant everywhere outside of Dubai. Even in Dubai, you have to wonder if anxiety levels are rising.

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