IFLC to cancel A380 order?

In reference to Schorsch’s and B-I-O’s comments: I hear time and again the “passenger preference” argument, yet have never read or seen this concept backed up by an independent (non manufacturer) study.

I have worked for an airline for almost 25 years, and my mother was a travel agent for 25 years, and our personal experience (and every independent study I have ever seen) says that the first three factors influencing ticket sales, are price, price, and price. (in that order, sarcasm intended…:))

No doubt the A380 is a nice ride, probably better than any competitor. I don’t see that fact trickling down to more orders or market success.

399 economy seats.
Supports your statement.

In reference to Schorsch’s and B-I-O’s comments: I hear time and again the “passenger preference” argument, yet have never read or seen this concept backed up by an independent (non manufacturer) study.

I have worked for an airline for almost 25 years, and my mother was a travel agent for 25 years, and our personal experience (and every independent study I have ever seen) says that the first three factors influencing ticket sales, are price, price, and price. (in that order, sarcasm intended…:))

No doubt the A380 is a nice ride, probably better than any competitor. I don’t see that fact trickling down to more orders or market success.

Having flown SQ 380 in buisness i can vouch for schorch’s comments (having also flown there 747 and 777’s) , the aircraft is more comfortable , quiter and a much nicer expereince. However SQ , EK , QR etc are special cases , the aircraft needs to make money , and if SQ can make more money in the long run with 2 777’s or 350’s then so be it , specially in the long run.

Never via Kobenhavn?

How would the seat capacity of one A380-800 and one A330-200 combined compare against 2x 747? And are airlines able to make a sensible interior design and ticket pricing such that rich passengers in First, Business, Premium Economy and full fare economy can fly in exact same comfort at either time they like, while discount economy only flies on the A380?

Example Singapore Airlines A380: First and Business class seats are not so much more than on a B747-400, but with much more comfort, making it a special experience. Actually, the Business Class on the A380 exceeds the First class of a few years ago. And the rest is economy. 399 economy seats.
Maybe a trend: offer the premium travelers an experience they are willing to pay for, and offer a big bunch of affordable economy seats (which still have a competitive comfort level, economy in A380 is considered quite human; no 2-5-2 cattle class).

If you travel from Hamburg to somewhere (outside Europe, and no charter trip), you’ll always go via Frankfurt, Munich, Paris, Amsterdam or London.
Same applies to Berlin, less wealthy but close to 4 million people.

Never via Kobenhavn?

How would the seat capacity of one A380-800 and one A330-200 combined compare against 2x 747? And are airlines able to make a sensible interior design and ticket pricing such that rich passengers in First, Business, Premium Economy and full fare economy can fly in exact same comfort at either time they like, while discount economy only flies on the A380?

Canceling the A380 would help EADS bottom line. If it is costing more to build an A380 than you can sell it for, they can’t make it up in it volume.

From now on your are the forum’s “Master Of The Obvious”.
Let me guess, you possess an MBA title?

With regards to frequency, you are absolutely right about maximising connections through higher frequency, and that will always be an issue.

The other thing to bear in mind is that frequency attracts premium travellers. Tjose buying business/first class fares tend to like flexibility and will pick an airline which gives them that. If a meeting overruns at either end of the route, they want to know that they haven’t missed their only flight for the day. Some research we did in London related to air travel need showed that businesses want higher frequency to primary business points, and will make their ticket decisions based on that.

While some other factors make it less simple. First, some destinations don’t allow increased frequency, as the time of arrival and time of departure would be too unattractive, especially to business people.
Second thing: the market. In competitive times the other airlines might sell the tickets cheaper, thus you are flying some frequency-sensible travellers, but the rest takes the big Jumbo.

The city of Hamburg is a major business center, actually one the richest communities in Europe. Still, despite close to 2.5 million people living in the domestic area, there are virtually no transcontinental connections from Hamburg. There is one Continental B757 going to Newark each day, and the flight Hamburg-Dubai. The connection Hamburg-JFK by Emirates was discontinued. If you travel from Hamburg to somewhere (outside Europe, and no charter trip), you’ll always go via Frankfurt, Munich, Paris, Amsterdam or London.
Same applies to Berlin, less wealthy but close to 4 million people.

Canceling the A380 would help EADS bottom line. If it is costing more to build an A380 than you can sell it for, they can’t make it up in it volume.

Who says it is costing more to build than they are being sold for? The investment that has been put in to the programme is large: infrastructure of workshops/buildings/offices/assembly plants etc, specialist moving equipment, contracts, pre-paid parts/materials and many more factors. These expenditures would still be present if you cancelled the program. The idea is to sell as many of the planes as possible to recoup these costs…

Canceling the A380 would help EADS bottom line. If it is costing more to build an A380 than you can sell it for, they can’t make it up in it volume.

Aircraft are not like cars, you can’t stop building just cos you’ve there is a blip in the market. The lead times from raw material to finished product can be quiet long therefore I’d don’t see how cancelling any order can be good for any manufacturer unless you’re at the end of the types production life (which the A380 is not). So explain how this would be of benefit to EADS.

Paul

So what?
The expenditure is done. Canceling it now wouldn’t help anybody, except the B747-8I

Canceling the A380 would help EADS bottom line. If it is costing more to build an A380 than you can sell it for, they can’t make it up in it volume.

AS I recall, break even for the 777 was quoted at something like 250 planes.
They sold that many fairly quickly.

The A380 is a long way from that.

But as I stated in an earlier post, being an Airbus…I’m not sure it has to make money since it’s seen by many government shareholders (like German Laenders) as a jobs scheme.

I’d love to sit down with an airline or IFLC guy.
The 380 would be a great plane for long routes that a lot of people travel.
As an example, BA flies has two flights daily from Seattle to London (I believe a 747 and 767).
Would it work to replace both flights with one 380?

I’m guessing the airlines see some advantage to having two flights daily especially in NA where a major hub has a large catchment area…in other words, people on the afternoon flight have spent all day getting to the hub, so having a later flight means they don’t have to spend the night in a hotel at the hub waiting for the morning flight.

Then there’s fuel, and AC and financing costs. Probably a thousand variables.
Interesting stuff, picking a plane.

With regards to frequency, you are absolutely right about maximising connections through higher frequency, and that will always be an issue.

The other thing to bear in mind is that frequency attracts premium travellers. Tjose buying business/first class fares tend to like flexibility and will pick an airline which gives them that. If a meeting overruns at either end of the route, they want to know that they haven’t missed their only flight for the day. Some research we did in London related to air travel need showed that businesses want higher frequency to primary business points, and will make their ticket decisions based on that.

The 777 was making profit within 10 years.

Who told you?

Other people have different viewpoints:
http://forum.keypublishing.co.uk/showpost.php?p=1148792&postcount=8

I’d like to see what you are smoking. You sound like a politician, deflecting the subject left, right and centre, but not actually answering the question.
The 777 was making profit within 10 years. Who cares if it wasn’t as much profit as planned, but it was bought and paid for nonetheless.
The A380 is way off that mark. Period. Stop trying to deflect the subject by asking when the 787 breaks even.

We’re talking A380 here, a single plane type with no comparison.

The B777 was a successful aircraft, but it didn’t exactly produce the positive cash in the first 10 years it was intented for (there were some large cost overuns, like always). So the beancounters in the upper management had the idea to make things much more “competive” this time and have an “innovative” idea: they decided to stop building aircraft altogether and rather run a procurement and marketing company which has a small factory attached to it.

When does the B787 break even?

Please elucidate.

The 777 sold 538 frames in the first ten years of production. I have a hard time seeing that as equivalent to the economic mess the A380 program is in.

AS I recall, break even for the 777 was quoted at something like 250 planes.
They sold that many fairly quickly.

The A380 is a long way from that.

But as I stated in an earlier post, being an Airbus…I’m not sure it has to make money since it’s seen by many government shareholders (like German Laenders) as a jobs scheme.

I’d love to sit down with an airline or IFLC guy.
The 380 would be a great plane for long routes that a lot of people travel.
As an example, BA flies has two flights daily from Seattle to London (I believe a 747 and 767).
Would it work to replace both flights with one 380?

I’m guessing the airlines see some advantage to having two flights daily especially in NA where a major hub has a large catchment area…in other words, people on the afternoon flight have spent all day getting to the hub, so having a later flight means they don’t have to spend the night in a hotel at the hub waiting for the morning flight.

Then there’s fuel, and AC and financing costs. Probably a thousand variables.
Interesting stuff, picking a plane.

So, not the best business case for the first decade, but honestly, most aircraft in the last 10-15 years were unsatisfactory from that standpoint (even B777).

Please elucidate.

The 777 sold 538 frames in the first ten years of production. I have a hard time seeing that as equivalent to the economic mess the A380 program is in.

Yes, there is a market for the A380. But big enough for the program to break even?

I’m skeptical

So what?
The expenditure is done. Canceling it now wouldn’t help anybody, except the B747-8I. With the awareness that air traffic still grows in the long run, the future seems safe.
Like with the B747, the chance of selling other aircraft in the wake of ordered A380 is good. I think the program will break even, but that might take a while, probably until 2017 to 2020 and 400ish units sold (the pure number is somehow irrelevant, more interesting is the price airlines are willing to pay).

So, not the best business case for the first decade, but honestly, most aircraft in the last 10-15 years were unsatisfactory from that standpoint (even B777).

Yes, there is a market for the A380. But big enough for the program to break even?

I’m skeptical

It must be said though, that the number of announced 787 order cancellations have in no way hit the program as hard as the potential A380 order cancellations will hit that program.

There is no need, as most customers will not see their B787 before mid of next decade. Boeing will deliver about 100 until end of 2012, or something like one fourth of the originally proposed plan.
Additionally, most customers have plenty of time canceling their B787 orders. ILFC is now talking about canceling, because they are approaching the final legal option to do so.

Hazy was a big proponent of the A380 concept.

Currently airlines have lost about 10% of their total passengers and and about 40% of their premium travelers. No wonder airlines don’t run to get bigger aircraft. But if the growth predictions of Boeing is correct, the A380 will become a sound business case after all. It still is (and will be for quite a while) the most efficient airliner available.
I rather see the B747-8I as victim of the crises.

I still think there’s a market for the A380.

Even Boeing thinks so.

Probably had customers lined up for it, who have most likely since seen sense and dropped out.
I didn’t say Hazy was infallable.

You are quite right. the interiors have caused a lot of headaches.

But to make a plane that is unusable to an organisation that could account for 3 and a half billion in sales (more than likely just to begin with) was perhaps unwise.

I respect Mr Hazy. He does know his industry, others know this too and will be watching what ILFC does closely.

Might I enquire as to why Mr Hazy ordered the plane in the first place, surely he was aware of the refitting issues…?