Home' Asian Aviation : AAV July August 2010 Contents Andrzej Jeziorski
is issue features news of a series of not unconnected
developments, both positive and negative, involving the
Airbus A380 and the Arab Emirate of Dubai.
Perhaps most prominent was the announcement in June
of a massive follow-on purchase of the double-deck
Superjumbo, which has su ered a dearth of recent sales,
from Dubai-based Emirates. e carrier added an order for
32 of the jetliners to the 58 it had already booked, bringing
its total outstanding orders for the world's biggest jetliner
to 90 aircra -- more than any other carrier.
" e latest order ... a rms Emirates's strateg y to become
a world leading carrier and to further establish Dubai as
a central gateway to wordwide air travel," said Emirates
Chairman and CEO Sheikh Ahmed Bin Saeed Al-Maktoum.
"Our latest commitment signals Emirates' con dence in the
growth to come in a thriving aviation sector."
Soon a er, Dubai Airports proudly announced the opening
of the new Al Maktoum International Airport, which will
eventually develop into the world's largest aviation hub.
e airport operator said the Emirate needs the additional
capacity to deal with an expected boom in both cargo and
passenger demand over the next 20 years or so.
At about the same time, the World Trade Organisation
(WTO) issued its ruling that at least some of the launch aid
granted by European governments to Airbus for the A380
-- as well as earlier programmes in the 1970s and 1980s,
was illegal. With some analysts questioning the commercial
viability of the giant airliner, which has only gathered 144
orders in the decade since the programme's commercial
launch, questions have also been raised over the reasons
behind Emirates' latest huge order and the terms Airbus
may have o ered the company to secure the deal.
Teal Group analyst Richard Aboula a does not mince his
words on the subject. e A380 "o ers a very quiet and
comfortable passenger experience," he says. "But it's a
Some of the 144 orders Airbus has scraped together "are
basically dead, and many others have been deferred," he says.
Elsewhere in this issue, Asian Aviation reports that Malaysia
Airlines (MAS) is still considering cancelling its order for
10 of the behemoths, while ai Air ways International tried
and failed last year to cancel or exchange its order for the
smaller A350 XWB. e ai carrier did, however, defer
deliveries by two years.
us, the Emirates order came as a massive boost to the
credibility of the A380, as well as a substantial step towards
the manufacturer's stated break-even point of 300 units
sold. But it has got many people asking whether the airline
has in this case bitten o more than it can chew, risking
ending up with aircra capacity it may be unable to ll.
Analysts point out that Emirates' management has a solid
track record of running the company well, delivering
consistent growth and pro tability, while maintaining an
enviable reputation for customer ser vice.
No doubt, Airbus is hoping that this reputation will
convince other carriers that they should follow where
Emirates leads and place their own new A380 orders for
fear of being le in the carrier's wake. Because the Emirates
order alone -- substantial as it is -- is unlikely to be a very
pro table deal for the manufacturer, which probably sold
the aircra to Emirates under extremely generous terms.
Airbus's latest Global Market Forecast estimates that
Middle Eastern air tra c will expand at an average 6.9
percent in the coming years. But Aboula a points out that
Emirates' order backlog -- which, apart from the 90 A380s,
also includes more than 200 A350 XWBs and 200 Boeing
777s and 787s -- would have to expand much faster than
that to justify all that additional capacity.
The carrier has grown remarkably fast in the past by
"grabbing other people's traffic", Aboulafia says. That
growth has come at the expense of European legacy carriers
such as Lu hansa, Air France-KLM and British Air ways,
which have ordered a combined total of just 39 A380s
"The A380 represents a publicly funded way to help
Emirates beat up on those European airlines," Aboula a
says. "Europe is subsidizing the aeronautical rope that
Emirates is using to hang European airlines."
Aboula a believes European governments are doing this
by: granting export credit nance (which is not available
to European airlines) for deals such as this one; dangling
the prospect of increased European landing rights in front
of potential Airbus customers; and, of course, by funding
Airbus development programmes.
" e A380 itself would have been impossible without
billions in taxpayer euros that will never, ever be paid back,"
the analyst says. Meanwhile, the A350 XWB might have no
need for public cash if not for the fact that Airbus is "losing
tens of millions" on each A380 delivery.
"In short, from Emirates' viewpoint, the A380 represents
Europe's fat and vulnerable aviation underbelly," Aboula a
says. "Europe has shown it is quite willing to protect its
national plane, even if that means throwing its national
airlines under a bus."●
massive boost to A380
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