Emirates faces tough decisions over the future of the A380

Emirates quickly became the biggest buyer of the Airbus A380, but now the airline is looking at alternatives. (Reuters)
Updated 12 August 2017

Emirates faces tough decisions over the future of the A380

LONDON: For almost a decade, the image of Emirates has been intertwined with that of the double-decker jumbo jet, the Airbus A380.
It is an image that may need to be reviewed as doubts about the viability of the aircraft’s future mount.
“Emirates has not appeared likely to order anymore of the current A380. The A380 this year marks 10 years in service, so the aircraft’s design is getting old and thus efficiency is decreasing compared to newer aircraft,” said Will Horton, a senior analyst at Capa — Center for Aviation.
Launched in 2007, the A380 was at the cutting edge of technology due to its size and passenger comfort, with the plane able to carry more than 500 passengers on long-haul flights. The Dubai-based airline was quick to snap up as many aircraft as it could, acquiring its first one in 2008.
Emirates became the largest buyer for the aircraft, and currently operates a fleet of 96 A380s, with a total order backlog of 46 planes.
Total Emirates A380 orders account for nearly half of all the 319 orders Airbus has received, according to the plane manufacturer.
Close to 10 years on, Emirates has started to slow down the rate of A380 orders and deliveries, having last placed an order for just two of the aircraft in 2016. This compares to the 50 A380s it ordered at the Dubai Airshow in 2013.
Now questions are being asked about whether the carrier will eventually abandon the A380, and if so, how will it be replaced.
At the end of 2016, Emirates deferred delivery of 12 A380s that were due for delivery over the next two years. In its half-year results released in July, Airbus revised down its A380 delivery schedule for 2019 from the planned 12 aircraft to just eight planes.
The possible demise of the A380 comes as the Middle East aviation market grapples with poor market conditions, where improving fleet efficiency is paramount for the region’s airlines.
Factors such as Brexit, the struggling oil and gas industry and the (now-lifted) ban on personal electronic devices on flights from some Middle Eastern airports into the US have been blamed for slowing down demand. Passenger traffic growth across all airlines in the Middle East slowed in the first half of this year, recording the slowest first half growth since 2003.
Emirates’ finances have also come under pressure. It made a round of job cuts this year, and in May it reported a 70 percent decline in profits for the financial year 2016-17 compared to the previous year.
Operating planes as big as A380s is no longer seen as a cost-efficient option. “Nothing will replace the A380 because airlines do not want to operate such a big jet because of its high cost, limited second-hand appeal and failure to operate at every airport. Emirates’ use of the A380 via its Dubai hub has been unique for moving people around, but that model doesn’t work for everyone,” said San Ahmad, chief analyst at StrategicAero Research.
The fate of the A380 could be decided at the Dubai Airshow in November, where the market waits to see what deals Emirates will strike with both the A380 manufacturer Airbus and with its US rival Boeing.
Airbus confirmed that no Emirates orders for A380s have been made so far this year, although there are campaigns currently running.
Emirates will also be considering whether to take up Airbus up on its new range of A380 enhancements being explored under its A380 development study.
At the Paris Air Show in June, Airbus showcased winglets that improve the plane’s fuel efficiency, allowing for up to 4 percent fuel burn savings. “Added to an optimized A380 maintenance program and enhanced cabin features, the overall benefit is a 13 percent cost per seat reduction versus today’s A380,” according to an e-mail from Airbus’ Africa and Middle East office.
These additions are seen as a compromise option to keep the A380 program going, as Airbus has so far rejected requests from Emirates to develop a new so-called A380neo aircraft.
“It (Emirates) would certainly order more (A380s) if Airbus were to strengthen the specification of the aircraft as the airline has been seeking,” said John Strickland, an aviation consultant at JLS Consultancy. “It’s also interested to order more if the new fuel-saving winglets proposed by Airbus could be retrofitted to some of its current fleet.”
Others are skeptical that the A380 program can be kept alive at all. “I’m really baffled by all of this talk of another order. They (Emirates) haven’t been taking the ones they have on order already. The only point of another order would be as a last-ditch effort to save a dying program,” said Richard Aboulafia, an aviation analyst at Teal Group.
“As their A380s retire, they will gradually be replaced by smaller twin jets,” he said.
Emirates declined to comment on any potential new orders.
If Emirates was to move away from the A380 model, one alternative is to further ramp up its already significant investment in Boeing’s 777x family. Emirates has 168 Boeing airplanes on order as of June 30, including 150 777Xs. Out of those 150, 115 are the large 777-9 aircraft that are seen as the latest rival to the A380.
Yet replacing A380s with the 777-9s will raise capacity problems for the airline, says Horton. Although still a large plane, the 777-9 model is not as big as the A380, meaning that Emirates would have to increase the number of flights leaving airports to maintain the same capacity. This could cause logistical issues trying to securing the right slots and the right time.
There are signs, however, that Emirates is changing its growth strategy, shifting toward providing more flights and greater frequencies by using smaller and more cost-efficient jets, said Ahmad.
“That will make them easier to fill, easier to shift on routes where airport restraints are in place and also drive down costs since each 777 or 787 flight will be a drop in the ocean compared to the A380,” he said.
The tie-up with FlyDubai announced last month is evidence of this strategy, said Strickland. “It’s also likely that the planned partnership with FlyDubai will increase network flexibility due to the latter using smaller Boeing 737-800s and 737max aircraft,” he said.
The pact between the two airlines gives Emirates greater access to narrow-body planes, and it could help the pair reduce costs by eliminating duplicate routes.

Britain, EU tell each other to move on trade

Updated 20 October 2020

Britain, EU tell each other to move on trade

  • Both sides call on each other to protect billions of dollars of trade between the neighbors

BRUSSELS: Britain and the EU said on Monday the door was still open for a deal on their post-Brexit relationship, calling on each other to compromise to find a way to protect billions of dollars of trade between the neighbors.

With just over two months before Britain ends a status quo transition arrangement with the EU, talks on a trade deal are deadlocked, with neither wanting to move first to offer concessions.

A no-deal finale to Britain’s five-year Brexit drama would disrupt the operations of manufacturers, retailers, farmers and nearly every other sector — just as the economic hit from the coronavirus pandemic worsens.

European Commission Vice President Maros Sefcovic repeated on Monday that the EU still wanted a trade deal but not “at any cost” after British Prime Minister Boris Johnson said on Friday there was no point in continuing talks.

“It has to be a fair agreement for both sides — we are not going to sign an agreement at any cost,” Sefcovic told reporters after meeting Michael Gove, Britain’s point man on the existing divorce agreement, in London.

“The EU is ready to work until the last minute for a good agreement for both parties,” Sefcovic said.

Britain, increasingly frustrated by the EU’s refusal to start text-based talks, called on the bloc to make the first move, with its housing minister saying that Brussels only had to make “some relatively small but important changes.”

Housing Secretary Robert Jenrick called on the EU to “go that extra mile, to come closer to us on the points that remain for discussion.”

A spokesman for Johnson again ruled out prolonging any negotiation beyond the end of this year, when the transition period runs out, saying the EU “must be ready to discuss the detailed legal text of a treaty in all areas with a genuine wish to respect UK sovereignty and independence.”

EU chief negotiator Michel Barnier had been due in London for talks with British counterpart David Frost this week. Instead, they will now speak by telephone on Monday to discuss the structure of future talks, Barnier’s spokesman said.

Negotiations broke down on Thursday, when the EU demanded Britain give ground. Issues still to be resolved include fair competition rules, including state aid and fisheries. EU diplomats and officials cast Johnson’s move as a frantic bid to secure concessions before a last-minute deal was done, and European leaders have asked Barnier to continue talks.

British officials have repeatedly said any deal has to honor Britain’s new status as a sovereign country and not try to tie it to EU rules and regulations.

German Chancellor Angela Merkel said compromises on both sides would be needed. French President Emmanuel Macron said Britain needed a deal more than the 27-nation EU.

Britain is launching a campaign this week urging businesses to step up preparations for a no-deal departure. In a statement accompanying the launch, Gove says: “Make no mistake, there are changes coming in just 75 days and time is running out for businesses to act.”

More than 70 British business groups representing over 7 million workers on Sunday urged politicians to get back to the negotiating table next week and strike a deal.