Airbus: Siding with the skeptics

Europe's megaplane Airbus dominates aviation headlines this week: Dubai's Emirates is set to order 50 of the new aircrafts--that's $6 billion worth. Looking for ways to increase its presence in the world’s largest defense market, Airbus maker EADS will team up with Raytheon Co. to bid on a contract for new U.S. Army transport planes. EADS reports a surge in first-quarter net profit thanks to soaring deliveries of the new jets. SPEA professor and aviation expert Clint Oster offers his view on the news making aircraft.

Expert perspective: “There doesn't seem to be a consensus in the industry about this plane, but many are skeptical. In a world of lots of people trying to fly to congested airports, such as London Heathrow or Tokyo Narita, a plane like this may make sense because it brings a lot of folks in with just one landing slot. If you take some of the aggregate trends of the last 15 years and simply extend them, it's easy to believe that such a world will exist. It's particularly easy to believe that if your frame of reference is Europe, where many of the airports are congested.

"However, belief in that world is also belief in a world where most people flying to airports such as Heathrow and Narita are flying there to connect to other planes bound for other destinations. In other words, this is a world where hub-and-spoke systems just keep getting larger. There are two problems with this view of the world. One is that it's not what passengers want. Passengers don't want to change planes, they want to go from their origin directly to their destination. Passengers are willing to change planes only if there aren't any convenient nonstop alternatives or changing planes results in much lower ticket prices. Even if you believe Airbus, the 380 isn't going to have enough lower costs to make much of a difference in ticket prices.

“Clearly the airlines are a bit skeptical about the Airbus claims because they insisted on penalty clauses if the operating cost targets aren't met. Plus, already in existence are a variety of planes that can fly the long distances that the A380 is designed for and can be matched to the size of the nonstop market. The 380 is going to require both gates and even runways and taxiways to be redesigned or strengthened to accommodate it, not only at the airports that are intended as origins and destinations, but also at airports that serve as alternate destinations in the event of some sort of emergency.

"Some airports will be willing to undertake these expenditures, but many airports may not be willing to spend the money to serve only a few flights or to serve as an alternate airport. The A380 may also encounter some passenger resistance depending on how long it takes to load and unload the plane, both for passengers and baggage. The air cargo guys will probably love it, but they won't need that many.

"I tend to side with the skeptics. It may be a technological accomplishment, but I tend to think of it as a monument rather than transportation.”

The SPEA toolkit: Clint Oster is an internationally known expert on aviation and airline industry issues. He researches and teaches about aviation safety, airline economics and competition policy, international aviation, aviation infrastructure, and environmental and natural resource policy.

For more on Clint Oster, click here.