Airbus took the wrong approach with the A380
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With the COVID-19 pandemic halting air travel all over the world, many airlines are experiencing one of the worst nightmares of a business owner: no revenue and tons of cash burn. To reduce the cash burn and preserve cash, many airlines have been canceling their airplane orders from Boeing, Airbus, Embraer, and other aircraft manufacturers.
One of the airplanes that might stop being produced after this pandemic is the Airbus A380.
The Problem
When Airbus was looking to make a new jet, they thought that many airlines are looking to stuff more passengers in one plane in order to maximize revenue and profits. This thought led them to create the Airbus A380, also known as "the Hotel in the Sky." Being a double-decker aircraft, the Airbus A380 was able to hold over 500 passengers.
Meanwhile, Boeing thought that airlines wanted an airplane that was nimble and that was really efficient. This is what led them to create the Boeing 787 Dreamliner. While it didn't carry as many passengers as an Airbus A380, it did help airlines save money on fuel costs.
In the end, Boeing was correct and the 787 Dreamliner became a massive success.
For Airbus, while demand for the A380 was high originally, as time went on, interest in the program diminished and the program became unprofitable for most of its tenure. The cash burn from the A380 program was what promoted the EU to provide subsidies to Airbus, to help them maintain profitability amidst the cash burn from their failed program.
Being wrong with their understanding of their customers, Airbus lost million (and potentially billions) of euros.
The A380 was helpful to some customers
Many of the airlines that were located in the Asia-Pacific region were fond of the A380 as they could accommodate many people into one airplane. Since the demand for air travel was high in the Asian-Pacific region, airlines were able to keep their planes full for most of their trips.
Meanwhile, other airlines had their issues with the A380
Many of the financial analysts in the airlines thought that they'll be able to reap massive profits from using the A380. After years of experience, data has shown that many of them didn't reap the profits that they anticipated. The accurate picture was that the biggest planes in their fleet were less profitable than their medium-sized and small-sized planes.
One of the main issues airlines had with the A380 was that there were more empty seats overall than anticipated. Also, the plane wasn't fuel efficient like other planes. These two issues resulted in the A380 becoming an unprofitable plane for the airlines.
Another issue airlines had with the Airbus A380 was how it ruined their image. While some people are amazed by the huge jets that the airline owned, others found it to be despicable. The low fuel efficiency many of those planes carry made some airlines look less green than other planes. Environmentalists would avoid traveling in the A380 and opt for flights with more efficient planes. The consumer's attention to the A380 is a contributor to the presence of empty seats for the plane.
Currently, bigger isn't better
But as the world population and the standard of living grows all over the world, demand for air travel will increase. I predict that with limited space in many airports, there will be a time where the average plane has to be bigger than it was years ago. Who knows, maybe technology will improve greatly where we will have flying cars before we need to upgrade the capacity of the airplanes.
In the meantime, just because the airlines want to maximize the profits on their planes don't necessarily mean that they needed bigger airplanes.
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