A irbus, the European plane maker, recently unveiled the Airbus A380, a superjumbo jet designed to transform the way people fly. The plane is a technological masterwork. It is the world’s largest commercial jet, and accommodating it will be no small task for airports around the world. The decision to build the A380 is a bet on how people will travel in the future. If the bet is correct, Airbus will be well-positioned to dominate the global aircraft industry in the 21st century, besting Boeing, its perennial rival.
The A380 is a double-decker, four-aisle airplane, capable of carrying up to 800 passengers. (Some say its interior can be configured to accommodate 1,000 people.) Its wingspan stretches 87 meters and its tail is as tall as a seven-story building. The fans in its Rolls Royce engines are 295 cm in diameter and deliver 80,000 pounds of thrust. The plane can fly up to 15,000 km, and its designers promise a 15 percent reduction in operating costs per seat. The first plane is scheduled to enter service in June 2006 as part of Singapore Airlines’ fleet for the Singapore-Los Angeles and London-Sydney routes.
The A380 took 10 years and $13 billion to develop, $2 billion over-budget. Each plane will cost $280 million, although discounting on sales is a regular part of business in the $55 billion aircraft industry. Airbus already has 149 orders, from 14 carriers. It says it needs 100 more to break even and an additional 500 before it can return the 20 percent return on investment it promised.
The A380 represents a forecast on how airlines will transport passengers in the future. Despite fears that terrorism might deter tourist travel or that information technologies might reduce the need for business travel, passenger loads continue to increase; traffic is expected to double within 15 years. But the existing airline infrastructure — airports and air traffic controls — is becoming stretched.
Airbus anticipates that airlines will handle the increase through a hub-and-spoke system of connections. Travelers will be routed through major airports and then transferred to smaller planes to arrive at their final destinations. In this system, carriers need the largest possible planes to ply the main arteries. The mainstay in that market is Boeing’s 747 jumbo jet; the A380 is intended to replace that industry workhorse.
Boeing is taking another tack. It figures travelers prefer long-distance direct flights rather than a series of shorter flights. Thus it is developing, for an estimated $10 billion, a 250-seat 7E7 “Dreamliner” to meet that demand. The plane will be able to fly nonstop between any two airports in the world, and is touted to be 20 percent cheaper per passenger to fly. Each plane will cost $120 million, and it will enter service in 2008 on All Nippon Airways routes. Thus far, Boeing has taken only 56 orders for the plane, about a quarter of projections.
Airbus and Boeing have an intense 35-year rivalry. In 2002, Airbus overtook Boeing for the first time as the world’s largest airplane manufacturer and maintains a slight lead in aircraft delivered. The rivalry has been the source of a bitter dispute between the United States and Europe over subsidies to aircraft manufacturers.
European governments have provided financial backing for Airbus, arguing that a strong European aircraft industry helps the overall economy and is a source of technological innovation. The U.S. industry is private, but it has long enjoyed support from aerospace contracts with the U.S. Department of Defense. The U.S. and the EU have recently agreed to suspend subsidies for their domestic aircraft for 90 days while they work to head off a trade war.
Determining the eventual victor in the aircraft competition will depend on several factors. The dollar’s relative weakness in international currency markets has increased the price of the Airbus; some analysts think that alone could halt Boeing’s fall in market share. Others see chaos, once the superjumbo goes into service, at airports that are not prepared to deal with planes disgorging 1,000 passengers at once. Gates and boarding areas will have to be redesigned, while runways, taxiways and even service roads will have to be moved to accommodate the plane’s wingspan.
Governments will have considerable say in the outcome. The model for air travel that emerges will depend on government decisions: Long direct flights require deregulation of domestic markets so that carriers can fly from one country to another. Since many airlines are designated national flagships, the idea that markets alone will determine the final outcome is mistaken. In the meantime, we can marvel at how an aircraft as large as the A380 will get off the ground — both literally and metaphorically.
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