A leasing company creates an airline to save A380 super-jumbos
The Irish leasing company Amedeo counts eight A380s super-jumbos among its fleet, and has a further 20 on order from Airbus, but such is the lack of interest in the world’s largest passenger plane that it has been unable to renew its leases, or find new customers, despite months of negotiations as reported by The Financial Times.
The solution is somewhat original but compelling: launching its own A380-only airline. According to Mark Lapidus, Amedeo’s CEO, the new airline’s business model will see it offer seats to existing carriers, or to potential non-traditional arrivals such as Airbnb. Passengers would buy their ticket through another company, while Amedeo would operate the flight, using its own cabin crew but tailoring the service to suit the client.
“Joint ventures and codeshares are making passengers feel accustomed to buying tickets with one airline but flying with another,” Lapidus told. He added that Amedeo would apply for an air operator’s licence next year.
The growing collection of low-cost airlines offering long-haul flights, such as Norwegian, WOW Air, Level and Air Asia X, would be obvious targets for Amedeo. Lapidus said it was in early discussion with a number of possible customers, including non-aviation firms like Airbnb who are looking for a simple way to enter the market without having to deal with the highly complex regulatory regime. “For them the premise should work well,” said Lapidus. “They keep the customer, they keep the margin, we just charge a transparent, very competitive utility return on a capital fee.”
The Amedeo chief believes that the best way to exploit the company’s assets is now no longer to lease to airlines but to operate it under what he optimistically believes could be a new model for air transport. without having to deal with the highly complex regulatory regime.
Rob Morris, head of consultancy at Flight Global, said that the idea was “interesting” but would be difficult to implement. “Brand is really important. Airlines are happy to contract out the back office but anything customer-facing is very difficult to contract out because of the risk if a contractor does not deliver,” he said. “It could work for a low-cost operator who wants to get established. But it smacks a little of desperation.
In January, Lapidus said the A380 needed “disruptive” airlines to secure its future, citing Norwegian, and suggested that the model was a natural fit for budget airlines willing to squeeze in more economy class seats. While the A380 is certified to carry up to 868 people, most operators use a two- or three-class seating configuration which means it carries far fewer in practice. On some flights, Emirates, for example, carries 399 economy class passengers, 76 in business class and 14 in first class, for a total of just 489. “When the A380 is properly configured with 600 to 700 seats it beats the economics in terms of unit costs of anything flying,” he said at the time.
Whether the proposal can save the A380 remains to be seen. The model hasn’t won a new customer in two years and at the Dubai Airshow earlier this month, Emirates, its biggest client, backtracked on an expected order for 38 of the super-jumbos placing the order for 40 Boeing 787-10s instead). Just days later Singapore Airlines grounded and stored one of its A380s after just 10 years of use. Airbus has announced a series of cuts to the rate it turns out the poorly selling jet. By 2019 just eight will be constructed each year under current plans.
However, with no new buyers the programme’s future is in doubt. Alex Macheras, aviation analyst, said: “Emirates is the one airline that has been able to get the best out of the A380 with its many long-haul routes. Passengers seek out the A380 and the airline has been able to work with that.”
The list price for an A380 is $437m, though airlines usually secure discounts. Airbus believes it can sell up to 100 Airbus A380s to Chinese airlines over the next five years, reports Aviation Week — the Tolouse —based manufacturer bases his optimism on the growth of Chinese outbound traffic, from 20 million passengers in 2006 to 120 million in 2016, a trend that he sees continuing. Norwegian is a Boeing-only airline, operating almost 150 aircrafts including Boeing 737-800s, Boeing 737 MAX aircraft and Boeing 787 Dreamliners on its destinations.