Business - Does the elephant need a superjumbo ?

Nirmal John

MUMBAI: Earlier this week, on October 25, the Airbus A380 completed one year of commercial service.

In international aviation circles and with the general public, it is still a privilege to have flown in one of the eight superjumbos in service today, which are flown by either Singapore Airlines, Emirates or Qantas.

It still remains the cynosure of all eyes wherever it goes, as it was at the Indian Aviation Air Show, held recently at Hyderabad.

The massive aircraft has now come to India twice. But given the recent problems in filling up seats in planes of lesser size, does the Indian market have the appetite for something so big?

Since the A380 entered service, the aviation environment has changed dramatically for the worse. Operational costs, led by fuel prices, have multiplied. World aviation is now seeing some of its toughest times yet. To make matters worse, a financial gloom has descended over the world. In India, as yet Kingfisher Airlines’ order for five of these birds remains on schedule — even though the airline has pushed back deliveries of the long-haul A340 aircraft.

Praful Patel, the union civil aviation minister, welcomed the aircraft in Hyderabad and interestingly enough, wished that Air India too will buy some.

John J Leahy, chief operating officer-customers, Airbus, was not one to miss the chance and made a sales pitch to Air India following Patel’s comment. “We think the A380 is the ideal aircraft for a market like India with a huge population,” he said.

But is it? Aviation industry experts say that for the A380 to find more takers here, the market would have to develop a strong hub, on the lines of Dubai or Singapore, where traffic from various parts would come in and get distributed. The challenge, they say, is in making sure that the 500+ seats (in a conservative two/three class configuration — in all-economy, this aircraft can fly up to 852 passengers!) can be filled.

Mark Martin, an aviation analyst with consultancy firm KPMG, told DNA Money, “The success of an aircraft like the A380 would depend on the economics and the economy. In India, it is not so much the airport adaptability issues which were talked about earlier as much as the viability in being able to fill a decent number of seats, which is what should dictate the decision for airlines.”

Boeing believes that the future would be more about connecting more destinations, or in aviation parlance, point-to-point.

Airbus, on the other hand, believes in the hub and spoke model, where all traffic will flow through large hubs.

Predictably, Boeings and Airbus’s assessment of the Indian market for these large aircraft vary wildly. Boeing forecasts a requirement of just 11 such aircraft, worth $3.1 billion, over the next twenty years. Airbus believes that there is potential for 66 A380s in India.

Analysts say the potential depends on the way the market develops. An analyst who requested anonymity said, “The numbers given out by Airbus and Boeing in their market studies are usually made to suit their product portfolio. The true potential would most probably lie somewhere in between these numbers.”

The airlines which are currently operating the A380 seem happy enough. “Singapore Airlines is very pleased with the performance of the A380 in its first year of operations,” said Chew Choon Seng, chief executive officer. “We are now flying six of them, linking Singapore with Sydney and Tokyo daily and with London twice everyday. The A380 has lived up to its promises and proven to be reliable and fuel efficient. Importantly, it has been a hit with our customers.”

According to Airbus figures, in the first year, more than 700,000 passengers have flown the A380, for a total of more than 15,000 revenue flight hours in more than 1,600 commercial flights.