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kc135topboom
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WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:22 am

The A-380 is by far the largest passenger jet of all time. It is a modern marvel of technoligy. But have the economics in the airline industry past it by? Currently, the A-380 has about 159 orders, but has not sold any new orders in over 2 years, dispite entering the vital flight test program to certify it to enter the world's airline fleet. By comparison, the much smaller B-787 has sold well over 400 aircraft, and it's production slots are sold through 2012. The B-787 has not even had airplane #1 assembled yet, nor has it entered flight testing.

Now the B-787 and A-380 are two completely different class of aircraft. But, they are both long haul aircraft (with vastly different passenger/cargo capacities), with similar ranges. One economic advantage the B-787 has over the A-380 is it's promose of a very low operating and trip costs, esspeically in fuel comsumption. It will also cost less in landing and parking fees, and does not need airport infastructure improvements to support the aircraft.

There are about 16 airlines that have ordered the A-380, while 28 airlines have ordered the B-787.

On the same note, it can be argued the B-747-800I has not had any airline orders to date. The B-747-800I is about 100 seats smaller than the A-380-800, but claims a lower seat mile cost. That remains to be scene by the airlines who may eventually order it.

Is there beginning to be a trend for airlines to move away from VLAs and to medium size airplanes? If you look at the sales record of the B-767, A-330, B-777, B-787 it is clear what the airlines want. I think this trend will continue, when the A-350XWB is finally defined. That airplane should also sell well, if it keeps its promises.

So are the A-380 and new version of the B-747 now going be the last of the four engine VLAs developed by Airbus and Boeing?
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:30 am

Quoting KC135TopBoom (Thread starter):

Is there beginning to be a trend for airlines to move away from VLAs and to medium size airplanes?



Quote:
While global airline traffic has risen nearly 5% annually over the past decade, the average number of seats per aircraft has barely risen on most key routes and decreased on many, according to a recent analysis by Airline/Aircraft Projects Inc., an aviation consulting firm in New York.

Officials at Airbus were aware of the shrinking-plane phenomenon when they launched the A380 in 2000, but they continue to say that the A380 serves a large potential market.

http://online.wsj.com/article/SB1160...WORDS=a380&COLLECTION=wsjie/6month
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mariner
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:31 am

Quoting KC135TopBoom (Thread starter):
Currently, the A-380 has about 159 orders, but has not sold any new orders in over 2 years

Um - the recent Singapore order perhaps?

Quoting KC135TopBoom (Thread starter):
s there beginning to be a trend for airlines to move away from VLAs and to medium size airplanes?

Not really "beginning". As was said of the 747:

http://www.flug-revue.rotor.com/FRheft/FRH9904/FR9904e.htm

The 747 created over-capacities, which are every airliner's nightmare. Most carriers preferred smaller aircraft: They were, however, afraid that the competition might buy the giant and in this way dominate on international routes. This is why mainly non-American airlines were queuing up outside the Seattle works.

Quoting KC135TopBoom (Thread starter):
So are the A-380 and new version of the B-747 now going be the last of the four engine VLAs developed by Airbus and Boeing?

Probably. At least within the next few decades.

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NYC777
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:37 am

Quoting Mariner (Reply 2):
Um - the recent Singapore order perhaps?

That's an LoI that has yet to be finalized so it is not an order.
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DAYflyer
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:41 am

I was thinking that the A-380 is going to do just fine on a limited number of routes, with a limited number of frames over time.

But the delays have cost Airbus a fortune, and I do not see the airplane breaking even anytime soon. I have seen estimates that it will now be 350 frames before it breaks even.
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futurecaptain
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:41 am

Yes, the market is getting more fragmented daily. Over the last few years airlines have definately started up more routes not requiring travel through a hub to get to your destination. Just look at new routes being started up, NW now flies between BDL and AMS. (while AMS may be considered a hub) who would have thought ANY airline would fly this route 5 years ago?

Now, if the 748 and A380 will be the last 4 engined a/c remains to be seen. We can reasonably assume both will be produced for at least 10 years, perhaps 20. Alot can happen in that time and perhaps the demand will be there for a super-heavy lift airliner that will have 4 engines rated at 150,000 lbs of thrust under the wings. Or maybe in that time a new form of blasting metal tubes through the air at 40000 ft will emerge and 4 of these devices will be required for power.
Future should be interesting.

[Edited 2006-10-16 22:05:48]
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Stitch
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:47 am

Quoting KC135TopBoom (Thread starter):
The A-380 is by far the largest passenger jet of all time...but have the economics in the airline industry past it by?

I believe it is too early to say. Many of those who have purchased the A380 continue to stand by it and one - SQ - has moved to increase it's commitment.

Quote:
Is there beginning to be a trend for airlines to move away from VLAs and to medium size airplanes?

Yes, where traffic supports such a move. But that does not negate the importance of the world's hub airports nor the benefits the A380 brings to some operators at some of them.

Quote:
So are the A-380 and new version of the B-747 now going be the last of the four engine VLAs developed by Airbus and Boeing?

I don't believe the 747-8 and the A380 will be the last VLA either company builds. While the "next generation" of 500-seaters might be a twin, heavy-lift passenger and cargo planes (including BWBs) might very well require four engines to lift them and their payload into the air.
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:49 am

Quoting NYC777 (Reply 3):
That's an LoI that has yet to be finalized so it is not an order.

Thanks for the clarification. A positive intention, perhaps?  Smile

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baron95
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:54 am

Quoting DAYflyer (Reply 4):
But the delays have cost Airbus a fortune, and I do not see the airplane breaking even anytime soon. I have seen estimates that it will now be 350 frames before it breaks even.

Agreed. But these are two separate issues. The A380 can be a money drain to Airbus and still be a money maker for some airlines that ordered it.

I think there is NO question that on some routes, for some airlines, the A380 will be a money maker. It has lower CASM than ANYTHING else flying. It has modest aquisition costs/seat, particularly now with the launch and penalties "discounts". However, I don't see it being relevant to a whole lot of routes or a whole lot of airlines. I think the 748I is in the same boat, with the added disadvantage of being later to market and "not quite as large".
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NYC777
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:56 am

Quoting Mariner (Reply 7):
A positive intention, perhaps?

Perhaps. I t hink they would probably firm it up but I'm not sure when. I think the A350 order is more in jeopardy though. That is something hat may not be firmed up and it all depends on what Airbus does in terms of launching it.
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zvezda
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:59 am

Quoting KC135TopBoom (Thread starter):
So are the A-380 and new version of the B-747 now going be the last of the four engine VLAs developed by Airbus and Boeing?

Yes, almost certainly. It's all twins for the forseeable future.

Quoting Mariner (Reply 2):
Um - the recent Singapore order perhaps?



Quoting Mariner (Reply 7):
Thanks for the clarification. A positive intention, perhaps?

Prior to the fourth WhaleJet delay, it would have been reasonable to expect SQ's LoI to be firmed into an order. There isn't much basis to hope for that now. It seems likely to go the way of SQ's A340-500 options.
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 4:59 am

Quoting NYC777 (Reply 9):
That is something hat may not be firmed up and it all depends on what Airbus does in terms of launching it.

That may be true, too.

Then again, I'm one of that small group that thinks they might have done better to have stuck with the original A350.

Mr. UH said it would earn them a silver medal, not a gold. But hey, nothing wrong with a silver.

 Smile

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Rj111
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 5:01 am

There's a trend towards smaller jets at present but there's another more fundamental trend that trends change over time.

Some factors to consider...

The 744 is somewhat dated technology vs A330/A340, 777 ect. The 773ER has lower CASM i'm led to believe, and has a much better cargo capacity.
The market has been somewhat on the defensive post 9/11 and hugher fuel prices, especially in the US.
Traffic is growing, expected to double by 2020.

Lets see how the market reacts to the A380 when is in service.

[Edited 2006-10-16 22:15:16]
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 5:10 am

Quoting RJ111 (Reply 12):
The 744 is somewhat dated technology vs A330/A340, 777 ect. The 773ER has lower CASM i'm led to believe, and has a much better cargo capacity.

No, the B747-400 has lower CASM than the B777-300ER, but airlines generally prefer the latter because it is smaller and therefore has higher RASM. The B777-300ER also has higher dispatch reliability (because it's a twin) and less market risk and more flexibility (because it's smaller). It also has better range and, as you pointed out, can carry more LD3s.
 
TeamAmerica
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 5:12 am

Quoting KC135TopBoom (Thread starter):
So are the A-380 and new version of the B-747 now going be the last of the four engine VLAs developed by Airbus and Boeing?

We may yet see large blended-wing body [BWB] aircraft in the future, and they quite possibly could have four engines. There's a distant possibility that Boeing's Y3 might be a conventional 4 engine planform, but I doubt it. Far more likely to be a giant twin or not get built at all.

One aircraft I specifically exclude is the A380-900. Airbus designed a wing for a plane that will never be built, and in doing so compromised the A388.
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 5:21 am

Quoting Zvezda (Reply 10):
There isn't much basis to hope for that now. It seems likely to go the way of SQ's A340-500 options.

Well, that may be true, too.

But since it hasn't happened yet, I reserve judgement.

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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 5:32 am

For Airbus the next 6 - 8 months are going to be critical. Do they have another delay in the A380? Do they launch the A350 and if so is it a version that the market wants? Most critically, how are they going to revamp their corporate governance structure and introduce cost cutting measures that may not be politically popular? It seems that launch aid has taken a back seat to all these questions but it may be revived with a roar if Euro govts' want to help solve those questions with more launch aid and other cash infusions.
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 5:35 am

Quoting RJ111 (Reply 12):
The market has been somewhat on the defensive post 9/11 and hugher fuel prices, especially in the US.
Traffic is growing, expected to double by 2020.

I'll spare you my full soapbox rant, but please consider the contradiction of citing higher fuel prices and a doubling of traffic by 2020. Rising fuel prices will slow traffic growth...or worse...and spell doom for VLA's.
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 5:41 am

Quoting KC135TopBoom (Thread starter):
Currently, the A-380 has about 159 orders, but has not sold any new orders in over 2 years,

I'm sorry that's wrong - if you are taking the signing of a firm order (as you must be as the SQ MoU is not included) then there have been 29 sales in the last two years (http://en.wikipedia.org/wiki/A380#Orders) I will grant you that it is true that there haven't been any orders signed in the last year but I hope that they get this sorted sharpish - I want to fly on one!
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 5:42 am

Quoting TeamAmerica (Reply 14):
There's a distant possibility that Boeing's Y3 might be a conventional 4 engine planform, but I doubt it. Far more likely to be a giant twin or not get built at all.

I don't think that's necessarily true.

It's quite possible that the market for the Y3 will not be large enough to justify a significant investment in an all-new mega-turbofan in the Ge90 legacy. Existing turbine technology could concievably scale up to 140-150 klb but that does bring a number of logistic and technical hurdles.

Consider two scenarios:

- Develop a high-risk new engine for several billion dollars for a product with market projection of maybe 300-400 units, and no application outside Y3.

- Apply a significant midlife upgrade to GEnx/Trent1000 in 2015-2020 for application on both Y3 and 787/A350, at a fraction of the cost and risk of a new engine.

By 2020, Boeing could concievably build a 400-500 seat jet capable of trouncing the A388's economics without using a twin configuration, so why assume all that risk for that extra percent off economics? Sometimes it's not having the absolute best product, but the sufficiently best product...

Quoting TeamAmerica (Reply 14):
One aircraft I specifically exclude is the A380-900. Airbus designed a wing for a plane that will never be built, and in doing so compromised the A388.

Excellent point IMO. While not the cause of today's A380 problems, it does hurt the economics in the short to medium term. If the A388 can't make a dent in that time, there may not be a "long term" to consider for a -900 stretch...

[Edited 2006-10-16 22:56:13]
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 6:20 am

Quoting DfwRevolution (Reply 19):
Develop a high-risk new engine for several billion dollars for a product with market projection of maybe 300-400 units, and no application outside Y3

This is exactly why I doubt that Y3 will be built at all. I think super stretched B787's are more likely (think B787-11). Of course, Boeing may not call it a 787...but Y3 may be a 787 derivative rather than the all-new aircraft we think of. If that occurs we may see B748F in production much longer than we expect.  airplane 
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Rj111
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 6:24 am

Quoting TeamAmerica (Reply 17):
but please consider the contradiction of citing higher fuel prices and a doubling of traffic by 2020. Rising fuel prices will slow traffic growth...or worse...and spell doom for VLA's.

I never implied fuel would continue rise in the future. I believe they've dropped slightly recently.

Nor do fuel prices alone determine air traffic growth. If the cost of fuel doubled over a time period but the need to travel through increased commerce and population rose four fold, there would still be traffic growth. Just not to the magnitude of four.

So there is no contradiction.

And would higher prices necessarily spell doom for the VLAs? That's a double edged blade. Traffic will be down but CASM will be more important than ever, and this is where the VLA's traditionally shine. Maybe the new trend could be kissing goodbye to frequencies.
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 6:27 am

Quoting TeamAmerica (Reply 20):
I think super stretched B787's are more likely (think B787-11).

While I don't expect it, Boeing could build an 80 meter long B787-12. It would have taxi issues at a lot of airports, but it would have great economics relative to the B747-8I SuperJumbo.
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 6:39 am

Quoting Zvezda (Reply 22):
While I don't expect it, Boeing could build an 80 meter long B787-12. It would have taxi issues at a lot of airports

And while CFRP mitigates some of the structural inefficiency of a long/thin tube, it does not erase them completly.

Quoting RJ111 (Reply 21):
Traffic will be down but CASM will be more important than ever, and this is where the VLA's traditionally shine. Maybe the new trend could be kissing goodbye to frequencies.

You must keep in mind that the 787-10 and A350-1000 are both projected to have better CASM than the A388.

If depressed traffic volume is an anticipated risk, there is no contest between midsized jets and VLA of equal CASM.

Quoting TeamAmerica (Reply 20):
This is exactly why I doubt that Y3 will be built at all.

Don't get me wrong, I consider 300-400 units a conservative number that would still be sufficient to launch a VLA in 2020.

The A380 was projected to have a 300 unit break-even once true unit price and program cost were accounted for, but now who knows given the events of the last six months?

Unless demand for a 400-500 seat jet absolutely plummets, I consider it highly unlikely that a long-term 747 replacement would not be in discussion by 2020.
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 6:41 am

Quoting TeamAmerica (Reply 14):
One aircraft I specifically exclude is the A380-900. Airbus designed a wing for a plane that will never be built, and in doing so compromised the A388.

Did Airbus ever said they won't build the 900? I was thinking that would be offered somewhere down the line and actually become the popular model?
I think everyone is writing off the A380 way too early, its safe to say that we are talking about an aircraft with 20-30 year product life.
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zvezda
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 7:03 am

Quoting Gokmengs (Reply 24):
Did Airbus ever said they won't build the 900? I was thinking that would be offered somewhere down the line and actually become the popular model?

Airbus have never said they would or wouldn't build it.

Quoting Gokmengs (Reply 24):
I think everyone is writing off the A380 way too early, its safe to say that we are talking about an aircraft with 20-30 year product life.

Opinions vary. There is a chance some may still be flying in 20 years, but I don't see any chance that WhaleJets might still be in production in the year 2026.
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 7:20 am

Quoting RJ111 (Reply 12):
There's a trend towards smaller jets at present but there's another more fundamental trend that trends change over time.

Yes good quote. I ask of the Boeing model, will the point to point always remain so? If they continue to be successful will they not become hubs? If so when? Could the airlines then not replace their 787s for bigger planes? Maybe a 380 each for their different points? What in about 10 yrs?

Also of the Boeing model when the downturn comes which one will hurt the most, the point to point travel, or hub to hub? The hubs are in the middle of large conurbations that soak up downturns in travel. Point to point is really exposed when customers stop spending.

If I was running an airline not sure what I would like to have in a downturn, several 787s flying on average 60% full, or a few 380s flying 60% full. My capital is already spent its the day to day spend like salary, fuel, landing charges, maintenance, ground crew that will determine whether I sink or swim. Tough call.
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 7:25 am

Quoting Mariner (Reply 11):
hen again, I'm one of that small group that thinks they might have done better to have stuck with the original A350.

I belong to this group as well. The old all new and improved A350, based on the A300/310/330 fuse would have allowed them to get a product to market two years after Boeing. This was the path of least risk and they would have probably been able to snag 40% (IMVHO) of the segment. Probably too late to turn back now....
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 7:31 am

Quoting KC135TopBoom (Thread starter):
There are about 16 airlines that have ordered the A-380, while 28 airlines have ordered the B-787.

Umm... one is a niche aircraft, the other is an all-purpose workhorse. How many airlines have ordered the 747-8?
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ebbuk
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 7:39 am

Quoting Lumberton (Reply 27):
This was the path of least risk and they would have probably been able to snag 40% (IMVHO) of the segment.

It would never have worked. With everyone knowing that it is a stop gap, they would have resisted buying it (40% very unlikely) and the re-sale value would be so low making it even less profitable.

Damned if they did and damned if they didn't. I am glad they didn't. XWB is a better plane and a better platform to base Airbus's future products. No matter how long it takes to get to the market.
 
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 7:42 am

Quoting Lumberton (Reply 27):
Probably too late to turn back now....

Yeh, I think you are right.

Still, it's good to be in agreement on something.  Smile

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DfwRevolution
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 7:43 am

Quoting EbbUK (Reply 26):
I ask of the Boeing model, will the point to point always remain so? If they continue to be successful will they not become hubs?

Well first, you have a flawed interpretation of "the Boeing model." You have the Boeing cheerleader/basher model, but those fanaties are far removed from the reality that Boeing is optimizing their products for.

What Boeing anticipates could more realistically be called "hub-point." For example, the 787 won't bring Europe/Asia routes to Tulsa, Oklahoma. It will make thin routes between large airports (hubs, if you like) much more viable.

Quoting EbbUK (Reply 26):
Could the airlines then not replace their 787s for bigger planes?

Of course this is a plausable scenaro. Boeing didn't announce plans to axe 777 production after they launched the 787, in fact they are activly lobbying for 747-8I launch customers.

Do you expect that airlines are contractually bound to never upgrade routes once they accept delivery of 787? Randy Bassler isn't going to cackle when ANA takes the first 787-8 and shriek: "Read the fine print bitches..." Big grin

Quoting EbbUK (Reply 26):
Maybe a 380 each for their different points? What in about 10 yrs?

There is a niche for such routes, they are called trunk routes

Certain airlines could defintly utilize the A388, but it's a highly limited niche. No independent anaylsis of global market forcast have come to the same conclusion that Airbus has boasted for the A388 demand.

Quoting EbbUK (Reply 26):
Also of the Boeing model when the downturn comes which one will hurt the most, the point to point travel, or hub to hub? The hubs are in the middle of large conurbations that soak up downturns in travel. Point to point is really exposed when customers stop spending.

Downturns greatly favor smaller aircraft.

Again, 787 won't be flown between LBB-PER. They will be flown along routes like DFW-AMS which doesn't currently exist with today's aircraft. That's between two rather large hubs, and if traffic falls during a recession, a 787 or A350 could easily be moved to another route.

Contrast that to the A380 which is only suitable for a select number of routes and requires capital improvement at virtually all airports to opperate on a regular basis. That's rigidly inflexible and requires the airline to assume a great deal of risk compared to a 787/A350.

Quoting EbbUK (Reply 26):
If I was running an airline not sure what I would like to have in a downturn, several 787s flying on average 60% full, or a few 380s flying 60% full. My capital is already spent its the day to day spend like salary, fuel, landing charges, maintenance, ground crew that will determine whether I sink or swim. Tough call.

In terms of efficient use of capacity, the 787 wins. It's an inherently more versatile aircraft that can be placed directly on routes an A388 could fly (and thus fly at higher LF) or fly on thin, high-yield routes totally unsuitable for a large aircraft
 
TeamAmerica
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 8:44 am

Quoting RJ111 (Reply 21):
I never implied fuel would continue rise in the future. I believe they've dropped slightly recently.

Fuel prices will rise. I'm not a believer in doomsday scenarios, but I have studied the history of petroleum production. There is a limit, and we must be very close to it today. If you are thinking the price of oil has come down, please consider where it was just three years ago ($25/bbl).

Quoting RJ111 (Reply 21):
Nor do fuel prices alone determine air traffic growth. If the cost of fuel doubled over a time period but the need to travel through increased commerce and population rose four fold, there would still be traffic growth. Just not to the magnitude of four.

Fuel price is certainly not the only factor, but it is already huge and growing. You cannot assert that fuel prices can double without having lasting impact on commerce, and hence on air travel. Your original statement cited a doubling of air traffic by 2020, but here you appear to be suggesting growth over a much longer period ("increase in population"). Rising fuel costs increase the price of everything and must inevitably reduce the ability to afford luxuries - and air travel is a luxury.

Quoting RJ111 (Reply 21):
And would higher prices necessarily spell doom for the VLAs? That's a double edged blade. Traffic will be down but CASM will be more important than ever, and this is where the VLA's traditionally shine. Maybe the new trend could be kissing goodbye to frequencies.

Yes, VLA's like the A380 and B748i are doomed. As smaller aircraft equal or surpass them in CASM (already happening) airlines naturally move to the smaller aircraft. As fuel prices force ticket prices up, it becomes harder to sell tickets...so the smaller aircraft has a distinct advantage in RASM. It is far easier to sell 200 full fares than to sell 400; much less risk with a smaller plane.

Quoting DfwRevolution (Reply 23):
I consider 300-400 units a conservative number that would still be sufficient to launch a VLA in 2020.

The manufacturer would have to expect an excellent profit per unit before launching a VLA with an expectation of only 300 sales. It might have been justified in 1965, but with today's development costs it would be incredibly risky.
Failure is not an option; it's an outcome.
 
baron95
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 10:05 am

If nothing else changes, doubling of fuel prices would cause less than a 10% rise in airline costs, since fuel represents 16-20% of total airline costs.

If you switch to more efficient airframes and engines, you improve route planning SW, you increase load factors, you reduce average plane size/costs, you bypass hubs, etc (all of which are taking place) the increase from doubling fuel price is even less.

So don't overplay the increase in fuel costs putting a damper on demand. From 2003-2206 oil prices went up by over 200% and yet passanger traffic continue to grow, right? Why would the future be any different.
Killer Fleet: E190, 737-900ER, 777-300ER
 
Rj111
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 10:11 am

Quoting DfwRevolution (Reply 23):
You must keep in mind that the 787-10 and A350-1000 are both projected to have better CASM than the A388.

If depressed traffic volume is an anticipated risk, there is no contest between midsized jets and VLA of equal CASM.

Agreed with the latter statement, but i'd rather see some full specs for the 7810, A3510 first (+ possible Trent 1700s on the A380?). I'm not denying it's certainly a distinct possibilty though.
 
DfwRevolution
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 10:46 am

Quoting TeamAmerica (Reply 32):
Yes, VLA's like the A380 and B748i are doomed.

Jeez tap the brakes...

There is certainly a market for VLA aircraft, both passenger and freight. Granted it will not grow as quickly as the midsized market, but VLA are large aircraft and sell with very high yield.

Quoting TeamAmerica (Reply 32):
As smaller aircraft equal or surpass them in CASM (already happening) airlines naturally move to the smaller aircraft.

No it's not "already happening." It's probable, but neither the 787-10 nor the A350-1000 have been launched (neither will be in service by 2012) and the 787-8/9 will not have lower CASM than the 747-8I or A388.

The fact that the 787-10 could have lower CASM than the A388 is an anomoly that dramatically shows what an inefficient design Airbus selected. You can't assume this example to be true for any generation of aircraft that will follow.

Quoting TeamAmerica (Reply 32):
It is far easier to sell 200 full fares than to sell 400; much less risk with a smaller plane.

Stop acting like there are no markets for VLA. There are pleanty to justify their existence.

Not to mention, the air freight market is exploding. Freight alone could subsidize the development of a passenger variant, as will likely be the case with the 747-8I.
 
TeamAmerica
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 12:28 pm

Quoting Baron95 (Reply 33):
If nothing else changes, doubling of fuel prices would cause less than a 10% rise in airline costs, since fuel represents 16-20% of total airline costs.

Let's assume that you were right and fuel represents 18% of current costs and all other costs remain the same. If the fuel price doubles, it would represent 31% of total costs; if they triple, it's 40%.

Now consider: Airline profits hit by oil price which states:

Quote:
Fuel accounted for 24% of Cathay Pacific's operating costs in 2004.

That's just one sample and your mileage may vary. Also note that the 24% figure is for 2004, and prices are considerably higher now. Reworking the math starting with 24% fuel costs, if fuels doubles it becomes 39% of total costs, and tripling becomes 49% of total. Do you see my point now? This is not something to dismiss.

Quoting Baron95 (Reply 33):
So don't overplay the increase in fuel costs putting a damper on demand. From 2003-2206 oil prices went up by over 200% and yet passanger traffic continue to grow, right? Why would the future be any different.

Passenger traffic has squeeked back up to 2001 levels. Not much of an increase, actually. As to why the future will be different, see above discussion of increasing fuel costs. Adjusted for inflation, fuel costs have been relatively constant since 1960. Rapidly rising fuel prices are outside of our historic experience.

Quoting DfwRevolution (Reply 35):
No it's not "already happening." It's probable, but neither the 787-10 nor the A350-1000 have been launched (neither will be in service by 2012) and the 787-8/9 will not have lower CASM than the 747-8I or A388.

Yes sir, it is "already happening". I speak of the foreseeable future, and unless you believe A350-1000 and B787-10 won't be built, it is a reality.

Quoting DfwRevolution (Reply 35):
Stop acting like there are no markets for VLA.

You're talking about the situation as it is today. I'm talking about the future economics of VLA's, and it's no act. I do not believe that existing aircraft will be scrapped, but rather that nobody will be designing any new passenger aircraft, and few of the exising models will be sold. Freighters are entirely different, and I think the B748F may remain in production for a couple decades yet.
Failure is not an option; it's an outcome.
 
WingedMigrator
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 1:40 pm

Quoting TeamAmerica (Reply 14):
One aircraft I specifically exclude is the A380-900.



Quoting DfwRevolution (Reply 19):
Excellent point IMO. While not the cause of today's A380 problems, it does hurt the economics in the short to medium term. If the A388 can't make a dent in that time, there may not be a "long term" to consider for a -900 stretch...

The financial pain of the A380 debacle has already come about. The decision to launch the A389 will be made on an incremental ROI basis. While the A389 may have a smaller yet market than the A388, it will cost an order of magnitude less to develop, precisely because so much of the A388 (and A388F) design was geared towards the A389. In light of this, I think there is still a good chance the A389 may fly in ~10 years.

Quoting TeamAmerica (Reply 32):
As smaller aircraft equal or surpass them in CASM (already happening) airlines naturally move to the smaller aircraft.

But the CASM of the A388 keeps dropping! Each delay cuts down the monthly payment.  Smile
 
zvezda
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 3:27 pm

Quoting EbbUK (Reply 26):
If I was running an airline not sure what I would like to have in a downturn, several 787s flying on average 60% full, or a few 380s flying 60% full.

The more realistic choice is: fly WhaleJets 30% full or fly some B787s 60% full while parking some others.
 
TeamAmerica
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 11:04 pm

Quoting WingedMigrator (Reply 37):
The decision to launch the A389 will be made on an incremental ROI basis. While the A389 may have a smaller yet market than the A388, it will cost an order of magnitude less to develop, precisely because so much of the A388 (and A388F) design was geared towards the A389. In light of this, I think there is still a good chance the A389 may fly in ~10 years.

How many orders would Airbus need to have in order to justify a launch? I'd think at least 50. The smaller version has only taken in 159 orders in six years. I just don't see it. If the market actually does grow, consider that in 10 years A389 may well be competing against Boeing's Y3. The A389 would not be competitive on purchase cost or CASM vs. a 747-sized CFRP aircraft. Airbus's best hope is that the market for VLA is so bad that Boeing stays out and A380 can generate a trickle of sales.

I see two possibilities. If I'm right about rising fuel prices, conventional VLA's are dead. If I'm wrong and there is a growing market for VLA, then Boeing builds a Y3 with the capacity of a B748, and that kills A380.
Failure is not an option; it's an outcome.
 
Rj111
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RE: WhaleJet=Economics Not On Tis Side?

Tue Oct 17, 2006 11:58 pm

Quoting TeamAmerica (Reply 39):
then Boeing builds a Y3 with the capacity of a B748, and that kills A380.



Quoting TeamAmerica (Reply 39):
The A389 would not be competitive on purchase cost or CASM vs. a 747-sized CFRP aircraft.

IMO these remarks are flippant at best. And the words 'dead' and 'kill' (come on we're not, 12-years-olds) are akin to some of the thoughts of the A330 when the 787 turned up. Yet the A330 has gone on to sell in many numbers since then. I feel some people just don't appreciate the value of an aircraft to an airline, regardless of the technology.

You've also missed out the very conceivable possibilty that there will be a market for the VLAs, but not one large enough that Boeing will feel justifies investment. Hence Airbus could reap the benefits of an albeit small monopoly.

[Edited 2006-10-17 17:07:20]
 
TeamAmerica
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RE: WhaleJet=Economics Not On Tis Side?

Wed Oct 18, 2006 12:52 am

Quoting RJ111 (Reply 40):
IMO these remarks are flippant at best. And the words 'dead' and 'kill' (come on we're not, 12-years-olds) are akin to some of the thoughts of the A330 when the 787 turned up.

I have seen these terms used many, many times here on A.Net. I agree that it is hyperbole - so please suggest a better way to say it. For myself, I will say that the A380 project is moribund, and that development of smaller aircraft with superior CASM is severely detrimental to its economic viability. Takes a lot more syllables to get the same meaning, but at least I won't be accused of sounding like a 12-year-old. sarcastic 

Quoting RJ111 (Reply 40):
You've also missed out the very conceivable possibilty that there will be a market for the VLAs, but not one large enough that Boeing will feel justifies investment. Hence Airbus could reap the benefits of an albeit small monopoly.

You criticize my tone without doing me the simple courtesy of reading my full post. I wrote:

Quoting TeamAmerica (Reply 39):
Airbus's best hope is that the market for VLA is so bad that Boeing stays out and A380 can generate a trickle of sales.

Perhaps I'm more cynical than you, but I did offer exactly that possibility.
Failure is not an option; it's an outcome.
 
zvezda
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RE: WhaleJet=Economics Not On Tis Side?

Wed Oct 18, 2006 1:49 am

Quoting RJ111 (Reply 40):
Yet the A330 has gone on to sell in many numbers since then.

The A330 was a great aircraft in its time with remarkably good CASM. The WhaleJet, on the other hand, is remarkable for its structural inefficiency. The weight per seat is embarrassing. Also, the main reason the A330 has been selling against the B787 is earlier availability and fleet commonality -- advantages that the WhaleJet doesn't share. Despite all that, A330 sales since the B787 launch haven't been all that many, though enough to keep the line going for a while and make Airbus some money with which to cover the WhaleJet losses. Bravo A330!
 
Rj111
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RE: WhaleJet=Economics Not On Tis Side?

Wed Oct 18, 2006 2:18 am

Quoting TeamAmerica (Reply 41):
but I did offer exactly that possibility.
Arguably. Airbus can do a lot better than a trickle of sales before Boeing thinks about getting invloved though.

Boeing would need to be sure that the market can offer ROI and create profit to justify the risk of launching. That's at least 300 models, and they wouldn't necessarily win all the orders so ramp that up to 350. Also that figure is from Y3 launch date, in which time the A380 has the opportunity sell more.

Any prediction lower than this and Boeing won't enter.

Please also note that if...


Quoting TeamAmerica (Reply 39):
If I'm wrong and there is a growing market for VLA, then Boeing builds a Y3 with the capacity of a B748, and that kills A380.
...lower fuel means the allure of the effiicient jet will be lower. So Boeing may have a harder time winning over airlines who may already have the A380.

Quoting Zvezda (Reply 42):
The A330 was a great aircraft in its time with remarkably good CASM. The WhaleJet, on the other hand, is remarkable for its structural inefficiency. The weight per seat is embarrassing. Also, the main reason the A330 has been selling against the B787 is earlier availability and fleet commonality -- advantages that the WhaleJet doesn't share.

Granted, but we're discussiong the A389 vs Y3. An A389 would have a much better weight per seat vs A388. Could probably be bought to market earlier than Y3, and would share commonality with the A388. I am aware that this is extremely hypothetical though. It's bordering not worth discussing.

[Edited 2006-10-17 19:27:00]
 
jdevora
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RE: WhaleJet=Economics Not On Tis Side?

Wed Oct 18, 2006 2:20 am

Quoting KC135TopBoom (Thread starter):
Currently, the A-380 has about 159 orders, but has not sold any new orders in over 2 years

http://www.airbus.com/store/mm_repos...media_object_file_OD_1974-2005.xls
2002->10
2003->34
2004->10
2005->20
 
AADC10
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RE: WhaleJet=Economics Not On Tis Side?

Wed Oct 18, 2006 2:23 am

Quoting Zvezda (Reply 13):
No, the B747-400 has lower CASM than the B777-300ER

Is there any data on that? I find that hard to believe that the 744 has lower CASM than a 773 in real world seating configurations. I know that UA's 744s have a higher CASM than their 777-200ERs even with the 777s in 3 class configuration. That is why the 744s were their first aircraft not scheduled to be retired to be parked and the last to be returned to service.

The opportunity for the A380 will not be in fuel economy, although depending on the seating configuration, the CASM between the A380 and 787 should be similar, granted that we are talking about planes that are not actually flying. The A380 will be useful at airports where no new runways are going to be built anytime soon, if ever but demand is still increasing.

The two largest cities in the U.S., New York and Los Angeles do not have any new runways planned. LGA is at capacity with EWR and JFK approaching their limits. LAX, one of the largest O&D airports in the world is approaching capacity and the only real alternative is ONT, some 50 miles away. There is actually a plan to remove gates at LAX. Slot restrictions in some form will have to be implemented over the next decade. ORD is restricted, but there is a runway plan. However, it will take many years to complete. Cutting down on the RJs and turboprops will help but it is unlikely that the FAA would squeeze out the regional carriers completely.

LHR and NRT have been capacity restricted for decades. FRA does not have much left either. While there are alternate airports in London, few want to fly to them. Many airports in developed countries are hemmed in, with little room for new runways.

While the fuel efficiency needs are more obvious now, capacity issues will appear in the future.
 
zvezda
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RE: WhaleJet=Economics Not On Tis Side?

Wed Oct 18, 2006 2:42 am

Quoting AADC10 (Reply 45):
I know that UA's 744s have a higher CASM than their 777-200ERs even with the 777s in 3 class configuration.

My friend in fleet planning at UA says that's not correct.

Quoting AADC10 (Reply 45):
That is why the 744s were their first aircraft not scheduled to be retired to be parked and the last to be returned to service.

No, UA parked the B747-400s first because they are the most difficult to fill. The largest aircraft are generally the first to be parked in any downturn.
 
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kc135topboom
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RE: WhaleJet=Economics Not On Tis Side?

Wed Oct 18, 2006 2:44 am

Quoting Scouseflyer (Reply 18):
I'm sorry that's wrong - if you are taking the signing of a firm order (as you must be as the SQ MoU is not included) then there have been 29 sales in the last two years (http://en.wikipedia.org/wiki/A380#Orders)

Even the Airbus web site only counts 159 orders for the A-380. Wikipedia is a site I go to more for entertainment than facts. Anyone can write anything they want to there. Wikipedia should have the motto "if it is on the web and on this site, it can be believed".  Wink

http://www.airbus.com/en/aircraftfamilies/a380/

Quoting Zvezda (Reply 42):
The A330 was a great aircraft in its time with remarkably good CASM. The WhaleJet, on the other hand, is remarkable for its structural inefficiency. The weight per seat is embarrassing. Also, the main reason the A330 has been selling against the B787 is earlier availability and fleet commonality -- advantages that the WhaleJet doesn't share. Despite all that, A330 sales since the B787 launch haven't been all that many, though enough to keep the line going for a while and make Airbus some money with which to cover the WhaleJet losses. Bravo A330!

 checkmark 

The A-380 has a better than even chance of being a failure, right now. Maybe things will change for it in the future, but today, this program is a failure. OTOH, the B-747-800 program has a viable option available that allows Boeing to continue the program. That is sales as a freighter. The B-747-800F has already out sold the A-380-800F. Why? Because it is a true freighter, by design. The A-380-800F is not much more than a very big package freighter, probibly more useful as a wearhouse. So, even if the B-747-800I never sees the light of day, the B-747-800F will carry the program into success.