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TheRedBaron
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 5:24 am

Quoting Stitch (Reply 129):
The A380 breaks even at a load-factor of around 60%, which means almost half of your available seats can be sold for any price and still generate a profit. A 747-400 can only do that with about 25% of it's seats.

Stitch SHHHHHHH, quiet!, that information is classified and only Tim Clark knows it !, so he can laugh all the way to the bank with one badly designed wing!

Quoting Matt6461 (Reply 131):
Or should we trust anonymous posters on an internet forum who claim to know better than them? People who, when pressed for evidence of anything they are saying, say they aren't allowed to provide it?

Well a dozen airlines have the aircraft and at least 2 of them are very happy with it, maybe reality can provide some kind of data, and in my view even if Airbus won't commit to a NEO version and only make a PIP on the CEO, EK will surely reorder them to change it older frames. LH will fly to MEX and will find a goldmine in that because the 748 and the 744 is always full....LATAM is the next big market for VLA´s, not because lama airlines will order them, but some player will flood the market with their A380 and 777X

Quoting Matt6461 (Reply 131):
I repeat my challenge again. Will you answer it?

Your challenge is moot because the market, changes all the time and even if we had a perfect example to show you wrong, there would be good arguments on oil price, inflation and changing market and economics to make it a worthless comparison. (heck even the A380 projections were not met in a mere span of 9 years).

Quoting Matt6461 (Reply 131):
Why did the A35J kill the 77W? Because A35J is more efficient. Why did the 77W kill the A346? Because 77W is more efficient. Why did the A330-300 kill the 77E? Because A333 is more efficient. Why did the 787 force Airbus to NEO the A330? Because the 787 is more efficient.

Some aircraft had a much higher maintenance cost like the A340 and the engine makers made it worse with ridiculous $$$ for spares, so again, just saying its more economic to operate, doesn't carry the whole "cost" and the reasons for ordering and making a huge CAPEX spending. (BTW the 717 is way more efficient than the MD83 and it was never a success)

Quoting Matt6461 (Reply 131):
Only on the internet is this kind of thinking possible. In real life

In real life EK has found a way to prove that there is a way to make the A380 profitable.

Quoting Matt6461 (Reply 131):
There will never be 300 CEO's delivered.

That is a very daring prediction, funny because its 10 years of the A380 wars here on Anet, and some said the aircraft would not fly at all! It may take to 2024 to deliver the 301 frame but they will be sold, PAX count will go up, slots will not grow and airspace will be more congested.... it only matter of time...

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seahawk
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 9:48 am

Quoting Matt6461 (Reply 135):
So this is a valid point. Things like bars and shops may only be possible in a VLA: They arguably have a certain minimum size, so there's a minimum pax number required to efficiently share the space they occupy.

Maybe the same goes for The Residence, but I don't see how. There's no shared space rationale... It seems the Residence works on the A380 because the A380 is more efficient.

But either way, now we're back in premium-land where frequency matters a great deal. As you seemed to recognize earlier.

I'll concede that this is a good candidate to directly respond to my earlier challenge: At equal unit cost, why ever choose the VLA? Now we have a possible reason: maybe only VLA's can do a full bar/shops.

But how compelling is the bar/shops rationale? Only 4 A380 operators use it; all of Airbus' recent A380 marketing has tried to convince on unit costs and denser cabins...

Again, you need to look at the airline.

EK has uses widebodies as feeders to the hub. The average stage length is high. Furthermore the O-D demand on most routes is rather limited. So we can assume that the most time sensitive travellers would probably go for a direct flight, whenever possible. And we can also assume that the trip length (time spent the destination) for the passengers is on the longer side. So on many of those routes time of departure or arrival will fall behind the overall time spent travelling in importance. Now considering the fleet used, it makes a lot of sense to use large aircraft and lower frequencies so that you can fill all your large aircraft while still offering not too long layover times. This allows you reasonable travel times at lower prices, while taking full advantage of the low unit costs of the large aircraft used.

TK´s network is different. The core is the single aisle fleet operating shorter routes with many of those routes having a higher O-D demand. O-D demand is a good mix of the time sensitive business traveller and the ethnic and leisure traffic. So we come to the conclusion that even before looking at the long haul ops, the feeder routes favour higher frequencies because of O-D traffic demand. Long haul also has a higher O-D demand and the feeder fleet also suggests that frequency works better for them.

And that is just a small glimpse into what has to be considered for each and every route served by every airline.

To come back to London - New York. This routes has a very large O-D demand, the passengers often have very short times spent at the destination, they are very time sensitive and many are able to pay higher ticket prices.

Compare it to London - L.A.- Just the typical difference in time spent at the destination has a big impact on the importance of frequencies and suddenly travel time to the final destination is more important than the time of departure. With a still high O-D demand, it is a VLA route.

There is no general rule about frequency being better, it all depends on the demand. For the QS satisfaction of the passengers in genral it is a fact, that less convenient departure times are not as bad as long layovers and departure time becomes less important when the travel time and the time spent at the destination become longer.

You really should read books like "The Global Airline Industry" and "Flying Off Course".
 
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speedbored
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 10:06 am

Quoting Matt6461 (Reply 128):
So when you say, "There are some [routes] that do not" benefit from frequency, I don't see how that can be true of any longhaul routes. Even an hour's departure time difference can mean a lot to your highest-paying customers - people whose time is worth $1,000 per hour and are willing to pay accordingly.

And yet the evidence of the market, that you are so keen to point out for other purposes, proves that he is right. Otherwise all long-haul flights would be flown by much smaller aircraft than they currently are. And BA would most definitely not have recently reduced their frequency on one of the most premium heavy routes in existence.

There are many people who claim that their time is so valuable that they cannot afford to wait two hours for a flight but, in reality, the people for whom that is actually true, usually travel on private jets.

Quoting Matt6461 (Reply 126):
Now, if frequency has no impact on revenue/yield, then I'm just dead wrong.

Well it does have an impact but it is not always the impact you are assuming, especially on long routes.

Quoting Matt6461 (Reply 126):
But every airline executive speaks about the importance of frequency.

Some of them do, but only on some of their routes.

Look at what is happening in the US market at present, where there are plenty of routes with more than 1 flight every hour. The airlines have, at last, realised that very few, if any, of their passengers genuinely need that sort of frequency, and that too many frequencies are beginning to hurt the bottom line and choke up the system. They are beginning to reduce frequencies on some routes. After all, what is the point in providing a flight every 30 minutes if there are so many flights trying to operate that the system can't cope and those flights regularly get delayed by an hour or more?

Quoting Stitch (Reply 129):
It's called "covering the market" because the market doesn't operate in a hypothetical vacuum where CASM alone determines the worth of an airframe.

   So true. Shame some people just can't "get it".

Quoting Matt6461 (Reply 131):
I define CASM in a way that is unfair to the A380, that's just facially inconceivable.

Well you continue to refuse to provide us with a usable definition of CASM so, until you do, anything is conceivable.

Quoting Matt6461 (Reply 131):
What is your idea of CASM and why should I or anyone else consider it better than the definitions used in the foregoing links?

There are no proper definitions provided in any of the foregoing links, just numbers, many of which are assumptions. And, where breakdowns have been provided, it is glaringly obvious that some costs, which would affect a frequency decision, have just been omitted altogether.

Quoting Matt6461 (Reply 131):
Or should we trust anonymous posters on an internet forum who claim to know better than them? People who, when pressed for evidence of anything they are saying, say they aren't allowed to provide it?

You should not require any number evidence. Just an understanding of the meaning of CASM, and a modicum of common sense or industry knowledge, ought to be enough for most people to understand that real-world CASM is so variable that it simply can not be used for the purposes that you seek to use it for here.

Take a look at the analysis of US mainline airlines in the report linked to from this page (sorry - a.net won't allow me to link it directly): http://www.oliverwyman.com/insights/...irline-economic-analysis-2014.html
Section 9 is probably the most relevant here - you will see that "CASM", even when calculated in the same way, varies enormously from airline to airline, and stage length to stage length. It also varies considerably from one airline to another, even with the same seating density over a standardised stage length. There are variances of as much as 20% in some of the cases included in that report. World-wide, variances can often be considerably more than that.

Quoting Matt6461 (Reply 131):
You won't address my repeated challenge to identify a plane with equal or higher unit costs than smaller competition that sold well.
I repeat my challenge again. Will you answer it?

Well it is a very difficult challenge to rise to in the absence, from you, of a usable definition of what you mean by "unit costs" or "CASM", or any available source of a trustworthy list of CASM by aircraft type, all calculated in the same way. But, if you take a look at the charts in section 9 of the report I referred to above, you will actually find some examples in there.

Quoting Matt6461 (Reply 131):
Only on the internet is this kind of thinking possible. In real life, people saying things that are flatly contradicted by everything happening in the world would be embarrassed to say these things.

Then perhaps you probably ought to not discuss aviation much outside of the internet.

Quoting Matt6461 (Reply 128):
At typical long haul route frequencies, there seems to be very few routes that would not benefit from frequency.

Makes you wonder why, then, in the real world, there are so very few routes where airlines are downsizing aircraft and increasing frequencies.

Quoting Matt6461 (Reply 131):
If it were selling well, there wouldn't be talk of shutting it down, there wouldn't be so much difficulty closing a business case for a NEO.

Despite media reports based on bad misinterpretations, there has not actually been any talk from Airbus of shutting it down, and what evidence do you have that Airbus are finding it difficult to close a business case?

Quoting Matt6461 (Reply 131):
And btw, the real number of orders is about 50 fewer - we've got to take out Amedeo's, Virgin's, Qantas' remaining order, Hong Kong's, Air Austral's.

Why? An order is an order until it is cancelled. Nobody ever seems to suggest that the same approach should be taken with order totals for other aircraft types, many of which have significantly more "flaky" orders.

Quoting Matt6461 (Reply 131):
There will never be 300 CEO's delivered.

On that I am certain that you will be proved wrong unless, of course, Airbus go ahead with a neo sometime soon.

Quoting Matt6461 (Reply 131):
Well the 800-seat market isn't covered.

Errr... yes it is, with quite a margin.

Quoting Matt6461 (Reply 131):
What about the 2,000-seat market? What about market between the A321NEO and the 787-8? What about the market for an SYD-LHR plane?

Why would they even consider covering non-existent markets?

Quoting Matt6461 (Reply 131):
If that's right it was stupid. If you're undertaking a 30-year program, you don't base it on how your customers operate now; you base it on how you expect them operate in the future. Airbus didn't base the A380 off just current practice, it based it off a prediction of how the market would evolve. And they were wrong.

Which is exactly what Stitch said they did. And no-one did forsee, nor could have forseen, some of the reasons why Airbus was ultimately wrong. {Before you cite Aboulafia as having had that foresight, go back and read what he actually said at the time. He may have got the numbers roughly right, but many of his reasons for predicting those numbers were way off the mark.}

Quoting Matt6461 (Reply 132):
Even a 2% price premium for doubled frequency has a massive effect on the bottomline: that's a good chunk of even the best airline's profit margin.

Only if you, incorrectly, assume that you can double frequency, and maintain capacity, without increasing your costs.

Quoting Matt6461 (Reply 137):
If frequency has some non-zero effect on yield/RASM, then there's no reason to choose a 500-seat plane when a 250-seater has equal unit costs.*

Perhaps you can show us one single example of an aircraft that has the same unit costs of another aircraft that is twice the size? Such a scenario simply does not exist in the real world.

Quoting Matt6461 (Reply 137):
But my thesis stands if frequency has any non-zero value. It definitely does.

No, it does not. Not in the real world.
 
frmrCapCadet
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 2:12 pm

EK solved some real problems. I can only cite what happened in Seattle. Getting from there to Mumbai, Addis Ababa, Bangkok, or Australia was grueling and expensive. Longer layovers were not uncommon.

Suddenly EK appeared and now the only grueling thing is the length of the flight (not a minor factor I observe). For a time EK was the cheapest on all four of the above flights. But as I predicted 1stop is not owned by EK, and other airlines are again becoming competitive.

Any airliner with widebodies with 8-12 hour flying capablility and either the system or alliance can compete with EK. Many will, and few will use 380s/748s or even 777Ws. 350s/787s will be fine.

My point is that the 380, and the airlines flying it will have many many competitors.
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 2:41 pm

Quoting TheRedBaron (Reply 150):
Quoting Stitch (Reply 129):
The A380 breaks even at a load-factor of around 60%, which means almost half of your available seats can be sold for any price and still generate a profit. A 747-400 can only do that with about 25% of it's seats.

Stitch SHHHHHHH, quiet!, that information is classified and only Tim Clark knows it !, so he can laugh all the way to the bank with one badly designed wing!

The ability to keep the secret is so strong that Airbus itself has two so-called white tails sitting in TLS, and MH can't find anyone to take up its underutilized frames. Maybe Amedeo should start whispering into people's ears given it has 20 frames to shift starting next year?
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abba
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 2:56 pm

Quoting EC99 (Reply 134):

The value of frequency is very much dependent on range. 10+ hour east-west it tend to loose its value as time difference means that - unless you want to leave on either inconvenient hours or arriving on such, the window you have is rather small. Shorter than that frequency beings to gain in value.

Those who argue for the value of long intercontinental flight are usually the same crowd who have never traveled such routes that often (if at all)....

Quoting parapente (Reply 139):
The plane is just too big for 90% of airlines,That's the problem.Their saviour is that it's just right or even too small for one gigantic airline.End of.But discounts aside does it really matter a sale is a sale.

And these two things are not without relation. Or to put in another way. The reason why 90% of airlines cannot use the 380 is exactly because there is one gigantic airline that slowly but surely eats away a significant part of their market. Looking at how the population is distributed in Germany and how EK is attacking that market, I have no major hope for LH as an intercontinental carrier - save for the US where they can cannibalize the markets of UA, DL et al....

So there are good reasons why no US airline can use the 380 (the Asian Pacifistic rim airlines are doing the same as the European ones due to the same reason) and only a few others - save for the ME - can.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 3:06 pm

Quoting Egerton (Reply 95):
Getting back on thread. I wonder what the sum total of most of the verbiage above is?

Is it that the price of Brent Crude oil has fallen in the last 12 months from roughly $100 to roughly $50 per barrel, from its peak at roughly $140 in 2008? West Texas Intermediate Crude shows a similar general trend but the numbers are different.

So what is economic at $140 or even $100 may be less economic at $50?

Does this applies across the industrial world, not just to the A380?

In the twin ailse civil aircraft category, the return on capital for future planned development projects like A380 NEO will be less with oil at $50 than at a higher oil price. Therefore is it more difficult to allocate scarce capital funds to the A380 NEO today than it was in 2008 or 12 months ago? I suggest yes, it is more difficult.

Does this theory applies widely across the industrial world? Answers on a small post card please.


May I extend this point about the economics of low oil prices?

Assume that a car manufacturer is reviewing the financial case for making a brand new car engine. When fuel prices were high, a more fuel economical car engine is a big competitive advantage, so helping the investment case. When fuel prices are low, the competitive advantage of this brand new car engine is less. It is still a competitive advantage to use less fuel, but the relative advantage is less with low fuel prices.

So the money men in the finance team calculate a lower rate of return on the investment if fuel prices are low than if they are high. The lead time on a new car engine is short relative to an aero-engine. So the car manufacturer's finance team can more easily defer the new car engine production project whilst continuing with research and development on car engines than those making aero-engines.

The brand new car engine will see the light of day from the big investment in production only when the finance team can make the numbers add up. They are looking for a rate of return on investment capital commensurate with the Board of Director's targets on rate of return on capital employed.

This approach pleases shareholders, who are looking for a rate of return commensurate with the financial risks involved. This is the concept of risk capital, as not all investment plans survive their encounter with reality.

In the case of Rolls-Royce today, they have already made a string of investment decisions of large civil engines going back to the late 1960's and the RB211. The investment plans have not always survived their encounter with reality. But over time and with some good luck their investment decisions have been right quite often. It has helped that the 'family of engines' concept has kept individual investments since 1971 on a manageable scale whilst keeping their technology up to date.

This luck has found RR in a good position just now, with the very competitive Trent 1000 and more recently Trent XWB families entering their production phases just as RR production operations have benefited from massive investment to efficiently manufacture the necessary higher quality and quantity of parts. Meanwhile the research and development side at RR is running at a fast pace to protect the future. I understand that City of London financiers may take a different view, each to his own. The fact that oil prices have dropped like a stone may have a positive effect on the longevity of the production lives of these Trent families by making the investment decisions of competitors more difficult.

The GE and Boeing situations are that their research and development teams came up with technology suitable for Emirates Airlines to go forward with their own investment decision on the 777X line with GE9 engines. But at a time when oil was not cheap. The three investment decisions of GE, Boeing and Emirates were greatly aided by the then price of oil.

Since then, very large investments have been applied by the three partners towards the production, delivery and funding. This cash has been spent, so it is now water under the bridge. There is an escalating rate of spend in prospect.

A question which cannot be answered until the next decade is the price oil when these 777X aircraft see the light of day?

If I were the partners, I might consider the future investment situation. A strategic withdrawal now might be better than a major defeat later. It all hangs on the price of oil, and if the reader or any of the three partners have a grip on this, then I need to trade in my crystal ball for the latest model.

Will Emirates new 777X deliveries be at a price which is commensurate with their original investment decision? Just now, this seems more and more unlikely. If oil continues to be cheap, with the benefit of hindsight would Emirates have been better to buy more of the current model of 777 and/or a current model from others? Will such a worst case render Emirates shareholders uncomfortable that competitors have a cost advantage due to the unexpected change in the supply and demand equation of oil, since the original investment decision to purchase 777X?

If GE or Boeing have already made or were to make too many mistakes with their new products so as to make them manufacturing or commercial bad news? A high oil price will lessen these risks, a continuing low oil price the opposite.

So what I am suggesting is that by pure luck RR are in the right place at the right time with the right products. Ditto Airbus. The three 777X partners may get equally lucky, and I wish them all the best, but they may possibly be betting the farm on what will be the price of oil in the next decade.
 
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Stitch
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 3:24 pm

Quoting Matt6461 (Reply 131):
My idea of CASM is taken directly from the published analyses of e.g., Leeham, AirwaysInsight, and even Amedeo.

Leeham.net's numbers are specifically for a flight between Los Angeles and Beijing. And they're offering multiple data averages because they do not have actual hard data so they're trying to cover their bases with their estimates.

Amaedo doesn't even bother to tell us what numbers they used for their calculation, which by the way is "valid" only for San Francisco to Tokyo.

So while those amalgamated and averaged - guesstimated, really - CASM numbers may may be valid for calculating the value of an A380 versus a 777-9 on Los Angeles to Beijing or San Francisco to Tokyo, they are not valid for any other city pair because a fair number of the guesstimated input variables input variables - would be different.

Yet you use that guesstimated number as if it is relevant and correct for any flight and you do it because it's easy - only having one number to argue makes the argument simpler to construct and defend.


Quoting Matt6461 (Reply 131):
What is your idea of CASM and why should I or anyone else consider it better than the definitions used in the foregoing links?

I trust the airlines because unlike Leeham.net or Amadeo or Boeing or Airbus they don't guesstimate what their fuel burn is on a mission. They don't guesstimate what their crew costs are. Or their maintenance costs. Or their navigation and landing fees. Or their Mission Cash Operating Costs. Or Per Seat Cash Costs. Or what they paid for the plane. Or what they pay to insure the plane. Or their Direct Operating Cost. Or their Total Cost. Or their CASM.

They know what each of those numbers are for every plane they operate on every flight they operate and that historical data gives them far better accuracy at calculating what those numbers are likely to be for every plane and/or flight they do not operate or evaluate then a "high", "middle" or "low" guesstimate.

And looking at the numbers they publish, either on their own financial sites or government sites like the one speedbored provided, shows those numbers vary wildly across airlines even between the same city pairs flown by the same model of airplane.



Quoting Matt6461 (Reply 131):
Comparing (the A380's break-even load factor) to the 747-400 is cheap...

The A380-800 was designed to compete with the 747-400 (and possible larger future variants of the family) so why is it "cheap" to use that model as the basis of comparison? The 777-300ER and 777-9 didn't exist, so it would be, IMO, far more "cheap" to compare it to them and then say Airbus cocked it up because they didn't do so.



Quoting Matt6461 (Reply 131):
You won't address my repeated challenge to identify a plane with equal or higher unit costs than smaller competition that sold well.

How do you define well?

The 777-200 family together has sold 729 frames, which I expect Boeing feels is "well" (as a shareholder, I certainly do). It's equal to the smaller, lighter and more efficient A330-300//A330-900, and I imagine you'll be hard-pressed to find a person who says that family has not sold "well".



Quoting Matt6461 (Reply 131):
People saying things like this. Only on A.net is it possible to say with a "straight face" that the A380 is selling. If it were selling well, there wouldn't be talk of shutting it down, there wouldn't be so much difficulty closing a business case for a NEO.

So by your definition, sales of 300 frames is not "well".

So that means the 777X, at 306 orders, is not "well". Perhaps Boeing should not launch it, then, as clearly there is no business case.

The A350-1000 - the plane that "killed" the 777-300ER - has only 169 orders (22% of the 777-300ER), so Airbus clearly needs to scrap start considering developing and offering a NEWER Engine Option even before it goes into service with the New Engine Option.

Look, I will save you the    and note I am being facetious and sarcastic, but it's a bit    to say a certain number of sales is a "failure" for one model, when they same (or even less) are a "success" for another. And yes, you can argue sales trends and historical numbers and all that, but then the OEMs take that into account, as well.

We know Airbus expected to need 250 sales to put the A380 on a path to financial success. Yes, they expected to sell three times that many, but the original projection was not ridiculous when we look at sales to date - and sales in an environment a fair bit less-friendly to the A380 then Airbus projected.

And none of us believe Boeing planned to need 1000 sales before the 787 would be financially successful. But they stuffed it up so bad that even if they make their 2000-plus frame delivery projections the program is going to be far less financially successful then they expected.

Quoting Matt6461 (Reply 131):
And btw, the real number of orders is about 50 fewer - we've got to take out Amedeo's, Virgin's, Qantas' remaining order, Hong Kong's, Air Austral's. There will never be 300 CEO's delivered.

Difficult to see. Always in motion is the future.


Quoting Matt6461 (Reply 131):
Well the 800-seat market isn't covered. What about the 2,000-seat market? What about market between the A321NEO and the 787-8? What about the market for an SYD-LHR plane?

Well the 800-seat market is covered by the A380-800, which is certified for that (and more). And Air Austral's configuration of 840 will be the highest if it goes into service.

As for the market between the A321-200 and 787-8, Boeing is currently working on possibly addressing it with the New Medium Airplane. And as for LHR-SYD, you can do that today with a ~200-passenger 777-200LR.


Quoting Matt6461 (Reply 131):
(Airbus' methodology used to design the A380) was stupid. If you're undertaking a 30-year program, you don't base it on how your customers operate now; you base it on how you expect them operate in the future. Airbus didn't base the A380 off just current practice, it based it off a prediction of how the market would evolve. And they were wrong.


Yes they were. And that makes them stupid, evidently.

Good to know that lack of omniscience is proof of incompetence. Excuse me while I adjust the allocations in my 401k.  




Look, we likely do agree on more than we disagree when it comes to the "big picture" view. But below, things get less clear-cut, IMO, and I do not believe we can state with high confidence that things that are "obvious" in the big picture are obvious as we get more granular in our perspective.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 3:45 pm

The next big test for the A380 will be what happens to SQ's first 5 - assuming they will no longer require them after their next 5 are delivered.
 
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Stitch
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 6:19 pm

Quoting JerseyFlyer (Reply 158):
The next big test for the A380 will be what happens to SQ's first 5 - assuming they will no longer require them after their next 5 are delivered.

Yes, around the end of the decade we should see the first tranche of 10 or so (ex-SQ / ex-EK) come off lease and enter the second-hand market.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 7:19 pm

If a seriously updated 380 is not offered before 2020 I suspect that existing 380s likely will be used by original buyers for 15 years. At that point a heavily used plane could reasonably be retired and recycled.
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 7:51 pm

Quoting seahawk (Reply 151):
EK has uses widebodies as feeders to the hub. The average stage length is high. Furthermore the O-D demand on most routes is rather limited.
Quoting seahawk (Reply 151):
This allows you reasonable travel times at lower prices, while taking full advantage of the low unit costs of the large aircraft used.

...and I've made exactly this argument before, many times. But look at its structure:

-EK uses the A380 in ways that minimize frequency's RASM impact
-EK benefits greatly from A380's unit cost efficiency

...which is a fairly straightforward application of the ideas I'm putting forward here about capacity/efficiency tradeoff. The A380 works best when its capacity doesn't hurt yields due to frequency loss, as then its lower CASM/CAMM goes straight to the bottom line.

A lot of you are agreeing with me; you're just unwilling to admit it.

Quoting seahawk (Reply 151):
There is no general rule about frequency being better, it all depends on the demand.

...and yet you take this a bit too far. Even for EK frequency would have some *non-zero* value. There are many routes where EK is multiple 77W-daily. If frequency had *zero* value they'd only fly A380's.

Quoting Revelation (Reply 154):
Stitch SHHHHHHH, quiet!, that information is classified and only Tim Clark knows it !, so he can laugh all the way to the bank with one badly designed wing!
The ability to keep the secret is so strong

Can we make a deal? If anyone of "my" anti-A380 camp says something stupid like the A380 causes airline bankruptcy, I'll tell them to piped down. Can someone do the same when people argue that every airline besides EK is dumb? Many of us here on both "sides" recognize EK's particular characteristics that enable A380 use... I just think our discussions would be more intellectually serious (and therefore fun!) if we maintained some norms about the quality of dialogue. It might be more effective for Stitch to have responded to this point than for me or Revelation to do so.

Quoting Stitch (Reply 157):
Leeham.net's numbers are specifically for a flight between Los Angeles and Beijing. And they're offering multiple data averages because they do not have actual hard data so they're trying to cover their bases with their estimates.
Quoting Stitch (Reply 157):
they are not valid for any other city pair because a fair number of the guesstimated input variables input variables - would be different.

First a global point then a couple specific points.

Global: For the purposes of this thread's discussion, it doesn't matter to me what A380's actual CASM/CAMM edge is. Whatever it is, the market consensus is that it's not good enough. That's a tautology, but sometimes recognizing a tautology gives insight.

Specific points:

1. This is the standardized data we have, and it's for 6000nm
2. If we have data 6000nm, the *relative* CASM picture at 4000 and 8000 won't be massively different for, e.g., A380 and 77W. When I say ~10% unit cost difference, that could encompass 7-13%.
3. It is extremely important to use standardized data, otherwise there is no point making comparisons
4. The definition of CASM used by Leeham/AInsight incorporates fuel, capital, maintenance, crew, and fees. I've noted that catering, cargo/pax handling is left out of that definition. Surely a few other things as well. But when we look at the *relative* impact on a *relative* CASM/CAMM picture, the included items are such a huge part of DOC, that I don't see how catering or handling can fundamentally change the *relative* picture.

Quoting Stitch (Reply 157):
And looking at the numbers they publish, either on their own financial sites or government sites like the one speedbored provided, shows those numbers vary wildly across airlines even between the same city pairs flown by the same model of airplane.

I'm writing this response on my phone while at an event, haven't looked at the link yet. But to the extent that the data is for real-world airlines using different seating configurations, that's exactly the kind of data we want to avoid. Seating configuration changes everything. I could argue that JL's old domestic 744's are 40% more efficient than KE's A380. It would be true by nominal seat counts but it would be a ridiculously stupid statement.

But when we quote CASM based on real-world configurations, we do exactly that.

Look there are some here who apparently are hostile to "theoretical" comparisons of standardized planes. If that's your position, we have nothing to say to each other. I find it incredibly frustrating, stupid, and frequently dishonest to argue with someone using Airline X's Plane A against Airline Y's Plane B. There's no way to keep the playing field even.

Quoting Stitch (Reply 157):
The A380-800 was designed to compete with the 747-400 (and possible larger future variants of the family) so why is it "cheap" to use that model as the basis of comparison?

Because the 744 is a 1989 derivative of a 1970 plane. If Airbus really envisioned competing against only the 744 and derivatives 15 years after program launch, well...

Quoting Stitch (Reply 157):
The 777-200 family together has sold 729 frames
Quoting Stitch (Reply 157):
So that means the 777X, at 306 orders, is not "well"
Quoting Stitch (Reply 157):
Look, I will save you the    and note I am being facetious and sarcastic

Thanks for the saving.

It's just that - come on don't you recognize that the A380 is having sales trouble?

Quoting Stitch (Reply 157):
And none of us believe Boeing planned to need 1000 sales before the 787 would be financially successful. But they stuffed it up so bad that even if they make their 2000-plus frame delivery projections the program is going to be far less financially successful then they expected.

True but irrelevant to the A380 imo. But if this amount of Boeing-bashing is a predicate of critical thought about the A380, fine.

I'd rather discuss the fact of Boeing's participation in the U.S.'s illegal torture program. Pretty sure Airbus never helped fly prisoners to black sites for disappearance and torture.

Quoting Stitch (Reply 157):
Look, we likely do agree on more than we disagree when it comes to the "big picture" view.

Yes  
 
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TheRedBaron
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 9:35 pm

Quoting Revelation (Reply 154):
The ability to keep the secret is so strong that Airbus itself has two so-called white tails sitting in TLS, and MH can't find anyone to take up its underutilized frames. Maybe Amedeo should start whispering into people's ears given it has 20 frames to shift starting next year?

While I agree 100% with your points, I think most of the A380 misfortunes have to do with market and utilisation, than on the Aircraft itself, for example I have been saying for years that MEX has enough traffic for such an aircraft, but there are problems: first MEX is a dumpster, and has no provisions for the A380, on top of that it is a hot and high airport, so it took 8 years and change for LH to say, lets go with the A380, as of today it can't be used because they are making provisions for such a flight to march 2016, the yields, the density and the economics are present but the infrastructure, is not.... I bet MH did not make their homework and now they have an airplane that they cannot fill, Skymark, had problems and canceled their so called "white tails", they did not even got theirs, that is not a problem with the aircraft, its a problem on how to use it, EK, LH, BA, and some other have found its a nice moneymaker machine IF you can use as it was intended, so its valid to say that the current NO SALES period of the A380 is a result of : Market, infrastructure, CAPEX, cheap oil, safer products to buy and the big torpedo of last year where an airbus big head said the program would be shut down, basically cornering them into offering a NEO, so the current CEO is no longer wanted.

I for one will try to get into LH flight next year...

TRB
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 9:58 pm

Quoting Matt6461 (Reply 161):
There are many routes where EK is multiple 77W-daily. If frequency had *zero* value they'd only fly A380's.

Not necessarily. They could just as easily be selecting 2x77W over 1xA380 because demand on the route is too much for 1xA380 but not enough for 2xA380s. Multiple frequencies are not only provided just to allow people to fly at the times they desire.

Quoting Matt6461 (Reply 161):
Whatever it is, the market consensus is that it's not good enough.

In your opinion. Statements from a number of current operators would suggest that your opinion is wrong.

Quoting Matt6461 (Reply 161):
If we have data 6000nm, the *relative* CASM picture at 4000 and 8000 won't be massively different for, e.g., A380 and 77W.

See the report I linked to, to see just how wrong you are. It can even be very different for the exact same aircraft/config but with different engine types.

Quoting Matt6461 (Reply 161):
It is extremely important to use standardized data, otherwise there is no point making comparisons

Well the airlines definitely seem to disagree that there is "no point". They make aircraft comparisons, often on a daily basis, both for operational and fleet purchase decisions, with many millions of dollars at stake on the outcome of those decisions. They never, in my experience, use standardized data to do so. Maybe you think they are all too stupid to see that it would be better to do it your way? Why spend all that money collecting and processing real-world data every day when you can just work the numbers once using Matt's standard comparison, and be done with it?

I find it particularly bewildering that you simply cannot see why "standardized" comparisons based on made-up (i.e. open to manipulation) seating plans, stage lengths and other criteria, render a standardized comparison meaningless. Given that every aircraft out there has a different operational "sweet-spot", and different operational limitations, it is impossible to come up with any standardized comparison that would not favour one aircraft over another.

Quoting Stitch (Reply 157):
I trust the airlines because unlike Leeham.net or Amadeo or Boeing or Airbus they don't guesstimate what their fuel burn is on a mission. They don't guesstimate what their crew costs are. Or their maintenance costs. Or their navigation and landing fees. Or their Mission Cash Operating Costs. Or Per Seat Cash Costs. Or what they paid for the plane. Or what they pay to insure the plane. Or their Direct Operating Cost. Or their Total Cost. Or their CASM.
They know what each of those numbers are for every plane they operate on every flight they operate and that historical data gives them far better accuracy at calculating what those numbers are likely to be for every plane and/or flight they do not operate or evaluate then a "high", "middle" or "low" guesstimate.

  
The only meaningful comparisons are those made using real data. Anything else only shows that one aircraft is more efficient than another for some imagined route and seat layout.

Quoting Matt6461 (Reply 161):
But to the extent that the data is for real-world airlines using different seating configurations, that's exactly the kind of data we want to avoid.

I'd disagree - airlines only buy aircraft in the real world and they almost always use their own seating layouts. But, regardless, there are examples in the report of significantly different CASMs, even with the same seat layout.

Quoting Matt6461 (Reply 161):
Seating configuration changes everything.

Not everything. But it does change a lot, which is one very good reason why a standardized comparison is meaningless - airlines use different configurations, often even on the same aircraft type. Making a decision based on a standard layout, and then fitting the aircraft with a different layout, could easily lose you a lot of money.

Quoting Matt6461 (Reply 161):
Look there are some here who apparently are hostile to "theoretical" comparisons of standardized planes. If that's your position, we have nothing to say to each other. I find it incredibly frustrating, stupid, and frequently dishonest to argue with someone using Airline X's Plane A against Airline Y's Plane B. There's no way to keep the playing field even.

Well if you can come up with a standardized comparison that even comes close to providing an even playing field, please do post it. No-one has managed it so far.

You really need to get over this fixation you have with comparing aircraft on some notional unit basis, and accept that there are very many real-world scenarios where the most suitable aircraft for an airline/route is not the one with the lowest unit cost.

Quoting Matt6461 (Reply 161):
It's just that - come on don't you recognize that the A380 is having sales trouble?

Is it? Most aircraft types hit sales doldrums from time to time, especially, it seems, when their order backlogs exceed around 5 or so years-worth of production. There are currently a number of on-going A380 sales negotiations that I am aware of, which are being badly impacted by much of the recent neo speculation, hence some of the announcements coming out of Toulose recently. I'm pretty certain that we will see additional sales sometime soon.

It also seems to me that one of the main reasons for slow sales to many airlines, is the competition they are now getting from the A380's best customer. Many/most of the aircraft that EK has purchased would very likely have been purchased by other airlines if EK did not exist. Given that EK only seems to order A380s in units of 50+, we should hardly be surprised to see long lulls in orders. Lulls that would otherwise be filled by more regular, smaller orders from those other airlines.

Quoting Matt6461 (Reply 161):
True but irrelevant to the A380 imo.

I fail to see how it is irrelevant - it is a very good example that rebuffs your assertion that Airbus was stupid in its decision making process around the A380 design, by showing that every manufacturer occasionally gets their forecasts wrong.

Given the huge lead times for new aircraft projects, and the expected life of an aircraft production program, both manufacturers have to base their decision making on the current state of the market, and forecasts of how the market will evolve over the next 30-40 years, based on lots of very detailed research.

Very few market forecasts are accurate even as close as 5 years out. Most people forget that it is already 25 years since the original A3XX announcement. A lot has changed since then, sometimes for reasons that nobody could possibly have predicted.

Quoting Matt6461 (Reply 161):
True but irrelevant to the A380 imo. But if this amount of Boeing-bashing is a predicate of critical thought about the A380, fine.

Stitch is one of the most level headed posters around here. Labelling him as a Boeing basher is, frankly, puerile. As are your comments labelling other people as stupid or dishonest.
 
billreid
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 10:22 pm

Gee.
I thought NEO was New Engine Option not New Wing or something else stupid!
Airbus already commited to the NEO but RR did not.

So unless AB can come up with 1500 firm engine orders for RR from at least four buyers it is most likely a non starter.
The engine development costs are an extreme risk and 150 birds dont get RR to BEP when considering development costs.

The delay is most likely AB trying to get enough firm committments to have RR agree!
Some people don't get it. Business is about making MONEY!
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 10:50 pm

Quoting Stitch (Reply 157):
I trust the airlines because unlike Leeham.net or Amadeo or Boeing or Airbus they don't guesstimate what their fuel burn is on a mission. They don't guesstimate what their crew costs are. Or their maintenance costs. Or their navigation and landing fees. Or their Mission Cash Operating Costs. Or Per Seat Cash Costs. Or what they paid for the plane. Or what they pay to insure the plane. Or their Direct Operating Cost. Or their Total Cost. Or their CASM.
They know what each of those numbers are for every plane they operate on every flight they operate and that historical data gives them far better accuracy at calculating what those numbers are likely to be for every plane and/or flight they do not operate or evaluate then a "high", "middle" or "low" guesstimate.

Besides underestimating how much EK would effect other potential 380 customers what other assumptions did A make that turned out wrong. I'm not trying to cause a fight but would like to understand the situation. Id love to understand same about the 748 as too me this is even a worse decision but I guess that deserves its own thread.
 
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Stitch
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 10:53 pm

Quoting Matt6461 (Reply 161):
Global: For the purposes of this thread's discussion, it doesn't matter to me what A380's actual CASM/CAMM edge is. Whatever it is, the market consensus is that it's not good enough.

How has the market concluded that the A380's CASM/CAMM edge is not good enough? Because they have not bought as many as they have bought A330s? A350s? A320s?

How many do they have to sell before it's considered a success?


Quoting Matt6461 (Reply 161):
It is extremely important to use standardized data, otherwise there is no point making comparisons.

But then the comparisons are nothing more than a "Batman vs. Superman" fictional debate. You cannot argue the non-fictional market has made a decision for or against a particular plane using fictional data.

Quoting Matt6461 (Reply 161):
But to the extent that the data is for real-world airlines using different seating configurations, that's exactly the kind of data we want to avoid.

So you want to use use non-real world data to argue that real-world airlines don't feel the A380 is sufficiently efficient enough to continue buying come the next decade.

As Vin Diesel once said in a movie: "Uhmm...okay."

Quoting Matt6461 (Reply 161):
Seating configuration changes everything.

Yes it does. And real-world airlines have different seating configurations, even for the same model of airplane in their fleet, much less across fleets. They do not limit themselves to "one configuration fits all", so why should we?

Quoting Matt6461 (Reply 161):
I could argue that JL's old domestic 744's are 40% more efficient than KE's A380. It would be true by nominal seat counts but it would be a ridiculously stupid statement.

Why is it stupid when it's true?

But JL's 747-400Ds were employed very differently than KE's A380-800s. That is something the rest of us take into account as to suggesting why JL bought the 747-400D and flew it on HND-ITM and why KE bought an A380-800 and flies it on ICN-LAX.

Your standardized methodology, on the other hand, would declare that because the 744D at 500 seats is 40% more efficient than the A388 at 400 seats, KE should operate a 500-seat 744D on ICN-LAX - even though the plane couldn't actually fly it due to lack of fuel (by available take-off weight).

Quoting Matt6461 (Reply 161):
the 744 is a 1989 derivative of a 1970 plane. If Airbus really envisioned competing against only the 744 and derivatives 15 years after program launch, well...

Well, what? What, exactly, should they have envisioned happening by 2025?
 
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Stitch
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 11:18 pm

Quoting Planeflyer (Reply 165):
Besides underestimating how much EK would effect other potential 380 customers what other assumptions did A make that turned out wrong.

I believe they presumed that the main drivers of long-haul traffic would be North America, Europe and Asia and that traffic would grow along pre-existing routes (so the major cities of NA, EU and Asia directly connecting to each other).

I believe they also did not see that DXB would "split" that EU to Asia/Oceania traffic via a stop, nor did they see DXB's location would generate traffic growth in the Indian sub-continent or Africa.



Quoting Planeflyer (Reply 165):
Id love to understand same about the 748 as too me this is even a worse decision but I guess that deserves its own thread.

Honestly, I think Boeing felt much the same way as Airbus did, which is why they kept pushing new models of 747. With the 747-8, they finally found a configuration that air cargo operators loved (ironically, shortly before the air cargo market crashed) so they were finally able to launch the model as a freighter.

Lufthansa had long-wanted a larger 747 to slot between the 747-400 and A380-800 and I believe Boeing (incorrectly) felt that if Lufthansa wanted it, so would every other 747-400 operator so they launched the Intercontinental.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sat Sep 26, 2015 11:52 pm

Quoting speedbored (Reply 163):
I find it particularly bewildering that you simply cannot see why "standardized" comparisons based on made-up (i.e. open to manipulation) seating plans, stage lengths and other criteria, render a standardized comparison meaningless. Given that every aircraft out there has a different operational "sweet-spot", and different operational limitations, it is impossible to come up with any standardized comparison that would not favour one aircraft over another.
Quoting speedbored (Reply 163):
The only meaningful comparisons are those made using real data. Anything else only shows that one aircraft is more efficient than another for some imagined route and seat layout.

I agree.

The basis of the calculations are guesses for routes not currently flown by the A380, then extrapolated for higher and lower distances. But the underlying premise is a guess. Might be good, might be way out.

Unless you believe EK, BA, SQ and LH share valuable micro business information with industry bloggers, the data isn't data, it's estimates, guesses and predictions, dressed up as data.

And because one poster keeps repeating it, in different shapes and forms, it doesn't make it any more accurate.

But at least he's consistent, but now to the point good debate with a wider ranging a.net audience is being stifled, because so maay find it hard to counter THE data.
 
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Stitch
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 12:56 am

Quoting speedbored (Reply 163):
The only meaningful comparisons are those made using real data. Anything else only shows that one aircraft is more efficient than another for some imagined route and seat layout.

Honestly, I am not against "standardized" data nor it's use to compare the A380, 747-8, 777-9 777-300ER and A350-1000 on a particular route like Leeham.net has done. It does make such a comparison easier for that particular route.

What I am against is taking that "standardized" data and saying that it "proves" the 777-300ER / A350-1000 / 777-9 is "better" than the A380 and the 747-8 across the board and furthermore, the A380-800 and 747-8 are therefore "bad" airplanes that need significant re-work to be made better.

And when you add the person who believes the planes need significant re-work then offers an opinion on what said re-work should be, I cannot help but think that the data is being massaged to support the underlying belief that the planes are "bad" and need to be made "better" in the way suggested.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 1:42 am

Stitch, thanks for the info on the thinking of A & B. Really amazing assumptions. By 2000 it was already clear that the Asia -NA market was going to fragment. Reply don't understand how industry insiders could have missed this.

Re standardized data while we might not have the details we know the result; twins rule
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 1:45 am

Quoting Stitch (Reply 169):
I cannot help but think that the data is being massaged to support the underlying belief that the planes are "bad" and need to be made "better" in the way suggested.

Ok, for arguments sake, let's agree that point, how do we then explain that Airbus itself is looking at an NEO and to some degree it is already a done deal, the only question is when, which data are they using to arrive at the same conclusion?
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 3:22 am

Quoting Stitch (Reply 169):
What I am against is taking that "standardized" data and saying that it "proves" the 777-300ER / A350-1000 / 777-9 is "better" than the A380 and the 747-8 across the board and furthermore, the A380-800 and 747-8 are therefore "bad" airplanes that need significant re-work to be made better.

I'll reply on the broader debate after the weekend, if I can wrap my head around how best to explain what to me is intuitive. I don't mean that with disrespect; there's obviously a gulf here that I want to think about how best to approach before shooting something off.

This narrower point about me massaging the data continues to be baffling. I am citing 2 articles that argue *for* the A380NEO business case, and the marketing figures of a firm trying to lease out a380's. If that's massaging data then I simply can't imagine what wouldn't be. Maybe only Airbus' marketing data, in which A380ceo has like 20% better CASM than 777-9?

And the CASM data are not at all what I am using to support my argument here. I am saying that, whatever a380's unit cost edge is, it's too small to make it attractive.
That's based on sales, not data.

If anybody in this debate is ignoring real world facts it's not me. I am looking at a plane that isn't selling and offering a theory for why; you all seem to argue either that it is selling well or only isn't selling because airlines don't know what they're doing. Or a combo thereof.

On the standardization argument:
Stitch you're ok with the 6000nm data apparently, where Amedeo/AI/Leeham see a ~10% CASM edge for the A380. What is your objection for using that data as a broad baseline? It's obvious that CASM will change at different stage lengths, but it isn't obvious that the rate of CASM change is significantly different for a380 vs. 777s or a350. To make your argument stick, you'd have to show that A380's relative position is markedly worse at 6000nm than at different ranges. I could see an argument that A380's relative picture would be better at shorter ranges, where fuel is less important and capital/crew/mx more. But then we're at stage length where cargo differential hurts the A380 far more because twins' bellies can fly full.

I'd appreciate your taking this point about the relative picture seriously. If you're going to attack comparative figures, you need to show some reason for believing that differential changes to CASM from a 6000nm baseline would be so significant that saying "~10%" is no longer valid. It isn't good enough to just say that each plane's numbers would be different, what matters is the relative rate at which the comparative absolute numbers change.

That's a mouthful and a brainful, hope you get my point. I am about 6 beers in and typing this on a bar so apologies if clarity was lacking.
 
2175301
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 3:35 am

Quoting par13del (Reply 171):
Ok, for arguments sake, let's agree that point, how do we then explain that Airbus itself is looking at an NEO and to some degree it is already a done deal, the only question is when, which data are they using to arrive at the same conclusion?

Airbus is looking at the NEO because their largest customer requested them too.

As far as the NEO being a done deal... That speculative at this point. Airbus initially indicated that they thought it would be; but, at the same time indicated that they needed a solid business case (which has been repeatedly stated). The fact that they have been having a hard time putting together that business case has been known since about late spring or early summer of this year.

If the statement that started this thread is any indication it appears that they cannot assemble a suitable business case for the NEO at this time.

Thus I do not see your optimism that the NEO is a done deal.

Airbus, or their suppliers, are already starting to buy materials and parts for planes to be produced in 4 years... with no hard commitments for all those planes (a hard commitment is an order they expect to fill, not just an order on the books) Airbus can do that for about a year, or so, without spending a lot of money. A year from now if there are not noticeable new orders it will become exponentially expensive to continue to order parts for planes with no hard orders.

If there is not an NEO announced in the next year, and there are not substantial orders I do not believe Airbus can afford to keep the production line open once most of the existing hard backlog is delivered (I think about 3 years from now). People talk of how a NEO in 2022-2025 would be the right timing... that is only true if the production line still exist then; and I don't believe it will without noticeable orders in the next year of so.

The A380 is a great plane for a limited amount of routes. In general my view is that it appears that Airbus missed their market projections by about 100% (there is only half the market than they projected). Is that enough market to justify continued production and/or the NEO. I have my doubts as Airbus has now had at least 9 solid months of trying to assemble a business case, without apparent success.

Have a great day,

[Edited 2015-09-26 20:39:43]
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 7:24 am

Quoting 2175301 (Reply 173):
Airbus is looking at the NEO because their largest customer requested them too.

I think it is fair to say, EK asked Airbus to improve the A380 because it is now an aircraft a couple of generations old. Even Airbus themselves have stated they will need to do something with the A380.

Quoting 2175301 (Reply 173):
If the statement that started this thread is any indication it appears that they cannot assemble a suitable business case for the NEO at this time.

...and this is the issue! Airbus have plenty of options for the A380. For the existing airframe they can use PIP's to upgrade the engines and increase the aircraft's carrying capacity by adding more seats. For a revised airframe they can add new engines, re-wing it, give it a short stretch and put it on diet.

Regardless of ALL of these options Airbus still can't make a business case for the A380 work. This has to speak volumes!

Quoting 2175301 (Reply 173):
Airbus, or their suppliers, are already starting to buy materials and parts for planes to be produced in 4 years... with no hard commitments for all those planes (a hard commitment is an order they expect to fill, not just an order on the books) Airbus can do that for about a year, or so, without spending a lot of money. A year from now if there are not noticeable new orders it will become exponentially expensive to continue to order parts for planes with no hard orders.

...and this is why Airbus will have to make a decision on the A380 soon!

My numbers have the A380 with 95 FIRM net orders (147 less QF, VS, Amedo, Air Austral, AF, Hong Kong Airlines & Transaero orders) with twelve of these orders in cabin outfitting and nine in final assembly. If we consider some of the structures are long lead time items (2 years), Airbus probably have around six months to make a decision. They either have to find new orders, build white tails or start winding down the A380 production facilities.

There is no magic potion that makes this reality go away!

My guess is Airbus should be able to re-prioritise some of their A380 production for further rate increases in A350 production. If this is the case a decrease in A380 production could be offset by an increase in A350 production.

Airbus are lucky enough that they can play cat and mouse with their different aeroplane programs.

Time will tell!

.....

To add more perspective to the debate we have the following numbers.

In total Airbus have received orders for 334 passenger A380's.

Out of these 334 orders 5.09% have cancelled their entire orders (17 aircraft) and 15.57% have placed orders on hold (52 aircraft).

51% of orders have now been delivered (170 aircraft) with 28.44% of the original order book now outstanding (95 aircraft).

In total, the A380 has/had 22 customers. Of these 22 customers 3 (13.55) have cancelled and 7 (33%) have placed orders on hold.

At this stage only 12 customers (54%) will take delivery of all of the A380's they originally placed orders for.

Emirates represents 42% of the total order book.

These are not the numbers you want to see for a $20 billion aeroplane program!

Travelhound

[Edited 2015-09-27 00:53:13]
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 8:56 am

Quoting Matt6461 (Reply 161):
...and I've made exactly this argument before, many times. But look at its structure:

-EK uses the A380 in ways that minimize frequency's RASM impact
-EK benefits greatly from A380's unit cost efficiency

...which is a fairly straightforward application of the ideas I'm putting forward here about capacity/efficiency tradeoff. The A380 works best when its capacity doesn't hurt yields due to frequency loss, as then its lower CASM/CAMM goes straight to the bottom line.

A lot of you are agreeing with me; you're just unwilling to admit it.

No, they use it when they can fill it. Simple as that. And as their route network allows not much more than 3 waves at DXB, they use when the 777W becomes to small for a mission.

https://www.airliners.net/aviation-fo...ral_aviation/print.main?id=5791555
http://www.intervistas.com/downloads...neth_Hub_Design_Best_Practices.pdf

US hubs do up to 10 waves, European 4-7 (some have operating limitations)
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 1:17 pm

Quoting Planeflyer (Reply 170):
By 2000 it was already clear that the Asia -NA market was going to fragment. Reply don't understand how industry insiders could have missed this.
http://en.wikipedia.org/wiki/Confirmation_bias , imho:

Quote:
Confirmation bias, also called myside bias, is the tendency to search for, interpret, favor, and recall information in a way that confirms one's beliefs or hypotheses while giving disproportionately less attention to information that contradicts it.
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 2:16 pm

Revelation, assumptions are always dangerous.

I have been flying to AP since the early 80's, 4-8 times per year. Up till the 90's almost all my flights were in and out of tokyo on a 747.Once the 777/330 arrived the Asian flights started to move to these models.This started turning 3 connection flights into two connection flights.

Once the ER model arrived Tokyo was bypassed.

For a short time both TG and SQ used the 340 to fly US Singapore and BKK direct so it wasnt like Airbus did not have direct info about the desires for p-P flights.

In summary it was clear by the mid 90"s that the demand for VLA's would lessen just by observing the proportion of 747's at Narita.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 2:51 pm

Quoting travelhound (Reply 174):
They either have to find new orders, build white tails or start winding down the A380 production facilities.

In fairness, Airbus has a near-term problem with the 380, not necessarily a long term one. Just guessing, but I imagine they need to produce nearly 300 CEO models before the business case for a NEO will work. They need to figure out how to economically slow down the production rates and rationalize the production network.

Case 1: produce 30/year for another 3 years, mothball the line for a 3-5 years until there is sufficient demand to restart production.
Case 2: ramp down to 15/year over next 12 months, spread production over 6 years, and renegotiate supply contracts at the lower rates.
Case 3: do a NEO for an EIS in 2021ish.

Case 3 starts to look a lot like 1 or 2 depending on their strategy; all it cal really achieve is incremental sales activity, but without knowing where oil will be in 5-10 years it is a high risk endeavor.

Comparing Case 1 and 2, 1 offers a lower cost per plane, but makes future sales difficult and has substantial risk to the industrial footprint of the 380. 2 would dramatically increase the cost per plane, but improves the total sales opportunities and might give a chance to better optimize production.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 2:53 pm

Quoting Planeflyer (Reply 177):
In summary it was clear by the mid 90"s that the demand for VLA's would lessen just by observing the proportion of 747's at Narita.

This is a good point. I had the same experience going thru Narita many times in the 90s maybe 2 times per year. As US-Asia traffic numbers (presumably) steadily climbed since 1990, the proportion of >2 engine jets linking the US and Asia has fallen from approx. 99-100% to approx. 10%. Meanwhile, the efficiency of fuel burn (and pilots) per seat has improved. When you count the loss of the flight engineer. In terms of fuel, the efficiency of A330s and 777s versus 747 Classics and DC-10s is astonishing. This all does not point to a market for the 748 or A380.

It is non-obvious why an A380 might be a bit ceremonial rather than practical on a route like ICN-LAX. A380 boosters once claimed that all such routes would be inevitably pushed to A380 for economy reasons. In fact, market competition did not allow the revenue enrichment per trip necessary to support the A380. The market could be supplied by A380s, but it would require your and your competitor's premium revenue to be combined onto one flight. Competitors were unable to conspire to do that, instead sabotaging each other's best routes. This pushed most Asia flights to the cheapest trip cost available (basically the 777).

[Edited 2015-09-27 08:01:33]
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 3:40 pm

This point has likely been covered already, and many of us have made it in the past. EK is both the 380s salvation as well as its its biggest problem. With the 777 they have perfectly executed a long range strategic plan that has damaged competition across Europe and Asia so effectively that these airlines cannot justify ordering the 380 in the quantities AB first envisioned. It's the ultimate catch-22. The other terrible and beautiful irony, terrible for AB but beautiful for consumers, is that EK is using the 380 to open up the kind of secondary city O&D markets (all via the new DBX hub) that I don't think anyone quite foresaw happening, at least not with the lightning speed that it did.

In many respects the 380 is undoubtedly the greatest plane ever made, but really only for the dream come true that is EK, and so far that's not enough for Airbus. The better they make this plane the more swiftly EK will finish off the injured likes of LH, AF, SQ, etc. What to do then? Tough question to answer.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 4:17 pm

Quoting par13del (Reply 171):
Ok, for arguments sake, let's agree that point, how do we then explain that Airbus itself is looking at an NEO and to some degree it is already a done deal, the only question is when, which data are they using to arrive at the same conclusion?

I believe it's being driven on the A380 for the same reason I believe it was driven on the A320 and the A330 - by the engine manufacturers.

The A320 family certainly did not need a new engine to remain competitive, but Pratt really wanted back in the commercial aviation game. And while they signed on all the next-generation frames from Bombardier, Mitsubishi, Sukhoi and Irkut, all of those together pale in comparison to the output Airbus or Boeing have, so they needed at least one of those OEMs on board to really make the engine a financial success.

Rolls has a new generation of engine technology (Advance) coming of age without an application. They tried to get on the 777X (as they tried 15 years ago with the Trent 8000 on the previous 777X), but lost both times to GE. And while RR has a commanding lead in customers on the A380, all those customers together don't buy as many engines as Emirates has from Engine Alliance. So I see a bit of a strategic move by Rolls to knock Engine Alliance out of the market by winning Emirates over. Which they subsequently have done. (As an aside, I also believe they pushed for a new engine option on the A330 to knock GE and PW off of that frame, as well.)

As I do not believe the A380 needs a new engine to maintain it's hold on the upper end of the market, I feel it is Rolls-Royce "driving the bus" on this one just as they did on the A330.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 4:18 pm

Quoting JHwk (Reply 178):
They need to figure out how to economically slow down the production rates and rationalize the production network.

  

Quoting JHwk (Reply 178):
Case 1: produce 30/year for another 3 years, mothball the line for a 3-5 years until there is sufficient demand to restart production.

Doesn't work for many reasons: customers can't accept early deliveries, suppliers can't just mothball plants with no guarantee of future work, etc.

Quoting JHwk (Reply 178):
Case 2: ramp down to 15/year over next 12 months, spread production over 6 years, and renegotiate supply contracts at the lower rates.

Best option.

Quoting JHwk (Reply 178):
Case 3: do a NEO for an EIS in 2021ish.

Still no clue if the business case will close for such a project.

The world won't end if the A380 has to "tread water" for a few years, and it won't end if there never is an A380NEO or A380NWO. The world didn't end when Concorde got parked either.

Quoting wingman (Reply 180):
With the 777 they have perfectly executed a long range strategic plan that has damaged competition across Europe and Asia so effectively that these airlines cannot justify ordering the 380 in the quantities AB first envisioned.

And EK is far from done. They are accepting delivery on their 67th out of 140 on order and of course have the worlds largest 777 fleet and the largest 777X order too. EK will drive the market to saturation and beyond, it seems to me.

Quoting wingman (Reply 180):
The better they make this plane the more swiftly EK will finish off the injured likes of LH, AF, SQ, etc. What to do then?

The fact is that Airbus doesn't need to make a NEO since EK has already said they are going to take all their frames on order regardless of the status of the NEO.
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 5:20 pm

Quoting Matt6461 (Reply 126):
If you can break two trips into three, or one into two, it isn't obvious that the VLA is most profitable unless:

-The VLA is more efficient than the smaller planes, and
-The VLA saves more money than is lost due to lower frequency

Have you taken into account that an A380 commands a premium fare over other types. How long this will go on for is anyones guess but its another reason not to split VLA flights into 2 or three flightson smaller planes. There is more than one way to increase revenue than adding frequencies.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 5:56 pm

Quoting Stitch (Reply 181):
And while RR has a commanding lead in customers on the A380, all those customers together don't buy as many engines as Emirates has from Engine Alliance. So I see a bit of a strategic move by Rolls to knock Engine Alliance out of the market by winning Emirates over. Which they subsequently have done. (As an aside, I also believe they pushed for a new engine option on the A330 to knock GE and PW off of that frame, as well.)

That's all a bit conspiratorial and I don't think fits the facts. With the last A380 EK order going to RR, RR has a lead in both customers and engine number orders.

Re the A320, Airbus had a clear chance to gain market share over Boeing with a big fan engine - and this has been the case.

Re the A330 - the line would've closed without a new engine. It was in Airbus interests to keep it going. It was then a straight fight between the only companies who had an available engine, and GE seemed less keen on the business case than RR.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 7:27 pm

Quoting JHwk (Reply 178):
Case 2: ramp down to 15/year over next 12 months, spread production over 6 years, and renegotiate supply contracts at the lower rates.

What an interesting concept. You want the suppliers to maintain their production line, produce less parts, and lower cost. I've purchased $millions in parts and services via contracts and that is just not how it works. You get lower cost/part or service by ordering more not less. The supplier has to raise prices in your scenario in order to cover the cost of maintaining the production line with fewer parts.

So, your case 2 is really: Ramp down to 15/year, spread production over 6 years, and increase the cost of the parts (and the Airbus cost of assembly because Airbus must now spread their assembly facility cost over fewer frames), while not being able to recover the cost increases from the customers.

Brilliant misunderstanding of supply and demand markets, if I may say so  

I'd like to see how you think that the business case can close on this option - especially as I do not yet believe that Airbus has yet achieved production cost breakeven on the A380 yet (their last claim that I recall said that would occur by end of 2015 on one of the later frames for the year).

Have a great day,
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 8:07 pm

Quoting kurtverbose (Reply 184):
With the last A380 EK order going to RR, RR has a lead in both customers and engine number orders.

True but did this happen just because EK changed their minds and now believe that the current RR engine is better than the EA one, or was the switch done to persuade RR to commit to do an engine for a neo?

Quoting 2175301 (Reply 185):
Brilliant misunderstanding of supply and demand markets, if I may say so

Only if you ignore the fact that most of the suppliers used on the A380 also supply parts to Airbus for other programs.

Given the current very significant ramp-ups on both the A320 and A350 lines, and the increased A330 line life, I suspect that Airbus currently has a lot of leverage to keep a lid on most of their A380 parts supplier costs.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 8:43 pm

Quoting 2175301 (Reply 185):
I'd like to see how you think that the business case can close on this option - especially as I do not yet believe that Airbus has yet achieved production cost breakeven on the A380 yet

If Airbus is going to produce an A380NEXT ~2021-2, it may be less expensive to produce ~10-15 frames/year at a loss for a few years, than to shut down and restart. I'm no expert on European labor law and on Airbus' union contracts, but I've heard that they would incur a lot of cost for laying off the production workers and then trying to restart later.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 8:53 pm

Quoting kurtverbose (Reply 184):
That's all a bit conspiratorial and I don't think fits the facts. With the last A380 EK order going to RR, RR has a lead in both customers and engine number orders.

And why did EK switch to RR for their next 50 when they have so many EA engines already? Serious speculation is because RR was willing to do a new engine option for the A380 where EA was not. And I don't think the sole reason for that was because RR has access to RLI and EA does not. EK is also a significant GE customer, yet they have agreed to order RR if they choose the 787 in their next RFP.

Quoting kurtverbose (Reply 184):
Re the A320, Airbus had a clear chance to gain market share over Boeing with a big fan engine - and this has been the case.

Yes, but they didn't have to do so. They were already splitting the market and now that Boeing has launched the 737 MAX, Boeing is winning significant orders, as well, and the market is closing back on parity again.



Quoting kurtverbose (Reply 184):
Re the A330 - the line would've closed without a new engine. It was in Airbus interests to keep it going. It was then a straight fight between the only companies who had an available engine, and GE seemed less keen on the business case than RR.

Well RR was the clear winner on the A330 already and the best market for the frame is, IMO, the A330-300 which favors the Trent 700 already. So they arguably should have stood pat and just taken what A330 orders they could get rather than invest in a new engine for it.
 
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Matt6461
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 10:07 pm

Quoting travelhound (Reply 174):
My numbers have the A380 with 95 FIRM net orders (147 less QF, VS, Amedo, Air Austral, AF, Hong Kong Airlines & Transaero orders) with twelve of these orders in cabin outfitting and nine in final assembly. If we consider some of the structures are long lead time items (2 years), Airbus probably have around six months to make a decision. They either have to find new orders, build white tails or start winding down the A380 production facilities.

Interesting points. I suppose we'll probably see a rate reduction announcement within the next 6 months. It will probably depend on whether Amedeo can find customers for its 20 frames, which seems increasingly unlikely. If they can't they'll have to either push the 2017 production slots onto EK again, or reduce rates from 2017.

Quoting seahawk (Reply 175):
No, they use it when they can fill it. Simple as that.
Quoting Flighty (Reply 179):
A380 boosters once claimed that all such routes would be inevitably pushed to A380 for economy reasons. In fact, market competition did not allow the revenue enrichment per trip necessary to support the A380.

It's not as simple as airlines use the A380 when they can fill. They use it when they expect to fill it *profitably.*

Given route fragmentation, broadly-used VLA's have to fly with lower-yielding pax mixes focused on transfer-willing time-insensitive pax. Plenty of airlines could fill A380's with these types of pax; few can do it profitably. EK can by combining the A380's efficiency advantage with EK-specific cost advantages in labor, airport fees, and financing. It needs each of these advantages to work, as its profit margin is a normal 3-6%.

Efficiency matters. An A380 with 20% lower trip cost would open up a lot more viable VLA routes, especially for thickly-hubbed carriers who could carry premium pax on direct flights between rich megacities, and fill the back of the bus with connecting pax.

Quoting Stitch (Reply 181):
So I see a bit of a strategic move by Rolls to knock Engine Alliance out of the market by winning Emirates over.

Not sure how ultimately strategic this is going to be. RR's stock price declined when the EK deal was announced, as insiders perceived that RR had given away too much to win the deal.

Quoting Stitch (Reply 166):
Quoting Matt6461 (Reply 161):
the 744 is a 1989 derivative of a 1970 plane. If Airbus really envisioned competing against only the 744 and derivatives 15 years after program launch, well...
Well, what? What, exactly, should they have envisioned happening by 2025?

Airbus should have known (probably did) the approximate contours of 2015 airliner efficiency. It's really not that difficult to look a decade out and see the performance trends, even if foreseeing the exact plane types is impossible.

They should have thought about the implications of unit cost parity with a 350-seat twin only ten years into service life. To expect the competition - internal or external - to be no better than a 5th-derivative 1970 design is just unconscionable.

---------------------------------------------------------------------

I've been thinking about your sales figures points, Stitch. You do have a point.

If the A380ceo ends up delivering ~270 frames, that's the "seats-equivalent" of ~460 77W/77L's at their current ratio. Boeing has sold 845 77W/L's, so the A380 has ~55% of the 777 Classic's market success. It's far from what Airbus wanted but commercially not bad.

But now it's definitely not selling, and it's facing tougher competition than in the period when it did sell some. The 777 will improve by ~20% fuel burn, ~10% CASM/CAMM. Airbus needs to *at least* match that improvement, and probably significantly exceed it. We don't have to say the A380 is a bad airliner commercially to argue that, financially, a rerun of the A380ceo vs. 77W isn't a wise program.

And even if the NEO business case closes somehow, I'd still say it's a missed opportunity to create a truly outstanding VLA that could wipe the floor with the 777x. I don't get why so few a380 fans dream of a modernized, optimized version of the plane.

Quoting ncfc99 (Reply 183):
Have you taken into account that an A380 commands a premium fare over other types.

As I've said before, I think this is only for nominal RASM. If you look at RAMM - revenue per floor area - I doubt the A380 actually commands a premium. Carriers fit out their A380's more opulently than other types. Compare the nominal RASM of EK's 2-class A380 with the RASM of CX's 4-class 77W, for example, and the 77W will have a premium over the A380.

But that would be a conceptually muddled analysis. We should be looking at airframe-specific effects, not at airline-specific effects of configuration decisions.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 10:38 pm

Quoting speedbored (Reply 186):

Quoting 2175301 (Reply 185):Brilliant misunderstanding of supply and demand markets, if I may say so [End quote]


Only if you ignore the fact that most of the suppliers used on the A380 also supply parts to Airbus for other programs.

Given the current very significant ramp-ups on both the A320 and A350 lines, and the increased A330 line life, I suspect that Airbus currently has a lot of leverage to keep a lid on most of their A380 parts supplier costs.

I do not believe Airbus has nearly the leverage you think they have - no matter what other parts a company is producing for Airbus. No company is going to intentionally decide to produce parts at a loss. Airbus can ask for a quote, and maybe can argue them down a bit. But, bottom line is that the part supplier company will maintain an adequate estimated profit margin, or they will decline to produce the part. Happens all the time in the real business world. Companies are in business to make a profit - on every order (and their are enough unintentional failures to be able to make such a profit to routinely hammer home the point of the necessity of an appropriate profit margin).

Have a great day,
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Sun Sep 27, 2015 11:30 pm

Quoting Matt6461 (Reply 189):
broadly-used VLA's have to fly with lower-yielding pax mixes focused on transfer-willing time-insensitive pax.

Makes you wonder then why a number of airlines are on the record as saying that they are achieving higher yields with their A380s than other types. BA, for example, say that they have very significantly increased the ratio of premium seats on LAX-LHR while also reducing the number of frequencies. I guess you think they are lying.

Quoting Matt6461 (Reply 189):
EK-specific cost advantages in labor, airport fees, and financing

Let's not let facts get in the way of a good bash. EK's labour costs are actually quite a bit higher than many other international airlines, due to their need to import so much foreign labour. Airport fees at DXB (where EK pay the same as other airlines) are broadly in-line with many similar large international airports. And EK obtain all of their finance on the open market so they pay the same rates that other well run airlines can achieve.

Quoting Matt6461 (Reply 189):
Not sure how ultimately strategic this is going to be. RR's stock price declined when the EK deal was announced, as insiders perceived that RR had given away too much to win the deal.

Yes, it declined by all of 0.7% on the day of the announcement. That's far less of a decline than is often seen from day to day, even in the absence of any announcements. If the markets genuinely thought the deal was bad for RR, then the share price would not have recovered that "blip" and added a further 6% over within a week, as it did.

Quoting Matt6461 (Reply 189):
And even if the NEO business case closes somehow, I'd still say it's a missed opportunity to create a truly outstanding VLA that could wipe the floor with the 777x.

And lose Airbus many billions in the process.

Quoting Matt6461 (Reply 189):
Compare the nominal RASM of EK's 2-class A380 with the RASM of CX's 4-class 77W, for example, and the 77W will have a premium over the A380.

Hardly an apples to apples comparison. And rather hypocritical given that you previously stated:

Quoting Matt6461 (Reply 161):
But to the extent that the data is for real-world airlines using different seating configurations, that's exactly the kind of data we want to avoid. Seating configuration changes everything.
Quoting 2175301 (Reply 190):
No company is going to intentionally decide to produce parts at a loss.

Yet they regularly do in all manner of industries all over the world. Businesses regularly take hits in one area if it means they can increase profits by higher amounts elsewhere.

Quoting 2175301 (Reply 190):
Companies are in business to make a profit - on every order

No, they are not, at least not if they are public companies. They are in business to maximise shareholder value - that's their legal obligation. If they need to make zero profit, or even take a loss, on one order, in order to retain / obtain other more profitable orders, then that is what they must do. Businesses don't always negotiate every single order in isolation. Call it blackmail if you like but it is going on in businesses all over the world, every day.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Mon Sep 28, 2015 12:19 am

Quoting speedbored (Reply 191):

No, they are not, at least not if they are public companies. They are in business to maximise shareholder value - that's their legal obligation. If they need to make zero profit, or even take a loss, on one order, in order to retain / obtain other more profitable orders, then that is what they must do. Businesses don't always negotiate every single order in isolation. Call it blackmail if you like but it is going on in businesses all over the world, every day.

That model - where you are allowed to earn extra profit on another order to make up losses on an item does not work in situations where the other orders are competitively bid. If orders are competitively bid there is no incentive to take that loss, as your competitor will likely win that next order where you try to add back in the money necessary to keep the company doing well from accepting an order at a loss (Companies have gone bankrupt from that strategy). I note that these are not "market development" orders where companies can rationally take a loss and write if off as marketing expense. The A380 market is relatively stable.

In almost all cases there are multiple companies bidding on the other aircraft parts for the other models.

I also know that Airbus has squeezed all the part manufactures to get the cost of A380 parts as low as possible in order to try to get to production cost breakeven on assembling a A380.

I maintain that if Airbus cuts production rate significantly that both cost of parts and cost of Airbus assembly per A380 will go up. Airbus is not going to convince all their suppliers that they have to take a loss on A380 parts to retain the A380 part business. Too much competition, to many suppliers.

Have a great day,
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Mon Sep 28, 2015 12:26 am

In case anyone wants to read about EK's advantages in cost structure, there's a good CAPA article:

Quote:
The biggest source of unit cost advantage for Emirates is in labour costs, which account for almost US6 cents out of the total US16 cents cost per ATK advantage enjoyed by Emirates over the average cost per ATK of IAG/Virgin. Emirates’ labour cost per ATK is half that of the IAG/Virgin average.
Quote:
Most of this advantage comes from having a lower labour cost per employee. IAG’s average labour cost per employee, almost USD94,000, is more than 80% higher than the figure of USD51,500 for Emirates, while Virgin Atlantic pays 9% more than Emirates. The average of the IAG and Virgin figures is USD75,000, which is 45% higher than the Emirates figure. Of course, Emirates benefits enormously in this area from the absence of income tax in Dubai. The IAG/Virgin average would be well below USD60,000 after UK tax and social security deductions.

In addition to the tax benefits, Emirates operates in a union-free environment and does not have significant legacy pension costs.
http://centreforaviation.com/analysi...-new-model-not-unpicking-it-147262
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Mon Sep 28, 2015 12:48 am

Quoting 2175301 (Reply 193):
That model - where you are allowed to earn extra profit on another order to make up losses on an item does not work in situations where the other orders are competitively bid.

True but neither Airbus nor Boeing just put all of their part supply orders out to simple competitive tender. There's a lot of negotiation and due diligence that goes on as part of the tender process.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Mon Sep 28, 2015 1:07 am

Quoting Matt6461 (Reply 194):
In case anyone wants to read about EK's advantages in cost structure, there's a good CAPA article:

And if you compared the costs of just about any other airline with the costs of IAG or Virgin, based at one of the most expensive airports in the world, you'd find that very many of them have an advantage too.

I'm sure that the picture in that article would be very different if they compared EK with an average of major airlines. But it really should not be a surprise to anyone that EK's costs are lower per seat-mile than other airlines with lower fleet utilisation and/or significantly smaller fleets, and/or significantly smaller average aircraft size.

Nice to see that the article you linked debunks your claim about EK enjoying advantageous financing, though.
 
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RE: Bregier: No A380NEO Decision Before End Of The Year

Mon Sep 28, 2015 2:17 am

As somebody above mentioned, the thing about EK that is arguably the most impressive is their ability to serve secondary cities with the 380. Very impressive. These guys run a tight ship.

LH, better figure out how to serve all the business travelers in the many secondary cities in Germany.
 
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seahawk
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Joined: Fri May 27, 2005 1:29 am

RE: Bregier: No A380NEO Decision Before End Of The Year

Mon Sep 28, 2015 5:04 am

Quoting Planeflyer (Reply 196):
As somebody above mentioned, the thing about EK that is arguably the most impressive is their ability to serve secondary cities with the 380. Very impressive. These guys run a tight ship.

LH, better figure out how to serve all the business travelers in the many secondary cities in Germany.

LH could not do it, simply because of the different geographical positions of the hubs. There are only so many routes from Germany that have enough O-D traffic to be operational possible, while EK connects any part of the world (without the Americas) with a one stop connection from Europe.

Look at where DXB is situated, they can connect traffic going between 4 continents with one stop connections. A European hub could not do this, because you would need to fly in the "wrong" direction for many connections which would make for longer trip durations.

Quoting Matt6461 (Reply 189):
It's not as simple as airlines use the A380 when they can fill. They use it when they expect to fill it *profitably.*

I would believe no sane airline buys a plane to burn money by operating it. For the rest, take a look at the other part of my posting. The geographic position of your hub plays a big part on how low or high yielding your connecting routes are, as this has a big impact on the travel duration.
 
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Matt6461
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RE: Bregier: No A380NEO Decision Before End Of The Year

Mon Sep 28, 2015 7:56 am

Quoting seahawk (Reply 197):
The geographic position of your hub plays a big part on how low or high yielding your connecting routes are, as this has a big impact on the travel duration.

I did look at the links. Thanks for those.

I'm not sure what particular point you're making though.
 
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seahawk
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RE: Bregier: No A380NEO Decision Before End Of The Year

Mon Sep 28, 2015 8:11 am

Quoting Matt6461 (Reply 198):
I did look at the links. Thanks for those.

I'm not sure what particular point you're making though.

The big point is that from DXB you can connect many destinations with one stop without adding a lot to the time spent travelling. And as the time spent for travel is the biggest factor on how much people are willing to pay for a flight, EK can make more one stoppers work than airlines with hubs in less geographically well placed locations.

They are not depending on low yiedling passengers to will their VLA, they can fill their VLA because their connections are competitive.

Yield (price) and travel time are two factors closely linked. A VLA does not work if the lay overs are too long for connecting passengers or if you have much longer flight times because your hub is not well placed. DXB is perfectly placed.

No US airline could make the EK model work, because North America does not allow for the EK system to work. No EU airline can make it work either, because their hubs are not so well placed. No Australian airline can do it, no Japanese, etc.

And there lies the big problem of the A380. All those airlines can only compete with the ME3 when they offer faster connections. This means more direct connections and more frequency, which means smaller planes.

The success of EK with the A380 is killing the A380.

[Edited 2015-09-28 01:13:10]
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