Author Archives: Malcolm Sheil

Brace for Impact: The A380’s Crash Landing into Failure

In May of this year the first A380 was delivered to the Japanese carrier ANA, though it was a first for the airline, it was one of the last for Airbus since it had announced just 3 months earlier that it would finally stop the production of the A380 by 2021, citing insufficient demand as the main reason. The history of the airliner is riddled with environmental, political and financial issues that led the A380 to become not only the biggest plane ever, but also the biggest commercial failure the aviation industry has ever seen.

Airbus vs Boeing

Before the turn of the century, two decades after the launch of the 747 ‘Queen of the Skies’ (also known as the Jumbo Jet), Boeing had already begun to realise that airlines were less and less interested in very large aircraft, be it for increasing fuel prices or changes in consumer behaviour. Instead of launching yet another variation of the jet, it chose to invest on developing new, smaller aircraft like the 777 and most recently, the 787. Meanwhile in Europe, Airbus had finally drawn up the courage to start developing an aircraft larger than the 747. Since the other two major aircraft manufacturers, Lockheed Martin and McDonnell Douglas, were finally out of the picture, Airbus saw this as a window to compete directly with Boeing for the large aircraft market, or so they thought. Boeing had been aware since the early 90’s that it was impossible to find the demand for a superjumbo in the near future, and it voiced its concerns loud and clearly when Airbus approached them with the offer of a jointly-produced superjumbo. It seems, however, that Airbus was reluctant to listen to Boeing it decided to carry on with the project, solo. Though sometimes it might not be in a company’s best interest to listen to their competitor, Airbus completely disregarded the warning Boeing had sent them.

Putting All Their Eggs in One Basket

In recent years, the A380 has basically become a synonym for Emirates, its largest operator. Which is why when Emirates cut their order for the superjumbo by over 50 aircraft, the end of the A380 was inevitable. The Dubai-based airline turned the A380 into a product of luxury, decadence and excessiveness. Their superjumbos have showers, lounges and many other features that other airlines would never even dream of having on board. Because of this, it was no surprise that Emirates was one of the main reasons why other airlines decided to stay away from the A380. Though most American airlines had never actually considered buying the aircraft due to its oversized operating costs, it turns out that some of them could not compete with the over-the-top-ness of Emirates. In fact, research found that most consumers now connect the A380 to Emirates, which in turn means on-board showers and other luxuries. According to the CEO of American Airlines, these types of features are only economically viable in companies that are largely state funded, much like Emirates and its compatriot Etihad. So, for most American and European airlines, the A380 would mean disappointing consumers whose expectations would have been way too high. Regardless of the branding disaster Airbus found itself in by relying so heavily on Emirates, the fact of the matter is that no company should ever put all their hopes on just one client.

Confusing Grandioseness with Success

Airbus had it wrong from the beginning, the A380 was already shaping up to be one of the costliest projects in the history of aviation, with development costs soaring above $25 billion American dollars. The airliner has a listing price of around $400 million dollars per unit, but it has been reported that Airbus was so desperate to sell the plane that most sales went for under $200 million dollars. The A380 doesn’t fare well in terms of operating costs either, the four-engine behemoth spends about $30,000 on fuel for every hour while flying, whereas Boeing’s newly-designed 787 spends just under $15,000 dollars of fuel per hour. The idea of having 800 seats to fill also sounds daunting for most airlines who prefer to play it safe and use aircraft like the 777 with seating capacities of around 200 to 300 passengers. In commercial terms, the A380 makes zero sense: its breakeven point is way too high; it costs too much to operate and it’s just way too big.

However, the politics behind the A380 are almost too good to be true. Even though Airbus is a European company, with CEO’s from different countries alternating in order to guarantee fairness, there were some goals they all followed, independent of their nationality. The A380 was conceived at the height of the technological race of the early 2000’s, meaning national parties were keen on using the A380 as a way to keep Europeans neck-to-neck with Americans engineers. It also meant that, in France, thousands of skilled workers would be employed for decades as the project developed from concept to reality. At the end of the day, the plan worked: the A380 became a symbol of technological advancement and was a huge engineering feat, while also employing more than 5000 people over the course of the years.

The politics behind the A380 basically blinded Airbus executives to the huge red flags that were coming up everywhere, in order to benefit the parties in power at the time. Left to scramble with the failure the A380 has become, Airbus has hopefully learned that political greatness is not necessarily a synonym for profitable success.