Lemme pose a few questions:
1. Do you believe there is any market for a plane larger than a 777-9?
2. Do you believe the A380 accurately reflects "The Market" for VLA's?
3. What do you believe determines the size of the market for a plane of a certain size?
Perhaps answers to these questions will clarify what we mean by:
4. Was the A380 a mistake?
1. Yes. It could be quite large, depending on the plane (see #3)
2. No. The A380 is very inefficient for a VLA
. I recognize that the A380 is the current CASM king, it's just that it beats the 77W by an insufficient margin. It's only has parity on fuel per seat, has to gain the rest of the difference in capital, crew, fees, and maintenance.
;DR: Capacity/efficiency tradeoff. Bigger must be more efficient; much bigger much more efficient]
At a fundamental level, it's a capacity/efficiency tradeoff that mirrors the RASM/CASM curve. To increase capacity is to decrease RASM. This is tautologically true from the belief that modern yield management software price-discriminates efficiently such that higher-paying pax board while lower-paying pax are outbid. In broad terms, I believe this is correct. Because airlines operate with slim profit margins, there is very little room for RASM decrease at equal cost: marginal passengers will be paying less than their marginal cost. Profit maximization usually* occurs at greater capacity only when the bigger plane is more efficient. Thus we see that bigger planes facing smaller, more efficient, competition always lose. But smaller, less efficient, planes can succeed because of the positive RASM effect.
To decrease frequency is also to decrease RASM. At the most abstract level*, suppose it's possible always to keep capacity on a route constant while varying frequency. This is almost precisely true of 3x744 vs. 2xA380, for example. In this stylized treatment, decreasing frequency is only profitable if cost decreases more than does RASM.
So I don't believe there is a strict "THE Market" for a plane of a given size: it all depends on the economics of the particular product. In the '90's the 300-seat 77E dominated, in the '00's the 350-seat 77W dominated, now we're back to 300-seat 789's and A359's. Traffic didn't grow, then shrink. The products offered just changed in attractiveness.
*Before the hordes of pedantry pounce - yes, I recognize that sometimes an airline needs X% more (profitable) capacity, and that in these circumstances a bigger, less efficient plane can be profit-maximizing. The 748, for example, is less efficient than the smaller 77W. LH
, inter alia, judged it best for certain routes. Its few orders are the exceptions that prove the rule.
4. The A380 was a mistake. Not because it's a VLA or 4-holer, but because it's a too-large, too-inefficient VLA. The 650-seat optimization strategy was insanely wrong. The 80m box hurt efficiency - especially given the already too-heavy frame that carried the -900's wing area.
If Airbus had designed a ~450-seat double decker (think EcoLiner but probably still a quad), it would have had decent success so far IMO. A 2-decker provides a step-change in structural and aerodynamic efficiency at ~450 seats; Airbus just overshot on capacity and underdelivered on execution (due to 650-seat strategy and 80m box).
...which is not to say that an alternate reality Ecoliner380 would have made program profit so far... But with an update (new engines and/or wing) it would have been poised for great success in the 2020's.
[Edited 2016-02-21 23:11:03]