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The Flying Elephant
Will the A380 break Airbus?
Nicolas van der Leek (Nick)     Print Article 
Published 2006-10-11 03:35 (KST)   
Why is the A380 two years behind its delivery date?

The A380 Superjumbo will be, they say, available in the second half of 2007. The biggest A380 customer, Emirates, is very unhappy with this state of affairs. They had expected to take delivery of their first A380 this month. First in line is Singapore Airlines, with Air France, Qantas, Virgin Atlantic, Korean Air and Lufthansa all waiting in the wings.

As a result of these delays Gustav Humbert, Airbus head honcho, was sacked, along with co-CEO Noel Forgert, who is being investigated for trading in stocks prior to the announcement of these delays (making $3.2 million in the process).

While airline bosses impatiently pace up and down their runways, and Airbus parent EADS audits and re-audits its balance sheets (it recently announced a $2.5 billion profit warning), no one seems to have considered how ill-advised the construction of such a super-sized aircraft is.

The dilemma when building a flying machine that carries 555 people is cost. How much more fuel will a bigger, heavier plane need? Obviously Airbus have convinced the industry, and themselves, that at current fuel prices (and these were 2004 projections), the A380 would be a profitably aerial bus.

This year, again, we saw fuel prices soar to $78.

In a world where we are seeing some tranformation even in vehicles (either to hybrids or to much smaller cars), why are the airlines thinking of going large? Entrepreneurs are often fascinated, dazzled, by technology. But technlogy, especially in aeronautics, have their limits. Who better to ask than Howard Hughes, who discovered that putting the biggest aeroplane (at the time) into the sky would bankrupt his company, and never fly more than a few feet. Smaller aeroplanes were capable of doing the job faster and better, without redesigning landing strips or airports.

Sometimes older technology is more functional. Remember the hype around satellite phones? Remember a company called Iridium? The idea was that you could make a call from anywhere in the planet to anywhere in the planet. Unfortunately, these phones were quite bulky (they still are, compared to our credit card sized GSM handsets) for all their technological wizardry. Why didn't they work? Because we didn't need to phone the moon or someone on Mount Everest on a daily basis. Ordinary GSM phones met the basic consumer demands, which were convenience, low cost, and ease of use.

In the same way, the trend in airlines (including South Africa) is away from the powerful players and towards the so-called budget airlines. This is because air travel, having become so cheap, has become accessible to nearly everyone. When prices go up, people tend to prefer lower cost airlines. And what trends are we seeing in fuel prices? Over just the last three years we've seen some staggering upward jerks in the fuel price. And it is common sense to believe that a finite resource, a limited resource that is becoming expensive, will become even more expensive in the future. In this scenario, an airline won't be able to feed elephantine aircraft massive quantities of fuel. Airlines will need to be smaller, and more flexible. Aircraft will have to be fuel efficient above all, and that implies excellent power-to-weight-to-cost ratios.

Yes, despite the temporary appearances that we can continue to the the world on a 'cheap energy' psychology, we are rapidly moving more and more deeply into an energy predicament. The well known writer, James Howard Kunstler(1) writes that "Worldwide oil production is on track to go down 3 percent in 2006. If it keeps on going that way, the 84.5 million available to the world now will shrink to something like 50 million in 2015."

In this environment of limited resources, the last thing we need is a thirsty Air Bus on a wild (spruce) goose chase. With Boeing coming out with their Dreamliner, it's my prediction that the A380 will break Airbus. In the coming years though, all airlines will be the first in line to face bankruptcy related to a world with 'expensive energy prices'.

In the meantime, it's likely that the illusion of cheap energy will persist, and the psychology of previous investment, ludicrous as it is, will dig an even deeper hole for investors and companies. Meanwhile the first 4 A380's will go to Singapore Airlines will receive. Those airlines that decide to cancel their orders may well find themselves lucky to have done so.
(1) Author of The Long Emergency, Surviving the Converging Catastrophes of the 21st Century.
©2006 OhmyNews
Other articles by reporter Nicolas van der Leek

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