Update | Airbus' A380 proves jumbo-sized challenge for global airlines
Lufthansa will boost its capacity between Hong Kong and Europe by 20 per cent from October when it switches to an Airbus A380 on its Hong Kong-Frankfurt route, but the world's biggest passenger plane has not proved a sure-fire winner for all 13 carriers operating the double-decker behemoth.
The German airline will become the eighth carrier to operate A380s in Hong Kong this year, but A380 flights into and out of the city have dropped from a peak of 63 in January last year to between 42 and 55 a month this year, according to the Centre for Aviation.
The superjumbo, operated by 13 airlines around the world, has proved a blessing for some since it entered service eight years ago but a curse for others. The more than 500 passengers needed to fill it can either mean efficient use of a slot with low unit cost, or being stuck with a fuel guzzler burning around US$10,000 worth of fuel an hour.
Saj Ahmad, chief analyst of London-based consultancy StrategicAero Research, said: "Apart from Emirates, there don't really seem to be a lot of success stories to the A380."
China's largest airline, China Southern, the only Chinese A380 customer, says it will deploy the superjumbo on its Beijing-Amsterdam route from this month - its first international A380 route from the home base of rival Air China. While not considered as prime as Beijing-Paris or Beijing-London, the Amsterdam route is a long overdue route out of the capital for China Southern, which has only been allowed to fly domestic routes or international routes into and out of Guangzhou since taking delivery of the first of its five A380s four years ago.
Company insiders say the A380s have been causing the airline losses of "at least 1 billion yuan" (HK$1.2 billion) a year, although the difficulties in filling the seats had eased over the past year.
Will Horton, an analyst with the Centre for Aviation, said: "Clearly China Southern's A380 experience has not gone to plan. The aircraft saw very low utilisation and then were deployed on leisure markets as something of a measure of last resort … the A380's large size makes it challenging to profitably fill. At Emirates you have different economics since you have A380s feeding A380s for transfer traffic - that brings scale."
Airbus boss Fabrice Bregier admitted in April that it was disappointed to have won just won 317 orders for the A380, less than a third of the 1,200 orders it had projected for its first 20 years. The world's biggest airlines, based in the United States, have not ordered one.
Ahmad said the A380 could be "a prime revenue driver" in today's market where "business class is the new first class" for a lot of blue chip airlines, provided their network allowed them to capture enough of such high-yield traffic.
"The A380 works well for Emirates because of its geographic location, whereby it can rapidly add capacity to busy markets like Europe, the USA and Australasia," he said. "Dubai is a huge connective hub and Emirate's strategy of passenger connections through Dubai on A380s is what has made that jet work for them."
The fundamental issue with the A380 is that it has been beaten into submission by more advanced, cheaper to fly and more economical jets like the B777, B787 and A350
But the same could not be said for other A380 operators.
Ahmad said Singapore Airlines had dropped one A380 flight from London's Heathrow airport because of competition and failing traffic, while the likes of China Southern and Thai were struggling to fill their jets.
"The fundamental issue with the A380 is that it has been beaten into submission by more advanced, cheaper to fly and more economical jets like the B777, B787 and A350 … airlines simply aren't interested in trying to fill a behemoth - to do that, fares and yields would fall and hurt profitability," Ahmad said.
Malte Haut, Lufthansa's general manager for Hong Kong, Macau and South China, said replacing the B747-8 currently used on its Hong Kong-Frankfurt route with the A380 meant adding more than 120 seats per flight.
"It's almost like adding another plane," he said. "But I don't think the economics would be as good if we were to add another frequency."
He said he expected initial yield weakness, as was the case with all new capacity deployment, and for demand to pick up from business traffic beyond Hong Kong in Southern China, Taiwan and Southeast Asia.
