Lumberton From United States, joined Jul 2005, 3408 posts, RR: 11 Posted (2 months 1 week 1 day 7 hours ago) and read 6708 times:
Here's a podcast in which three of the original four authors of a report critical of the A380 business case reunite to update their views. Bottom line up front: they are unrepentant. Here's the link: http://iagblog.podomatic.com/entry/2008-05-12T14_37_47-07_00
This podcast runs 30 minutes. Here's the summary from the moderator:
Quote: The original team of four analysts (Aaron Gellman, Richard Aboulafia, George Hamlin and Hans Weber) who wrote this report in 2002 were lambasted by Airbus boosters because of their negative views of the A380 program. In 2004 the analysts revisited the project with the same view when they updated their report. Today we had three (Gellman, Aboulafia & Hamlin) of the original four analysts to provide a verbal update on the 2004 update.
Their views have hardened. They see the A380 as an even bigger mistake today; they don't pull any punches. Not only do they see the plane as mostly an emotional, industrial policy decision, but they also point to the risk Airbus has with so many of this plane being bought by one customer.
Boeing does not get by unblemished. Its 747-8 is struggling for sales because the analysts view the VLA market as simply unattractive given the way the airline market has evolved. This is a sobering view of the A380's prospects
.
All in all, a very interesting read/listen for devotees and detractors of the A380 business case alike.
"When all is said and done, more will be said than done".
A380900 From France, joined Dec 2003, 647 posts, RR: 0 Reply 1, posted (2 months 1 week 1 day 7 hours ago) and read 6666 times:
We'll see in 2038. Maybe once in 2002 this kind of study was interesting for further reference but now I don't really see the point. The train has left the station.
EbbUK From United Kingdom, joined May 2006, 675 posts, RR: 0 Reply 2, posted (2 months 1 week 1 day 7 hours ago) and read 6647 times:
Give that human do as human does, I would be most surprised if any of the four wise men would change their views in public. Their word is their bacon and they wouldn't dream of changing it. That almost real fear of looking stupid if you change your mind and end up with egg on your face (we all have it eh?)
In the end the 380 will do what the 380 was designed to do. That is all that we can ask.
2038! Why wait until then? Won't we know something in 5 years, or two years, or--at the very least--which way the market is trending? Richard Aboulafia made the point--twice--that composite twins are the future.
Edit: I only hope I'm around in 2038 to continue the debate!
[Edited 2008-05-12 17:03:21]
"When all is said and done, more will be said than done".
Stitch From United States, joined Jul 2005, 11967 posts, RR: 52 Reply 4, posted (2 months 1 week 1 day 6 hours ago) and read 6512 times:
Personally, I think Airbus lucked out.
As oil prices rise, world travel is not going to rise as steeply as Airbus and Boeing expected. This means that on the long-haul trunk routes between the top 20-30 destinations frequencies will start to decrease so airlines will look to run larger planes.
The 747-8I is likely both too small and too big to fit in the fleet's of the airlines that dominate traffic on those routes. As such, they will (continue to) choose the A380-800 going forward, though they will likely reduce their planned purchases (and by this I mean they will take all they have ordered and perhaps all they have optioned, but will likely not take large quantities more beyond that).
Whether or not it breaks even is academic at this point. Airbus' goal going forward is to just keep selling as many as the market will accept.
Singapore_Air From United Kingdom, joined Nov 2000, 12673 posts, RR: 16 Reply 5, posted (2 months 1 week 1 day 6 hours ago) and read 6481 times:
As wonderful as I'm sure it is, I don't have the time to read a 99 page PDF but let's listen....
Urgh - 30 minutes of audio?!
OK so it was quite interesting but I did find I had to take their views with a pinch of salt.
I thought the point regarding the overstating of the market and at the end how in five years time that orders would not have doubled is an interesting perspective.
I kind of let the stuff about how Airbus is subsidised and that it doesn't conform to neoclassical microeconomic theories of the firm pass over my head but it's an argument nonetheless.
All in all, it was an intriguing discussion by a learned panel with a particular stand on the whole thing. I share their hope that the A350 does get on its wings and fly on time as that is crucial for Airbus' future. But given the recent past of new product launches in the aviation industry, I remain sceptical.
As with most things, time will tell if these gentlemen are right. Alas, I prefer to take a more optimistic view.
Not an employee or representative of Singapore Airlines Limited, or any related company, or their views thereof.
KC135TopBoom From United States, joined Jan 2005, 5231 posts, RR: 33 Reply 6, posted (2 months 1 week 1 day 5 hours ago) and read 6464 times:
Quoting Stitch (Reply 4): As oil prices rise, world travel is not going to rise as steeply as Airbus and Boeing expected. This means that on the long-haul trunk routes between the top 20-30 destinations frequencies will start to decrease so airlines will look to run larger planes.
But, those planes will have two engines. This is good news for the B-777, A-330, B-767, B-787, and A-350.
Quoting Stitch (Reply 4): Whether or not it breaks even is academic at this point. Airbus' goal going forward is to just keep selling as many as the market will accept.
I think you are wrong here, Stitch. Like all businesses, Airbus does want to make a profit off the A-380. The break even point for the A-380 is well past 415 airplanes now. It is going to be incresingly more difficult for Airbus to show a profit on this program. Gillman and co-horts are correct, the A-380 was built as more of an emotional response (to Boeing) than a sound business decision.
Mariner From New Zealand, joined Nov 2001, 9857 posts, RR: 75 Reply 7, posted (2 months 1 week 1 day 5 hours ago) and read 6428 times:
Quoting KC135TopBoom (Reply 6): Gillman and co-horts are correct, the A-380 was built as more of an emotional response (to Boeing) than a sound business decision.
What does it matter? It's built. Airbus aren't going to un-build it.
Stitch From United States, joined Jul 2005, 11967 posts, RR: 52 Reply 8, posted (2 months 1 week 1 day 5 hours ago) and read 6428 times:
Quoting KC135TopBoom (Reply 6): But, those planes will have two engines. This is good news for the B-777, A-330, B-767, B-787, and A-350.
Many of those city-pairs have very limited "departure/arrival windows" in order to make the service convenient for passengers at the origin or at the destination. As such, it will favor consolidation on fewer, larger planes which would favor the A380-800.
Quoting KC135TopBoom (Reply 6): I think you are wrong here, Stitch. Like all businesses, Airbus does want to make a profit off the A-380. The break even point for the A-380 is well past 415 airplanes now. It is going to be increasingly more difficult for Airbus to show a profit on this program.
Sure they would. But they are a few million kilometers beyond the point of no return. They have no choice but to soldier on and accept what happens. They can't stop now (cancel the program) because they're irrevocably committed to it. So whether they make money or lose money is just a function of sales over time.
Magyar From Hungary, joined Feb 2000, 556 posts, RR: 0 Reply 9, posted (2 months 1 week 1 day 5 hours ago) and read 6368 times:
Dear KC135TopBoom,
Quoting KC135TopBoom (Reply 6): Quoting Stitch (Reply 4):
Asnoil prices rise, world travel is not going to rise as steeply as Airbusnand Boeing expected. This means that on the long-haul trunk routesnbetween the top 20-30 destinations frequencies will start to decreasenso airlines will look to run larger planes.
But, those planes will have two engines. This is good news for the B-777, A-330, B-767, B-787, and A-350.
I have noticed (on several forum) that you are convinced that high oil prices favor smaller twins. You may be
right but I don't understand how. If you have a route that can support 2 B777/A340 that can support 1 A380.
At equivalent technological level flying a FULL bigger plane IS more economical than flying 2 FULL smaller plane.
Period, I do not think anybody can argue this. The higher the oil prices the the more it is so, regardless
the number of engines. I understand that other factors (frequencies, flexibility) also important,
but that does not change the fact (IMHO) that high oil prices push the balance in favour of the bigger plane
(as long as it can be filled). Sorry I do not get your point!
ER757 From Cayman Islands, joined May 2005, 821 posts, RR: 4 Reply 10, posted (2 months 1 week 1 day 5 hours ago) and read 6342 times:
Quoting Magyar (Reply 9): high oil prices push the balance in favour of the bigger plane
(as long as it can be filled).
The last part of the above statement is critical. If higher oil prices = less growth in avaiation as Stitch suggests, then it's just how much the growth is stifled that determines whether a mid to large twin (787/A350/777) is more economical on a route than a VLA (747/A380). It's certainly more ecomonical for the VLA , as you suggest, if it's full. But if it runs at a load factor of 65-70% then flying a twin and leaving a few folks behind becomes for more attractive to the carrier's bottom line.
KC135TopBoom From United States, joined Jan 2005, 5231 posts, RR: 33 Reply 12, posted (2 months 1 week 1 day 4 hours ago) and read 6293 times:
Quoting Magyar (Reply 9): If you have a route that can support 2 B777/A340 that can support 1 A380.
At equivalent technological level flying a FULL bigger plane IS more economical than flying 2 FULL smaller plane.
Period, I do not think anybody can argue this.
If you can always fly an A-380 full (500+ paying passengers and no non-revs), you would be right. But, as you know, any airline cannot fly 100% of their VLAs at a 95%+ load factor. So, here, 2 B-777-200LRs/ERs/-300ERs, A-330-200s/-300s, B-787-800s/900s/1000s, or A-350-800s/-900s/-1000s, with 80% load factors on each airplane, have a stronger business case. Additionally, you can move almost twice the freight as the A-380 doesn't carry that much more cargo than any of these twins.
AutoThrust From Switzerland, joined Jun 2006, 931 posts, RR: 4 Reply 13, posted (2 months 1 week 1 day 4 hours ago) and read 6278 times:
Quoting KC135TopBoom (Reply 6): Gillman and co-horts are correct, the A-380 was built as more of an emotional response (to Boeing) than a sound business decision.
Wrong, the Airlines asked Airbus to make it and were involved since beginning in the design. Airlines like LH,EK,SA,.. even told Airbus to not make it to small like a A380 chief engineer declared.
Besides International Airports growing every year at the incredible rate of 5 % i don't see a problem to fill this planes. We will have to wait for the A380-900 to judge if the program was successful. Not to forget if Airbus wouldn't have screwed up production they would be near to brake even, so this was no emotional decision.
MedAv From United States, joined Mar 2008, 44 posts, RR: 0 Reply 14, posted (2 months 1 week 1 day 4 hours ago) and read 6256 times:
Quoting AutoThrust (Reply 13): Not to forget if Airbus wouldn't have screwed up production they would be near to brake even,
Eh?
192 orders to date. Break-even point according to Airbus (so take with large grain of salt) is 420. A smoother production would not have landed that many additional orders.
This plane is far far from breaking even, though I do believe it will turn out to be a profitable product, but that's 10-20 years down the line.
AutoThrust From Switzerland, joined Jun 2006, 931 posts, RR: 4 Reply 15, posted (2 months 1 week 1 day 3 hours ago) and read 6226 times:
Quoting MedAv (Reply 14): 192 orders to date. Break-even point according to Airbus (so take with large grain of salt) is 420. A smoother production would not have landed that many additional orders.
Not correct, before delays the break even point was lower, at about 250 planes IIRC. But delays did rise cost and so the break even point.
StuckInCA From United States, joined Oct 2005, 522 posts, RR: 0 Reply 17, posted (2 months 1 week 1 day 3 hours ago) and read 6195 times:
Quoting Mariner (Reply 7): What does it matter? It's built. Airbus aren't going to un-build it
That doesn't mean that it isn't interesting to discuss. Following your logic, so far as I can tell, any study or conversation of history would be pointless.
MedAv From United States, joined Mar 2008, 44 posts, RR: 0 Reply 18, posted (2 months 1 week 1 day 3 hours ago) and read 6183 times:
Quoting AutoThrust (Reply 15):
Not correct, before delays the break even point was lower, at about 250 planes IIRC. But delays did rise cost and so the break even point.
The delays and production mistakes cost them penalties + resources, but the 35% increase (and I bet it will rise as time goes on) of the break-even point tells you that they had originally vastly underestimated the cost of designing and building this behemoth (much like Boeing vastly underestimated the time/resources the 787 would end up needing).
(Or, if you wish to take an entirely different route, you can say that they underestimated the sweet deals they'd have to cut the airlines to get them to sign up?)
Mariner From New Zealand, joined Nov 2001, 9857 posts, RR: 75 Reply 19, posted (2 months 1 week 1 day 3 hours ago) and read 6149 times:
Quoting StuckInCA (Reply 17): Following your logic, so far as I can tell, any study or conversation of history would be pointless.
Well, not quite, since I am a historian by profession - and a moderately revisionist/controversial historian.
But all we have here is the Gellman group justifying their conclusion - which conclusion might have been interesting, but was always irrelevant.
There is no "process", no illumination of what happened, or might have happened, no input from any contrary point of view. So it is - from my point of view - sterile.
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