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The A380NEO Thread Part 2

Thu Jan 01, 2015 2:57 pm

Welcome to the 2nd edition of the A380NEO threads. Please continue the discussion here. Link to the original The A380NEO Thread (by TheSonntag Dec 11 2014 in Civil Aviation)
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RE: The A380NEO Thread Part 2

Thu Jan 01, 2015 3:11 pm

From the last thread:

Quoting brilondon (Reply 174):

First I would like to address this thread as a whole; the only way to get an A380NEO is if an airline would express interest in helping to finance its development.

That's just not going to happen. Airlines do not finance airliner development, and any CEO who went down that path would be in hot water. Typically airlines get price breaks to take the early frames, not the other way around.

Quoting brilondon (Reply 174):

The only problem with the A380 was it was put into service during a pretty bad world economy. I would hazard a guess that if the A380 were to have entered service during the boom times there would have been a greater demand, and would justify spending money on an A380NEO.

That would have to be an incredibly robust economy, one that would have lasted from EIS till the decision to launch A380neo was made. To expect such would be an "excess of optimism", IMHO. And of course if the A380 was selling to the expectations (45 deliveries per year) chances are it would not be under the pressure it is now under to launch the NEO to keep the program alive.

Quoting Matt6461 (Reply 208):
A380 operators would make more money cramming seats if they could dependably fill those seats. It's only because they can't that they don't.

That's largely true. EK is launching a higher-density sub-fleet so we can see the largest operator of the type is gradually getting to the point where it can do so, but all other operators have not gotten there yet.

Quoting WingedMigrator (Reply 211):
Which is why the A380's wing isn't too large for its fuselage as you have argued; quite the opposite: its fuselage is too small for its wing. Guess which one is easier to change? This should offer a strong hint of the path available to Airbus.

The problem is that the path that is available isn't all that attractive to the airlines. The path Airbus predicted and thus designed for was that the market would be demanding the -900 so soon that it was worth burdening the -800 with the extra structure for it. That is the kind of decision that is hard to reverse.

Quoting speedbored (Reply 217):
True but as Fabrice has publicly stated, they will have to prove the business case BEFORE going ahead.

The quotes I've seen like that have been coming from Tom Enders, who is Fabrice's boss. Fabrice seems to have thrown out a few "damage control" quotes saying of course there would be a NEO and a stretch without saying much else.

Quoting seahawk (Reply 226):
Advance started as their offer for the 777X, with not many other new airliners being developed in that time period, their option is either to write-off the Advance series, or to keep developing it and hope to find a use for it.

My understanding is that Advance is quite different than RB3025.

Flight Global tells us:

Quote:

The RB3025 builds on the Trent 1000 and XWB engines, but Nuttall says the concept is built around its Advance3 environmentally friendly engine (EFE) technology development programme, which includes a Trent 1000-derived core, lean-burn combustor, composite fan and advanced materials in the combustor and high pressure elements of the core.

whereas we know what is now called Advance is pretty much an all new core with the workload of the HP and IP spools redistributed relative to the T1000-based core in the RB3025.

The development sequence reported by Rolls to the press went RB3025 -> RB3039 -> Advance. There's probably more than that which we don't know, but that's the sequence that one finds via Google.
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RE: The A380NEO Thread Part 2

Thu Jan 01, 2015 8:04 pm

Quoting Revelation (Reply 1):
And of course if the A380 was selling to the expectations (45 deliveries per year) chances are it would not be under the pressure it is now under to launch the NEO to keep the program alive.

Where do you get the "45 deliveries a year" figure from 'Revelation' ?

At EIS in 2005 (I think); Airbus stated they were hoping to attract 50% of an estimated 1200 VLA market over 20 years. That's 600/ 20 years = 30 per year; which is roughly their current output.
 
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RE: The A380NEO Thread Part 2

Thu Jan 01, 2015 8:17 pm

Quoting SelseyBill (Reply 2):
Where do you get the "45 deliveries a year" figure from 'Revelation' ?

How about an AB press release from October 2006.

http://web.archive.org/web/200610142...ys_company_restructuring_plan.html
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 8:33 am

To try to take this topic back to the heartland subject, I want to discuss the most recent Leeham analysis in more detail, and what its finding imply for NEO's viability.

The story is behind a paywall here: http://leehamnews.com/2014/12/17/a38...-of-its-competitivness/#more-13705

I will share details about their conclusions, which I think is fair use. Others on this thread (KarelXWB) have access and can keep me honest about my statements.

Leeham offers CASM comparisons between A380neoW (winglets) at several different fuel price assumptions. It shows COC and DOC (COC+capital costs). A380's NEO and CEO are calculated to be worse on fuel consumption versus 77X, though lower on overall costs. Therefore, the cheaper fuel is, the more relatively attractive is the A380.

Here are Leeham's CASM findings for 77X and A380neoW at different fuel price levels, 6000nm mission:

@$2 fuel: 77X: .0662 A380neoW: .0574 ---> 13% CASM advantage
@$3 fuel: 77X: .0771 A380neoW: .0685 ---> 11% CASM advantage
@$4 fuel: 77X: .0881 A380neoW: .0796 ---> 10% CASM advantage

These are pretty good figures for the A380neoW. If true, and taken alone, they might justify some non-EK sales of the plane.

A few caveats that I think disproportionately favor the A380 in this analysis:
-the comparison ignores cargo capability. Leeham sees 77X as having twice the cargo space for this mission (34.7 LD3 versus 17.5 after pax bags). If cargo yields only 1/5 of equivalent pax weight, that difference makes up about 5% of pax revenue. 1/5 seems low but that's the figure that Leeham posited - does anyone have hard data on cargo yields? The figures I've seen would imply a ratio between 1/3 and 1/4.
-Leeham puts 569 seats in the (10-abreast) A380, 368 in the 77X. Even Airbus's new "optimized" 10-abreast configuration, using the same type seating as Leeham (81in F, 61in J, 32in Y) seats only 558.



This means that the A380 has more seats per m2 than the 77X. The best figures I've seen for floor space, including in Ferpe's spreadsheets show the A380 as having 51.5% more floor area (545.5 vs 359.5 m2). Here, the A380 has 54.6% more seats, despite the Y class taking more space per seat and despite having 8 exits versus 4 for the 77X.

-Leeham sees the A380neoW as having only 14% higher engine maintenance costs than 77X. This is odd because Leeham claims its maintenance costs are based on total thrust and the A380 has 37% more thrust than 77X (288k vs. 210). That's without applying a penalty for quad versus twin (I don't think this penalty is as great as people think, maybe 3% per lb-T, but still...). I'm going to ask them a question about this figure, will report back.

-Leeham sets the A380neoW's sales price at $430mil. Keeping that price low is crucial to a meaningful DOC edge, but it doesn't leave much room to recoup investment if the A380 is breaking even at the current $414.4mil list price. If real sales price is 55% of list (Leeham's assumption), and if the A380neoW costs as much to build as the CEO (dubious assumption), then profit per frame would be only $8.6mil. If, as is likely, the NEO costs significantly more to build, Airbus will be back near breakeven per frame.

For discussion, let's take Leeham at their word for the moment except for ignoring cargo - no real world airline purchasing decision would do so. At cheap fuel and a $430mil list price, the A380neoW would have about a 8% cargo-inclusive CASM edge over the 77X. At expensive fuel it's about 5% better per seat.

Now let's assume, for argument's sake, that airlines will purchase a 54% bigger plane for a 5-8% CASM benefit. If Airbus is making, at most $8.6mil more per frame sold, how many does it have to sell during the 2020's decade to justify $2-3bil invested during this decade? 30 frames per year gets you a future profit stream of ~$250mil. At just nominal pricing, that $2.5bil during the 2020's. We don't have to be finance wizards to see that the internal rate of return there is lacking.

Now so far I have discussed the plane leaving Leeham's assumptions intact, except for ignoring cargo. I have even adopted Leeham's suggestion that cargo has 1/5 the yield, per weight, of passengers, despite indications I've seen to the contrary (again, hard numbers on cargo yield would be appreciated). If, however, the A380 can't pack passengers more densely per m2 than 77X at 10-abreast, and if its maintenance costs per lb-T are not really 17% lower than 77X's, as Leeham assumes, then that DOC edge quickly shrinks. Even with an 8% edge, it doesn't seem guaranteed that Airbus will sell many frames beyond the ME3, and even if it can sell 30/year, it doesn't seem like it can make a long-term profit. Up the sales price and DOC gets worse. Plus there's the risk that ONLY Emirates orders the plane. Even if Emirates has a 200-A380 fleet, and replaces them on average every 12 years, that's 16-17 frames per year. At that build rate Airbus would almost certainly be losing money per frame.

So to get back to the main point of this thread, I still see this as a really difficult business case to close. It's not impossible but Airbus doesn't seem eager to close it either.

From the foregoing I'll just say that a NEO looks poised, on the most favorable assumptions, to continue to be a niche aircraft that contributes little, if any, to Airbus's bottom line. If unfavorable assumptions come into play, there's a risk that it just adds to the A380's losses so far. I don't want to hijack the thread into being about an A380X, but the main reason I'm so supportive of that path is that it seems like only a radical change to the A380 is going to make it a commercial success for Airbus.

[Edited 2015-01-02 00:37:20]

[Edited 2015-01-02 00:41:15]
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 8:48 am

Quoting Revelation (Reply 1):
whereas we know what is now called Advance is pretty much an all new core with the workload of the HP and IP spools redistributed relative to the T1000-based core in the RB3025.

The development sequence reported by Rolls to the press went RB3025 -> RB3039 -> Advance. There's probably more than that which we don't know, but that's the sequence that one finds via Google.

Well surely what they now consider hanging on the A380NEO is a bit more "advanced" than the offer made for the 777X but many parts from that programm carried over to the current Advance. Engine development did not stand still in those 4 years. But in the end, the fact remains that the A380NEO is probably the only application for the Advance engine before Ultrafan is ready and there fore the best bet to regain some of the money spent on engine development starting with the 777X offer.

[Edited 2015-01-02 00:50:05]
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 8:55 am

Quoting Matt6461 (Reply 4):
From the foregoing I'll just say that a NEO looks poised, on the most favorable assumptions, to continue to be a niche aircraft that contributes little, if any, to Airbus's bottom line. If unfavorable assumptions come into play, there's a risk that it just adds to the A380's losses so far. I don't want to hijack the thread into being about an A380X, but the main reason I'm so supportive of that path is that it seems like only a radical change to the A380 is going to make it a commercial success for Airbus.

There is another option, that makes even more sense. Drop the A380. The time and money needed for a A380X can be used for a A322, A3511 and by 2025 the single aisle family will need looking at as well.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 9:01 am

Quoting seahawk (Reply 6):
There is another option, that makes even more sense. Drop the A380. The time and money needed for a A380X can be used for a A322, A3511 and by 2025 the single aisle family will need looking at as well.

Yeah maybe. But if you can finish the A38X by 2021, can still do NSA. A 40% more fuel-efficient A380 would make a ton of profit though.

I also think dropping this program would be strategically difficult for Airbus. Europe gave them billions to build it. If they close the line now, it'll look like they took those billions and Europe got nothing back. It'll make it harder to get future launch aid. I suspect that the purely financial numbers support closing the line and not doing an A380, and that this is what Airbus's CFO was expressing at investor's day. His bosses have the political/strategic considerations more in mind, however, which is why they considered his statement premature and tried to walk it back.

The A35K is another reason not to a NEO. A 35K with Advance engines might actually eviscerate the 77X.

[Edited 2015-01-02 01:03:34]



[Edited 2015-01-02 01:10:48]

[Edited 2015-01-02 01:11:30]
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 9:47 am

Quoting Matt6461 (Reply 7):
A 35K with Advance engines might actually eviscerate the 77X.

This new Airbus variant will come with the ultrafan from around 2025 then being 1-2 engine generations ahead of the
It doesn't need to be designed now. If you see how many Orders are now for the 777x after Emirates took the majority of orders just like the A380.
It will be an engine application program similar to the A380NEO which will be then there 2020/2021.

No doubt that the A380 will stay - there will be continuous updates in the business discussion for the next 5 years.

Regards

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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 9:49 am

Quoting Matt6461 (Reply 7):
If they close the line now, it'll look like they took those billions and Europe got nothing back. It'll make it harder to get future launch aid.

Why? The launch aid is repayable regardless of what happens to the A380 line.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 9:55 am

In some ways the longer that Airbus can wait the better the economics may look as the engine technology will be better. The downside is that actually they may have to move due to sales etc - as Boeing had to move with the MAX.

I am sure that Airbus are constantly looking at options and will move if it makes an economic case - as they eventually did with the A330NEO.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 9:59 am

Quoting speedbored (Reply 9):

Quoting Matt6461 (Reply 7):
If they close the line now, it'll look like they took those billions and Europe got nothing back. It'll make it harder to get future launch aid.

Why? The launch aid is repayable regardless of what happens to the A380 line.

Some of the aid was research grants, not loans. For the loans, whether they're repaid isn't the whole story. Governments typically aren't involved in lending money for private investment. When they do so, they typically invoke an economy-wide benefits rationale, citing employment, maybe national prestige etc. So the A380-funding governments won't be fully compensated in either monetary or "expected other benefits" terms.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 10:02 am

Quoting Matt6461 (Reply 7):
The A35K is another reason not to a NEO. A 35K with Advance engines might actually eviscerate the 77X.

Airbus will not re-engine the A350 so soon.

Quoting flyglobal (Reply 8):
This new Airbus variant will come with the ultrafan from around 2025

No, the UltraFan is a narrowbody engine.
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 10:14 am

Quoting KarelXWB (Reply 12):
No, the UltraFan is a narrowbody engine.

This was a proposal from RR to reenter the narrowbody market and to compete against P&W.

I am sure the Ultrafan is applicable to larger cores as well, the same way as Pratt also says it is applicable.
And RR iself says that the Advance is preparing the Compressor/ Turbine setups to the needs of the ultrafan 5 years later.

Rgeards

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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 10:28 am

Quoting flyglobal (Reply 13):
I am sure the Ultrafan is applicable to larger cores as well

Perhaps, but not in 2025. Like Pratt, Rolls will focus on a smaller engine first.

Quoting flyglobal (Reply 13):
the same way as Pratt also says it is applicable.

Applicable, but not under development. Pratt are working on the GTF V2, due around 2025. Rolls are working on the UltraFan, due in 2025 as well. These engines will offer up to 45k lbf thrust, enough to power an 757 sized jet. Anything bigger will require additional development time and will not see daylight before 2030, IMO.

[Edited 2015-01-02 02:30:10]
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 12:37 pm

Quoting seahawk (Reply 6):
Drop the A380. The time and money needed for a A380X can be used for a A322, A3511

Is Airbus that constrained in terms of development people and investment funds? I doubt it.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 12:56 pm

Quoting JerseyFlyer (Reply 15):

Is Airbus that constrained in terms of development people and investment funds? I doubt it.

If they do the A380X that he is suggesting, it would be very much on the same level as the 777X and that is a big project. The NEO can easily be done without putting much strain on the engineering resources. In fact it might be valubale to keep engineers employed and busy.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 1:13 pm

Quoting seahawk (Reply 16):
If they do the A380X that he is suggesting, it would be very much on the same level as the 777X and that is a big project.

  
Adding new engines to the A380 would be an order of magnitude smaller project than the 777X. The 777X project, in addition to new engines, includes a stretch, interior wall sculpting and new wings with folding wingtips. Wings are one of the most complex and expensive parts of any aircraft.

The 777X project is almost half as large as an entire new aircraft project. Far far bigger and more expensive than doing a NEO. And I personally believe that certification of folding wingtips is going to prove significantly more costly and time consuming than many people seem to think.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 2:17 pm

Quoting Matt6461 (Reply 7):
I also think dropping this program would be strategically difficult for Airbus. Europe gave them billions to build it.

Looking a little bit further ahead I think the most stupid thing Airbus could do now is to close the 380 line. First, there will be no direct competition in the next 2 to 3 decades - if not more. Air travel is growing dramatically and will only accelerate its growth rate when the global economy starts growing again. Intercontinental travel is going to be - even more - concentrated to a few mega carriers that will take care of the wast majority of intercontinental travel - EK is just the beginning of this process. The 380 is - over its lifetime - going to earn Airbus gold.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 2:21 pm

Quoting speedbored (Reply 17):

Adding new engines to the A380 would be an order of magnitude smaller project than the 777X. The 777X project, in addition to new engines, includes a stretch, interior wall sculpting and new wings with folding wingtips. Wings are one of the most complex and expensive parts of any aircraft.

I replied to Matt6461 who is suggesting a project far more complex than a NEO - he calls it A380X.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 2:24 pm

Quoting Matt6461 (Reply 4):
Leeham puts 569 seats in the (10-abreast) A380, 368 in the 77X.

Is that 9-abreast on the 779? Are you sure that's correct? Everything I've heard so far indicates that the 77X will have 10-abreast in Y as standard.
Then, of course, it ought to be compared to an 11-abreast A380...

Quoting KarelXWB (Reply 12):
Airbus will not re-engine the A350 so soon.

  

A minimum change stretch retaining the engines and MTOW of the current A350-1000 is the most reasonable scenario. Development would be quick and cheap, commonality would be retained and in all likelyhood it would still beat the 779 on CASM. Depending on when the first open slots on the A350 line are available, it might even EIS before the A380NEO (and 779) if launched in the next few months.

Not all routes need a 8000nm range. The sales success of the A333 in recent years clearly shows this, as do promising order tallies for the A339NEO and 787-10.

In my opinion, Boeing could have done something way better than the 748i: A 777-400 built as a simple stretch on the 773ER. But that ship has sailed, so I disgress...
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 3:07 pm

Quoting Matt6461 (Reply 4):
Now let's assume, for argument's sake, that airlines will purchase a 54% bigger plane for a 5-8% CASM benefit.

I do not believe they are.

CASM is most-important to every other commercial airplane model in service today, but it is not most-important to the A380, IMO.

Look at current A380 operator configurations. They could all add 30-50 more seats in Economy by moving to 3+5+3 and decrease CASM and increase RASM while still offering similar seat width to the A330 / A350. But instead, they're all sticking with 3+4+3 and more personal space even as many of them have gone to 10-abreast on the 777 to improve CASM and RASM. They also have generally very premium-heavy configurations as a percentage of the total seats.

A380s are being used today like 747s were used in the early 19790s - as a "best in class" flying experience. Passengers choose the A380 not because it is big, but because that size offers more comfort than any other airplane in service. Just as the 747 did in the early 1970s. Once you've flown an A380 - regardless of class of service - you're going to always want to fly an A380 if you could. It really is that special.

Emirates understand this like no other A380 operator (though Etihad and Korean Air seem to have studied them well). People can roll their eyes at Tim Clark's comments about the "ghetto premium cabins" of other A380 operators, but Tim Clark understands how this plane changes the game for the flying experience. In fact, he makes it an experience in and of itself, much like Upper Class on Virgin Atlantic when they launched it. Business Class on an Emirates A380 is not about isolating yourself in your little cubicle and "running out the clock" until you get to your destination. It's more like First Class on a trans-Atlantic ocean liner or the Orient Express - an active, interactive communal experience with your fellow travelers that helps the time pass in an enjoyable and entertaining fashion.

Which is why I believe any decision to re-engine the A380 must also include a decision to stretch it to the A380-900. Not because it will lower the CASM, but because it will allow more people to experience the A380 and once they do, they will keep coming back.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 3:18 pm

Quoting Matt6461 (Reply 7):
Europe gave them billions to build it.

Is that true? Then please provide the evidence for that. I am sure Airbus would be very interested in free money that you imply they have received.

Quoting A342 (Reply 20):
Is that 9-abreast on the 779? Are you sure that's correct? Everything I've heard so far indicates that the 77X will have 10-abreast in Y as standard. Then, of course, it ought to be compared to an 11-abreast A380...

it should, and than still the B777-9 loses out.  .

Quoting Stitch (Reply 21):
A380s are being used today like 747s were used in the early 19790s - as a "best in class" flying experience. Passengers choose the A380 not because it is big, but because that size offers more comfort than any other airplane in service. Just as the 747 did in the early 1970s. Once you've flown an A380 - regardless of class of service - you're going to always want to fly an A380 if you could. It really is that special.

Very well put.   .

Quoting Stitch (Reply 21):
Emirates understand this like no other A380 operator (though Etihad and Korean Air seem to have studied them well). People can roll their eyes at Tim Clark's comments about the "ghetto premium cabins" of other A380 operators, but Tim Clark understands how this plane changes the game for the flying experience. In fact, he makes it an experience in and of itself, much like Upper Class on Virgin Atlantic when they launched it. Business Class on an Emirates A380 is not about isolating yourself in your little cubicle and "running out the clock" until you get to your destination. It's more like First Class on a trans-Atlantic ocean liner or the Orient Express - an active, interactive communal experience with your fellow travelers that helps the time pass in an enjoyable and entertaining fashion.

  .

EK have understood this at best for sure. And some are following, but many remain too conservative to go that route. Is conservatism at the airlines maybe a bottleneck in selling more A380's to other airliners.

Quoting Stitch (Reply 21):
Which is why I believe any decision to re-engine the A380 must also include a decision to stretch it to the A380-900. Not because it will lower the CASM, but because it will allow more people to experience the A380 and once they do, they will keep coming back.

Totally agree with you!  
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 3:23 pm

Quoting EPA001 (Reply 22):
Is conservatism at the airlines maybe a bottleneck in selling more A380's to other airlines?
Tim Clark has publicly stated his belief that is the case.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 3:36 pm

Quoting Matt6461 (Reply 11):
Some of the aid was research grants, not loans.

Any research grants would have been completely independent of the A380 program.

Quoting Matt6461 (Reply 11):
For the loans, whether they're repaid isn't the whole story.

They are repaid. On commercial terms. What more story is there? Please enlighten us.

Quoting Matt6461 (Reply 11):
Governments typically aren't involved in lending money for private investment.

On planet earth, they most certainly are. Regularly.

Quoting Matt6461 (Reply 11):
So the A380-funding governments won't be fully compensated in either monetary or "expected other benefits" terms.

Yes they will. And the WTO has ensured that it will be on commercial terms, too.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 4:12 pm

Quoting EPA001 (Reply 22):

Quoting A342 (Reply 20):
Is that 9-abreast on the 779? Are you sure that's correct? Everything I've heard so far indicates that the 77X will have 10-abreast in Y as standard. Then, of course, it ought to be compared to an 11-abreast A380...

it should, and than still the B777-9 loses out. .

No I don't think that this is the case.
Instead Leeham used todays configuration of Business and First Class Seat environment and space, while the famous Boeing Figures (408) are based on First and business class configurations in use 15 years ago.

For Y Class they used 10 abrest.

Regards

Flyglobal
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 5:09 pm

Quoting A342 (Reply 20):
Depending on when the first open slots on the A350 line are available, it might even EIS before the A380NEO (and 779) if launched in the next few months.

Doubtful that a re-engined A350 could EIS before the 779. The GE9X engine is the pacing item in the 779 development path and has been in active development for several years, including interaction with airline customers to hammer out the details of their requirements. While the RR Advance exists as a concept, a specific engine definition has not yet been selected.

Contributors to this forum seem to continually under estimate the complexity of engine development and the flow times required. Recall that the A3510 97K engine uses a less than optimal fan size to achieve its rating. A larger fan would be desirable for TSFC and noise considerations, but design, test and certification of an increased fan diameter wouldn't support the A3510 development schedule.
Airplane design is easy, the difficulty is getting them to fly - Barnes Wallis
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 5:52 pm

Quoting OldAeroGuy (Reply 26):
Doubtful that a re-engined A350 could EIS before the 779.

Sure, but that's not what I was talking about:  
Quoting A342 (Reply 20):
A minimum change stretch retaining the engines and MTOW of the current A350-1000
Exceptions confirm the rule.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 6:39 pm

Quoting Stitch (Reply 21):
I do not believe they are.

nice correlation.. I agree with you..
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 11:11 pm

Quoting A342 (Reply 20):

Quoting Matt6461 (Reply 4):
Leeham puts 569 seats in the (10-abreast) A380, 368 in the 77X.

Is that 9-abreast on the 779? Are you sure that's correct? Everything I've heard so far indicates that the 77X will have 10-abreast in Y as standard.
Then, of course, it ought to be compared to an 11-abreast A380...

No both planes were 10-abreast.

Quoting Stitch (Reply 21):
CASM is most-important to every other commercial airplane model in service today, but it is not most-important to the A380, IMO.

I frequently hear this kind of argument for the A380- that it wins on RASM, CASM isn't that important to it. The most obvious response is, if this were true, why isn't it selling? Why not just put 350 seats in it and win over the 77W on passenger comfort?

A better way to think of the economics is maybe Cost per Meter Squared ("CM2"). At constant CM2, you can trade RASM for CASM and vice versa. The question is whether trading CASM for RASM, as you suggest, is wise. In general, it is not. If it were, we'd see bars and showers on 788's right? There's no physical reason you couldn't do that. There is a financial reason for not doing it: In general, planes use their floor area most efficiently -they generate the most revenue - by jamming in the most seats they can for a given class and marketing profile. At constant CM2, increasing seats by 10% lowers CASM by ~9%. Taking away 10% of seats, however, does not necessarily increase RASM accordingly. If it did, we would never see 10-abreast 777's or 9-abreast 787's. Yet the fact is that these denser seating arrangements predominate. If RASM truly predominated over CASM, why not do 7-abreast A380's and 6-abreast 777's?

Now you are correct that, assuming you have A380's, your relative emphasis on RASM versus CASM should be greater than for a 787 operator. This is not, however, because the A380 changes the fundamental constraints of floor space and its revenue maximization. Rather, it's because you probably can't fill all the A380's seats anyway - at least not without heavily diluting yields. So getting better on CASM doesn't help much. Instead, yes, operators want to emphasize RASM. But this is only because they already have A380's. If they're deciding whether to buy A380's they'll realize that they'll have to use a strategy - flying showers and bars, for example - that nobody even considers on other airplanes because it's not the optimal use of flying floor space.

The fact is that an airline's biggest value proposition is getting from A to B when you want. They're transportation companies, not hotels. They can make some profit off of transporting more comfortably, but this always comes at a cost to the basic metric of moving folks. Everybody arguing the RASM point has to think a little harder about the cost of achieving RASM.
 
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RE: The A380NEO Thread Part 2

Fri Jan 02, 2015 11:34 pm

Quoting Matt6461 (Reply 29):
I frequently hear this kind of argument for the A380- that it wins on RASM, CASM isn't that important to it. The most obvious response is, if this were true, why isn't it selling? Why not just put 350 seats in it and win over the 77W on passenger comfort?

Why isn't it selling with the best CASM in the industry? Singapore Airlines says it's some 22% more economic than their 777-300ER, and yet they still have more 777-300ERs than A380-800s (if just). Why are they not just flying A380s? Evidently, CASM alone isn't why airlines are buying it (see two paragraphs below for why I believe they are buying it).


Quoting Matt6461 (Reply 29):
I frequently hear this kind of argument for the A380- that it wins on RASM, CASM isn't that important to it. The most obvious response is, if this were true, why isn't it selling? Why not just put 350 seats in it and win over the 77W on passenger comfort?

There are airlines that do just that - Korean Air, for example, has 407 seats on their A380s.

Quoting Matt6461 (Reply 29):
A better way to think of the economics is maybe Cost per Meter Squared ("CM2"). At constant CM2, you can trade RASM for CASM and vice versa. The question is whether trading CASM for RASM, as you suggest, is wise. In general, it is not. If it were, we'd see bars and showers on 788's right? There's no physical reason you couldn't do that. There is a financial reason for not doing it: In general, planes use their floor area most efficiently -they generate the most revenue - by jamming in the most seats they can for a given class and marketing profile. At constant CM2, increasing seats by 10% lowers CASM by ~9%. Taking away 10% of seats, however, does not necessarily increase RASM accordingly. If it did, we would never see 10-abreast 777's or 9-abreast 787's. Yet the fact is that these denser seating arrangements predominate. If RASM truly predominated over CASM, why not do 7-abreast A380's and 6-abreast 777's?

Because the A380 is not a 777 or a 787. Or an A330 or A350. It's a special kind of airplane, just like the 747 was in 1970.

The 747 entered service at 8-abreast when the 707 and DC-8 were 6-abreast. They could have been 9-abreast and offered better comfort or 10-abreast and offered the same comfort and CASM would have been significantly better, but Pan Am (and those who followed PA in ordering the 747) saw that the overall capacity was so much higher that they could offer more comfort and still have excellent economics. And by offering more comfort, they motivated people to fly.

Emirates has made the A380 successful - and the A380 has made Emirates successful - because Emirates doesn't treat the A380 like every other airliner. They treat it like the 747 when it first entered service and make flying on the A380 a comfortable, exciting and memorable experience that people want to repeat by offering showers and lounges and other amenities that are not economically practical on smaller airplanes because they don't have the raw physical space that the A380 does.

[Edited 2015-01-02 15:39:40]
 
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 12:00 am

Quoting Stitch (Reply 30):
Why isn't it selling with the best CASM in the industry?

Because it's not good enough on CASM to justify its higher trip costs. A bigger plane has to be better per seat. A much bigger plane has to be much better per seat. Your ignoring the adverse effect of capacity on yield (RASM). The A380 might well be worse on RASM than a 789, despite its greater comfort, depending on route.

The A380 is much bigger but not much better. A 6% CASM advantage is less than the difference between A35J and A359, 789 vs. 788, 739 vs. 738, 321 vs. 320. It should be at least 20% better than much smaller competition to sell. You quote SQ's comparative numbers but I doubt even SQ believes that. Every other serious analysis sees the A380 about as efficient as 77X, give or take a few percentage points. To rely on one quote from SQ is called cherrypicking data.

Quoting Stitch (Reply 30):
Emirates has made the A380 successful - and the A380 has made Emirates successful - because Emirates doesn't treat the A380 like every other airliner. They treat it like the 747 when it first entered service and make flying on the A380 a comfortable, exciting and memorable experience that people want to repeat by offering showers and lounges and other amenities that are not economically practical on smaller airplanes because they don't have the raw physical space that the A380 does.

I don't understand your "raw physical space" argument. A 788 couldn't fit a bar or shower? It's really an argument about efficiency of space - the A388 flies floor space more cheaply, per m2, than the 788. So it's possible to use some of that space in a less-than-ideal fashion.

A lot of the 747's spaciousness owed to its being the only aircraft with that range when it first entered service. Like with the A380 today, airlines couldn't fill all the seats anyway, so they provided amenities and hoped to charge a premium for them. Unlike the 747, A380 isn't unique in range.

I do think the enhanced comfort of a 10-abreast A380 contributes to its appeal for EK. I don't think that's replicable outside EK. You're underrating the extent to which EK's success is about EK, rather than about just the A380. EK is flying 77W's to Liverpool! Who ever thought Liverpool would see a long-haul 77W flight? The scale of EK's hubbing ops makes larger aircraft more feasible everywhere in its network - it means that the yield-diluting effects of size are less present. The A380 works for EK because all of its routes are huge - they're huge because all of its other routes are huge. In that circumstance, a 6% CASM advantage, or a 4% RASM advantage, won't be cancelled out by yield dilution and capacity risk.

EK is alone in this. When Tim Clark criticizes other airlines he's just bragging about his business model, while forgetting that it's an accident of geography and first-mover status that other airlines can't adopt right now. Not a single other airline has said publicly it wants more A380's. Qatar is the only who says it might. That has to mean something, right? It can't be that all airlines are stupid - they're making record profits these days.
 
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 12:01 am

Just a little bit off topic , but one of my friends if flying tonight from Dallas to DBX, on the A380, She is flying coach and there are only 8 seats empty !!! I know a single flight doesn't make a solid business case but, since everyone was saying in other threads that flights were a blood bath in empty seats, it amazes me they could fill the whale jet....

The A380 time will eventually come, and it will be alone on its own... no matter what version IMHO.

TRB
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 12:15 am

Quoting Stitch (Reply 30):
Because the A380 is not a 777 or a 787. Or an A330 or A350. It's a special kind of airplane, just like the 747 was in 1970.

I've flown on an A380 btw. And I did love it. When I was planning a trip to Australia this summer I was looking for A380 flights too. One of reasons I advocate for A380X is so more people can fly A380s, and more cheaply.

We need to think about the true value of the more spacious Y seating though. I'll take an A380 over a 777 or 787 any day, at least when those are 10 or 9-abreast. BUT, if I can save $200 by going with the 777, I just might, especially when I can avoid a transfer by doing so. That's sort of the limit of the RASM advantage of the A380's Y seating - how much more per ticket are you willing to pay versus, say, a 10-abreast 77X?

The airline industry is pretty smart at figuring these things out. And they have largely decided that they make more money with a 10-abreast 777. We might gripe about the seating but in the end we vote with our wallets - at least those of us who usually fly economy. A nine-abreast 777 is about as comfy as a 10-abreast A380, same for 8-abreast 787. Going from 9 to 10 on a 777 probably gets, after increased costs, ~8% more revenue. So, in the judgment of airlines who go 10-abreast, the RASM impact is less than 8%.

8% would be the ceiling for the RASM benefit of A380's Y seating versus 777X.

[Edited 2015-01-02 16:16:06]
 
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 12:57 am

Quoting Stitch (Reply 30):
Why isn't it selling with the best CASM in the industry? Singapore Airlines says it's some 22% more economic than their 777-300ER, and yet they still have more 777-300ERs than A380-800s (if just).
Quoting Matt6461 (Reply 31):
You quote SQ's comparative numbers but I doubt even SQ believes that.

I have been unable to find a Singapore Airlines source that says the A380 is 22% more economic than the 773ER. The closest is an Airbus analysis done when SQ replaced their 777W's to Zürich with A380's. There is no evidence that any SQ data was used in the analysis. Instead Airbus developed data were used to compare the airplanes.
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 1:45 am

Quoting OldAeroGuy (Reply 34):
I have been unable to find a Singapore Airlines source that says the A380 is 22% more economic than the 773ER. The closest is an Airbus analysis done when SQ replaced their 777W's to Zürich with A380's. There is no evidence that any SQ data was used in the analysis. Instead Airbus developed data were used to compare the airplanes.

Let's have a look at this thread from five and a half years years ago:

A380 21% More Economical P.seat Than 77W (by NA Jun 27 2009 in Civil Aviation)

At that time, I was subscribing to the magazine where this was mentioned. I shall see if I can dig up that issue tomorrow, and if I can, I'll be back and post here what was said in the article. Having said that, I'm still rather sure that the number of 21% less CASM came from SQ, not Airbus.
Exceptions confirm the rule.
 
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 2:22 am

Quoting Stitch (Reply 30):
Why isn't it selling with the best CASM in the industry?
Quoting Matt6461 (Reply 31):
Because it's not good enough on CASM to justify its higher trip costs.

That is the 747-8's problem.



Quoting Matt6461 (Reply 31):
You quote SQ's comparative numbers but I doubt even SQ believes that.

If SQ didn't believe them, they would not be ordering new A380s to replace old A380s. They would instead be buying more 777-300ERs and the rumors last year of a 40-frame 777-9 order would have become fact at the Farnborough Air Show, or at least the rumors would have remained in circulation, rather then going quiet in the months before said air show.



Quoting Matt6461 (Reply 31):
Every other serious analysis sees the A380 about as efficient as 77X, give or take a few percentage points. To rely on one quote from SQ is called cherrypicking data.

SQ operates both the A380-800 and the 777-300ER and operates them on the same route. I put a lot more faith in that data than I do Excel spreadsheets and PowerPoint presentations of the 777-9, which is still in early design definition.

Quoting Matt6461 (Reply 31):
I don't understand your "raw physical space" argument. A 788 couldn't fit a bar or shower? It's really an argument about efficiency of space - the A388 flies floor space more cheaply, per m2, than the 788. So it's possible to use some of that space in a less-than-ideal fashion.

Yes, which is why I noted such amenities are not economically practical on smaller planes. They are economically practical on the A380 because of it's space.

Quoting Matt6461 (Reply 31):
A lot of the 747's spaciousness owed to its being the only aircraft with that range when it first entered service. Like with the A380 today, airlines couldn't fill all the seats anyway, so they provided amenities and hoped to charge a premium for them. Unlike the 747, A380 isn't unique in range.

The range argument really didn't come into effect until later HGW models of the 747-200B and, especially, the 747-400. The early operators of the 747-100 were using it on the same transoceanic missions flown by the long-range models of the 707 and DC-8.

Quoting Matt6461 (Reply 31):
I do think the enhanced comfort of a 10-abreast A380 contributes to its appeal for EK. I don't think that's replicable outside EK. You're underrating the extent to which EK's success is about EK, rather than about just the A380.

It's not applicable outside of EK because, as Tim Clark suggests, other A380 operators lack the proper vision. Honestly, if anyone outside the ME3 could make the A380 work in the EK style, it's Virgin Atlantic. And yet they're the one most people (myself included) who feel they won't operate it.

Quoting Matt6461 (Reply 31):
The A380 works for EK because all of its routes are huge - they're huge because all of its other routes are huge. In that circumstance, a 6% CASM advantage, or a 4% RASM advantage, won't be cancelled out by yield dilution and capacity risk.

EK is alone in this. When Tim Clark criticizes other airlines he's just bragging about his business model, while forgetting that it's an accident of geography and first-mover status that other airlines can't adopt right now. Not a single other airline has said publicly it wants more A380's. Qatar is the only who says it might. That has to mean something, right? It can't be that all airlines are stupid - they're making record profits these days.

EK has certainly used the geographic location of DXB to their advantage in linking Europe, Asia and Oceania, but there was travel between those regions long before EK started operations two decades ago and EK didn't really start their meteoric growth until about a decade ago.

But perhaps it's all down to just having Tim Clark running the place. Like the Vulcan proverb that states "only Nixon can go to China", perhaps "only Clark can create a successful mega-airline", having done so with SriLankan before joining Emirates. If British Airways had snagged him when they took over British Caledonian, perhaps today LHR would have 100 A380s in Union Flag livery.

Quoting Matt6461 (Reply 33):
We need to think about the true value of the more spacious Y seating though. I'll take an A380 over a 777 or 787 any day, at least when those are 10 or 9-abreast. BUT, if I can save $200 by going with the 777, I just might, especially when I can avoid a transfer by doing so.

You might, but Emirates' customers - and customers for most, if not all, other A380 operators - are choosing to pay more for the "A380 experience", even when it involves a transfer, as well.



Quoting Matt6461 (Reply 33):
Going from 9 to 10 on a 777 probably gets, after increased costs, ~8% more revenue. So, in the judgment of airlines who go 10-abreast, the RASM impact is less than 8%.

8% would be the ceiling for the RASM benefit of A380's Y seating versus 777X.

I'm quite skeptical it's that low considering how many more seats an A380 can fit than a 777-9, and even if it is, consider the larger premium cabins on the A380. The revenue those cabins generate - especially for EK, where load-factors are in the 90th percentile on the A380 per their comments, is going to be a fair bit more than 8%.
 
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 3:41 am

Quoting Stitch (Reply 36):
Yes, which is why I noted such amenities are not economically practical on smaller planes. They are economically practical on the A380 because of it's space.

You can't be saying that just having a larger space is the difference, right? You must also be saying that the space is flying more efficiently, per meter? If not then I think we're just miles apart on how we think about airline operations. In order to make this argument work, you have to be able to say something like the following:

-You can trade X% of floor space seats, resulting in Y% increase in RASM
-After making that trade, and considering X*Y, the A380 is still sufficiently more efficient than competition to overcome dilution in yields owing to size and lower frequency.

I have tried to put us into some numbers by comparing A380 to 10-abreast 777X. The problem with these kinds of arguments is that if we don't look at numbers we just talk past each other. You reject my 8% figure, but you don't really engage the argument or any of its premises. I probably didn't communicate it well enough. Here's the argument, dissected into premises:

Premise 1: a 9-abreast 777 is about as comfy as an A380 at ten-abreast
Premise 2: going from 9-abreast to 10-abreast lower Y-class CASM by around 8% after increased costs
Premise 3: because airlines judge the foregoing tradeoff as wise, the 9-abreast 777's RASM can't be more than 8% better than ten-abreast 777. If it were not, they would stay with 9-ab.
Premise 4: Comparison between A380 @10-ab versus 77X @10-ab is like comparison between 777 at 9-ab and 777 at 10-ab. Therefore, A380's RASM benefit in Y can't exceed 8%.

I'm just trying to make this discussion a little more hard-nosed. We know what makes A380 Y more attractive (bigger seats, quieter). So maybe we try to be analytical about these differences instead of talking about some amorphous experience that the A380 provides. If we're going to continue the discussion, I'd prefer that you dispute specific premises, or dispute the structure of the argument.

Btw - do you recognize that there is a negative impact on yield (RASM) from lower frequency and increased capacity? I've brought that point up a couple times and a lot of A380 fans try to ignore it.

[Edited 2015-01-02 19:45:16]

[Edited 2015-01-02 19:47:57]

[Edited 2015-01-02 19:50:07]
 
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 4:09 am

Quoting Stitch (Reply 36):
But perhaps it's all down to just having Tim Clark running the place. Like the Vulcan proverb that states "only Nixon can go to China", perhaps "only Clark can create a successful mega-airline", having done so with SriLankan before joining Emirates. If British Airways had snagged him when they took over British Caledonian, perhaps today LHR would have 100 A380s in Union Flag livery.

It bothers me a little bit that A380 fans on here tend to lose the ability to think analytically and reasonably whenever the subject comes up. I don't mean to be insulting, I've enjoyed our exchange, I just mean to say - consider whether you're choosing your evidence to fit your points.

I, for example, started with discussing a Leeham post that argues for the viability of an A380NEO. I took all of their assumptions, for the purposes of this argument, besides ignoring cargo. I then limited myself, in the rest of this thread, to going off of Leeham's CASM figures, adjusted for cargo. And this despite the fact that I identified several very suspect assumptions in Leeham's analysis. I am not trying to choose evidence to fit my point.

You and others, however, see an entire industry that rejects the A380. From this industry you pick a single voice that supports your position and repeat his assertions. You don't admit that his business (EK) has enormous advantages that are unique to it and that, by definition (as the biggest longhaul-to-longhaul hubber), can have a population of one. You consistently ignore points about yield dilution due to capacity and frequency, and you reject, without explanation, reasoned attempts to grant you, e.g., an RASM benefit, while fixing a reasonable value on it. It makes arguing with A380 fans very frustrating... It's like there is no set of real world facts or reasonable assumptions that could convince you otherwise.
 
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 4:44 am

Quote

The A380 is much bigger but not much better. A 6% CASM advantage is less than the difference between A35J and A359, 789 vs. 788, 739 vs. 738, 321 vs. 320. It should be at least 20% better than much smaller competition to sell. You quote SQ's comparative numbers but I doubt even SQ believes that. Every other serious analysis sees the A380 about as efficient as 77X, give or take a few percentage points. To rely on one quote from SQ is called cherrypicking data.

This thread is about the possibility of a NEO version after over 10 years of service.Especially as a new 400 seater will be coming into service at the end of the decade.What was true at its launch will not be true in 2020.Hence the proposal to NEO it (ie improve it by circa 15%). Where is the beef in that?

Whether any new airlines will 'buy into it' is another matter. I personally doubt it. But many existing users may well do so and some have publicly said as much.The real issue is whether this is enough - no?
 
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 4:44 am

Quoting Matt6461 (Reply 7):
I also think dropping this program would be strategically difficult for Airbus. Europe gave them billions to build it. If they close the line now, it'll look like they took those billions and Europe got nothing back
Quoting speedbored (Reply 9):
Why? The launch aid is repayable regardless of what happens to the A380 line.

IIRC repayable launch investment has to be repaid within 17 years whether a program makes money or not. It's a good bet for the investor - assuming the recipent does not go bust. All the aid is repaid plus royalties on sales continue on every frame sold. A sort of heads you don't lose, tails you might win loads possibly bet. (A320 launch investment has brought a massive return).
 
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 4:59 am

Quoting parapente (Reply 39):
This thread is about the possibility of a NEO version after over 10 years of service.Especially as a new 400 seater will be coming into service at the end of the decade.What was true at its launch will not be true in 2020.Hence the proposal to NEO it (ie improve it by circa 15%). Where is the beef in that?

Whether any new airlines will 'buy into it' is another matter. I personally doubt it. But many existing users may well do so and some have publicly said as much.The real issue is whether this is enough - no?

It's about whether a NEO will be a viable commercial offering. Whether new or existing airlines buy into it is very relevant... Aside from EK, who has said publicly they would buy a NEO? That's the only existing operator who's excited about A380's future. Most of the others (LH, AF, BA, VS, QF), are on record as wanting to cancel outstanding orders or are saying they don't want any more.
 
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 5:03 am

Quoting Matt6461 (Reply 37):
You can't be saying that just having a larger space is the difference, right?

It is, and sheer size does matter. You can't have a properly sized bar lounge in a 777 because it would consume too large a fraction of the 777's available space. You can't have showers in a 777 because they would consume too large a fraction of the 777's available space. You can't have a duty free shop in a 777 because it would consume too large a fraction of the 777's available space. All these amenities can only consume a small percentage of the available space, so the space needs to be very large for them to pencil out at all.

Quoting Matt6461 (Reply 37):
Premise 3: because airlines judge the foregoing tradeoff as wise, the 9-abreast 777's RASM can't be more than 8% better than ten-abreast 777. If it were not, they would stay with 9-ab.

Let me flip your argument upside-down, as an experiment. Premise 4: because airlines judge it wise to fly the A380 at 10-abreast, the 10-abreast A380's RASM must be more than 8% better than the 11-abreast A380's. If it were not, they would pack them in at 11-abreast.

(I admit this premise is shaky, since 11-abreast is indeed being talked about, but it demonstrates that your logic isn't necessarily rock solid.)

Two assorted remarks...

This whole question of how-many-abreast is optimal ignores the large fixed costs of changing the cabin (seats, IFE, etc.).

As for revenue, Y isn't really where it's at, so perhaps the how-many-abreast question is only tangentially relevant to the overall business case.
 
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 5:08 am

Quoting art (Reply 40):
IIRC repayable launch investment has to be repaid within 17 years whether a program makes money or not. It's a good bet for the investor - assuming the recipent does not go bust. All the aid is repaid plus royalties on sales continue on every frame sold. A sort of heads you don't lose, tails you might win loads possibly bet. (A320 launch investment has brought a massive return).

I understand the finance of it. And I also am very supportive, personally, of these kinds of government investment. A more efficient transport will create value beyond that captured by anybody who's willing to finance development - mostly in lower ticket fares.

But despite my own personal support for public-private investments like this, they tend to require a lot of political capital expenditure. People realize, after all, that the state is taking on some risk and almost certainly giving a deal that wouldn't be had in the private capital markets - else why wouldn't Airbus just finance through those channels. Given the perception of taking on risk, and of giving a subsidy, politicians have to play up benefits like jobs created. Which they did for the A380. If it's cancelled those jobs go - even, in public perception, if workers shift to other lines. Politicians and populaces won't forget that the next time Airbus goes looking for launch/research aid - how will my voters trust that these jobs will only be here for a few years, then you'll axe the program if it doesn't go well on your own narrow profit calculations?

I'm not arguing the merits of that line of thinking, I'm just saying it must be present in the Airbus boardroom.
 
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Matt6461
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 5:18 am

Quoting WingedMigrator (Reply 42):
Let me flip your argument upside-down, as an experiment. Premise 4: because airlines judge it wise to fly the A380 at 10-abreast, the 10-abreast A380's RASM must be more than 8% better than the 11-abreast A380's. If it were not, they would pack them in at 11-abreast.

I totally accept your inversion of my premise, I like the way you're thinking here. And I think it makes intuitive sense - 11-abreast would really suck in the A380, both from a space (worse than 77W) and layout perspective. This is the kind of analysis that I think we can do without having deep proprietary data and modelling about seat yields at differing capacity and comfort levels. Where we can make transitive comparisons like this we should. It's a much better alternative to just saying, without any tether to plausible facts, that plane A can charge X% more per ticket. That gets us nowhere - worse, it distracts (and frustrates).

Quoting WingedMigrator (Reply 42):
It is, and sheer size does matter. You can't have a properly sized bar lounge in a 777 because it would consume too large a fraction of the 777's available space. You can't have showers in a 777 because they would consume too large a fraction of the 777's available space. You can't have a duty free shop in a 777 because it would consume too large a fraction of the 777's available space. All these amenities can only consume a small percentage of the available space, so the space needs to be very large for them to pencil out at all.

You're probably onto something here, but I still don't totally accept the rationale. If a 787 has half the seats, for example, one shower instead of two would take up relatively same amount of space. And a 380 is ~50% bigger cabin than 77W. I could see a bar on a 77W that is 2/3 of, say, Qatar's large upper deck bar. Furthermore, if the amenities/RASM strategy is such a slam dunk, then losing a fraction of space efficiency versus an A380 wouldn't be such a big deal anyway. We're already assuming that A380 is flies space more efficiently. If bars/showers are 6% of cabin area, and on a 787 they'd be 16% less space-efficient, then that's a difference of only 1% in revenue per floor area efficiency. If the RASM strategy is good enough to save the A380, surely it doesn't stop being a good strategy because it costs 1% relatively more to implement on a smaller plane.

[Edited 2015-01-02 21:26:05]

[Edited 2015-01-02 21:27:17]
 
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Matt6461
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 5:37 am

Quoting WingedMigrator (Reply 42):
As for revenue, Y isn't really where it's at, so perhaps the how-many-abreast question is only tangentially relevant to the overall business case.

I agree with this also. The thing is, however, that the A380 has no intrinsic advantage in the layout of premium seats either. Maybe with 6 versus 7-abreast in J (777 has disadvantage there). But 1-2-1 J is the future and the upper deck on an A380, where 1-2-1 goes, is a little less spacious for this layout than a 777, about the same as 787. So A380 is back to trading floor space for comfort/RASM. How much room does it have to do so? Well Leeham's very generous analysis sees 5-8% CASM advantage, even less of an advantage on floor space (it has A380 with denser seating somehow). That's not a ton of room to increase comfort for RASM before you're at parity with smaller planes per floor area.

And the elephant in this room remains the ratio at which one is able to trade increased RASM for lower CASM. I don't have any numbers on this, beyond my plausible case that going from 10->9 Y can't get you more than 8% in RASM. In general, however, the industry favors the CASM side over the RASM side for seating layouts: depending on what is minimally acceptable (e.g. 1-2-1 J, 17in Y), they cram as many of these in as possible. Many airlines don't even think premium economy seating is an acceptable tradeoff of RASM for CASM. In short anybody saying that RASM strategies will somehow save the A380 has strong industry practice headwinds against them. And the newest A380 champion, Mark Lapidus, strongly argues that it's the RASM strategy that's been holding the A380 back all along. He wants maximum density and get rid of the bells and whistles. I suspect he's right over all on the importance of CASM, but wrong as to the A380. It's better to pursue RASM with an A380, not because RASM is the better strategy, but because non-EK airlines have trouble filling all those seats anyway.

The RASM strategy is the best airlines can do to manage the overcapacity problem they created by ordering A380's in the first place.

Now if the A380 was 25% more efficient than its competition it could win with an RASM strategy. And it would be if Airbus had broken the 80m wingbox and not burdened the -800 with needless structure for a stretch nobody wants.

[Edited 2015-01-02 21:45:54]
 
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Stitch
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 5:53 am

Quoting Matt6461 (Reply 37):
You can't be saying that just having a larger space is the difference, right?

Yes I am. But again, this is unique to the A380.



Quoting Matt6461 (Reply 37):
If not then I think we're just miles apart on how we think about airline operations.

We are, but only as it applies to the A380.

Your argument appears to me to be that the A380 must be considered only by the same criteria a 777, 787, A330 or A350 is: what's the CASM?

My argument is that it does not. It is a unique category of airplane with unique opportunities that one operator, at least (EK) has been able to leverage into a very effective and powerful weapon to drive traffic and revenue across their entire network. If EK only looked at the A380 by it's CASM, they probably would have 14 instead of 140 and their 777 fleet would be multiples of what they currently have.

Quoting Matt6461 (Reply 38):
It bothers me a little bit that A380 fans on here tend to lose the ability to think analytically and reasonably whenever the subject comes up.

A380 detractors operate in this same pattern.

Quoting Matt6461 (Reply 37):
I'm just trying to make this discussion a little more hard-nosed. We know what makes A380 Y more attractive (bigger seats, quieter). So maybe we try to be analytical about these differences instead of talking about some amorphous experience that the A380 provides. If we're going to continue the discussion, I'd prefer that you dispute specific premises, or dispute the structure of the argument.
WingedMigrator articulates the subject rather well in Reply 42. It's not that you cannot have amenities like a shower or a bar on a 200-300 seat wide body, but that the amount of space they take up relative to the seating is too high to make it economical.

When EK sent 77Ws to LHR, they had 354 seats (8 F | 42C | 304Y). The A388s they now send have 517 seats (14 F | 76C | 427Y). The entire upper deck of their A380s is dedicated to premium cabin customers and the number of seats is 75% higher in First and 81% higher in Business. And the Economy class cabin on the main deck has 40% more seats than the 77W - in fact, it has 21% more seats than the entire 77W.

If EK added a premium lounge to the 77W, they'd lose one third of the Business Class cabin. Now they could take that space from Economy, but you're going to be losing 10% or more of your seating there. The numbers can't justify losing that amount of space. But the A388 is already so large, giving up two rows of Business Class is acceptable - it's only 14% (8 seats) - and it's still almost double what you have on the 77W.

Quoting Matt6461 (Reply 37):
Btw - do you recognize that there is a negative impact on yield (RASM) from lower frequency and increased capacity? I've brought that point up a couple times and a lot of A380 fans try to ignore it.

Not necessarily.

Many international airports have curfews that, when combined with the flight times, restrict the time period flights can operate in terms of departure from the origin airport to ensure they arrive when the destination airport is operating.

USA to Australia, for example, requires that all the planes depart the US within a window of only a few hours in the late evening in order to arrive in Australia after the curfew lifts. So you can either send three 777-300ERs, one every hour, or you can send two A380s spaced 90 minutes apart. And because it's late evening, your passengers are all going to be consolidated in that timeframe so frequency doesn't help their schedules.

Airlines also put their A380s on the most desirable routes at the most desirable times, so they can increase RASM, not decrease it. SQ has decreased frequencies to some markets by replacing 10 weekly 777-300ER flights to 7 daily A380 flights. That is three less flights per week, but 83 more total seats (2863 vs. 2780) and SQ now can even out the loads across the week, rather than have peaks and troughs due to either having too much capacity (2x 77W days) or not enough (1x 77W days).
 
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Matt6461
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 6:13 am

Quoting Stitch (Reply 46):
Quoting Matt6461 (Reply 38):
It bothers me a little bit that A380 fans on here tend to lose the ability to think analytically and reasonably whenever the subject comes up.

A380 detractors operate in this same pattern.

I'm not a detractor. I am, if anything, a little obsessed with the plane by now. That's why I put so much thought into the A380X.

Quoting Stitch (Reply 46):
Your argument appears to me to be that the A380 must be considered only by the same criteria a 777, 787, A330 or A350 is: what's the CASM?

My argument is that it does not.

We just fundamentally disagree. No airliner can ignore CASM - or RASM. There is a tradeoff between the two - do you recognize this? CASM is tripcost/seats. RASM is trip revenue/seats. What we want is maximize profit per trip. So the key question is - what is the tradeoff between CASM and RASM? I actually agree with you that RASM is the better strategy for most A380 operators. You realize that Mark Lapidus of Amedeo, and Airbus's current management, now blame the RASM strategy for the A380's woes so far. They want maximum density and now make their arguments on CASM. They know the customers better than us, that's what airlines want to hear.

Quoting Stitch (Reply 46):
Quoting Matt6461 (Reply 37):
Btw - do you recognize that there is a negative impact on yield (RASM) from lower frequency and increased capacity? I've brought that point up a couple times and a lot of A380 fans try to ignore it.

Not necessarily.

Look we can all think of situations where the frequency impact is lower. The general trend, however, has been to lower frequencies when deploying the A380. Airlines constantly talk about frequency impact when discussing the A380, however.

You also ignore the point about the impact of overall capacity on yield. If you're flying 350 pax/day on a 77W, and switch in an A380, you have to lower prices to get more folks on the A380. It's just a fact.

[Edited 2015-01-02 22:14:39]

[Edited 2015-01-02 22:16:42]

[Edited 2015-01-02 22:17:53]
 
Unflug
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 7:16 am

Quoting Matt6461 (Reply 38):
You and others, however, see an entire industry that rejects the A380.

I don't see an entire industry rejecting the type. Taking SQ or LH as an example, they are not rejecting the A380, they are perfectly happy with it. They don't currently need more than they have on order, but that's true for other types as well.

Looking at the entire industry, I see a certain percentage of worldwide long haul traffic on routes that can fill one ore more daily A380s.

It's a bit unfortunate for the other carriers that most of this traffic is serviced by one airline, but the traffic is there and it will not go away. In the long term, I do see a very good business case for the A380NEO. And I'm not a fan of anything  
 
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speedbored
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RE: The A380NEO Thread Part 2

Sat Jan 03, 2015 8:36 am

Quoting Matt6461 (Reply 31):
Your ignoring the adverse effect of capacity on yield (RASM).
Quoting Matt6461 (Reply 31):
The A380 might well be worse on RASM than a 789, despite its greater comfort, depending on route.

And yet many A380 operators are on record as saying that they are able to charge a premium for the A380 because passengers like it so much.

Quoting Stitch (Reply 36):
You might, but Emirates' customers - and customers for most, if not all, other A380 operators - are choosing to pay more for the "A380 experience", even when it involves a transfer, as well.

  

Quoting Matt6461 (Reply 37):
Btw - do you recognize that there is a negative impact on yield (RASM) from lower frequency and increased capacity? I've brought that point up a couple times and a lot of A380 fans try to ignore it.

No, a lot of people keep pointing out to you that it is not always true. We don't live in a binary world.

Quoting Matt6461 (Reply 37):
I'm just trying to make this discussion a little more hard-nosed.

By limiting it to the factors that too many people get hung up on, such as RASM and CASM, and ignoring all of the real world factors that don't fit your argument?

Quoting Matt6461 (Reply 44):
11-abreast would really suck in the A380, both from a space (worse than 77W)

Or would it actually still offer a more spacious seat?

Quoting Stitch (Reply 46):
Quoting Matt6461 (Reply 37):
Btw - do you recognize that there is a negative impact on yield (RASM) from lower frequency and increased capacity? I've brought that point up a couple times and a lot of A380 fans try to ignore it.

Not necessarily.

Many international airports have curfews that, when combined with the flight times, restrict the time period flights can operate in terms of departure from the origin airport to ensure they arrive when the destination airport is operating.


   Slot restrictions also play a part.

I get bored of saying it but airlines buy aircraft to make money, not for the best RASM or CASM or fuel burn or number of engines or .... They have departments full of clever people that do nothing but analyse what will work best for the airline, looking at different aircraft, different routes, different cabin layouts and a whole raft of other details before deciding on which aircraft the airline should buy.

RASM, CASM, or any other such factors are never used in isolation in the decision making process, unlike the way they are used in so many "discussions" around here. In the real world, it's a whole order of magnitude more complicated than RASM or CASM or fuel burn ....

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