The A380 is a great aircraft and milestone achievement in aviation. It has not worked out as well as expected, though, with production coming to an end and several airlines retiring fleets early. Emirates, however, is different. It operates almost half of all A380s and has made it work where other airlines have struggled.
Going large with the A380
Only 14 airlines have ever ordered the A380. Emirates tops the list by a long way, with a total of 123 aircraft. To put this into context, second-placed Singapore Airlines ordered 24 aircraft, and third-placed Lufthansa only 14.
Bringing in the A380 marked a new strategy for Emirates; it has operated just two large widebody aircraft types since 2016. This was not always the case – it has operated several aircraft types over the years (including the A300, A310, A330, A340, other 777 types, Boeing 727s, and one 737). And it will change again in the future with the Airbus A350, Boeing 777X, and 787.
Working for Emirates, but not for others
The overall story of the A380 is a difficult one. Whilst it is generally agreed that it has not worked out as well as planned for Airbus and for many airlines, it has worked well for Emirates.
We have discussed the reasons for its downfall several times on Simple Flying. Some of this has affected all operators – most notably the rise in the ability of twin engines since the A380 was conceived. But many other factors that have been a problem for other airlines have not been for Emirates, including:
- The A380 was built for hub and spoke operations – as Emirates focusses on
- It suits large airports and is limited in operation at others
- Operating a large fleet makes a huge economic difference
Matching Emirates’ hub strategy
The A380 was designed with hub and spoke operations in mind. Boeing had done well with the 747, with airlines introducing it on key routes and lowering cost per seat. Airbus conceived the A380 during the 1980s to take on Boeing in the high-capacity market but boldly decided to take it further.
Airbus was not alone in believing in the growth of the hub model and the need for larger aircraft. McDonnell Douglas proposed the two-deck MD-12, Lockheed Martin had plans for a Large Subsonic Transport aircraft, and even Boeing tried to launch a larger variant of the 747. None of these went on to construction, however.
Of course, we know now that this is not how the aviation market has moved. There has been a shift from many airlines to point-to-point operations, favoring lower capacity aircraft.
US airlines are a good example of this, with none ordering the A380. Growing Chinese airlines as well have followed this trend. Only China Southern has found a role for the A380 (operating it on busy routes to Los Angeles and domestically from Beijing to Guangzhou).
Emirates is an exception to this. It has grown rapidly as a hub-based carrier, offering significant east-west routes. With this, the A380 has thrived.
The A380 works at busy airports
The A380 was also envisioned for busy airports. It would help airlines get around capacity issues at slot-constrained airports and carry more passengers with the same number of flights.
Again, this has matched Emirates’s business model well. It operates into many busy airports, scheduling A380 services on these routes – and able to fill them due to the hub model feeding in passengers from multiple other locations. London Heathrow, for example, was served by eight A380 flights a day at peak.
In contrast, its size has been a limitation in use for many airlines. Whilst it is perfect for busy routes and busy airports, airlines have had problems moving it to other services. Its size places it in the highest category, severely restricting the airports where it can operate.
Operating a large fleet
Many airlines choose to operate simplified fleets. This saves on operational and maintenance costs and helps aircraft and crew scheduling. Plus, larger orders could enable better purchase prices. We see many low-cost airlines doing this – Southwest Airlines with the Boeing 737 and easyJet with the A320, for example.
It is less common with full-service airlines – and especially with widebodies. But Emirates has done this with the A380. It makes up around half its fleet, giving advantages with costs and operations that no other operator of the type has.
CEO Tim Clark discussed this in comparison with Air France, in an interview with Airline Ratings:
“The A380 was a misfit for Air France. They never scaled; they only have ten aircraft. Yes, we faced the same teething problems, but we dealt with them because we were scaled enough to deal with it. If you’ve got a sub fleet of 10 it’s a bloody nightmare, and the costs go through the roof… But if you got a hundred of them, it’s a bit different. Your unit costs in operating with that number are a lot lower than having just ten.”
Space for luxury and facilities
And as a final success factor, consider how the A380 fits with Emirate’s aim to offer a top-end, luxurious product. The A380 allows a great premium offering. Many airlines, of course, have taken advantage of this. For Emirates, the space allows a bar and lounge area and shower facilities for first class. The 777 (and the new 777X) still allow good business and first class seating (the 777 features the latest first class suite), but there is less space for extras.
A larger aircraft also allows more premium seating to be installed. This again has remained a focus for Emirates. We took a detailed look at the decline of first class (well before the pandemic) and noted how Emirates was the exception to this. In 2018, it offered around 310,000 first class seats. In 2019 this had grown to more than 600,000.
The decline of the A380
The story would not be complete, though, without a quick look at the future of the A380. While Emirates has made it work so far, and it won’t rush to remove it from service, its long-term plans are different. With growing retirements too, it won’t be long before it becomes a rare sight in some skies.
Emirates fleet plans
Emirates has no immediate plans to retire the A380. With such a large commitment to the type, it couldn’t do this in any case. But in fact, the A380 remains a good fit for Emirates. Reduced passenger numbers have, of course, led to a decline in use. In March 2021, for example, 102 of its fleet of 117 are parked, compared to just one 777 aircraft (according to Airfleets.net data).
But as demand picks up, its hub model will enable it to feed passengers onto high-capacity routes – just likely with fewer flights per day. As of March 2021, it already plans to operate it to 18 cities by summer. And by the end of the year, the airline aims to return the whole fleet to service.
Looking further forward, Emirates will move to a more diverse fleet. It ordered 150 Boeing 777X aircraft in 2013 but later changed this to a mixed 777X and 787 order. It will also add the A350 and possibly the A330neo.
The A380 won’t be going anywhere quickly, though – and new aircraft are still to be delivered. Although it has started to retire older aircraft, the fleet’s average age is just 6.6 years. CEO Tim Clark may have commented that the A380 is now over, but it won’t leave its fleet anytime soon. It will take time for the 777X to replace it slowly.
End of production and retirement
Retirements were planned before the pandemic, but the slowdown has expedited this. Air France announced early in the crisis that it would retire its A380 fleet. Simple Flying reported in September that Lufthansa is unlikely to return its A380 fleet to service. And doubt has been expressed about Etihad’s A380s return to service.
It remains a difficult decision for airlines. There is a very limited second-hand market. Only Hi Fly has taken on one, and it recently announced it will be retired. Some airlines have used it for cargo during the pandemic, but it is not well designed for this (and the planned freighter version was dropped partly for this reason). High-capacity infrequent routes (such as pilgrimage routes) remain an option, albeit a limited one. If re-fitted as an all-economy, it could carry 853 passengers.
How many will return to service with other airlines remains to be seen. Those that do will suffer the same challenges as they did before the pandemic. Emirates most likely will continue to find a way to make it work.
Emirates has clearly made the A380 work where other airlines have struggled. And going forward, it will be increasingly alone in operating it. Feel free to discuss more about this critical part of Emirates’ success in the comments.
Wow: Virgin Australia Sells 71,000 Domestic Tickets In 24 Hours
Virgin Australia experienced one of its busiest days of domestic ticket sales in 20 years just after the Australian government’s A$1.2 billion (US$920 million) stimulus package went into effect. The enthusiasm was sparked by half-price flights offered on subsidized routes, which included flights to the Gold Coast from the cities of Melbourne and Sydney, among others.
71,000 tickets sold in 24 hours
Within the span of a full day, Virgin Australia sold enough tickets to completely fill over 400 of its Boeing 737-800s (which have 176 seats each). The hottest tickets were for subsidized routes, for which the airline halved its standard prices.
Swept up in the momentum and also experiencing large jumps in ticket purchases were other ‘full-price’ routes, which included Melbourne-Perth, Perth-Sydney, and Melbourne-Sydney.
“The overwhelming response from Australians demonstrates loud and clear that they are ready to get back in the air and travel and are a positive sign for the aviation and tourism sectors as they look to recover from the impacts of COVID-19,” -Virgin Australia statement via 7News.com.au
While Virgin Australia had the record-breaking day, The Islander reports that the country’s other airlines saw spikes in web searches during the same period. Searches for “Qantas”, “Jetstar,” and “Virgin” sharply increased from around midnight Thursday and spiking again at 06:00 Australian Eastern Daylight Time.
The Australian government’s stimulus package
Announced in early March, the government support package includes A$200 million (US$152.6 million) for Qantas and Virgin Australia. Reuters notes that this funding will support the airlines from April to October, with the intent to help maintain mothballed aircraft as well as bring planes out of storage and support wages for international flying staff.
Another major part of the scheme, and the main reason for this story, is the government subsidization of 13 routes. Subsidization has meant that eligible airlines can offer half-price tickets. The impetus for the deal was to support airlines while encouraging domestic tourism at a time when international tourism has been hard hit. According to The Guardian, the routes are as follows:
- Sydney: flights to the Gold Coast, Cairns, Proserpine, Hamilton Island, Maroochydore, Uluru, Alice Springs, Launceston, Broome, and Avalon.
- Melbourne: flights to the Gold Coast, Cairns, Maroochydore, Alice Springs, Uluru, Launceston, Devonport, Burnie, Broome, and Merimbula.
- Adelaide: flights to the Gold Coast, Maroochydore, Alice Springs, and Kangaroo Island.
- Brisbane: flights to Alice Springs, Uluru, and Launceston.
- Darwin: flights to Cairns and Broome.
- Perth: flights to Alice Springs.
- Avalon: flights to the Gold Coast
The half-price fares were made available on April 1st and will continue to be offered until the end of July.
Hope for the best, plan for the worst
One key concern when it comes to domestic flight bookings is the ever-present risk of interstate border closures in the event of an outbreak during this global health crisis. While it’s hard to resist a good deal, it’s also wise to consider the possibility of such unwelcomed restrictions. Having flight bookings with flexible re-booking and cancelation policies will help greatly if such restrictions arise.
Were you a lucky Australian resident who managed to secure a half-priced flight? Or did you try and miss out? Share your experience with us in the comments.
US Congressmen Call On DOT To Deny Norse Atlantic Airways Permits
The Chair of the US House Committee on Transportation and Infrastructure, Peter DeFazio, and Chair of the Subcommittee on Aviation, Rick Larsen, have called on the US Department of Transportation (DOT) to deny permits for Norse Atlantic Airways to fly to the United States, citing concerns about the airline.
Members of Congress on Norse Atlantic Airways
Rep. DeFazio, a Democrat from Oregon, and Rep. Larsen, a Democrat from Washington State, have called on the DOT to deny Norse Atlantic Airways Operating permits on account that it is flouting labor protections.
Drawing on earlier language indicating opposition to the airline, Reps. DeFazio and Larsen have argued that, by organizing itself in a country outside of Norway, where there are strong labor laws, the airline is seeking to flout those laws.
Drawing strong comparisons with Norwegian
The two Congressmen believe the airline is doing this because one of its executives was a former executive at Norwegian, which used Irish and UK subsidiaries to operate long-haul low-cost flights between the US and Europe.
In the letter, the Congressman stated the following:
“Their long-haul low-cost business model was predicated on the use of pilots and flight attendants employed under short-term contracts and assigned to the Norwegian subsidiaries via third-party crew sourcing firms. In short, Norwegian exploited labor while enjoying the liberalized benefits of the U.S.-E.U.-Iceland-Norway open skies agreement and competing unfairly with airlines that do not subvert fair labor standards.”
Using Norwegian as a warning
The letter also urged the DOT to consider that Norwegian failed in its transatlantic operations. Between 2016 and 2019, the letter states that Norwegian incurred debt of nearly $7 billion.
Norwegian is currently under bankruptcy proceedings in Europe and has decided to shut down its long-haul routes and focus on its flights within Europe.
Norwegian made a huge splash when it started transatlantic operations in 2016 between the US and Europe. Using a fleet of mostly Boeing 787 aircraft, the airline brought large numbers of customers across the pond.
Norse Atlantic Airways has already indicated it will operate a similar model, using Boeing 787 aircraft it has signed leases for.
US airlines breathed a sigh of relief
When Norwegian came into the transatlantic market, it followed its initial routes with plenty of growth. That growth put pressure on US airlines.
Now, without Norwegian in the market, airlines are breathing a sigh of relief. Without that low-cost competition in the market, airlines like United are bullish on their international exposure. Without Norwegian in the market, there is also room for plenty of existing airlines to move toward higher-yield transatlantic operations.
The return of transatlantic demand will depend greatly on the removal of travel restrictions between the US and Europe. Most airlines are focused on cargo with low passenger loads on flights to Europe currently. Only essential travel is permitted between the two areas.
Norse Atlantic is a startup to watch. It has the opportunity to massively grow to the size of Norwegian’s long-haul operations before it shut down, but doing so may come at a high cost and low profitability. It will have to make the long-haul low-cost model work to be successful.
For now, it is a waiting game to see how the DOT will respond to Norse Atlantic. US Congressmen are coming down on the side of the US airline industry, but the DOT may end up granting Norse Atlantic operating permission.
Do you think Norse Atlantic Airways should be allowed to operate between the US and Europe? Let us know in the comments!
Frontier Launches IPO – How Can The Airline Benefit?
American ultra-low-cost carrier (ULCC) Frontier Airlines has officially gone public. Pricing out at the lower end of its target share price, the airline is still expecting to raise over $200 million from the endeavor. Here is a look at how that could benefit the airline.
Frontier’s initial public offering pricing
Frontier Airlines announced its initial public offering of 30 million shares at a price of $19 per share. This was toward the lower end of the initial pricing for Frontier’s shares. The share consists of 15 million shares of commons tock offered by Frontier and 15 million shares of common stock to be sold by certain of Frontier’s existing stockholders.
Less the underwriting discount, commissions, and estimated offering expenses, Frontier will net proceeds of approximately $266 million. The sale of stock by the existing stakeholders will not raise Frontier cash. Overall, the net proceeds to both Frontier and the private stakeholders is expected to be over $500 million.
The airline is being traded on the Nasdaq Global Select Market under the ticker “ULCC.” Since going public, the airline’s stock price has hovered between $18 and $19 a share.
The net proceeds
The amount that Frontier expects to receive is around $266 million. This is a respectable amount similar to the funding another airline IPO, Sun Country, received.
With $266 million, the airline can do plenty of things. Frontier ended 2020 with long-term debt of over $300 million. The airline can choose to pay down some of its high-cost debt with these proceeds. Or else, the money can be used to fuel expansion. The airline sees plenty of growth opportunities and has a sizable aircraft order book which costs money, and this funding can go a long way.
The current state at Frontier
Frontier Airlines is one of the carriers leading the way with capacity increases through the year. The airline’s top stations are Denver, Orlando, and Las Vegas. These are major leisure travel hotspots, but some of them also provide opportunities for Frontier to sell connecting flights.
Frontier serves over 300 nonstop routes touching around 110 airports. Using a low-frequency model, the airline targets mostly point-to-point leisure travelers.
Frontier also sees plenty of room for growth. In the airline’s initial filing for an IPO, the carrier highlighted it had an opportunity to serve 518 additional domestic routes between airports within its existing network not currently served by a ULCC. This is a fascinating number, but it also raises the question of Frontier’s expansion.
In the past, Frontier has not been very hesitant in terms of adding new cities and then cutting them if those flights do not provide the anticipated financial benefits. Moving forward, Frontier will face shareholders and stockholders that may temper some of those ambitions, but the carrier is still expected to add new routes. This is especially true as signs continue to point toward a summer surge, and the CDC outlines guidelines for vaccinated Americans to travel.
The airline is already making moves to become a more modern, fuel-efficient carrier with an eye on costs. The aging and comparatively expensive Airbus A319s will exit the fleet this year as the airline welcomes newer Airbus A320neo family aircraft. Those new jets will also feature lighter-weight seats that will save on fuel, which in turn saves on Frontier’s costs.
Ultimately, Frontier has set itself up to do well in the future. The net proceeds from this IPO will go a long way in getting Frontier the cash influx it needs to survive the next few months and prepare to handle the increase in passengers expected over the summer. As the US airline industry starts to turn the page on the crisis, Frontier is expected to be one carrier that benefits early on from its mostly domestic and short-haul international leisure-oriented model.
Do you think Frontier made the right decision by launching an IPO? Let us know in the comments!
Cheap ticket deal breaks Virgin’s all-time record, despite lockdown
Virgin sold more domestic tickets on the launch day of the government’s half-price ticket scheme than on any 24-hour period in its history.
The result came despite fears Brisbane’s recent snap lockdown, which ended on Thursday, would put people off interstate travel.
Domestic aviation has been pinning its recovery hopes on the federal government’s plan to supplement 800,000 half-price airfares for passengers to 15 destinations including the Gold Coast, Alice Springs and Kangaroo Island. It follows the end of JobKeeper last week.
Virgin said in a statement it sold 71,000 supplemented seats in the 24-hour period from 12:01am on 1 April. The top five routes were:
- Melbourne to Gold Coast
- Gold Coast to Sydney
- Maroochydore to Melbourne
- Cairns to Sydney
- Adelaide to Melbourne
Destinations not in the scheme also received a “significant boost”, in particular, Melbourne to Perth, Perth to Sydney and Melbourne to Sydney.
“The overwhelming response from Australians demonstrates loud and clear that they are ready to get back in the air and travel and are a positive sign for the aviation and tourism sectors as they look to recover from the impacts of COVID-19,” said the business in a statement.
“As a sign of renewed confidence and pent-up travel demand for travel, more than 85 per cent of the new bookings have been booked for travel from May onwards.”
Greater Brisbane lifted its snap lockdown on Thursday at noon, following the state recording just one new case of community transmission.
Queensland Premier Annastacia Palaszczuk did though announce a slight increase in restrictions, which will require residents to wear masks indoors and a limit of indoor gatherings to 30.
The good news came shortly before NSW announced no new local infections across the state, too.
The half-price ticket scheme saw Virgin announcing fares from just $55 between Melbourne-Launceston and Jetstar offering tickets from just $32 between Adelaide and Avalon.
The updated list of destinations now includes Cairns, Townsville, Whitsunday Coast/Hamilton Island, Sunshine Coast, Darwin, Alice Springs, Hobart, Launceston, Devonport, Broome, Avalon, Merimbula, Adelaide, Kangaroo Island and the Gold Coast.
The fares are on sale until the end of July for travel until the end of September, with discounts applied automatically.
Both airline groups have also topped up the 15 locations with sales to other destinations and also extended fare flexibility in light of recent uncertainty.
The package of measures to support aviation in Australia also includes a new wage subsidy for those working in international aviation; cheap loans to small business coming off JobKeeper; and a six-month extension of the ‘RANS’ and ‘DANS’ supplemented routes initiative.
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