Airbus Thinks United Will Order the A380

Dec 5, 2011

More Reading on This Topic: A380, United

Someone sent me an article last week that I thought was pretty funny. Apparently, Airbus super salesman John Leahy thinks United is going to buy A380s. Now, I suppose that it’s possible, but I just don’t see why United would do that.

According to Leahy, an order isn’t coming anytime soon, but “United understands that if it wants to have a major presence in Asia it needs the A380.” He also says that with demand predicted to double in the US in the next 15 years, growth can’t happen through frequency increases at every airport. That leaves the A380 in his mind as the option of choice.

I certainly don’t have any inside knowledge on this, but it would surprise me to see United pick up A380s in the near or even distant future. Why? Because it doesn’t really need the airplane.

Yes, there are some airports that are capacity-constrained that will have a hard time keeping up with increases in demand, but that doesn’t mean United needs a huge airplane. How many routes are there that United even wants to use its biggest 747s on? Not a ton. Leahy might be concerned about New York, but many of those European markets aren’t big enough to support more than a 757 or 767. If demand grows, then United has plenty of airplanes that it can use that are larger. It doesn’t require an A380-sized airplane by any stretch.

Are there some routes that might benefit from an A380? Potentially. There are some capacity constrained airports in the world – notably places like London and Tokyo. But is that enough reason to order the A380? So far, no US carrier (and very few worldwide) has seen a reason. There are so few routes that these airlines would like to have an A380 for that it’s not even worth considering.

So has something changed with United’s thinking? I don’t know, but this sounds to me like an overly optimistic thought on the part of Airbus.

Brett

30 responses to “Airbus Thinks United Will Order the A380”

A3*G

Dec 5, 2011 at 3:49 am

If UA does decide to order a VLA, I sincerely hope that they’ll go for the 748 rather than the 380…

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Fred

Dec 5, 2011 at 4:40 am

(For JFK and other US airports), I would think that we would see fewer RJs flying long before anyone would order the 380. Only on routes where there are 4+ daily 777s/747s (does UA have any?) it might make sense to replace them, since the typical capacity of the 380 is only about 25% larger than the 747, and about 38% larger than the 773.

Airbus is just getting desperate here.

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1. Shane
  
  Dec 5, 2011 at 5:40 am
  
  There is always the Dulles – Frankfurt route (currently 777, 777, 767, 747) and Dulles – London (777, 777, 767 with an additional in the summer). However, it doesn’t make sense to buy a specific aircraft for these few routes. That gets rid of all flexibility to deal with demand and cost fluctuations. I flew to LA once from DC via Pheonix and there were 2 US Air (AWA) flights leaving for LA from adjacent gates within a minute of each other. At first it seemed stupid and confusing as people were scrambling between the two gates checking the flight numbers, but then I realized it allows for fluctuation in capacity and doesn’t require purchasing a different airplane type.
  
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  1. Shane
    
    Dec 5, 2011 at 6:43 am
    
    (fix: the 747 is a Lufthansa codeshare: but that would make an 380 even less logical since if they really needed the lift, Lufthansa could use their 380 vs 747 and UA woulc be happy because they share the revenue anyway)
    
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mattheww50

Dec 5, 2011 at 5:17 am

Leahy is forever the optimist when it comes to sales. My own belief is that most of the airlines that have a need for the A380 have already ordered them.
That’s the real reason why A380 sales are just about dead in the water.

The secondary issue is the ASM costs on the aircraft aren’t that great. Going from the 707 to 747 cut ASM cost just about in half. I suspect the 777-300ER and 747-8i have ASM costs that are marginally lower than the A380’s. The 747-8i has made potential A380 customers look long and hard at the benefits of owning such aircraft. Most have apparently decided the benefits don’t outweight the costs, so neither is selling very well.

My own belife is Airbus missed the mark on the A380. The aircraft that there is probably a real demand for is an A370 (like the A340/A330), a medium range, very large twin.

Get rid of the two extra engine and couple hundred thousand pounds worth of fuel carriage, and you can probably fly with a pair of uprated GE90’s with vastly superior economics. Such an aircraft is likely to do quite well in both Europe and Asia. Such an aircraft is unsuitable for Airbus’s Ego, so I doubt it is going to happen.

A stretched A380 would probably have better economics, but would probably not have the ‘legs’ for Asia-North America. The problem is that it would probably cost another Billion dollars or so, and I have serious doubts enough would ever be ordered to recover the Non-recurring Engineering costs.

My thoughts.

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1. Ben
  
  Dec 5, 2011 at 1:52 pm
  
  Wouldn’t this A370 that you speak of be the A350 that is currently in development?
  
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  1. mattheww50
    
    Dec 7, 2011 at 5:38 pm
    
    The A350 is considerably smaller than the my suggested A370.
    Basically the A370 is twin engined A380 with an 860,000 pound MGTOW.
    Getting rid of 2 engines and the associated extra systems probably removes 40,000 pounds form OEW. That would leave about 370,000 pounds for self loading cargo and fuel on such an aircraft. 800 bodies=175,000 pounds, 195,000 pounds for fuel, that is about 7 hours worth, around 3500nm
    
    That a whole lot larger than the A350-1000.
    
    Having said that, I am not sure the A350-1000 is ever going to be the aircraft originally promised. I believe Tim Clark at EK summed it up a couple years ago. It will be a great airplane, IF they can build it… At the moment Airbus is having serious trouble building it.
    
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Brian

Dec 5, 2011 at 5:25 am

Given that EWR cannot handle A380s this is pretty much a non-starter.

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Bobber

Dec 5, 2011 at 6:13 am

Would agree with all sentiment here that UA don’t have the need (currently, or foreseeably) for the 380.

That said, it’s still a great aircraft to fly in – equally as enjoyable as the 777 for us in scum class (I find, anyway).

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Ben

Dec 5, 2011 at 6:23 am

Maybe it’s just me, but this appears like typical Leahy arrogance. Like he is saying that UA won’t be able to compete in Asia without the a380, because all the competitors will have them. There is no reason for UA to order something that big, especially since they have been looking to get rid of the VLA they already have. I would think UA would look at ordering 773’s before they looked at an airplane as big as the A380. Maybe they would look at the larger 777’s after the aircraft is modified, like the -9 or -10

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Hermann

Dec 5, 2011 at 8:17 am

As far fetched as what Leahy says sounds, he´s doing exactly what´s in his job description. I do see potential on some Asian routes, if cost savings realized allow for cheaper tickets and thus higher demand.

That said, I don´t see any US airline buying A380s any time soon, considering their largely difficult capital situation and the relative difficulty to sell or return 380s, whereas 777-300ERs like AA is buying can likely be placed more easily.

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Zack Rules

Dec 5, 2011 at 8:28 am

While I largely agree with most of what has been said, I think the A380 actually does have a small role within the United fleet. An initial order for 15 examples would be a good start because there are certain routes where the 747-400 currently operates profitably (at least most of the time)
ORD-Hong Kong
ORD-Tokyo Narita
LAX-Sydney-Melbourne
SFO-Beijing
SFO-Hong Kong
SFO-Sydney
SFO-Tokyo Narita
United can compete better with the Japanese and Cathay Pacific, arguably its two largest competitors across the Pacific with a plane large than either Japan Airlines or Cathay intends to order. Right now, Cathay has a lion’s share of the US-Hong Kong market but UA could reclaim some of that with a larger jet. SFO-Beijing has always been a strong performer and while UA could ask for more frequency, a single daily flight on a larger jet would be more profitable. With only 16 slots at Narita, the only way for UA to add market share is with the A380.

While 777-200ER, the -300ER, or even the proposed direct 747-400 replacement, the 777-9, would be profitable for United, an A380-800 would solidify UA’s place as the largest US-Pacific carrier while allowing it to reclaim some market share from a surging Cathay, potential Chinese competitors, and grab a larger share of the Japanese market.

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1. Fred
  
  Dec 5, 2011 at 1:04 pm
  
  Well, their Asian competitors, for the most part, use 777s and 747s at higher frequencies rather than the A380 and do just fine. Frequency is still a big selling point on popular transpacific routes, and UA should look for more frequency rather than larger planes to compete with CX’s several daily HKG-SFO/LAX/ORD flights.
  
  Also, larger isn’t necessarily better – profitability is key, and UA would need to be extremely careful where it puts the 380s if it gets them, as they had better be running full and being put on routes where their niche is wasted.
  
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David SF eastbay

Dec 5, 2011 at 8:48 am

Some of UA’s Star partners have the A380 so with codeshares and their own 747/777 aircraft, they can compete in a lot of markets with other carriers. Just because you have a giant A380 doesn’t mean you can fill it every day it operates, and you can only use in at airports ready to handle it.

Except for the newness of the A380 how many people will chose to fly one airline over the other just because one flys an A380 and the other a 747.

As someone already said, the flexibility of 747/777/767/etc type planes are better then a giant A380 that can only go to/from certain airports that can handle it.

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Noah

Dec 5, 2011 at 9:25 am

My problem with that logic is that market share does not equal profitability!
So what if they are number 1 (especially in terms of seats, not frequency or gateways, or non-stop citypairs–all of which are more important to customers)?

Its true the a380 may have a role on a few, niche markets. But is it worth the capital cost? training cost? small fleet cost? just for a few more seats over a 777 or two frequencies on a 767 or 777 and 767?

After all, how often do flights usually fill with yields that matter. Increasing seats while increasing junk fares does not add profitability! Revenue is great and all, but the inflexibility of the a380 is probably not worth the cost.

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Bruce

Dec 5, 2011 at 9:52 am

So far no one has mentioned the CO 777 routes that come with the merger … EWR to Shanghai, Beijing, Tel Aviv (2 daily), FRA, LHR … HOU to TYO, LHR ( 2 daily). I agree with all of the above opinions about Leahy and the A380. But the 747-8I (wish they’d just dubbed it the 747-800) mite be a perfect fit for these routes as well as the ones mentioned by Zack, especially since the 747-400s are getting long in the tooth. For any airline already flying 747-400s, the similarity of the 747-8I means a simple transition for cockpit crew, ground handlers and airports. (Also, it’s a beautiful airplane unlike the A380 which reminds one of a moray eel especially head-on!)

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Tony

Dec 5, 2011 at 10:49 am

Frequency trumps mode every time.

Especially if more destinations and capacity are opening up everywhere. We started to see this with the re-opening up of Tokyo Haneda to more international destinations, and the rapid emergence of second tier Chinese destinations (Xiamen, Kunmming, Wuhan, Dalian).

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Cook

Dec 5, 2011 at 11:43 am

Agree that UAL does not really need the A380 in their fleet and I don’t see them buying any new ones. However, when some of the early introducers of this monster see the error of their ways, UAL may obtain a fire-sale buy (or lease) for a few of them. I cannot see the ugly thing as viable on more than a handfull of UAL’s routes. Remember People Express? Their 747s moved a slot of SLC between New York and Los Angeles, but it was not a pretty experience. In the end, UAL is a LCC interested only in the least cost per butt mile and service be damned. In a few years and if they can get a good deal on a handfull of used A380s, you may see a few big uglies on a few routes. What you won’t see is my butt in one of those seats. I learned my lesson with People Express.

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Jim

Dec 5, 2011 at 12:43 pm

They don’t need a lot, but they might need a few. The Asian market is growing fast, and China Southern Airlines is using it on domestic routes. I know people that will pay an extra $300 and add a stop to their itinerary in order to fly the A380. If the A380 becomes more common on trans-Pacific flights, airlines without them will be at a disadvantage.

Oh, and a lot will depend on oil prices too.

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Jason H

Dec 5, 2011 at 1:29 pm

I don’t buy the argument that UA needs the A380 to compete in Asia. Much has been said here why it is silly so I see no reason to rehash that.

What I find interesting is the stipulation that there is a need for the A380 in order to compete. The A380 offers more passenger capacity, but as far as I can tell not a substantial improvement in freight capacity. That is where 747 operators make a large part of their money.

Additionally, there is no other benefit to the A380 over a 744 or 748i. When the 707-720, DC-8, and deHavilland Comet appeared there was a NEED for an airline to have them. They revolutionized how you transported self-loading cargo with increased speed and comfort, allowing airlines to use the aircraft for more flights and therefore amortize the cost over a larger number of flights.

You don’t get that with the A380, 748i, or 787. They are just evolutions and each designed to fit a niche. There is no real need generated by the aircraft outside of the usual marketing ploys.

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Alfred T

Dec 5, 2011 at 5:05 pm

Buying a particular aircraft such as the A380 alone won’t help compete with the Asian carriers if United’s service doesn’t match Cathay or Singapore. I have flown SFO-HKG route several times and each time I fly it is always on Singapore because of their impeccable service. United’s price may be a tad cheaper but they will never get my business as long as Singapore or Cathay is flying this route.

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Cook

Dec 5, 2011 at 5:52 pm

UAL and A380 or not, the folks at AirBus ought to be praing – a lot and regularly. Personally, I have zero need or desire to fly the thing. I easily understand that many wish to do so. Given their hiccups, delays and engine issues, even one LOL accident before ~2017 could easily kill this expensive airplane. AB ought to have some owner/operator clause about not operating the aircraft in other than ideal circumstances. The risk to AB is just too high. From a SLC’s point of view, I have no interest in flying this machine. I’m not overly concerncerned about its reliability or safety, but sharing my tight space with 500 others is not my idea of a pleasant experience. I do not ‘need’ to do it, so why should I? Nuff said.

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1. Bobber
  
  Dec 6, 2011 at 2:56 am
  
  I can just imagine what the comments would be like were this aircraft called a Boeing 780 instead…….
  
  ….anyway, @Cook: I think Oscar Wilde once said that you should try anything once. Except Morris dancing and incest. You never know, you might enjoy the A380 – close your eyes and you might even convince yourself the odd (!) american might have built some of it…
  
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Ace_dc

Dec 6, 2011 at 1:14 am

Ek has said that people drive further to fly the 380 on their routes. It may be a novelty, but it is still driving people towards a carrier (or flight). And on certain routes, it does well. AF took 3 flights at IAD (1×330 and2x777) and changed to 1×380 and 1×777. Took 2 great aircraft and opened it to other routes. In the meantime, UAL downshifted to 2×757. So, would you rather fly the 757, or the 380 for 8 hours?

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1. Bill
  
  Dec 6, 2011 at 4:49 am
  
  Considering that the alternative is Air France, I’d take a UA 757.
  And of course more people are choosing to fly on the 380 because it seats more people. It can do well on certain routes, but again, full flights does not mean profitability (actually, decreasing the availability of seats drives prices up for the most part).
  
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2. CF
  
  Dec 6, 2011 at 11:47 am
  
  I would argue that people may go further to fly the Emirates A380 because it’s a much nicer product. The airplane itself doesn’t matter – it’s what’s inside. And the Emirates A380 offering is different than anything else in its fleet (in the front cabins).
  
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Mike

Dec 6, 2011 at 2:33 pm

obviously EK is running a vastly different operation but they do seem to believe its beneficial to operate both the 777 and the A380.
having thrown some nice punches in Europe, North America is next. thats not as much of a direct threat to UA/DL as to the European legacies but UA management would be stupid not to consider the option. (and dismiss it if they deem appropriate).

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Ashwin

Dec 12, 2011 at 11:55 am

Absolutely agree that UAL doesn’t “need” the A380. But when you look at the airlines that have placed orders, neither do they.

Further, EWR is not even close to being ready to accommodate the aircraft. According to my knowledge, the following are closely and chronologically linked: The NY-NJ-PHL airspace modernization followed by Expansion plans at EWR followed by UAL placing the orders. By the time all of the above happen, UAL will forecast a growth that will require some VLAs.

All the jargon about “UAL thinking”, “Airbus expecting” is just to fill in the voids left in some news column. It ain’t going to happen until its operationally feasible and financially sound.

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Dirk

Dec 15, 2011 at 11:45 am

What surprises me is that so many airlines around the world see a need for such a VLA and they are used to fly to the USA. Singapore, Emirates, Air France, Lufthansa, Korean they are all using A380s to different cities in the US. May it be JFK, LAX, MIA etc. But any US citizen involved in any kind of aviation forum tries to convince the rest of the world that there is and never will be a need for a US carrier to go A380. Just so far, nobody was able to explain me why not if so many other airlines are obviously able. If Lufthansa ( and they have even ordered the B747-8i as well) can make use of A380s from FRA to JFK, MIA, SFO and soon IAD, then why is there not a single US carrier able to make use of a A380 the other way around???? The pax are obviously there…..

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1. CF
  
  Dec 15, 2011 at 2:17 pm
  
  I’m not sure how much of a need Lufthansa and Air France saw for the A380. The cynical side of me thinks it’s just the government pushing those airlines to buy the Airbus offering. I feel that way more about Air France than Lufthansa, but still.
  
  I would say that there certainly are some route opportunities out there for US carriers, but it’s a conscious strategy decision not to bother. There aren’t enough routes to make it worthwhile to have a small fleet, and besides, why do they care? No airline has ever failed because it had too little capacity unless it’s in a competitive situation where other airlines have more frequency or last minute availability. That wouldn’t happen here.
  
  Airlines in the US instead prefer smaller airplanes going on more point to point routes. Are there some congested airports that still will need more capacity? Yes, but some of the people on those flights today will begin to overfly those routes with aircraft like the 787. That will free up more room for local passengers.
  
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