Airbus A380 project hit by Japanese snub
Times of London 12/08/03
author: Ben Webster
(Copyright Times Newspapers Ltd, 2003)
THE £6.2 billion project to build the world's largest passenger aircraft yesterday suffered a setback when one of the biggest potential customers said that it had no interest in buying the aircraft.
Airbus, the European manufacturer building the double- deck A380, had said last month that it was confident of selling dozens of the aircraft to Japanese airlines. But All Nippon Airways (ANA), Japan's biggest domestic carrier, said that it would stick with the Boeing 747 for at least the next ten years.
ANA also questioned whether passengers would want to travel with 800 other people in an A380. ANA operates 747s with 569 seats on short domestic flights between densely populated Japanese cities separated by mountains.
Keisuke Okada, ANA's vice-president for corporate planning, said that the airline was concerned about the risk of purchasing an untested aircraft of unprecedented size that might prove unpopular with passengers.
He said: "The big question is whether the customer is happy. Already, when I take a ride on a big 747 we have to wait with a lot of people in the lounge and boarding is a crazy stress. Baggage and passenger handling is chaos."
Mr Okada said ANA's preferred solution was to expand Japan's crowded airports, including adding a runway to Toyko's Haneda airport, to cope with more regular flights by such smaller aircraft as the Boeing 777. He said: "If that happens we do not have to go for a risky, bigger plane."
Japan Airlines, Japan's other big airline, has also indicated it is not interested in investing in the A380 at present.
Japanese airlines have a uniquely close relationship with Boeing, which extends from the economic and military ties with the US developed after the Second World War. Only about one in ten aircraft flown by leading Japanese airlines is an Airbus, with the rest built by Boeing.
The business case for the A380 depends on Japanese airlines investing in the aircraft. The British Government has contributed £500 million of taxpayers' money in launch aid, which will be lost if the A380 programme fails to make a profit.
The wings of the A380 are manufactured in Broughton, North Wales, and one version of the engine is being built in Derby by Rolls-Royce.
Airbus has 121 A380 orders, all at a heavy discount. Singapore Airlines and Emirates are due to fly the first A380s in passenger service in 2006, with Virgin Atlantic following a couple of months later.
Airbus claims it needs to sell only 250 to make a profit but industry analysts believe the true breakeven point, after discounts are included, is 500.
Andrew Doyle, news editor of Flight International magazine, said: "Japanese airlines are the key to the success of the A380 programme. If Airbus does not sell the aircraft to the Japanese then it blows a great hole in the company's market forecast."
ANA has shown much greater interest in Boeing's plan to build a super-efficient mid-sized aircraft with about 250 seats, known as the 7E7, and Mr Okada said: "The 7E7 is a good plane so we are making very close communication with the manufacturer. We need to make some strategic decisions very soon and that plane covers a very wide range."
Boeing has reached an outline agreement with three Japanese industrial giants, Mitsubishi, Fuji and Kawasaki, to build 35 per cent of the 7E7 in Japan. Airbus attempted to forge a similar link with Japanese manufacturers for the A380 but was rebuffed.
John Leahy, Airbus's chief commercial officer, last week attempted to apply pressure to Japanese Airlines by telling them they would lose out to competitors if they failed to buy the A380.
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