Hoping to launch a new age of passenger aviation, Airbus, a unit of European Aeronautics Defence Space Co., or EADS, has faced several costly delays during development of the program.
By RUSS BRITT, MARKETWATCHairbus a380 88 298(photo credit: Bloomberg)MarketWatch: In-depth global business coverage
The largest passenger jets ever to hit the skies debuted in the United States Monday when a pair of Airbus' double-decker A380s landed almost simultaneously on both coasts, part of a sales tour clouded by concerns that many airlines won't be able to afford them.
The eight-story-tall planes, each capable of carrying more than 800 people, touched down at Los Angeles International and JFK Airport in New York.
As it taxied along the tarmac, the A380 dwarfed the other passenger jets, even making the heretofore king of jumbo jets, Boeing Co.'s 747, look small.
But the A380 has a long way to go before it becomes as prolific as Boeing's 747 workhorse.
Hoping to launch a new age of passenger aviation, Airbus, a unit of European Aeronautics Defence Space Co., or EADS, has faced several costly delays during development of the program. It now has 156 of the jets on order from various international carriers, but not a single US airline has ordered one. Each plane goes for $319 million.
The first US landings come nearly two years after the aircraft's initial flight. Delays in configuring the jumbo jet's complex wiring system are among the problems that put off deliveries for two years. Allan McArtor, chairman of Airbus's North American holdings, said it's unclear when the company will start to break even on the jet.
"With the delay in the program, we clearly are costing ourselves more money in the program," McArtor said. "But as far as not only breaking even but to make a profit on the airplane, we have very high confidence in that."
McArtor said the A380 is designed to reach large global hubs, and traffic is growing in that realm by at least 6% a year.
"We'll dominate that market space," he said. "Are we going to sell enough planes to do well? Yes, of course we will."
Acceptance of the plane may not be easy to come by as its double-deck configuration will require airports to create special gates. These are needed to not only handle the extra wingspan, but install jetways that can load and unload passengers from both decks simultaneously.
A gate already has been reconfigured at Los Angeles Airport's international terminal to handle the A380, McArtor said. He said the West Coast city will handle the most of any US cities, as Los Angeles is critical for serving trans-Pacific traffic and many of the A380 customers. London's Heathrow Airport will handle the most flights worldwide. L.A. Airport officials say they have spent $49m. thus far to upgrade L.A. International and plan to spend a total of $121m. on it and the nearby Ontario Airport so they can handle the A380 and others joining this new generation of larger aircraft.
Thirty airports will be able to accommodate the giant planes when they first start ferrying passengers, and that will expand to 70, McArtor said. Singapore Airlines will be the first to put the A380 into service in late 2007.
Australia's Qantas Airlines has become one of the jet's biggest customers, ordering 20 of the planes, the first of which will fly in 2008. Several Qantas officials were on hand at Los Angeles International to welcome the jet. They said L.A. will become a critical hub for service to US cities from Melbourne at first, and Sydney will be added later.
"It's a new generation of aircraft and when you're getting into a new generation of aircraft, it's a big step," said Peter McLaughlin, vice president of Qantas' Northern California operations. "It's a more efficient aircraft. It allows us to transport more people in one trip."
Qantas first started examining the use of the A380 in 1995, he said.
The plane is more state-of-the-art for passenger amenities. And passengers will have more flexibility in terms of what types of entertainment they use on board, he added.
The cost of flying passengers will become cheaper, but what that means is that airlines will be able to hold down the cost of international service, not necessarily cut rates, McLaughlin said.
"The airline industry, as a whole, is going to be challenged with rising fuel prices, which will drive them to use more fuel-efficient aircraft," he said.
Once the first A380s are pressed into service later this year, it will have taken passenger aviation 37 years to top itself in terms of capacity. The A380 is only slightly longer than the 747, but is 25% taller and can hold 27% more weight. Airbus officials say the jet's floor area is 50% larger than the 747 and can hold 35% more seats.
The jet's initial landing at Los Angeles appeared to be flawless, although it seemed to skid slightly to the side as it touched down. A set of stairs that was wheeled up to the aircraft's opening craned to reach the door, and the platform tilted somewhat to get close enough for its pilots to get off.
Los Angeles Mayor Antonio Villaraigosa also was on hand, praising the jet's quiet engines, as well as its reduced emissions.
While the A380 is certified by the Federal Aviation Administration to hold more than 800 passengers, McArtor said the jet is likely to carry around 550 on virtually all of its flights. Designed mostly for international travel, many planes will be configured with three classes, with most of the seats reserved for mid-range business class travelers.
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