Why couldn't the A380 secure any orders for two straight years?

Question

The double-decker aircraft has failed to win a single order from any new airline customer for two years now. Comparing its orders and sales with its biggest competitor, the B747 it had received 315 orders in its first 10 years, about 40 years back. Today though, the A380 has recieved 317 in its first 8 years, but it failed to receive even a single order in past two years.

“It’s true the market hasn’t developed as much as we’d have liked,” Airbus Chief Executive Officer Fabrice Bregier said this month. “This plane was probably launched 10 years too early.” (Source)

Why couldn't the A380 sell as much as the B747, even though it has won many admirers in a shorter period of time. Also, a rough comparison shows A380 is worth its price, when compared to 747-8. But the 747-8 is still getting more orders than the A380.

Update : Iran Air has finally ordered some A380s in February 2016.

Answer 1

Several reasons:

• A380s are really expensive. Unit cost for an A380, depending on interior appointments, is about \$375 million. The 747-8 is about \$357 million. The 777-300ER is about \$320 million, the last variants of the A340 about \$275 million, and the 787 about \$200 million. The 380 might be the biggest airliner ever to fly, but it's also the most expensive. Keep in mind these jets can't fly every day, requiring you to buy a couple more than the schedule requires and rotate them in as maintenance is required on each airframe. That means A380 operators have at least one three hundred and eighty million dollar airframe sitting on the tarmac not making money on any given day (in fact, up to 55 days at a time for the 6-year "D check" maintenance, not counting lower-level maintenance performed more often as well as any unscheduled maintenance).

• Airbus could not/cannot build them fast enough to meet initial orders in a timely manner. Airbus received 189 initial A380 orders prior to the airframe's scheduled start of production in 2007, plus 27 A380F variant orders, and has received 128 since production began (though the freighter orders were cancelled). To date, it's only delivered about half due to a combination of issues found during full-scale production that delayed ramp-up, and currently its pace is about 30 planes a year, giving it about a 3 year backlog of remaining orders (some of which have been sitting in the build queue for 10 years). It initially prioritized passenger variants for Emirates, which put in the largest single order (almost half of total orders) to handle that airline's primarily long-haul schedule. As a result, everyone else got pushed off until many (including FedEx and UPS which were waiting for freight versions) cancelled their orders and went to Boeing for 747-8Fs or 777-ERFs.

• Jumbos represent a serious cost-revenue risk that most airlines are no longer willing to gamble on. You use a jumbo jet when you need to move a lot of people at one time. That typically means a high-demand, long-distance route that calls for nonstop service, but that you don't want to have to fly any more times than you have to. 747s used to be used for high-volume domestic connectors in the US during and immediately after the regulation era, between major cities like New York, Chicago, LA, Houston, Miami etc. They were also used for major intercontinental flights, primarily because regulations required more than two engines for trips extending a certain distance beyond the nearest divert field. However, the 747 is a 50-year-old design with only incremental improvements made in efficiency. Four engine jets in the modern air transport market require you to fill the plane every time, and with ETOPS-rated two-engine widebodies now making many of the same flights that previously required three or more engines, the A380, even with the most efficient engines ever put on a commercial airliner, is at least three decades late to the jumbo party, and is entering the market at a time when the 747 is being phased out of most fleets in favor of more economical widebodies.

• The A380 was designed for an air travel market that hasn't materialized. Airbus was betting big (NPI) on airport congestion and increased passenger counts during the 80s and 90s requiring a shift to fewer flights on larger-capacity planes to reduce pattern and gate congestion. Except for a few major metropolitan areas that simply cannot grow their airports anymore (O'Hare, LaGuardia/JFK, Heathrow etc) that hasn't really been the case. 9/11 and the 2008 financial crisis have seen passenger counts plummet from post-regulation highs, which has reduced total flights and allowed smaller planes which are more efficiently scheduled. In addition, Denver opened up the largest airport by land area in the world (so it has plenty of room to grow), while Atlanta, Dallas, Charles de Galle and others are busy primarily because they're massive complexes with efficient layouts that can support a major airline's hub operations. The use of jumbos in general is therefore very risky, and many airlines, in addition to passing on the A380, are phasing out the venerable 747 that was previously unchallenged in this class, in favor of something a little more economical in the next smaller widebody class, like the 777, 787, A340 or A350. That was Boeing's bet, that smaller, high-efficiency jets would be the wave of the future over pure size, and it seems to be paying off as Boeing, despite higher production capacities, has more 787 orders than it has capacity for the foreseeable future, while Airbus's competing A350 is more or less getting the overflow (and it can't even meet that demand; 700 orders, 5 produced).

• The A380 really doesn't solve the problem it was created for, and in fact causes more problems for airports than it solves. A super-heavy like the A380 creates monumental wake turbulence that poses a danger to other planes, which requires ATC to space following traffic further back (up to double the time/distance compared to a midbody), while for smaller jets (even widebodies), approach control can usually get away with a little more than standard 2-minute spacing unless the plane behind it is a much smaller regional jet or GA prop. So, the A380 can carry about 520 passengers in mixed-class configuration (Emirates' 6-star config seating only about 490), but takes up two "slots" in the approach pattern, while a 777 can carry 320 passengers in mixed-class layout and can be spaced much more closely to other airliners. So in terms of maximizing total passenger movement at an airport, two 777s or A340s are better than one A380.

  At the gate, the A380 causes even more headaches. It's so honkin' big that adjacent gates typically can't be used while it's parked, and it often requires additional jetways to efficiently board and deplane its passengers. As one example, DFW's Terminal D was fairly recently renovated to be the airport's primary international terminal, including Gate 16 in the southwest corner specifically intended to allow 747s to park with minimal adjacent gate disruption (17 couldn't be used, but 18 was available for smaller jets and 15 around the corner could handle pretty much any size):

  

  When the A380 came to DFW in 2014, with Qantas replacing the 747 on the famous Flight 7 and Flight 8 from Sydney to DFW (the longest scheduled passenger flights by travel time in the world), and Emirates commencing service to and from Dubai with A380s, DFW had to redesign this corner of the airport entirely, basically having the A380 come in diagonally to Gate 15. Gate 15 then services first class, 16's jetway was moved and extended to load and unload the lower deck, and a third jetway, 16X, was built adjacent to 16 solely for the A380's upper deck. The jetways for Gates 14 and 17 then had to be lengthened considerably to allow their use with a 380 at the ramp, otherwise the superjumbo would essentially take up 4 entire gates while parked:

  

  As an aside for scale in the last image, Gate 14 to the right is in Sun Country livery which would make it a 737-700, while the American jet at the very top at Gate 19 is still in older livery, and with its long narrow body the best guess is a 757-200. Gate 17 looks like an Air Canada Rouge so with the body length I'd say A319, and Gate 18 is in new American livery so it's a 737-700. None of them really big aircraft by today's commercial standards, but they're certainly not puddle-jumpers either (all aircraft at this terminal are for international flights), and the Emirates A380 at gates 15/16/16X absolutely eclipses them all. It is a big jet.

Answer 2

It's not as fuel-efficient as a twin engine aircraft and doesn't offer as much scheduling flexibility.

Comparing the 747 in 1969 to the A380 today isn't really a good comparison. A better comparison would be comparing both of them today. In 1969, the 747 was revolutionary. It was the first large jet that could get a lot of people from one side of the world to the other relatively quickly and efficiently (compared to the previous-generation 707, DC-8, etc.) At that time, having either 3 or 4 engines was required by law for flights operating more than 60 minutes away from the nearest suitable diversionary field (in FAA-land, at least,) so it was a must for any aircraft that wanted to operate long-haul routes. However, as my answer here discusses further, the introduction of ETOPS in the 1980s and 1990s allowed twin-engine aircraft to start operating those routes. Since that time, the era of 3-engine and 4-engine airliners has been quickly drawing to a close.

Nowadays, airlines can get the same number of passengers from point A to point B using less fuel on large twin-engine aircraft while also gaining the ability to offer more flexible schedules (by spreading those passengers out between multiple daily flights) and better ability to match the number of seats on a route to demand on the route. Additionally, less engines means less maintenance costs. The A340 was the first major casualty of this effect, but it's killing the 747 and A380 programs, too. Meanwhile, Boeing and Airbus can't make 777s, 787s, A330s, or A350s as fast as they can sell them.

Here's what Wikipedia currently lists for open orders on the above types:

4-engine airliners:
Boeing 747-8: 31 unfilled orders
Airbus A380: 152 unfilled orders (which are mostly old and some of which may be cancelled)

Twin-engine airliners:
Boeing 777: 563 unfilled orders
Boeing 787: 803 unfilled orders
Airbus A330: 176 unfilled orders (I can't tell if this is also including the 145 A330neo orders)
Airbus A350: 776 unfilled orders.

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This answer to the question about whether Airbus is planning to make a stretched A380 also contains some relevant information.

Answer 3

• The market for such a huge aircraft is very limited. The big airlines that have interest already have them. When the 747 was introduced, it was an unrivalled aircraft, and there was a booming market.

• The A380 is now becoming a 10-year old aircraft in need of a bit of updating. The questionable outlook on orders does not inspire confidence in airlines that such change would take place.

• The 747-8 orders are to some part passenger aircraft (many of the operators also with older versions of the 747, i.e. fleet commonality) but many are also freighter versions where there is nothing in that size category. Even so, the 747-8 is definitely not selling like butter, and they too have cut back production rates numerous times.

Answer 4

Put very simply it is an aircraft designed for a hub and spoke/star topology air network of main backbone routes connected to smaller regional routes, launched at virtually exactly the time that carriers moved increasingly to direct point to point routes instead.
The backbone traffic that is there is already (over) serviced by existing 747 aircraft, there is very little need for new models of either beyond flagship aircraft. Instead long range ETOPS aircraft used on point to point travel are the major seller at present.
You could write a novel on WHY this move has happened - but it is at the core of the low sales of very large aircraft.
Also there are currently long waits for orders of the A380, so choosing one of the two you are likely to choose the one you can get.

Answer 5

In a nutshell: The four engined jumbo jet as a airliner was killed by smaller ETOPS-certified twinjets with extended ranges. The smaller twins are just more economical for the airlines and while slightly cheaper to buy new than a 747 or an A-380, they really beat the jumbos in terms of maintenance costs and airfield operation.

The 3- and 4-engined jumbo jets were the kings of the 1970s-1990s as engine technology during that period had not advanced to the point that reliability for extended overwater flights demanded an airplane with more than two engines onboard, justifying the extra operating costs associated with that design. So as an operator faced with rapidly growing international air travel market and a choice between buying a 707 or DC-8 vs a 747, DC-10, or L-1011 and have the increased range and decreased operating cost per passenger mile combined with government regulation of the airlines to soften the financial blow in case the gamble didn't pay off for them, it made perfect sense to upgrade to the jumbo for their intercontinental operations.

In order to make its owner money, an airliner must be in the air with a full load of paying passengers going places. Can't fill the seats because of travel demands? Can't operate your jet from shorter airfields where your travelers are or want to go to nonstop? Too bad. You're going to lose money - and quite often a LOT of money on a failed gamble like that. If you own or operate a jumbo jet you have to fly it like this round the clock, stopping only for passenger transfers, refueling, re-servicing and maintenance. Periods of time where the aircraft is not doing this - even short ones - can cost the airlines literally millions of dollars in lost revenue with is why AOG is such a dreaded term.

With the dawn of the new millennium, air travel has changed. Customer demands for long range, non-stop travel is more fluid and there is a greater profit to be made if you can provide the service from smaller satellite airports as opposed to limiting this to just the major hubs. This combined with improvements in engine technology which made for the ETOPS-certification of twins for intercontinental routes and medium sized, extended range, twin wide body aircraft like Boeing's 767-300, 787 and the Airbus A350 fit much better into that niche, cost less both to buy and for the major budget buster of the airlines, the operating costs.

The operating costs of a 747 or an A-380 are similar to the costs of operating two A-330s or two 787s, except that its a single aircraft and cannot be rerouted depending on passenger loads. The massive size of weight of the superjumbo jet (over 1.2 million lbs MTOW for an A-380!) requires long runways, wide taxiways with good clearance and parking ramps and gates which can accommodate the aircraft while the smaller jets fit better with established infrastructure at smaller airports, which gives a lot more flexibility for operations by the airlines to match passenger trends. If travel demands change, simply re-route one or both aircraft to different fields by schedule. Simple as that.

Bigger airplanes need more power, which means more fuel and maintenance per flight hour, mitigated somewhat by passenger loads. Having a four engine aircraft adds a LOT more in maintenance costs, effectively doubling the op costs over a twin. The dawn of the ETOPS twin made this apparent to the airlines and they quickly went over to medium-large twin engine aircraft for international travel. This is strikingly obvious if you look at the orders for the A380's ancestor, the A340. Sales for this airplane were quite strong in the 1990's but had decreased to a trickle by 2010 and beyond; I would be surprised if this aircraft was still in production by 2020.

There is one area where the superjumbo remains king of the air and that's in hauling freight. Freight doesn't care much about hanging around airport terminals, changing planes and gates, flight delays, etc., so the hub-and-spoke and op cost per pound per mile advantages that a large aircraft like a 747 or A380 offers. When I worked for Boeing as an intern in the summer of 2000, I only saw one passenger 747-400 on the lines; the rest were 747-400F freighters. If you have ever watch the IMAX film 'Living in the Age of Airplanes', it quite convincingly advocates that our modern way of life would simply not be possible without these mechanical giants moving parts and parcels around the globe.

Answer 6

A simple reason is that airlines have found another way to carry a large number of passengers at a smaller cost: the seat density.

Contrary to what was expected, the trend is not to sell more comfortable seats. This hits both Boeing and Airbus.

Why buy a gigantic Airbus A380 or Boeing 747 when you can squeeze more seats into a smaller plane instead?

This low-cost market trend coincides with the uncertain future of hubs at large airports, the trend being to see an increase in direct (and smaller) trips ratio.

Answer 7

Great question. A380 and B-747 had nearly equal number of orders for the first 10 years. Thereafter, for the B-747, orders jumped dramatically. Will the A380 follow the pattern? Probably not. First, Boeing kept improving the 747 following its launch, delivering it in several models. (In fact, its all-time best-seller, the 747-400, was still in the future.) The A380 design has been stagnant. Second, the B-747 had a huge advantage over its nearest competitors at the time (DC-10 and L-1011) in range - nearly 10,000 km for the initial version, v. 6000 for Douglas and 5000 for Lockheed (albeit numbers increased considerably for all over time.) Simply put, the B-747 could fly routes that no-one else could. While the A380 has superb range, it is not unmatched. Studies have shown that number of seats per plane is largely unchanged over the past decade (or more), so capacity by itself doesn't sell planes. Finally, Boeing designed the 747 from the beginning to be usable as a front-loading freighter. Airbus has never mastered the concept.

Disclaimer - I have never owned or operated an airline. Just interested in market dynamics.

Answer 8

Adding to others observations, the 747 has been around for so long that parts will be available for what I can see long after the 380 is no longer in air. When the 747-8 rolled off the assembly line Boeing intentionally overloaded it to prove its heavy lift capability, something Airbus missed the boat on. The 380 was built on the CEO's ego. Boeing went with business logic with better performing smaller aircraft. I remember reading about Airbus betting on bigger and Boeing betting on smaller and which would be the correct choice. I think we know which was the correct bet.