SC430 wrote:Does the A380 really have bad CASM?
Airbus created this simplistic myth and many keep repeating it. The concept is that congested airports will need a more A380's to increase the number of passengers per landing slot. The problem with this simple minded statement is that it assumes the only solution is at the upper end of the size spectrum ie. the A380. The fact is the average plane size has been increasing all along the spectrum from narrow body on up.Hundreds of A380's is not the way to solve the issue.
It doesn't seem like it because it has efficient engines and it burns only 1 kg/mile/person. But when the time to upgauge comes, there is definitely a need for an even more efficient VLA the size of the A380 or larger - because technology will be very mature by then.
Isn't the market answering that question for you?
If not, google led me to some numbers:
Keep in mind the bigger airplane needs to have lower CASM than competition in order to deal with very real issues like yield dilution (more seats can lead to less profit on each).
And it's definitely not definite that there will be a need for an efficient VLA the size of the A380 or larger. For this to be true it would need to have breakthrough economics that could not be matched by smaller aircraft, and there would need to be enough city-pairs that produced enough traffic to justify the investment needed to make such an aircraft. It's hard to see those conditions being true any time soon.
Keep in mind when A380 was launched in 2000 the economics of 77W was not known. If they had been, I imagine it would not have been launched.
I disagree with almost everything on this post.
You can speak of yield dillution if you have a limited market on a specific direct O&D route with limited competition.
Open up Momondo and try to type in a long haul route between two major cities. You will find hundreds of flight options for any given route on dozens of airlines.
In a market with tens of thousands of seats available for any given route, operating a 600 seater instead of a 250 seater doesn't dillute yields, because those same 600 seats are also offered for other 1-stop route combinations with again tens of thoudands of options.
When you start thinking of the longhaul market as layers, with each layer representing the network of an airline, yield dillution is very limited and it's more a matter of how many tickets each airline can sell.
Within that market, there are airlines offering different volumes of seats and in different ways, so a bigger aircraft here and there doesn't automatically mean that you dillute yields, it can also be that you are forcing other carriers out of routes or that demand is increasing on specific routes or that there is an underlying unmet demand at a lower fare spectrum that could still be very profitable and more so than flying only a B777X with only pax in the higher fare spectrum.
In other words, lower fares increase demand, so it's up to each airline to develop yield management strategies to segment the demand.
If a seat on a given sector costs an airline 300 USD, they need to make sure each seat gets filled, and that someone that is willing to pay 500USD for that seat doesn't end up paying just 350USD, like other people who would only pay 350USD for that seat.
A bigger aircraft allows you to make money by taking market share, by selling a seat at 450 USD to a pax that would otherwise have paid 500 USD for a seat on a competitor's tight B787. You can keep doing this until the competitor's B787 starts to fly around empty seats.
About a competition between an A380 versus 2 B787's. Here too, the A380 operator can add a second A380 and force the B787 operator out of the market.
It will be harder for the B787 operator to force the A380 operator out of the market, as the A380 operator can also add B787's.