Odds and Ends: Boeing discounting; A380 analysis; A320neo LEAP

Boeing discounting: Although Boeing alternately acknowledges it’s under price pressure from Airbus or it’s maintaining pricing on its aircraft, UBS aerospace analyst David Strauss concludes that discounting is increasing on the 737 and 777 but is somewhat better on the 787.

Strauss writes in an August 6 note that discounting on the 737 is around 59%. The 777 is now discounted at about 54% and the 787 trails at 46%. (He doesn’t bother with the 747-8.) These are for in-production models.

Strauss concludes that 737 discounting increased since the introduction of the MAX in 2011.

Current list pricing for the 737 is $78.3m for the -700, 93.3m for the -800 and $99m for the -900. The MAX list prices are $87.7m, $106.9m and $113.3m.

The list prices for the 777 are $269.5m for the -200ER, $305m for the -200LR, $330m for the -300ER and $309.7m for the -200LRF. The -8X comes in at $360.5m and the -9X at $388.7m.

The 787-8 lists for $218.3m, the -9 for $257.1m and the -10 for $297.5m.

We are hearing, however, of special cases in which the 787-9 runs for $135m or significantly less and the 787-8 for as low as $115m. We also hear of the 777-300ER being offered for as little as $128m in special circumstances. The calculated discounts UBS mentions for 737 fall within the pricing range that we hear in the market. Strauss writes that some discounts to list reached 65%, also within the range of what we have heard.

The discounting becomes increasingly important because Airbus says it can price the A330ceo and neo sharply below the 787, up to 25% less. Boeing has far less flexibility to discount the 787 than with the 737NG and 777 Classic. The former still isn’t making money while the latter have amortized production lines–just as the A330ceo line is fully paid for. Airbus has offered the A330ceo at steeper discounts to list than Boeing offers the 787, and the forthcoming neo will also see steeper discounts than the 787–unless Boeing becomes more aggressive in that pricing, which will only increase the time to profitability.

A380 analysis: Here is a good, detailed analysis about the Airbus A380 and its position in the marketplace.

A320neo LEAP: CFM’s LEAP-1A, for the Airbus A320neo, has entered production. Aviation Week has this article with the details.

171 Comments on “Odds and Ends: Boeing discounting; A380 analysis; A320neo LEAP

  1. The A380 article is of little valuable, and only for people without any idea about the current sitaution.
    It repeats the various hearsayings and questionable intepretations why the A380 isn’t successful. No mentioning of airline dynamics & competitive landscape, global availability of finance and customer preferences when booking flights (apart from the overrated and wrong conclusion that people actively avoid hubs … guess between which cities most B777s fly?).

    • Well, it’s the silly season in quite a few countries. What never ceases to amaze me, though, is how it’s open season on the A380 from the usual bunch of critics, all year around.

      • Boeing has significant problems all year round these days.
        A level playing field is required 😉

    • The article describes one point why US airlines fear to use the A380:
      “Shares of United would plunge at least 10 per cent if it bought A380s, according to one analyst, because of concerns that they would bring too much capacity into the market.”
      Airline management is also paid according to stock value and not for a bright vision but this statement gives a hint about the business case for Amedeo. The analyst may accept a lease far more patiently than a buy.

      “In recent years, US airlines have found the way back to profitability by cutting capacity and retiring planes, effectively taking seats out of the market. A bigger plane, in the view of some analysts, would undo everything they’ve done.”
      Someone should start to turn the steering wheel in another direction.

      • Many European and Asian airlines use A380s to serve US destinations. Kind of opens the question why US-based airlines are unable to capture this demand (it is there country after all). I guess most US-based airlines are still way too much focused on their domestic market, and the much more profitable international market is captured by other airlines.
        Further, if you want to fly awful planes with awful cabins and receiving awful service, book a US-based airline.

    • “customer preferences when booking flights (apart from the overrated and wrong conclusion that people actively avoid hubs ”

      I think the point was less about avoiding hubs, and more the preference for point to point.
      I know I just booked a flight from Seattle to London on BA – I paid more than I could have to have a direct flight.
      I know for me, and I know I am not alone, the three decision points on booking a flight are (not neccessarily in this order, but in combination):
      1. Cost
      2. Direct route vs having to make connections
      3. Frequent flyer mile partnerships (I am an Alaska FF)

        • OV-099 – I understand that.
          My point is that I (and many others) will pay a premium for a direct flight, rather than point to hub to hub.

        • The point there is that there are many more points in the world connected by a one stop flight than a non-stop flight. In fact, the most successful airlines in the world operate through one, or two (i.e. LH), hub(s) while flying either point to hub or hub to hub.

          Also, according to the original P2P “philosophy” that was advertized by Boeing, P2P would make it economically feasible to open up long range flights both between secondary airports and between a secondary airport and a hub. As thysi is pointing out down thread, only a handful of 787 flights are true P2P flights.

    • Every hub is also a point. Smaller planes can serve hub to point routes, rather than hub to hub. People prefer no-stop flights. That’s why the A330, 787, A350, and 777 are outselling the A380 and 747.

    • Global availability of finance? Airlines and leasing companies sure don’t have a problem financing record sales of 737s, A320s, A330s, A350s, 777s, and 787s–do they?

      • Leasing companies don’t like the A380. They like generic twin aisle aircraft that appeal to many different potential customers. That allows airlines to get hand on those for lower leasing rates.

        • Leasing companies don’t like the A380.

          Most airlines don’t either, with the exception of EK.

    • Re: A380’s Role
      The following tables highlight the differences between the civil aviation markets of the US, China, the United Arab Emirates and Singapore. The statistics are from the World Bank. ‘Pax’ represents the total boarding for both domestic and international and likewise ‘Departures’ include represents all domestic and international departures ranging from a small commuter turboprop to A380s.

      Pax 2009 2010 2011 2012 2013
      US 679,423,408 720,497,000 730,796,000 736,699,000 743,096,000
      China 229,062,099 266,293,020 292,160,158 318,475,924 352,795,296
      UAE 31,761,631 44,948,144 50,342,892 59,948,767 69,191,127
      Singapore 18,427,473 24,859,825 26,509,929 29,138,458 30,554,914

      Departures 2009 2010 2011 2012 2013
      US 9,182,363 10,095,197 10,057,768 9,864,360 9,734,073
      China 2,140,124 2,377,789 2,538,667 2,779,741 3,073,450
      UAE 170,588 240,855 269,521 311,758 358,828
      Singapore 83,772 131,722 144,697 157,939 166,883

      Avg Pax/Flight 2009 2010 2011 2012 2013
      US 74 71 73 75 76
      China 107 112 115 115 115
      UAE 186 187 187 192 193
      Singapore 219 188 183 185 183

      Notice the Avg Pax/Flight’ for the UAE and Singapore and more than twice (almost three times) the average for the US – no doubt reflecting the greater use of VLA – especially the A380 operations at the Dubai and Changi mega hubs.

      In comparison with the US’s 318,548,000 people the UAE with a total population of 9.2 million and Singapore of just 5.4 million are tiny – but by exploiting their location and business skills have created airlines to service the world’s expanding demand for global air travel.

      Note, the UAE’s business model has to a large extent been built around the A380 as the recent quotes by Tim Clark confirm:-

      “The airport (Dubai) handled 66 million passengers “last year, rivaling Heathrow as the busiest international hub.”
      “But for Emirates, the biggest selling point of the A380 is its ability to pack in more business-class seats and create an environment that appeals to big-spending passengers.
      “The upper deck of the A380 is an absolute gold mine for us,” Clark says. “We elected to make it all premium. We elected to put in all the gadgets and gizmos. We were laughed at, at first.”
      “There are more first- and business-class seats on the Emirates A380 than on the 777, and they are usually 75 to 80 percent full, Clark says. On some routes, like those to Heathrow, where Emirates has five daily flights, that figure can reach 90
      percent. Once the whole plane is 85 percent full, its operating costs fall below those of a 777”

      For Emirates an A380neo-900 would just be unbeatable.

      Also note that while the 2013 pax trip count for the United States (9,734,073) is triple that of China’s (3,073,450) the two things that should be bourne in mind are:-
      1) The small (76) number of pax per flight refects the US’s higher proportion communter flights.
      2) Between 2009-2013 the US air travel grew by only 63,672,592 trips, or just 9.37%. Over the same period the growth for China was 54.02%.

      Clearly, the China can maintain anything like the growth it will overtake the US in with 10-20 years.
      To service this type of growth China (and the rest Asia) will need to operate bigger aircraft and I for one believe the A380 has a role to play in meeting this demand.

      The sited A380 article also mentions another interesting number – “Airbus spent roughly $US25 billion to develop the aircraft”, the is about same as the B787 deferred production costs!!!!

      Another point to recognise that if the market dynamics does demand become VLA to offset slot restrictions at the world’s increasing number of mega hubs then Boeing have not real counter to the A380, nor do the the time and resources to develop one.
      This I believe is the true threat to the US and why they are so vicious in their condemnation of the A380.

      Airbus – stick with it the A380 time will come – its a great plane.

  2. I think in the real world there is no thing such as a discount price! The price you pay for your Aircraft is the real market price combined with your personal bargaining power,as stated in your summary The listprice is just an imagenary cluster of numbers. Nobody would be able to pay $ 400 Million( A380) for one Airplane-thats almost half a billion!

  3. I have never understood why aircraft list prices are so out of whack compared to actual sale prices. has any airline ever paid even within 30% of list for an airplane (at least any time in the last 15 years)?

    in the world of pretty much all other large commodities, list price is within 20% and usually 10% of average transaction price, why do aircraft makers maintain the fiction of list price?

    this fiction also greatly distorts the announced values of contracts for aircraft purchase relative to actual values, which in turn is greatly misleading to unsophisticated investors. no other industry that I am aware of so routinely lies to the world on such a large scale about the financial value of purchase or sales contracts, why is this tolerated in the aircraft industry?

    Take, for instance, the recent Emirates/Qatar joint purchase order for 200 777x aircraft loudly shouted to be worth ~$70 Billion. the reality given the above figures is that it was closer to a $30B transaction at best (and likely less as it is a gigantic launch order from an extremely powerful customer). How is the public pronouncement of it being a $70B* deal (*at list prices) anything other than a criminally fraudulent attempt to mislead unsophisticated investors as to the future bookings of Boeing and therefore drive an unjustified spike in stock price?

    Not to pick on Boeing as Airbus is just as guilty in this arena.

    Scott, please explain to me
    A. What rational market dynamic drives this
    B. Why the press and analysts (including you) play along with this fiction rather than reporting actual likely value
    C. how this is legal (or maybe more accurately, _why_ this is legal)

    • I have never understood why aircraft list prices are so out of whack compared to actual sale prices. has any airline ever paid even within 30% of list for an airplane (at least any time in the last 15 years)?

      I would guess that yes, that has actually happened.
      But anyway, regarding list prices, it’s a common practise for these to be just the starting point of the discussion. The price that nobody ever pays, but that to a point is leverage for the seller. As in: “Because you’re such valued customers, we start at list price minus 20%”, and then the haggling for further discounts begin. Also, of course, the airline will start a discussion on an RFP expecting at least X% off list price anyway.
      A phenomenon found in most sectors these days, not just the aviation industry. I’ve only ever heard of a single customer of my own employer (IT sector) refusing a discount on list prices… and that was allegedly on the basis that they don’t grant any sort of discount themselves. But even that attitude still leaves some leeway with regard to commercial terms about “soft” products like maintenance, software licenses, etc.

      • yes, I understand that List Price is (traditionally) the seller’s official asking price and in most industries it is traditional to entice a customer with a perceived discount from list (I have, for instance purchased several cars in my lifetime and never paid list, and been privy to commercial quantity discount purchase contracts).

        the point of my post was:
        only in the commercial aircraft industry (maybe also large B-jets) is list price commonly fully double actual sales price.
        only in the commercial aircraft industry do contracts get announced, touted, celebrated at full list price theoretical value.
        in almost all other industries, $ value of contracts are either not reported (until a bookings line on the quarterly report is broken down) or accurately reported.

        see recent coverage of Farnborough which universally proclaimed enormous false values for the contracts and sales announced.

        why, oh why, are the general press and industry analysts (including this site) complicit with this blatantly misleading and fraudulent practice?

        • the point of my post was:
          only in the commercial aircraft industry (maybe also large B-jets) is list price commonly fully double actual sales price.

          You’d be surprised what conditions are attached to company cars. Never mind a lot of IT hardware.

          I think there’s some sort of “blind spot” phenomenon here, in that most people in the comments here will be aware of the level of discounts in the aviation industry, but not in other industries – which doesn’t mean similar discounts don’t exist elsewhere, just that a group of aviation analysts/enthusiasts isn’t as aware of them.

    • Scott, please explain to me
      A. What rational market dynamic drives this
      B. Why the press and analysts (including you) play along with this fiction rather than reporting actual likely value
      C. how this is legal (or maybe more accurately, _why_ this is legal)

      I’m not Scott, but I’ll give it a shot anyway.

      A) See above. An airline that intends to buy more than a single airplane won’t pay list price. Same as you wouldn’t pay list price if you bought two cars of the same make/type. Also, the OEMs can show how valued a customer is by taking X% off the list price at the start of negotiations. As I also said, this isn’t an aviation phenomenon – it’s the same with pretty much any other company out there that deals with enterprise customers; as soon as you’re in a region of $20,000 or more apiece, rest assured that almost no company out there pays list price for anything, unless the quantity in the order sheet is given as “1”. Heck, in the olden times in Germany even for sums way below that, a discount (“Skonto”) of 3% would be automatically granted by most companies if you immediately paid the sum in full; no negotiations required. I haven’t done business in Germany in a while, so I don’t know how applicable that still is, but it goes to show that “not paying list price” is neither a new phenomenon, nor one only associated with planes.
      B) The press and analysts don’t “play along”, they frequently mention list prices but at the same time point out that significant discounts are the rule. Problem is that list prices are the only officially published numbers, so those and the average discount according to market intelligence are the only things you can write about. Plus: Airline 1 getting discount X does not mean airline 2 gets the same discount. I.e. in reality there’s no such thing as a “standard price” that airlines pay for a particular plane.
      C) Why wouldn’t it be legal? This isn’t the USSR, so Airbus and Boeing are both free to make up their own list prices and grant discounts as they wish.

      • the legality I refer to is the lies told to the public (always carefully asterisked) about the contract value. yes, they are hiding behind fine print disclaimers, but that is part of the problem I am getting at.

        we have these laws regarding corporate financial reporting you see, that require a public company to do this thing called “telling the truth” about the financial state of their business.

        when every press release is a total lie couched in fine print, and the quarterly reports are jiggered to make apple pie from rotten tomatoes, the investing public rely on the press and analysts to expose the reality.

        Analysts and the press should not be let off the hook because they wrap themselves in similar fine print and asterisks. Analysts and the Press have a duty to accurately report the whole story, not just the company press release.

      • Afromme summed things up nicely. We would only add that we do report “real” prices when we learn them, much to the annoyance of the OEMs.

        • so how about enhancing your typical “although airlines rarely pay list price” qualifier to be a bit more illuminating, for example “Airlines typically pay 40-60% below list price for orders of this size so the actual value of this deal is likely $10B vs. the announced value of $20B”?

          your average reader has no idea that the discounts from list are so high that the entire concept of list price for an aircraft is a complete fiction.

    • I think Scott actually did an article a while back on another, maybe more important, factor in the disconnect between aircraft list and actual price, although a quick search did not find the article again, so maybe I am misremembering.
      At any rate the thing that I recall is that most aircraft purchase contracts, being quite long term, have an inflation adjustment built in, and that adjustment is commonly keyed to the list price of the aircraft involved. As a result, it is in the airframer’s interest to continuously increase list prices to get the most value out of their existing contracts. The result, though, is that, since they can never reset the list prices back into better agreement with actual market prices because doing so would negatively affect the actual value of their existing order book, so the divergence just grows year over year, as does the resulting apparent prevailing level of discounting reflected in actual market prices.

    • The Seattle Times routinely gives the list price and then mentions the estimated discount price when they write about new aircraft orders.

    • When it comes to bargaining in the aircraft business, I can only imagine how extremely complex it is and I’m certain that neither Airbus nor Boeing ever talks about list price with the customers. The OEM most certainly have very good knowledge how much an airline (or leasing company) is able to pay for the aircraft and it’s intended usage and still make money and they will try to help the customer to find new revenues, ways to cut cost, financing, support etc with the purchase. This is done to add value for the airline and therefore being able to charge more for the product (which certainly consist of far more things than the airplane). And an aircraft is not a single item. It is a very complex system with many possibilities to make money for the OEM (and their partners) and both parties are very well aware of this.
      This is a multi-billion-dollar-very-serious-business and it is not serious to be able to take away another 25 % from your initial offer.

      • A list price about 100 to 120% higher than of a given transaction is quite common.

        The List price applies in our case to the extreme case of an order of a single aircraft, which is obviously not attractive for the SELLER, compared with a especially important megaorder of lets say 50 or more, with 60% discount!!

    • “It’s a commercial disaster,” Mr. Aboulafia says. “Every conceivably bad idea that anyone’s ever had about the aviation industry is embodied in this airplane.”

      And that, Ladies and Gentlemen, is why people don’t take him seriously. Say what you will about how Airbus read the market wrong, how the cycle worked against Airbus’ favour, how Airbus then bunged up the production of the plane… but that statement from Aboulafia is just nonsense.
      He also pairs that with a statement (“People would rather take direct flights on smaller airplanes, he said, than get on big airplanes”) that Boeing has been using in its own marketing for the 787. A statement that already works against the 777-300ER, to not even mention the 777-9X (which Aboulafia is a big fan of).

      • It may look as if Richard Aboulafia has staked his reputation on the A380 being a failure. That’s why it’s in his interest to talk it down at every opportunity.

        As for his view on direct flights vs hubs etc., he seems to be stuck in a peculiar American mindset in which America always leads while the World follows. Since deregulation and operating an absurd number of flights from slot-controlled airports has worked so well in America, it must do the same, apparently, for the rest of the world — according to Dick.

      • A statement that already works against the 777-300ER, to not even mention the 777-9X (which Aboulafia is a big fan of).

        No it doesn’t work against the 777-300ER or the 7779X. They are much smaller planes, than the A380.

        • No it doesn’t work against the 777-300ER or the 7779X. They are much smaller planes, than the A380.

          But they’re also much, much bigger than the 787, which Aboulafia implied was the people’s choice because people prefer smaller airplanes over bigger ones.
          Also, the 779X is safely in VLA territory in all but Boeing’s marketing, taking away what little life the 747-8i had left in it.
          To pretend that the 773ER and 779X are in a “small” category that is used mostly on P2P instead of between hubs, and to which the statement “People would rather take direct flights on smaller airplanes” does not apply is a somewhat slanted view, to be honest.
          It’s no coincidence that the biggest A380 customer is also by far the biggest 773ER and 779X customer – and likely to keep that title.

          Sure, the A380 is bigger still than the 773ER and 779X – but the reason it’s not selling as well is not that Hub-Spoke has died and everybody is flying on smaller planes offering direct connections to any airport in the world.
          I’m curious to see how market dynamics are going to change when the 779X actually enters service. Will a lot of airlines decide that this (and/or a hypothetical A350-1100) is really as big as they need, or will its availability actually help the A380 (neo-ised) which suddenly isn’t quite as big a step up from the biggest twin any more.

        • Clarification:

          To pretend that the 773ER and 779X are in a “small” category that is used mostly on P2P instead of between hubs, and to which the statement “People would rather take direct flights on smaller airplanes” does not apply is a somewhat slanted view, to be honest.

          My use of “apply” there isn’t very clear. What I meant was:
          To pretend that the 773ER and 779X are in a “small” category that is used mostly on P2P instead of between hubs, and which thus isn’t ridiculed by the statement “People would rather take direct flights on smaller airplanes” is a somewhat slanted view, to be honest.

        • You really went out of your way to distort my comments. I guess some people have invent straw men, and then knock them down.

          You also distort what Aboulafia said.

          Aboulafia implied was the people’s choice because people prefer smaller airplanes over bigger ones.

          “People would rather take direct flights on smaller airplanes…” is what he actually said.

          To pretend that the 773ER and 779X are in a “small” category that is used mostly on P2P instead of between hubs, and to which the statement “People would rather take direct flights on smaller airplanes” does not apply is a somewhat slanted view, to be honest.

          I never “pretended that the 777 is a “small” category airplane, I simply pointed out that it’s a smaller plane than the A380.

          It’s no coincidence that the biggest A380 customer is also by far the biggest 773ER and 779X customer – and likely to keep that title.

          So? Lots of airlines fly the 777, EK is just one of many. None of this changes the fact that the 773ER and 779X, are smaller than the A380.

          Sure, the A380 is bigger still than the 773ER and 779X –

          Thank you!

          …but the reason it’s not selling as well is not that Hub-Spoke has died and everybody is flying on smaller planes offering direct connections to any airport in the world.

          I never said hub-spoke is dead. I never said everybody is flying on smaller planes offering direct connections to any airport in the world. Putting words in peoples mouths, is the sign of a weak argument.

        • The 779 is much bigger than anything else flying today, bar the 747 and A380. It is clearly not going to ply “thin” routes outside the hubs with 400+ pax on board, the way the 788 was envisioned.

        • But it’s eating the 747 and A380’s lunch.
          Why do you suppose that is?

        • My point wasn’t about the sales, but about the size — which will dictate how it is used (basically the same way as the 747 or A380).

        • The 7779X is going to ply thinner routes than the A380. It will work for a lot more airlines than the A380. Where the 7779X is too big they will use the A351. It’s all about right-sizing the aircraft for you particular needs. If the A350 is too big, there is the 787, or the A330 (range permitting).

        • I never said hub-spoke is dead. I never said everybody is flying on smaller planes offering direct connections to any airport in the world. Putting words in peoples mouths, is the sign of a weak argument.

          You didn’t, but Aboulafia did, which was what/whom I was relating to all along. I responded to you because you defended Aboulafia’s statement.
          Sorry if that wasn’t clear.

    • Wondering what the task set for Jad Mouawad was.
      Interesting to see this renewed small flood of Airbus bashing pieces
      come up ahead of A350 certification and EIS.
      Really, is that “level playing field” so dearly needed ..

      • Uwe, what fact(s) in the article are false and what opinion or judgments unreasonable?

        • The article and the referenced essay from Aboulafia are nothing more than stated opinion presenting a very one sided view. No balance at all.
          But both ( more so the Aboulafia reference ) are presented as researched unfailing truth.
          The strong dominance of P2P still is nothing more than PR.
          In general the fault is with a tenditious presentation style and less so with blatant lies.
          Modern journalism seems to have lost any understanding for factual reporting.
          ( Just count the number of words with a ( strong ) emotional payload.)

        • The article doesn’t really give any hard facts to base any market prediction on, does it?
          It just paints the current situation, specifically based on two undisputed facts that are presented as such:
          * The A380 didn’t sell as well as many had hoped
          * The A380 doesn’t work on just any route
          * Emirates absolutely loves the plane

          Everything else is a sort of accumulation of opinion and anecdotes, selected chiefly to be able to paint a certain picture.

          For instance, a supposed preference for P2P instead of Hub-Spoke is mentioned, chiefly based on Aboulafia’s comments. There’s no actual analysis – however short – of whether this is true, how aircraft sizes have been trending, what that means for the A380, etc.

          They also mention LH and AF having cancelled/deferred orders. Because it fits with the plot of a plane that’s a hard sell.
          It’d be just as valid to point out that SQ placed a repeat order just as their last originally ordered frame had been delivered, but that doesn’t fit with the storyline.
          In reality, neither of these (SQ/AF/LH) really amount to more than anecdotes. The numbers are too small (5 new orders, 3 cancellations, 2 deferrals) to make a trend.
          Sure, they’re all facts, but what do they actually tell you about how likely/unlikely more A380 orders in the next 12 months or in the next 12 years are?

          It’s a bit like going through statistics of how many times did Germany beat Argentina on a Sunday in July in the last 132 years… sure, you’ll arrive at some undoubtedly factual number. But how much is that particular really going to tell you about the likelihood of Germany beating Argentina in the 2014 world cup final?

          It’s a similar story with the anonymous statement that “Shares of United would plunge at least 10 percent if it bought A380s”. How much fact is in that, how much speculation, how much wishful thinking, and how many analysts would actually agree? And irrespective of how many people agree, how right is that prediction going to be?
          (Again, draw a parallel to soccer pundits if you want to.)

          • “Shares of United would plunge at least 10 percent if it bought A380s”

            This could actually hold a little bit of truth.
            …. and explains the reason for this kind of “invocation journalism”.
            Airlines with less exposure to share value fixated management appear to go for the A380 while the timid pick at small crumbs like all the other timid chicken 😉

        • So I thought to look into the P2P a bit more just now, given that the appeal of the 787 was promoted to be on the basis of the P2P model, and there are now enough of them flying to look at how they are being used.

          Looking at the active 787 routes on airportspotting.com, I found 157 scheduled routes with this aircraft, excluding Thomson (which I didn’t count as it’s really a charter airline). Out of those 157, 153 are to the respective airlines’ hubs, and 4 are P2P (assuming I count Norwegian’s TATL flights from LGW as non-hub). That’s 2.5%.

          What is clear is that the 787 is being used on thinner routes where the economics don’t allow the use of larger planes such as the 777. But I expect I would see a similar pattern for the A330 as well, so the way the 787 is being used today really does not appear revolutionary.

        • I forgot to include the actual numbers …

          Aeromexico 0 of 4
          Air Canada 0 of 2
          Air India 0 of 15
          ANA 1 of 24
          ArkeFly 0 of 4
          BA 0 of 7
          China Southern 0 of 7
          Ethiopian 0 of 11
          Hainan Airlines 0 of 6
          JAL 0 of 13
          Jetairfly 0 of 4
          Jetstar 1 of 7
          Kenya Airways 0 of 1
          LAN 0 of 4
          LOT 0 of 4
          Norwegian 2 of 16 *
          Qatar Airways 0 of 15
          Royal Brunei 0 of 5
          Thai Airways 0 of 1
          Thomson Airways (not counted)
          United 0 of 6

        • Out of those 157, 153 are to the respective airlines’ hubs…

          Every H2H flight is also a P2P flight. For example LHR is a point and so is JFK. People get hung up on this P2P, business.

          What is clear is that the 787 is being used on thinner routes where the economics don’t allow the use of larger planes such as the 777.

          Exactly.

          But I expect I would see a similar pattern for the A330 as well, so the way the 787 is being used today really does not appear revolutionary.

          It’s not revolutionary. It started with the 767 and A330. The 787 makes even longer, thin routes possible. All one has to do is look at the sales of the A330, A350, 777, and 787, compared to the A380 and 747, to see where the market is heading.

          This was fair article. It discussed how much passengers love the A380, and how well it works for EK.

        • Every H2H flight is also a P2P flight. For example LHR is a point and so is JFK. People get hung up on this P2P, business.

          Well, the reason it’s being discussed here is that Aboulafia brought it back up again in an article linked above as an “argument” against the A380.

          What is clear is that the 787 is being used on thinner routes where the economics don’t allow the use of larger planes such as the 777.

          Exactly.

          Indeed.
          Which should once and for all do away with the notion that the A380 isn’t selling because “People would rather take direct flights on smaller airplanes”.

        • Which should once and for all do away with the notion that the A380 isn’t selling because “People would rather take direct flights on smaller airplanes”.

          I know I prefer direct flights, without having to make a connection. I doubt I’m the only one who feels this way.

        • I know I prefer direct flights, without having to make a connection. I doubt I’m the only one who feels this way.

          How much extra are you willing to pay for those direct flights?

        • Present me with two prices and two schedules, and I’ll make a decision.

  4. My comments

    1) Basing on my experience, the fact that a product is already amortized makes no difference in the pricing, unless the company is in cash flow diffiulties. The profit on already amortized products is precisely what makes a company tic and if it used such proceeds to subsidize further sales it would never achieve profitability!

    2) Basing on what I argued in former post, IMHO there is no doubt that the A330 cannot compete, even if subsidized, with the B787 on distances above 5,000 – 6,000 nmi. On distances near 4,000 nmi the position of th A333neo could be somewhat better, as the Ceo is designed for shorter distances as the B789, providing eventually a market niche with the help of hefty internal o external subsidies

    3) But possibly, if BOEING perceives this niche important enough, they could eventually codify the already mostly designed A783 to achieve about 4,000 nmi at 300 PAX. But this is pure speculation

    4) Assuming that the Neo could be a B787 killer, it will expand to a A359 one. Factually, United has already cancelled 50 A359, which is the only widebody with really good perspectives, in exchange of a mere vague letter of interest for the allegedly much cheaper neo! And since the show in Dubai nearly a year ago there wer nearly no new customers A359 orders, instead cancellation.

    5) IMHO, the 12-14% RE-ENGINING efficiency improvement is true in front of the

    6) A330 present old, even if improved engines. But nothing near to such figure in front of the much newer B787 ones. I suspect, this is forgotten sometimes!!

    7) Much of the negatives I cite above would widely disappear if Airbus would proceed to UPGRADE in the extent as the B779X does, which of course is much, much more as re-engining!!! But obviously, as it is the case of Boeing, this would be more costly and more important, take about 5 years!! As one of the main reasons of the Neo is to fill the gap due to the “little to offer situation” until 2020, supported by the saturation of th BOEING production, AIRBUS can simply not afford doing so!!!

    8) So, what should Airbus do?? MY, CERTAINLY NOT WELCOME ADVISE
    • forget the A330neo
    • forget due to other reason the A380 production
    • Use the factories working presently on th A330ceo to increment the production capacity of the A320/21neo. By the way, there a re-engining (which is no miracle formula applicable in other cases) as here they wer able to flabbergaster the sleeping on the wheel BOEING, which had no competitor immediately available and the B737max is also only a half-solution

    • 6) A330 present old, even if improved engines. But nothing near to such figure in front of the much newer B787 ones. I suspect, this is forgotten sometimes!!

      “Forgotten” because it’s completely incorrect.
      The A330neo is going to get a modified version of the Trent-1000-TEN designed for the 787 (based on the original Trent-1000 the 787 was launched with). So by definition, the 787 won’t have “newer” engines than that.
      For reference: that Trent 1000-TEN had its first test run just over two months (!) ago.
      http://www.rolls-royce.com/news/press_releases/2014/030614_ten_runs_first_time.jsp

      8) So, what should Airbus do?? MY, CERTAINLY NOT WELCOME ADVISE
      • forget the A330neo

      Read: Forget a relatively low-hanging fruit that based on launch commitments alone will pretty much pay for itself and is furthermore poised to keep a well-oiled, fully amortised FAL running for another 5-7 years over its current lifespan, generating – even with discounts to compete with the 787 – more margin per frame than you could hope for on any A320. Added benefit: It may make life a bit more difficult for Boeing.

      forget due to other reason the A380 production

      Do you mean “cancel immediately” or “don’t invest further in it”?
      The latter may have some merit (although I still wouldn’t agree, but I can see how you could debate how much sense investing in, say, an A380neo is going to make), but the former qualifies as an utterly crazy suggestion in my book, as it implies paying hundreds of millions in penalties, paying back deposits to the tune of a few billion, negating the per-frame profit they’re going to generate from 2015 onwards, and – cream on the pie – shattering customer confidence in Airbus.

      Use the factories working presently on th A330ceo to increment the production capacity of the A320/21neo.

      Right. You can’t just “use the A330ceo factory” for A320s (or any other type, for that matter), you’d have to tear it down and rebuild it. Maybe keep a few of the cheaper items like lavatories and some walls and a roof. Which you can’t do before 2017 at the earliest anyway, because you still have to (contractually) deliver A330ceo until then.
      Also, your suggestion would give them their 5th A32S/A32Sneo assembly line. What for? In 2017, Airbus are going to have four (!) fully operational assembly lines for that airplane family already!
      The limiting factor on A32S/A32Sneo even with the three FALs at the moment isn’t so much the number of available assembly lines, it’s the supplier base.

      • 6) You should read what you respond. What I stated is that the B787 has newer machines as the A330 (not the Neo!!!)

        8) Again: have you read 1) ?? You do not sell cheaper a model because it iis amortized, if you do so, the company never would be profitable!!

        As for the A380, I was not clear. Obviously, do not invest in the A380 once production of not cancelled units is complete

        Nobody told that they simply could produce A320beo in a A330ceo site. But as I consider that the A330, once the backlog is delivered, will disappear, the factory must b closed or retooled. I suggest that retool is for A320neo would be the logical thing to do

        WHAT I ADD HERE:

        * Airbus should try to exploit the successful single aisle sector to compensate the near collapse ofther wide body business

        * I am not suggesting to “forget” the wide body sector, not only becausethere must be a competition for Boeing. But to accept that during the next 5 years no more as absolutely should be invested (time an hardware) in unproductive wide-body tasks
        and instaed free the resources to design really competitive aircraft which should not ned neos or complemets each few years!!

        • “Airbus should try to exploit the successful single aisle sector to compensate the near collapse ofther wide body business”

          My, my. 45% market share is near-collapse?

          “… and instaed free the resources to design really competitive aircraft which should not ned neos or complemets each few years”

          Every few years? A320 was 22 years old when the NEO was launched; the A330 was 20 years old at that time.

        • ” I suggest that retool is for A320neo would be the logical thing to do”

          A350XWB production will overflow into A330 spaces.
          As planned. they already appear to share some stations.
          Then notice that 90% of production effort happens away from the FAL lines.

          A320 FAL structure:
          IMU there are 2 lines in Toulouse, 3 lines in Hamburg, 1 line in Tianjin, 1 future line in Mobile each with a final capacity of about 8 maybe 10 frames / month potentially building from 640 to 870 A32* per year.

        • 6) You should read what you respond. What I stated is that the B787 has newer machines as the A330 (not the Neo!!!)

          Apologies, I misunderstood which A330 you were referring to. I thought you meant the neo because I it’s common knowledge the A330ceo has older engines and is thus no longer competitive once the 787 becomes available in numbers. Which is exactly why the A330 is getting a NEO treatment.

          8) Again: have you read 1) ?? You do not sell cheaper a model because it iis amortized, if you do so, the company never would be profitable!!

          I have read 1), and like thysi I don’t buy it.
          Also, I explicitly made reference to profit margins on the A330neo.
          I’m not for a second suggesting that they should give the A330 a NEO treatment if they’re not expecting to make a profit on the programme. But to close a line that is fully paid for and that is capable of producing planes at a profit to me is madness. Which is what you’re suggesting when you say Airbus should cancel the A330neo an tear down the A330 FAL once the last A330ceo is delivered.

          But as I consider that the A330, once the backlog is delivered, will disappear, the factory must b closed or retooled. I suggest that retool is for A320neo would be the logical thing to do

          Well – as I said, that would amount to tearing down the FAL and building a new one.
          Also, as uwe said, expanding A350 production would seem like a more logical step for the A330 site, to be honest.
          Again – Airbus are going to have four A32S assembly plants by 2017 (sorry, I said FALs previously, which wasn’t correct as uwe pointed out). A fifth isn’t what they need to increase production rates, should that even be warranted by the market.

          * Airbus should try to exploit the successful single aisle sector to compensate the near collapse ofther wide body business

          Almost 60% market share, four A32Sneo assembly locations (from 2017) and an annual build rate possibly in the region of 600 or more isn’t exploiting the narrowbody sector enough?

          * I am not suggesting to “forget” the wide body sector, not only becausethere must be a competition for Boeing. But to accept that during the next 5 years no more as absolutely should be invested (time an hardware) in unproductive wide-body tasks

          But that’s exactly what Airbus are doing?!
          They’re spending a relatively small amount on the A330neo which most analysts expect to come within ~3% of the 787 on missions up to a certain length. Even Aboulafia expects the A330neo to sell ~600 frames, which will be more than enough to justify the investment and turn a handy profit on it.

          and instaed free the resources to design really competitive aircraft which should not ned neos or complemets each few years!!

          As thysi already pointed out, “every few years” is a bit of an overstatement.
          Also, if they can sell the A330neo alongside the competing 787 at a profit until the mid 2020s. That’s the profits that are needed to develop something new later.
          Also remember that it’s not the airframe that’s the main driver of efficiency and performance, it’s the engines. You can’t expect to design an airplane today that will still be competitive in 20-25 years’ time without an engine upgrade. Also, you can’t design a completely new airframe for every size category every 20-25 years. So doing a re-engine can actually be a very clever idea if you can make the numbers work – witness how long it’s kept the 737 and 747 going, what it did for the A320 (over 3000 NEO orders before first flight!), and what it’s likely going to do for the 777.
          As I mention the 777 – rest assured that if Boeing could have made the numbers work against the A350 without adding new wings to the 777X, they would not have bothered with new wings. Such massive changes (and expenses) aren’t driven by a company thinking how much cooler it would be to develop fancy new wings to strap new engines under. They’re driven by cost/benefit analyses.

    • 1) Basing on my experience, the fact that a product is already amortized makes no difference in the pricing, unless the company is in cash flow diffiulties. The profit on already amortized products is precisely what makes a company tic and if it used such proceeds to subsidize further sales it would never achieve profitability!

      Quite the contrary. Once the tooling has been written off, the company can discount the older products to be competitive at the low end of the market while still securing premium pricing for its newer products. This is frequently seen in the automotive industry, for example.

      P.S. United ordered 25 A359s, not 50. And it converted those 25 into A351s, and added 10 more.

  5. That Boeing is discounting heavily its narrow body is the logical outcome of Boeing’s competitiveness vs 320Neo. This line is Boeing’s cash cow – profitable and raking in cash -which depends on high operating leverage ie fully occupied production line ; the goal for Boeing here is to make sure it gets 45%+ (they will externally talk of 50%) of the orders with a refurbished product which is reaching its design limitations. Hence no surprise there. At last Boeing is playing the game of pricing like Airbus -in a world of “more for less” and everything getting commoditised including high tech planes and engines.
    The other reason in my view -why the discounts are high- is that list prices are the ‘ideal” prices as worked out by the accountants and marketing people ,assuming that all ‘value add” accrues to the seller. In the market place, the so called “value add” is always questioned by the cutomer on his own and thru the competitor and other players in the market. If the discounts are 50-60% , it only tells us how optimistic the OEMs are when they make the project case to their board , with optimistic project completion times, low balling risks -both technical and managerial. Almost all the projects including value proposition are overstated in my view, while some pleasant surprises happen -300 ER for Boeing and 330/320 for Airbus -mostly due to product planning mistakes of the competitor. (four engines for long haul ; talking down the fly by wire 320 and continuing with the 737-300 and 400 and others)

    • “…the goal for Boeing here is to make sure it gets 45%+ (they will externally talk of 50%) of the orders with a refurbished product which is reaching its design limitations.”

      I guess you missed Scott’s August 7 post:

      “Airbus took an early lead with the A320neo but Boeing has done a good job of catching up both in product attractiveness and sales. It is now a dog-fight for every airline sale and whereas the A320 had an initial lead in overall promised efficiency there is, what we can see, nothing separating the two today after Boeing gradually increased the efficiency gain to 14% over the 737NG. The A320 has a slightly wider cabin but the 737 has the Sky Interior which is more attractive to airline passengers then the dated A320 cabin. We see these programs evenly matched with Boeing having the upper hand in the mid range (737MAX8 vs. A320) and Airbus on the high end (A321 vs. 737MAX9).”
      https://leehamnews.com/2014/08/07/half-time-2014-for-boeing-and-airbus/

      • I guess you missed Scott’s August 7 post:

        And yet, marketshare is still around 60:40 (firm orders)/57:43(firm+MoU+options)
        http://www.pdxlight.com/neomax.htm

        So saying “he goal for Boeing here is to make sure it gets 45%+ (they will externally talk of 50%)” as vaidya did here seems fair enough, to be honest.
        Furthermore, I don’t think there’s any reason to be unhappy about getting 40-45% of a market that in firm orders so far is worth ~$260bn even at a 50% discount on list prices.

        • to Fromme

          If you would share my opinion that tha A330neo is not a sensible project this would mean that the A330 production will be dead in any case. 

          As for use the factory for A320/1, it is not as you would demolish it. And more important, you would take advantage of the existing workforce 

          I agree that using the spacefor A350 instead merits a thought. But any idea to ncrease capacity of A350 must ensure that the A333neo is not built, as in such case mnagent ould be forced to ensure some sales by loosing prices, which would, as the preent example of UNITED cancelling 25 A359 against the hope to get cheap A330neos shows!!

        • @otontisch, when did United cancel an A350 order? As far as I know, they converted from A359 to A351 (and added 10 more) last year.

          • The Wikipedia page hs changed its content for United  A350 order 2 times in the last 48 hours. possibly I misreadin one of these 300 instea of 500, but I am quite sure I did not.

            Anyway, sorry

        • And yet, marketshare is still around 60:40 (firm orders)/57:43(firm+MoU+options)

          Of course Airbus was first to market. We don’t know what the market share numbers will look like in five years. I’ll bet both companies will be selling everything they can build.

        • If you would share my opinion that tha A330neo is not a sensible project this would mean that the A330 production will be dead in any case.

          If you shared my opinion that the A330neo is a sensible project you’d agree A330 production will not be dead in any case.
          Now what?

          As for use the factory for A320/1, it is not as you would demolish it

          .
          Well, you would, other than maybe lavatories and a few walls/roofs. Those are not the main expenses in building an airplane assembly line.

          And more important, you would take advantage of the existing workforce

          So does the A330 line. All the time. Without interruption as they transition from A330ceo to neo. Added bonus: Minimal additional training is required to school people on how an A330neo is assembled differently from an A330ceo.

          What you propose would put the existing A330 workforce out of a job for about 2-3 years, require extensive retraining, and the expense of building another A32S FAL which would be ready in ~2019/20, about 5-7 years before a successor is launched.
          RoI of that suggestion isn’t even going to be anywhere near what can be done by just leaving the A330 line and workforce in place, churning out A330neos from 2017 until ~2025 and using the time (and profit) until then to decide what project/family member/etc. to invest in to fill the gap from 2015 onwards.

          • All you arguments will not cover the fact that the A32-neos are sellable, the A330neo not or nearly not

          • As long as bragging millionaires and billionaires are available to support the A380. Are you willing to bet the future of the Airline on such??

  6. The article makes a valid point about airport investment, nobody is doing much of it!! Not only is it difficult to get a taxiway widened for A380s, new runways and airports are completely impossible, just look at SE England, Sydney, or other busy cities. Even China has reached the end of easy airport expansion now that the farmers are rioting when party officials want their land. The author might not have meant to, but effectively he is showing why large scale A380 use will come sooner or later.

  7. So it’s not just Airbus that discounts massively to sell its planes? It’s not a surprise to me, but many are absolutely convinced that huge discounts are the only way Airbus can ever sell a plane.

    Given Boeing’s 40% market share in new gen single-aisle planes, it’s no surprise to see them having to give significant discounts.

    • Who said Airbus is the only one that discounts planes?
      This is another straw man argument.

      • No it’s not. There are plenty who honestly believe the only way Airbus can sell any planes is to discount them to the point of loss-making. This is evidenced by the belief of the same people that anything Boeing builds is of such vast superiority that no discounting is required to sell them.

        • Selling them at a loss and discounting them are two different things.
          Anyway, no one in this discussion said Airbus is the only one who discounts planes. I’m confining my remarks to the here and now. If you’re going to open it up the anything, anyone, ever said anywhere, that’s pretty pointless.

  8. “(he doesn’t bother with the 747-8), These are for in production models ”

    When did the 747-8 cease production?, endangered yes but I believe they are still make 1.5 a month.

    • Factually, it is difficult to assess if the present B748i misere is permanent or could revert once more B744 and older withdraw. As the A380 is widely out of this market
      due to oversize (both physical and PAX wise, as well to its high full burn which only make the profitable on routes with extreme high load factor and “billionaire factor’, paying absurd prices for exhibitionist luxury), airlines must decide if to buy B748i or to the B779. Most speaks in favor of the latter, but for a significant percentage, it is somewhat too small. BOEING was forced to perform such cannibalistic act, as by not doing so, the even smaller A3510 would enter the race.

      By the way, few have written regarding a social-psychological factor: the much touted fact that the A380 is by much the lrgest civil aircraft and shall sooner or later, inevitably. grave near o god forbid, a total accident with 50

      0 or more victims occur, the resulting Media storm could be most grave, even terminal if related to such structural problems as lost Engines and cracks in the wings supports. Boeing is subject in minor degree to the same, but their liabilities are not main body related and the public has already some tolerance of B747 size accidents,

      Another alea is less deadly physically. If a social based sheikh throw over in a Gulf state occurs, their will be a backlash against captioned “billionnaires” excesses and their booking luxuries.

      All this speaks against the A380

      • Boeing lost a 747 Japan market high capacity due to a blown out rear bulkhead (bad repair by Boeing)

        I believe 550 people died in that one.

        Tennerief head on another large number. I don’t think it makes any difference as long as it is known what the cause was .

        • Transworld

          You did got my point. Objectively, it mke no difference if the vitims are in  A389 or Boeing, but as Airbus advertises continuously that the A380 is the biggest, an accident there would resonate a lot more. By the way, many people flies first time with an A380, as it is “in” to do it with the biggest!!

  9. About list prices, Emirates has just signed a 425 M$ loan for 2 new A380 (see the quote below). It’s not said if it includes engines or not but it gives an idea of what Emirates pays for its A380.
    http://gulfbusiness.com/2014/08/emirates-signs-425m-loan-for-two-a380-jumbo-jets/#.U-p2_mIaySM

    By the way I’ve got a question for Scott : during the last Farnsborough airshow, John Leahy said that Airbus list prices include more things than Boeing ones (he suggested that Boeing prices are for empty shells). Do you know what is actually different between Airbus and Boeing prices ?

    • In a way that is correct. Airbus sells you an airplane ready to fly away. With Boeing there is a lot of Buyer Furnished Equipment and the airline has to deal with vendors for a lot of things, including cockpit items, which can have multiple vendors.

  10. There has been lots of so-called analysis about the A380, but none of them explain how to deal with a traffic growth of 5% per year and congested airports.
    The trend is for bigger airplanes and that’s true for single-aisle as well (half of new built A320 family airplanes will be A321).
    So whatever Aboulafia says, the idea behind the A380 project is logical and well understandable. Maybe the A380 is a bit too big for the current market but time is playing in favor of this kind of planes.
    Airbus has still the possibility to make its airplane more attractive with better engines and maybe smaller/lighter wings. I guess they can’t avoid to build an A380 NEO, not only for fuel consumption reasons but also because the silence is no longer a priviledge of the A380. The A380 needs to keep its advantage in terms of comfort and silence. By the way, someone wrote here that it’s better to have a noisy cabin due to other people conversations. That doesn’t make sense since people spend more time sleeping, eating, listening for music or using their IFE than talking with each other during a 10 to 15 hours flight.

    • “”By the way, someone wrote here that it’s better to have a noisy cabin due to other people conversations. That doesn’t make sense since people spend more time sleeping, eating, listening for music or using their IFE than talking with each other during a 10 to 15 hours flight.””

      THIS WAS ME!!!!

      I never advocated for a noise cabin, but against an ultra-silent. And you must have very sound sleep or like ear plugs to make this 15 h statement!!

      • Otontisch, I’m not sure to have well understood your post but the question is not about your own preferences or mine but about what people in general are used to do or to prefer. And none marketing study has ever said that people prefer more engine or aerodynamic noise in an airplane cabin.

        • You insist calling it nois. The run run and soft music background in a hotel is not”noise” neither is a soft run run inide the cabin

          Do not try to invent taking points. Modern aircraft have all low sound ib the cabins and extreme silence is a draw back

        • The run run and soft music background in a hotel is not”noise” neither

          Well, technically, it is.
          The “hum” of an engine, an AC, the tapping of my colleagues’ keyboards around me, however low all of these may be on a dB scale, is technically still noise.

          As for the “muzak” in hotel lifts and corridors – thankfully, that’s going out of fashion. It’s put there on purpose so as such isn’t intended as noise – but it’s still perceived as noise by many.

          Do not try to invent taking points. Modern aircraft have all low sound ib the cabins and extreme silence is a draw back

          I would argue that the second sentence in that quote is a perfect example for trying to invent talking points.

          I’ll have to assume that you’ve never actually flown on an A380, otherwise you wouldn’t use the phrase “extreme silence” in this context. Nobody ever claimed the A380 cabin was 100% silent (well, Boeing was trying to give that impression once to try and paint the A380 as too silent). It isn’t. But it is markedly quieter than any other airliner out there.

          (Having said that – Scott (or was it Leeham EU?) recently commented that the A350XWB was even quieter, but that’s not in service yet, so there aren’t many people with first-hand experience on it.)

      • I find the most noise comes from the hissing of the air nozzle above my seat. Can’t they think of a better way to get air into the cabin?

      • The advantage of a quieter cabin is that everybody can use his own ambient noise.
        For otontisch I would recommend an endless recording of 777-cabin noise to sleep well on board an A380 or A350.

        I still believe that 777X’s reduced wall thickness will cause many acoustic troubles for Boeing. You can’t cheat acoustics/physic with a Power-Point presentation: “Advanced materials will do it”!

        • Indeed, I always find the noise level of 777s to be very tiring on long flights. The only thing worse is the very front main-deck cabin of a 747.

          I recently flew seven hours on an Etihad A340-600 followed by a similar length leg on a 777-300ER. The difference in cabin noise was astonishing and not in favour of the 777. Hopefully, the engines on the 777X will be quieter that the GE90s on the 77W, if not that is going to be one very noisy plane.

    • Maybe the A380 is a bit too big for the current market but time is playing in favor of this kind of planes.

      Maybe Airbus should have built the A350XWB first, and waited for the A380 market to materialize. By the time it ever happens, the A380 will be out of date.

    • So whatever Aboulafia says, the idea behind the A380 project is logical and well understandable.

      The logic was to sell a lot of them. In that, they have so far failed. The “congested airport” theory has not materialized. If it happens 10 years from now, then Airbus should have never launched this airplane in 2000, given the time value of money.

      • 2000 is before 911, an unelected imbecile starting a bunch of wars and the GFC.
        Projections for todays ( 2014) traffic levels was decidendly much higher than it is today.
        The GFC actually saved Boeings bacon in respect to the 787. Mitigating undeliverability by “un”demand 😉 As the GFC was a potentially triggerable “must happen” event this may even have been a planned move : gobble up the market with an overpromised product, have Airbus wither on the wine in the intermission and then
        step into the upswing with a full orderbook that is now back in demand.

      • Captain Hindsight to the rescue!
        In 2000, nobody, Boeing included, expected 9/11, nor the downturn in 2008/09.
        To wit: Boeing in 2000 predicted a total of 22,315 plane deliveries between 2000 and 2019, of which it expected 5% (13% by value) to be 747 and larger. That’s 1115 planes, and it expects pretty solid demand and, thus, prices.
        Source:
        http://www.as777.com/data/manufacturer/forecast/boeing_2000.pdf

        Even including freighters, with just 4 years to go until 2019, we’re only around 35% there (138 A380 delivered since 2000, plus 253 747 pax and F). At current production rates, we may get to ~500 deliveries by 2019, well short of even 50% of Boeing’s prediction in 2000.

        So yeah, Airbus failed to take various unexpected negative factors for the “747 and larger” category into account in their traffic/demand predictions. As did everybody else.
        But Airbus were particularly unlucky because they had just launched a plane whose sweet spot in the market was suddenly at least moved ~10 years to the right, possibly more.

  11. No one addressed the core comment on the Emirates A380, the people having a good time were the ones allowed into the bar, cattle class passengers were not interviewed.

    If you can afford the big buck seats (rooms) thats really sweet, but how do the rest of them feel?

    • TransWorld – from a previous thread

      I noticed you have chosen to tar the ’10’ abreast A380 and B777 with the same brush – this is a pity since my own experience and that of many of my friends now choose the A380 over the B777 – the ride and space accorded to passengers is so much better.

      The friends mentioned live in NZ and AUS and are mostly retired so have plenty of spare time but because of their limited budgets tend to travel economy/Y when visiting relatives living across the Tasman.

      Since Emirates have introduced the A380 trans tasman services most try and book the A380 in preference to any of the other alternatives (B777, B787, etc) operated by the other carriers (QF, JetStar, ANZ etc). In recent times I have noticed an increased awareness of the A380’s superior ride over the other aircraft and, like me, they now tend to arrange their travel to fly A380 whenever this is practical.

      As I have mentioned in a previous blog. I have on several occasions flown Singapore and Emirates 777s and A380 and believe you me the B777 comes nowhere close to the A380’s passenger experience. The last A380 trip was about 3 months ago, AKL – BNE return in Y flying Emirates (Qantas code share).

      The A380 is noticablely quieter, smoother and more spacious, both cabin and seat wise, and is pressurised to 6000 fleet.

      • That too will change when they cram in more people.

        My comment was that the people interviewed and having the grand time were not the steerage passengers.

        Doesn’t matter to me, I am not world class traveler even in cattle,

    • I can confirm with what Bernie has said from my own experience as well as that of family/friends who’ve been on the A380. And none of us has been in business/first on it, in case you’re wondering.

      So when I read reports from airlines saying that given a choice, passengers will opt for the A380, it makes complete sense and matches my own anecdotal evidence.

      • anfromme,

        I returned business class from UK to NZ on the A380 in 2013 but sadly my pockets are not deep enough to repeat the experience.

        No doubt about the Emirate A380 experience easily beats B777.

      • So when I read reports from airlines saying that given a choice, passengers will opt for the A380, it makes complete sense and matches my own anecdotal evidence.

        That’s all well and good, but it hasn’t helped A380 sales. Passengers don’t buy aircraft, airlines do.

        • This is a correct viewpoint. The A380 is an oversize aircraft, which allowed to offer some additional comfort to passenger in all lclsses. But precisely the same oversize makes this aircraft a white elephant with a few applications, 

          TIM CLARK has do a very good work to maximize until now pthese applications, But also he knows that this will be endangered in the future if the economic success continues to be based on the assumptions that other airlines will not take countermeasures (both by improving their effectiveness and by issuing protections to their own), by its  vaning novelty and the bragging luxury yearning ultrarich people in this region of the world (which would collapse if there were a “”GULF SPRING”) whilst the A380, clearly is a non-state-of-the art aircraft, continues to provide a mediocre efficiency.

          Until now,the high fuel consumption was not taken too seriously, as even this is not publicized, they acqqre it from their owner itself, the sheiks family to vastly lower as iternational prices (as other Gulf states reportedly do (and cannot be blamed!). But these discount are only transfers from one pocket to other and are not ensured in the fuure   

          So, TIM CLark is pursuing a “strangely” very public campaign to re-ENGIN the A380, even if he knows that  there is clearly no market for such and will be most probably rejected, more so a request to make a full upgrade as Boeing did with the B747 or 777X

          (By the way, above was (even less evidently)true also for the A330neo, but the lack of wide body sales allowed the marketing leaders to convince the management to risk such endeavor after a near yea struggle as the management was far less optimistic!!)

          So his rationale seems to be: to get against expectation the Up-engining, but if not, get the rationale to discard future A380 purchases or even cancel at least teh 50 units ordere in Dubai in September 2013

           

          • If you’re going to make such far-fetched claims, at least back them up with some documented evidence. Otherwise, probably best to not voice such radical theories without something more solid.

        • Yes, but airlines need passengers/customers and evenually customer choice will be noticed. I appreciate the A380 is large plane whose market is transfering 450-850 people between slot bound mega hubs. This will happen as population and incomes grow in China and Asia grow and the influence of the US and Europe decline.
          To back this up early in this I quoted some interesting stats from the World Bank – but unfortunately the table format got screwed.

          I also wrote:-
          “Another point to recognise that if the market dynamics does demand become VLA to offset slot restrictions at the world’s increasing number of mega hubs then Boeing have not real counter to the A380, nor do the the time and resources to develop one.
          This I believe is the true threat to the US and why they are so vicious in their condemnations of the A380.”

          • As RICK tellas, passengers opinion is not decisive for Aircraft purchases. Factually, the perks which the A380 offer in economy are even overcompensated by the perception  that so many people herded in a plane is not an advantage but a liability.   As the artificially hyped opinion that people in a modern plane, which are all reasonably silent, care about a few developed less

            As I stated repeatedly, the luxury of the First class at superprices is attractive for some, but the routes were this is relevant are laready covered by the A380. And when even some social changes in the Gulf states and elsewhere occur, this people will discreetly not be available!!

            Anyway, nothing of above is decisive related to the negative objective factors of this aircraft 

        • otontisch: RIGHT NOW, a full A380 is the most fuel efficient plane fling around, that might not the case when the B779 enters in service, but it is far from “only works because Emirates has cheap fuel”

          • I do not think that the A380 is the most efficient FULL aircraft flying around today, much less if you take the word FULL out
            As I stated in other posts, the max. size fuel tanks are more or less proportional to the max. fuel consumption plus reserve and no aircraft would carry needlessly bigger tanks as necessary

            Considering the following available FULL data (L being Liter of tank capacity)

            A380—–530PAX—————————— 324,000L—–8,500nmi—–611L/PAX
            B748i—-407PAX (=A380 x 77% LoadF) –243,000L—–8,000nmi—–597L/PAX
            B789—–280PAX (=A380 x 53% LoadF)– 139,000L—–8,000nmi—–496L/PAX

            Considering the Premium to be awarded to the A380 for the not proportional increase of fuel consumption due to longer range, it can be said that at 8,000nmi
            the FULL fuel burn will more or less the same. i.e proportional to 597L/PAX tank capacity, but much, much higher when the Load factor is not 100%).

            But even less comparable with the B787 (as it will not be with the A359!!!!) which should not surprise anybody given its state of the Art composite design

            And by the way, by changing engines the A380 efficiency would noy increase 12%
            as it could be for the A330, as the engines of the former are less ancient.!!!

          • otontisch – your method of measuring fuel consumption is overly simple and very inaccurate.

            Leeham gives fuel-burn of 748i as being 2.6% higher per seat per 100km than the A380.

            Lufthansa have publicly stated that fuel-burn of the A380 is 3.4L/100pkm compared with 3.5L/100kpm for the 748i.

        • Otontisch, your figures are somehow strange.
          e.g. Lufthansa:
          747-8i: 362 or 386 seats
          A380: 526 seats

          What about max seat counts?
          789: 440 seats
          747-8i: 605 seats
          A380: 853 seat

          and therefore

          789: 315 l/Pax
          747-8i: 402 l/Pax
          A380: 380 l/Pax

          Also you can’t compare range estimations on different bases.
          Explained here on video http://youtu.be/LgVLH0KYZsc from minute 21 on…

  12. I just checked, the747-8 is still in production, no one answered why it was not included

    • If no one is buying them, there will be no data points for the discount. And there have been no orders since the TransAero order in December 2013.

      • Cargolux ordered one frame back in February of this year. Besides, I don’t believe they were just looking at this year. However, even if one takes into account the 17 gross orders the 747-8 program had last year, it is still probably too small of a sample size for them to really get any meaning out if.

  13. Gentlemen, Before we descend further into the vitriolic a380 bashing and defending lets take a moment to see if we have any areas of agreement.

    1. The 380 has not sold as well as hoped
    This could have been due to any number of external factors such as the great financial meltdown, cyclic nature of airline industry making risk a problem, failure to correctly estimate demand or internal factors such as its size requires airport investment (when public money is tight), high fixed costs etc

    Regardless, it has not sold well.

    2. It may sell well in the future
    It is difficult to foretell the future but there are constrained hub to hub pairs that are thick enough to support a 380. It is difficult to tell if they will increase so much so that the 380 will be required or if up gauging using bigger twins will suffice.

    Regardless, it has a chance to do better in the future

    3. The fixed costs, uncertain second hand market and large investment coupled with the large capacity required to make it profitable make the 380 a risky bet for many airlines

    Due to the cyclic nature of airline travel and the way hubs are being utilized. In the US, the dispersed nature of hubs make the 380 a losing proposition. People argue that JFK in NYC is hub constrained. They do not mention that there are 2 other major airports in the NYC metropolitan area (LGA, EWR) that service the metro NYC area with national and international flights. It is obvious the national airlines in Europe can only find a few thick trunks to utilize the 380 on profitably (otherwise they would order a boatload more).
    Emirates has found the magic formula by essentially feeding all Europe-Asia flights into one megahub (DXB) and growing thick trunks to other hubs (eg. LHR). It doesn’t work as well for other airlines (else they would order the darn plane).

    Regardless, for most airlines, the 380 is a risky investment in an environment where most airlines are only just now making a profit (after going broke in many cases)

    4. Airlines have not found a way to use the 380 to its fullest capability/CASM.

    No one uses the 380 at max capacity. In fact the model that works well is a premium heavy set up of at most 550 or so passengers, far less than the >800 capacity. This implies to me (opinion) that the aircraft is too large except on the thick trunks.

    5. The development of the big twins has hurt the 380 (and the 747-8i)

    Although not a sure thing, it appears likely that the 777-x will outsell the 380. If you add the 350-1000 in, then the big twins have already done so. Although they are not the same size class as the 380, they offer more flexibility and cost less if there is a downturn in traffic. The second hand market is unclear as they haven;t even flown yet of course.

    So, the 380:
    1. Hasn’t sold well
    2. May sell better in the future
    3. Is a risky investment for many airlines
    4. Is not being used to fullest capability
    5. Has been impacted by the growth and evolution of the big twins

    Blast way!

    • Airbus (2014-01-13): The A380 is moving toward a break-even rate of 30 aircraft (per year). It’s enough for Airbus. In my opinion nobody wants to invest and increase the rate.
      Narrow body will outsell wide body; it is not strange: the big twins (A350, B777) will outsell superjumbo.
      A380neo (2018-20?) is more important and prestigious. For future and expanding program. Common engine (maybe Trent 1000-TEN – like Trent 9000) will help. A380-900 will be back? What will Boeing responds to the A380neo with a range over 9000nm and A380-900 with 600+ pax? At least several airlines waiting for the Neo.

    • So, the 380:
      1. Hasn’t sold well
      2. May sell better in the future
      3. Is a risky investment for many airlines
      4. Is not being used to fullest capability
      5. Has been impacted by the growth and evolution of the big twins

      Your whole post is in fact a pretty good summary, I think.

    • I would dispute 4)

      Emirates clearly knows how to make the A380 work and BA has nothing but praise for the plane. I fully expect BA to exercise their options and can see them with a final fleet of 30-odd.

      • I guess my point is that the full capability of the airplane is to lift a larger amount of passengers than is currently being done. The Emirates model requires a heavy premium cabin which increases RASM but decreases CASM. They have found a sweet spot that fits their traffic and their route network. No one else has been able to do that, it only fits a few routes for most airlines with traditional route networks and traffic patterns.

        • “The Emirates model requires a heavy premium cabin which increases RASM but decreases CASM.”

          No, the Emirates model doesn’t reguire a heavy premium cabin. The model is based upon the potential of connecting most population centers in the world by one stop in Dubai, while attracting premium passengers with competitive pricing, hassle-less travel and suberb hardware in the air and on the ground.

          Now, as I indicated, the number of premium seats as a percentage of total number of seats is significantly less on Emirates than, for example, on Lufthansa and ANA. So, this myth that the Emirates model is dependent on “heavy premium cabins”, is just a myth — or another one that is just beeing debunked. 😉

          Emirates_______Premium Seats/ Total number of seats
          777-300ER____________50/354=0.141
          777-300ER____________50/360=0.139
          777-300ER____________42/385=0.109**
          A380-800_____________90/489=0.184
          A380-800_____________90/517=0.174

          Lufthansa_____Premium Seats/ Total number of seats
          A330-300_____________56/217=0.258
          A340-600_____________68/306=0.222
          A380-800____________106/526=0.206
          747-8I_______________100/362=0.276

          ANA_________Premium Seats/ Total number of seats
          777-300ER___________60/250=0.240
          777-300ER___________85/247=0.334

          **Two-class seating configuration.

        • I see your point, but on the other hand, the other aircraft do not have lounge areas or open bars (not to mention having showers). Presumably that is what makes flying the 380 a better flight environment. I would suggest that is what makes it able to fill premium at a higher level (and perhaps charge more, although I haven’t looked…I can’t afford it ;0))

          • Customers for what kind of seat are selecting for the A380?
            ( Who has access to showers on the A380 ? I suppose that is limited
            to first class ? )

        • How little arguments for the A380 exist is documente by this laughable intent to insist that the sound level will save it!!

      • In my estimation, rational grounds alone cannot fully explain the apprehension of many airlines toward the A380. The comfort and passenger experience is second to none, and on thick medium to long haul routes its economics is rather incredible. Typically, at an eighty-something percent passenger load factor, the A380 produces as much profit as a 777-300ER does at 100% passenger load factor. And then the A380 operator has an opportunity to sell an additional 80 seats at dynamic pricing and grow its operations. The airlines operating the A380 are very pleased with the aeroplane, as the cited news article points out.

        With an A380neo, the aforementioned comparison figure could likely be improved to 80% or perhaps even lower, but in my view it does not fundamentally alter the dynamics of the economic equations because the economics of the A380 is quite splendid already. At the end of the day, the airline carrier apprehension towards the A380 is not really grounded in economics. I believe, like Tim Clark, that airlines will come around eventually.

        • The market has been carefully poisoned ( by a wide range of instruments from the FUD toolbox) . Most effectively for customers that are tightly bound into shareholder value cycles.

        • I don’t think that if there were huge profits to be made with a 380 that any propaganda by Boeing or anyone else would prevent the airlines from ordering them. The 777 beat out the 340 in spite of Leahy’s campaign, the 321neo is beating the 737-900neo, the 787-8 and 9 beat out the 350-800, the 330 beat out the 767…
          Money talks and BS walks as they say…

        • Dear Mike,
          it es exaclty on month after the lunch of A330NEO and you try to make a point with the A350-800?
          Also you didn’t mention the A350-900 relation to the 777-300 or A380 to 747-8i.
          My opinion is, the A380 killed the easy money of the 747-400 and forced Boeing to build the -8.

          • SORRY< I always forget there is no "EDIT" button, so I send the edited message here!!

            . I agree fully with you that the simple appearance of a larger as B747-400 aircraft motivated Boeing not to rely further on the age old latter aircraft!! Even if the A380 being both physically and dimensionwise to large to substitute the B744 in most of the cases, except  at the Mega-Airport connection

            B. My comparison figures A380/B748i and B789come are from the neutral Wikipedia site

            C. I am certainly not discussing that the A380, should it have the right dimensions and able to carry at 80% load factor 530 passengers or more, would be a good thing. But (if you speak German), if “mein’ Tant’ Raeder haet’, waere Sie ein Automobil (stinken tut sie eh schon..” , both “ifs” are not present in both cases

            D) Your statement that the A380 at 80% is the most profitable on the present market needs support

            As many said since it's inception, the A380 concept was simply too large in many senses, This, added to the too long implementation process, it's certainly not flawless quality, has converted it's in some case size advantage (the majority such customer have already purchased it and such market is now reduced to minimal) ) in an drawback in the majority of other

            To pull a cart an elephant is much stronger than a horse: but as a horse usually manages it, the Elephant would morphe  WHITE!!  Show message history

          • Otonisch, Wikipedia is not necessarily neutral. Anyone with an account (and it’s easy to get one) can edit/add entries. You can’t take Wiki as gospel.

          • Wikipedia is pretty good on “neutral things” such as mathematics and physics.

          • Scott

            I am doing so because I do not find anything more neutral or precise!!

            I really would be thankful if you with all you resources could provide more accurate data!

            But I do not agree that to relate the tank size (meaning the max, fuel carried is not a valid indication if one aircraft has a higher fuel burn, even if it do not allow to determine the real one,

            No manufacturer will guarantee a range at full load if the full tank under average conditions does not supports it (incl. reserve), nor anybody would fly around with a bigger tank as necessary!!

            If I had more or less accurate curves full load/fly lenght and fuel consomption / load factor I would be able to be much precise, bu tif you wish to save work to an old man, you surly can do it much more easier!

            As it is, all the blogs regarding A380 and A330 are are battlesof personal preferences

            I have a lot other questions, as in what range the fuel burn wise the results differ
            if not only the aircraft is re-ENGINED , but fully upgraded as the B748i or the B779
            Reading some of the fanatic posts, it would seem that the use of light composites is only a hobby of both Boeing and Airbus, that the design the wing is a secondary matter, etc. And onlt the Engines efficiency matters!
            If Leeham can help to put some valid parameters in the comparison, they would make us a great service!!

          • I agree fully with you that the simple appearance of a larger as B747-400 aircraft motivated Boeing not to rely further on the age old latter aircraft!!

            What’s that supposed to mean?

            Even if the A380 being both physically and dimensionwise to large to substitute the B744 in most of the cases, except at the Mega-Airport connection.

            Nonsense. There are quite a few non “mega airports” on which the a380 currently operates.

            http://a380flights.net/Airports.html

            Also, Emirates is looking forward to eventually fly the A380 to more than 100 airports around the world.

            From the delivery of its first A380 in July 2008, to receiving it 10th A380 on 7th June 2010 from the Airbus plant in Hamburg, Emirates is now serving eight international destinations with the super-jumbo aircraft including London Heathrow, Toronto, Paris, Jeddah, Bangkok, Seoul, Sydney and Auckland. The airline will start A380 services to Beijing from 1st August, Manchester from 1st September and will return service to New York’s John F. Kennedy (JFK) airport on 1st October. Emirates’ looks forward to expanding the list of destinations at more than 100 airports around the world as A380s become ready.

            http://www.emirates.com/at/english/about/news/news_detail.aspx?article=575643

            To pull a cart an elephant is much stronger than a horse: but as a horse usually manages it, the Elephant would morphe WHITE!!

            What about elephantine murophobia? 😉

            Anyway, here are two very good videos — in Deutsch — about how a A321 is made,

            Lufthansa Airbus A321 “Die Maus”

            https://www.youtube.com/watch?v=7GUu03CV5DQ

            https://www.youtube.com/watch?v=9shvVFP98nQ

          • The A380 replaced the 747-400 at Air France, BA, Korean, Lufthansa, Asiana, Malaysian, Qantas, Singapore, Thai and didn’t replace anything at e.g EK and QR. It meets its specs, airlines and passengers love it, Airbus grabbed the VLA market with it and airlines re order. Hard to digest for many that felt disliking / trashing it since its inception for unclear reasons.

            Airbus is poised to dominate this decade on NBs, but also on twin aisles and VLA’s (up to 600 A320NEO’s, 100-110 A330s, up to 150 A350s and up to 45 A380s per year towards to end of the decade while any 777x, NSA, 757 replacement remains on drawing boards and 737s, 747s, 777 classics are at a competative disadvantage and consequential questionable margins.

            Please correct if I’m wrong. I have the impression renowed analists like Richard A, John O proved very capable of adding up things, but are extremely hesitant telling unwanted news to their core customers (US media, stock holders, US public). Another tripple hurray for Boeing is so much more appreciated/ rewarding.

          • “Airbus is poised to dominate this decade […] ”
            As an european I wish Airbus all possible success but I think you are viewing things too much with rose tinted glasses.

            – Narrowbodies: Airbus has closed the gap in economics with the NEO and currently has a strong lead in orders. I think Airbus will increase its singlebody market share, but I’m not yet convinced that it will neccessarly dominate long term. Increasing production rate even further is not really a sign of weakness on Boeings side, too.

            – Widebodies: It’s still a long time before the 777-X enters service. I wouldn’t discard it just yet. It has the potential to give the A350-1000 and A380 strong competition and Airbus a headache. And the jury is still out if the A330-Neo will be a stop gap with ok success (500 or so planes) or if it will enjoy a wider scale of success.

            -VLA: Packing in more seats seems to be no option for its largest customer Emirates. So the only viable option to stay competitive against a 777-X will be a NEO.
            I think demand for VLAS will pick up eventually because of traffic growth, but that doesn’t help much if Airbus closed the line in the mean time because of lack of orders.
            Can the A380 programm survive only on Emirates replacement orders, if that worst case situation occurs ?

      • Well – I take 4) to read that the A380 by and large isn’t used anywhere near its capacity. Which means the current A380 business model for its customers – and EK is a perfect example of that – is to not just have in bring in extra raw capacity for trunk routes, but also to be able to capitalise on premium-heavy routes.

        I think that OV-099’s overview of premium seats divided by total seats is somewhat misleading in that sense, too.
        Look at EK’s A380 vs LH’s A380 vs BA’s A380, for example:
        EK01 90/489=0.184
        EK02 90/517=0.174
        LH 106/526=0.206
        BA 111/469=0.237

        The pure ratios would suggest that, of these three, EK has by far the least premium experience on their A380s, while BA leads the way. We all know this isn’t true.

        The problem with that simple ratio – in a nutshell – is that it has no concept of space usage and what total seat count you “sacrifice” for your premium seats/cabins. It thus also has no concept of how much your premium seats – whatever their percentage of the total seats on board – contribute to the bottom line.

        A simple example: Imagine you start with a main deck that’s fully Y-class, 399 seats. Now, imagine you’re going completely overboard on the upper deck – you add just 15 cabins, plus showers, swimming pool, a stage for an in-flight standup-comedian and/or band (attendance mandatory, of course 😉 ), and a dozen other fancy things you can come up with.
        The simple premium/total ratio would tell us:
        15/414 = 0.039
        Which would indicate an “even less” premium-heavy cabin than EK’s.
        Something’s obviously not right about that.

        To get a “simple” numerical value to give you an indication of how premium-heavy a configuration is, you’d need to take potential seats into account as well.
        An off-the-cuff example would be to simply use the A380’s 853 max capacity as “potential seats” value and then get a sort of “conversion rate” of “wasted” seats into premium seats, by calculating the following:

        (potential seats – total non-premium seats) / premium seats

        (potential seats = 853)

        With that approach, you arrive at the following “potential, which arrives as the following – higher numerical value means higher emphasis on premium in the configuration:

        Emirates:
        A380-800_____________(853-399)/90 = 5.04
        A380-800_____________(853-427)/90 = 4.73
        Lufthansa:
        A380-800_____________(853-420)/106 = 4.08
        British Airways:
        A380-800_____________(853-358)/111 = 4.46
        Hypothetical 15-seat upper deck:
        A380-800_____________(853-399)/15 = 30.26

        I think these give a much better indication of how premium-heavy a configuration is than just a simple “premium seat percentage of total seats” value. The values also intutitively seem more “real” when you match them with the impression you get from seat maps.

        Note: The major assumption here is of course that any “sacrificed” space/seat is used for making your premium seats more premium.
        You could refine this a lot more by fine-tuning the “potential seats” value to something that’s more realistic for a single-class configuration, and also by taking Premium Economy (if any) into the equation, assigning different weights to first and business class seats, etc., but I’m just trying to illustrate the general principle here. 🙂

        Now – off to bed! 😀

        • I like your ideas. Now connect to the $… which is I am sure proprietary to each airline.

        • I like your ideas. Now connect to the $… which is I am sure proprietary to each airline.

          Cheers!
          I agree things would get really interesting if we had numbers on margin per seat to feed that into the whole equation as well. But as you said – those number are not in the public domain, unfortunately.

        • “I think that OV-099’s overview of premium seats divided by total seats is somewhat misleading in that sense, too”

          My comment was a response to Mike’s claim that the Emirates model supposedly requires a heavy premium cabin. Clearly, their 77W fleet has a much lower ratio of premium seats to total seats than LH, ANA, BA etc., while their A380 fleet has a premium to total-number-of-seats ratio that is much closer to that of most other operators.

          As for Emirates’ A380 fleet, one should keep in mind that in contrast to most other operators, they have configured their A380s with better comfort and/or facilities in all three classes. First class on the A380 has about the same seat comfort as EK’s 77Ws, but you’ve got the shower/spa +bar in the aft on the A380. Business class on EK’s 77Ws have angled “lie-flat” seats, with the infamous “sliding down feeling”, in a 7 abreast 2-3-2 configuration, while business class seats on the EK’s A380s have slightly narrower seats, but with all the seats having direct aisle access — and the 77Ws haven’t got a bar. The relative difference, though, is probably biggest in
          EK’s economy class where it’s 18.5″ seat bottom widths on their A380s and 17″ seat bottom widths on their 77Ws.

        • I guess I would argue to OV-099 that the Emiarates seat density may be similar, but the overall space utilization is more for the seats they have (I presume the bar and shower take up space that would be seats in other airline configurations). Therefore, Emirates gets more load factor in first (more attractive product) or can charge more (ditto) and thus make more money off their premium offering.
          So heavy premium cabin does not necessarily mean more seats, I would suggest it means the configuration overall requires more space but makes more money… (altho of course I can’t prove that as I don’t have any numbers.)

          Anyway, they are making it work and far better than anyone else.

        • Again, if we are only talking about A380s and not the airline in general; yes, the ratio premium seats to the total-number-of-seats is closer to LH, but that was not your initial premise.

          As for efficient space utilisation, please do note that LH has only 8 first class seats in their A380s, which incidentally is the same number of identical first class seats which you’ll find on their 748s and refurbished A330s and A340s. EK, on the other hand has 14 seats in first class, which would seem to indicate that LH is not utilising the space ahead of upper deck doors 2L and 2R as efficiently as EK does. As for the bar in the rear end of the upper deck, it’s about the equivalent of 8 additonal business class seats.

          Lufthansa’s A380 upper deck layout (i.e. new business class section):

          http://www.lufthansa.com/mediapool/pdf/16/media_226681216.pdf?blt_p=DE&blt_l=en&blt_t=Info_and_Services>FlightInfo&blt_e=Content&blt_n=Our%20long-haul%20fleet&blt_z=Airbus%20A380-800%20Upper%20deck%20(8%20F%2F%2092%20C%2F%2052%20E%2F%20336%20M

          What is quite clear, though, is that ETIHAD is making a step change in first class; a standard which seems to be only doable on the forward upper deck of an A380, since their one aisle first class section ends at doors 2L and 2R and where also the twins aisle business class section starts aft of the forward galleys (i.e. a one aisle to twin aisle “transition” area).

          ETIHAD’s A380 upper deck layout ahead of doors 2L and 2R:

          https://twitter.com/AirlineLoop/status/480019430332989440/photo/1

          Looking at the image of the forward upper deck cabin on ETIHAD’s A380 in the above link, we can see that the concept can be further developed by making the front staircase narrower; or slightly wider than the one on the 748I. For exampe, if the stairwell width would be 27″ wide; or just about the same width as the single aisle on the forward upper deck, then the Residence would become wider in the bedroom area. Now, on an A380-900, I would expect to see two Residences, while the bathrooms for the first class “apartements” would be located just ahead of doors 2L and 2R. This configuration could therefore very well become the standard A380 first class section.

          For more insight, please do read the three linked articles below: 🙂

          From the early concepts it was easy to see the hallmarks of the final design. There was a clear initial vision which was carried through to completion. Acumen acknowledged that First Class and VIP passengers should be able to sleep and eat in two distinct places. Anthony explains: “We felt that the key differentiator to lead the first class sector must be to offer a separate seat and bed, but unlike the products that have gone before, neither the seat, bed, nor the suite itself should be compromised in achieving this”.

          The big breakthrough for the EDC was creating a single aisle (which at 27” is much wider than a regular aisle) first class product, an industry first in itself. This game-changing idea allowed Acumen to provide the real estate for their passengers to have ultimate comfort and space, without compromising layout.

          I couldn’t help but feel awed by the amount of detail that went into the design of the First Class and Residence products. Despite a considerable investment – delivering ‘above and beyond’, the airline had to be able to ensure a commercial return on their product. The fundamental use of the dead space on the A380 as a bedroom (used by some carriers as a forward lounge) was a very smart move, allowing for a truly expansive VIP suite with little extra cost to the footprint of the First Class cabin.

          http://thedesignair.net/2014/06/19/feature-exclusive-in-depth-look-at-etihads-a380-design-journey-part-2/

          http://thedesignair.net/2014/06/02/feature-exclusive-in-depth-look-at-etihads-a380-design-journey-part-1/

          http://thedesignair.net/2014/05/04/etihad-blow-competition-out-the-water-with-reimagined-experience/

    • A big part of the issue was Airbus had two things in mind.

      One it wanted to be “respected” so it wanted the biggest baddest aircraft (ego)

      the other was using the 747 model, i.e. you can get what you want for a big aircraft.

      The reality is ego projects do not have an ROI and the 747 was the only thing that had the range to do what was needed (or wanted) at the time economically as well as passenger numbers (and fuel was cheap)

      Time moved on but the analysis was not updated because it shot ego in the foot.

      The A380 could still sell, it does not look like it but I could be wrong. We will know more on it two years from now. Other than Emirates the orders are going way (including deferred).

      We do know the 747 is in big trouble now unless the freight market comes back and a remote possibility that Turkish Airlines orders it as they are more centered in their route system and it might fill that profile. Will see on that .

  14. Scott, please stop the childish behavior from both camps. It is annoying that some people can’t discuss a topic without remarks just showing their own ignorance. A380 have problems. The 747-8 has problems and other aircraft program has their own problems as well. It would be rather nice if comments are based on topic, insight, a wish to learn and not on brand preference. Some threads are going airliners.net and I have a feeling that one airliners.net is enough.

    I find the analysis and articles from Leeham very interesting and many of the comments are really good and helps me deepening my own knowledge. Let’s keep it that way.

    Best/Fred

  15. I have become agnostic.

    Boeing has good products and Airbus does as well (I do note that the mechanics I talk with prefer Boeing) That may be a local bias.

    Airbus looks to be a lot more competitive than Boeing now. The A320NEO and A330NEO are cases in point. While I am still doubtful of its going over 250- 300 for the A330NEO, I may well be wrong. The match looks very good on the market its targeted at.

    Boeing has good products but they are living off what others did in the past, it will be interesting to see how they do if they ever launch a whole new aircraft under McNenary system of “lets scatter the engineers all over hells half acre and no where close to where we in actuality build aircraft.

    The 787 was not technically flawed (issues yes, but basicly sound). It was a management failure of Biblical proportions. The engineering was still in place to have a very good design (and engineers next to the assembly line) the management end obviously was a colossal failure that is being given nothing more than lip service.

    Airbus does have holes in its lineup though the A330NEO certainly looks to have plugged one. The A350NEO/A380 NEO link that Scott talked about is certainly interesting. That link might make an A380NEO possible with the shared engine. Still would seem to need to stretch the A380 to its 900 length but…… I would like to see that frankly, not a pretty bird but an impressive one.

    Its definitely going to be interesting to see how it all plays out. I miss the old Boeing but a lot of what I cared about is gone and that is one more.

    • B787 hit the target, but Boeing´s management/sales missed. They should have made the aircraft unbeatable in the middle of the market before looking at extra range instead of increasing the range/empty weight and allowing Airbus back in with a re-engine program of an aircraft which still had a similar empty weight.

  16. Scott, would it be possible to have an analysis of wide-body orders over the last two decades? It would be interesting to see objectively what the status is and what has influenced changing market shares for the OEMs over time?

    • You mean plot out Airbus and Boeing widebody orders and deliveries between, say, 1990 and today on a timeline, calculate market share based on this and try to match that with, say programme launches, etc.?
      I’d say the first part should be easy enough – I’m half-inclined to go through the various spreadsheets I saved off to get started on it 😉 – but when it comes to answering the question of “what has influenced changing market shares”… that may turn out to be quite tough (if you want to do it thoroughly) when it comes to giving credit to factors outside Airbus/Boeing’s control.
      For example, how do you e.g. quantify/determine what impact the following had on widebody demand/market share:
      * Emergence of large-scale low-cost short/medium haul carriers like LionAir, Ryanair, Easyjet, etc.
      * 9/11
      * Consolidation of the US airline market: in 1994, there were AA, UA, TW, NW, DL, US, WN, CO, YX, J7/FL, TZ and probably a few others I forgot; even EA and PA went bankrupt less than four years earlier. As of 2014, that list of 11 is down to AA, DL, UA and WN.
      * Emergence of Asia as a major growth driver in the aviation sector.
      * ETOPS

      You could add quite a few more factors to that which you’d have to look at closely to evaluate its influence on the widebody market – what you have there is less the subject of a relatively short report, it’s the stuff PhD theses in economics are made of 🙂

    • Anyone can easily (well, with some work) pull up Boeing wide-body orders from their website under Orders and Deliveries, User Defined section. Airbus only has stuff in spread sheets so that’s much more difficult but possible for anyone to do so. I think Wikipedia also probably lists YOY deliveries if you go to the specific airplane type.

  17. afromme
    “And yet, marketshare is still around 60:40 (firm orders)/57:43(firm+MoU+options)
    http://www.pdxlight.com/neomax.htm

    Well, orders and commitments are one thing, but deliveries I believe is the real measure. Last year I believe Boeing delivered more B737 than Airbus A320. This year, the trend seems to be the same as through the end of July, Boeing has delivered more B737 than Airbus A320 (272 A320 against 278 B737, and the lead could widen as Airbus normally deliver few planes during August). So as one can see, where is the market share right now? Is it going to lean the other way so drastically?

    • Actually, Airbus tend to deliver more aircraft in the second half of the year. Last year they delivered 493 A320 family aircraft.

      Boeing last year delivered 440 737NGs, compared with 415 single aisle units in 2012. So, where’s Boeing’s lead?

      I expect A320neo production output to reach 70 units per month early in the next decade. For the next two years you’ll only see a moderate increase in production levels as Airbus will not take too many risks during the A320ceo/A320neo transition, although they’re seemingly prudently optimistic that the A320neo flight test phase will be relatively uneventful.

  18. Where are Boeing in terms of filling the 737NG production line till the 737Max comes in? They have 18months-worth or so more of these to produce than Airbus does due to the later arrival of the 737Max. We know that Airbus has sold out the remaining CEOs, how far is Boeing from doing that for the NG?

  19. I think the sales/ delivery figures for narrowbodies, widebodies and VLA’s as well as their weights, EIS, specifications and potential are transparent for this decade, as are the orderbooks.

    The deliveries and margins for the 737, 748, 787 and 777 this decade are going to be what they are, and not more.

  20. “Airbus has closed the gap in economics with the NEO ”
    This gap only exists in Randy’s powerpoints. Look up CFM’s sfc figures for both CFM-5 and -7. Its the BPR. Then there is LD3-45 and A321 capacity/ runway performance. Long before any NEO, A320 became the favourite, outselling /outproducing 737s.

    The 777X will only enter the arena after 2020. Hence my “this decade” reference.

    Its remarkable to notice how many now try to institute (the power of repeating) the A380 requires a NEO and its future hinges on EK. While ignoring the monopoly/ dozen blue chip operators the A380 has in its segment (yes, the future 779 will be way smaller) and collectively take a blind eye on the dramatic dependency the 777X has on Emirates.

    Most likely airlines will pack more seats into their 4 class A380s, a minimum seat width of 18 inch can be maintained at 11 abreast, still superior tto 777X economy seats at 10 abreast.

    I see airlines like ANA, UA, DL, SAA, CA as future A380 operators while the existing A380 customer base gradually expand their fleets.

    http://2.bp.blogspot.com/-iSQluQPPKmk/UhBP7HjyjQI/AAAAAAAAKhI/8MHcIjdeW0U/s1600/SUPERX3.JPG

    • Keesje

      As NOFLY implies, your vision of the A380 is distorted by wishful thinking

      1) Lets compile some facts regarding size
      :The A380 is larger than any competitor and able to carry more PAX at otherwise
      similar conditions, On routes where such PAX are available REGULARLY it is competitive, but I stress, It must be REGULARLY!! As it is, to avoid to carry dozens and even hundreds of heavy empty seats in most cases, AIRBUS has elected about 530-550 as a compromise even on what I call “Megairport” routes at a higher comfort, but nonetheless carrying along a too big a plane, which wings are not of optimal as they were originally for the still bigger A350-900.

      2) You cannot speak away the fact that except on a relatively few routes, the economy of and long range aircraft depends mainly from Economy and sometimes in lesser degree Business class sales. The case of luxurious FIRST class importance is limited mainly to the Middle East traversing rotes, where the A380 was successful but where the remaining market for such is now very small
      And the size related problems are fundamental. No Airport with a regular but not frequent B747 traffic will even think to adapt it to the A350 physical size requirements, much less when it is only a scale
      And of course, to provide the facilities to handle an aircraft arriving with such a number of PAX . Many have already too long handling times even with B747 arrivals.

      Latin America is an example. Nearly all of these have presently B747 traffic, including scales, even the small Central America and Caribbean countries. Nearly none is thinking to accommodate the A380

      And you will be surprised. Nearly any Economy PAX only cares of availability and cost and only marginally of confort, within reasonable limits.

      3) Regarding “EMIRATES” dominance and attitude:

      a) Many airlines were waiting for the now confirmation of Emirates and Qatar orders
      That Legacy airlines as Lufthansa were betwen the firts buyers is significant

      b) It is enormous in the case of the A380, due to special circumstances, which implies until recently more and more orders. But recently, when an increasing number of Airlines are cancelling or delaying their orders, TIM CLARK has obviously second thoughts, clamoring publicly for a ENGINE-alone NEO This only 5 years after EIS, a not nice record!!!
      By the way: the Engines of the A380 are much less ancient as the of the A330 and changing them would not provide 12% efficiency improvement, but quite less.
      And why he is not asking a complete upgrade, as Boeing has implemented and is implementing with the B777X, as a Composite new wing??? Simply because he assess that Airbus never will spent the money for such given the market realities!
      But the A380 fanatics are undeterred, claiming that such minutiae as lighter and better wing design are little important!! Which would imply that BOEING by doing so are victims of masochist tendencies.

      4) Regarding the B747-8i and Lufthansa
      Not being successful until now mainly due the long rumination and now decision of BOEING to proceed with the B777X The fact that LH has bought in addition of their not many A380 a good number of successfully operating B747-8i and now B777X shows exactly the point that the market is wide open for B777X and not so for additional A380

      • Otontisch, please don’t hesitate finding A380 load factors and what their operators say about revenues.

        ” Airbus has elected about 530-550 as a compromise ”
        When I worked at an airline, we determined the seatcounts/specs, not Airbus or Boeing.. And when our 744 were to large we changed them for MD11, 777 or A330s and used the 744s else where. Normal practice.. Is it different for the A380?

        The A380 dimensions at airports problem was used in the past, but most stopped spreading this feelgood story when all relevant airports quickly adjusted. For you apparently it’s still alive.

        ” Latin America is an example. Nearly all of these have presently B747 traffic.”
        Amazing I never saw that…

        Re 747-8i. I think both LH and Boeing would have done things differently if they had known how “succesfull” the 747NEO would become.

        • KEESJE SEE INSERTS IN YOUR TEXT

          Otontisch, please don’t hesitate finding A380 load factors and what their operators say about revenues I WONDER WHY YOU DO NOT TELL ME!! NT SELECTED EXAMPLES, BUT AVERAGES PER AIRLINE,PLEASE!! . ” Airbus has elected about 530-550 as a compromise ” BECAUSE ANYTHING ABOVE THAT WOULD BE PURE THEORY

          When I worked at an airline, we determined the seatcounts/specs, not Airbus or Boeing.. And when our 744 were to large we changed them for MD11, 777 or A330s and used the 744s else where. Normal practice.. Is it different for the A380? I REALLY DO NOT UNDERSTAND WHAT YOU ARE AT.

          The A380 dimensions at airports problem was used in the past, but most stopped spreading this feelgood story when all relevant airports quickly adjusted. For you apparently it’s still alive YOU FORGOT THAT THESE “RELEVANT” ARE ONLY A FEW WHAT I CALL ‘MEGA-AIRPORTS”  AND THE “OTHER”, BY VERY MUCH THE MAJORITY WHERE TH B77-400 OPERATES/OPERATED HAD NOT AND WILL NOT ADAPT. WHICH IS PRECISELY THE MAIN REASON THAT THE A380 HAS NEARLY NO MARKET LEFT, JOINTLY WITH THE OBVIOUS REASON THAT SMALLER AIRPORTS ARE NOT ABLE TO HANDLE 550 PAX WITHIN AN REASONABLE TIME  . ” Latin America is an example. Nearly all of these have presently B747 traffic.” Amazing I never saw that…SO PLEASE LOOK AGAIN, NEEDLES TO SAY THAT I REFER TO THE a747-400 OR OLDER MODELS Re 747-8i. I think both LH and Boeing would have done things differently if they had known how “succesfull” the 747NEO would become. THE B747-8i IS A BIG SUCCESS AT LUFTHANSA, WHICH ORDERED THEM FOR “OTHER” AIRPORTS  BEFORE THE POTENTIALLY EVEN MORE SUCCESSFUL B777-9X APPEARED ON SCENE, DETERRING OTHER AIRLINES, AT LEAST FOR NOW, TO ORDER THE FORMER.  CERTAINLY THE STORY OF THE LAST YEAR DO NOT SHOW ANY ENTHUSIASM FOR THE A380, JUST THE CONTRARY. WHAT EMIRATES WOULD DO WITH THE 50 ORDERED SEPTEMBER IF AIRBUS DENIES DUE TO THE ABSENCE OF MARKET THE A380neo IS STILL WIDE OPEN!!   Show message history

      • The Lufthansa decision to buy all types of aircraft is a fearful attempt to not make a wrong decision. By buying all aircraft types Lufthansa avoided any decision.

        Lufthansa is also a proven first costumer to kill errors with Lufthansa Technik in the background and therefore might get huge discounts on any new aircraft type. It is a nice feature to have an early costumer able to correct small bugs on his own but this is not for free.

        With 11-abreast in economy todays A380 will be very close to a future 777X. There will also be thirty less for Airbus, the A350 and Airbus is capable of adding another 100 at the second figure even before Boeing can play the X.

        We will see how good the 777X composite wing with folding wing tips will be. – BTW, when was the last time Boeing did design AND build a such a wing?

        “[…] your vision of the A380 is distorted by wishful thinking”
        How much wishful thinking is related to the X?
        The rather small price gap between the 777X and the A380 could become a mayor problem. A380 production costs will shrink.

  21. “– Narrowbodies: Airbus has closed the gap in economics with the NEO”

    Gap?! whats that? Any reference other then Randy?

    “– Widebodies: It’s still a long time before the 777-X enters service. I wouldn’t discard it just yet. It has the potential to give the A350-1000 and A380 strong competition and Airbus a headache.”

    This decade the 777x is missing in action. The jury is out on success in the next decade. Its just heavy per seat.

    “And the jury is still out if the A330-Neo”

    Long term yes. This decade 8-10 A330s a month will likely remain.

    “-VLA: Packing in more seats seems to be no option for its largest customer Emirates. So the only viable option to stay competitive against a 777-X will be a NEO.”

    Nov 2015 EK will start taking 617 seat A380s. The 779X will remain way smaller then A380 (its that upperdeck). No match capasity wise. Capasity-range is how airlines schedule their networks.

    “Can the A380 programm survive only on Emirates replacement orders, if that worst case situation occurs ?”

    Can we simply ignore the existing 5 year A380 backlog?

    • Leehamet

      I notice that it creates confusion that the introduction in itallic has generally nothing to do with what follows
      This post referred to something I wrote, but you are addressed you

      As for the Post itself, it does not need a comment!

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