00:00- The Majestic Airbus A380
earned the title
00:02of the world's biggest airliner
when it entered service,
00:04and from the very start,
passengers absolutely loved it.
00:09But in the end,
Airbus ended up losing money
00:11on every one of the 251
A380s they ended up selling,
00:15which led them to end the program
00:17even before Boeing stopped making the 747,
00:20which was the type that the A380
00:21was supposed to have replaced.
00:23Now, how did Airbus
manage to go so wrong
00:27with this aircraft, and
did Boeing somehow trick them
00:29into making this
really expensive mistake?
00:39Recently, I've been talking a
lot about how Boeing managed
00:42to get, well, quite a few
things wrong in recent years,
00:45but Airbus has not
got everything right either.
00:48A few months ago,
I made a video looking
00:50at the very first step of Airbus,
00:52which they took when they introduced
00:53the fantastic Airbus A300.
00:56Now, even though the A300
was a very slow seller
00:59in the beginning, it eventually
ended up showing the airlines
01:02how good a twin-engine
wide body could actually be.
01:05And that was obviously
because it was just
01:07so much more efficient
than the trijets,
01:10the DC-10 and the Lockheed L-1011
01:13that the airlines
were comparing it with.
01:15Now, this was an especially big deal
01:17after the 1973 oil crisis,
although it took quite a while
01:21for everyone to
fully get the message.
01:24But Boeing definitely noticed this,
01:26and they later launched the Boeing 767
01:28following Airbus's example.
01:31But still, Airbus had been the first
01:33to launch a twin-engine wide body.
01:35And for a company that
was just entering the market,
01:38this was a pretty great call, right?
01:41Well, in reality, Airbus actually
01:43got a little bit lucky here
in a couple of ways.
01:47Obviously, the timing of the oil crisis
01:49wasn't in their control,
01:50and contrary to how Lockheed
01:52and McDonnell Douglas was envisioning
01:54for their wide bodies to be used,
01:56Airbus believed that
the main use of the A300
01:58would be in the medium-haul
market and mostly over land.
02:02Early versions of the
L-1011 and the DC-10
02:05were also oriented towards medium-haul,
02:06but from the very beginning,
02:08long-haul versions
were also in the works,
02:10and in practice, the
regulations back then
02:13made that third engine
an absolute requirement,
02:16at least for long over-water legs,
02:18which I'll get back to soon.
02:20Without this long-haul role in mind,
02:22at least in the beginning,
Airbus didn't need a third engine
02:25for the A300, which made
the aircraft much more economic.
02:29The fuel consumption
and overall maintenance costs
02:31for two instead of three or
four engines are just way lower.
02:35Anyway, after gaining acceptance
02:37as an aircraft manufacturing group,
02:39Airbus then started working
02:40on what would soon become
the Airbus A320 family,
02:43and after that, they revisited
their wide body lineup.
02:47They started with a shortened,
02:48updated Airbus A300 called the A310,
02:51and they then continued
with Airbus A340 and the A330,
02:55who actually all used
the same A300 fuselage.
02:59Airbus really wanted to make themselves
03:01true equals to Boeing, and in the minds
03:03of a lot of people in the company,
03:05Airbus couldn't really
take on Boeing fully,
03:08unless its own aircraft lineup covered
03:10all of the aircraft that
Boeing had in their lineup.
03:14Now, the period that I'm referring
to here is the late 1980s,
03:17and this was a very busy
time for both Airbus and Boeing.
03:21In the United States in 1988,
03:23Boeing was test-flying
the then new Boeing 747-400,
03:26and at the same time,
they were talking
03:28to airlines about the new plane,
03:30which would eventually become
the majestic Boeing 777.
03:33In Europe, Airbus had
just introduced the Airbus A320
03:36and was still putting
the finishing touches
03:39on the remaining members of that family,
03:40whilst also developing the
A340 and the A330 wide bodies.
03:45So everyone was really busy,
03:47but like I said, Airbus saw itself
03:49as the one catching up in this race.
03:52Now, even with most
of their engineers busy,
03:55there were still some people at Airbus
03:57who were thinking
of the next step to do.
03:59In particular, they were looking
at the Queen of the Skies,
04:01the Boeing 747-400, which Boeing
was just about to introduce.
04:06Now, Airbus wouldn't
actually launch the Airbus A380
04:09until over a decade later.
04:11But to engineers
and planners at Airbus,
04:14it was seen as the
next logical step to take,
04:16even as far back as in the late 1980s.
04:19The way they saw it,
04:20the A330 was their
small twin-engine wide body,
04:24while the A340 had
the range to take care
04:26of long-haul with higher capacity,
04:28and their A320 family
would compete comfortably
04:31with the Boeing 737.
04:33Now, I'm sure you see
where this is all going.
04:37Airbus believed that the A340
would hold its own pretty well
04:41against Boeing's coming 777,
04:43and that the only one left
in the Boeing lineup
04:45was the 747 that they needed to cover.
04:48And of course, the
fact that a newer version
04:50of that 747 was just
entering service was too much
04:53for senior Airbus
engineers to just ignore.
04:56Simply put, creating
their own double-decker
04:59to pit against the wildly
successful Boeing 747
05:02was a question of both business strategy
05:04and prestige for Airbus.
05:06As the authors Guy Norris
and Mark Wagner explain,
05:09there was also another motivation
05:10for Airbus to design
a monster like this.
05:13Basically, Airbus' engineers
would need something to do
05:17once the A320, A330 and
A340 programs entered service,
05:21but obviously this new program
05:23would have to make economical sense
05:25in order for them to
get the green light for it.
05:28It would still take
several years of studies
05:31before the planning of these
aircrafts even became public,
05:33and when it did, Airbus referred to it
05:35as the Ultra High-Capacity
Aircraft, or UHCA.
05:39Now, those involved in
this project could clearly see
05:42that this aircraft would
require several innovations
05:45to both design and materials
in order to become a reality.
05:48And logistically, this new plane
05:50would also be an extreme test
05:52of Airbus' strategy of building
aircraft using parts made
05:55in different factories all over Europe.
05:58From the very beginning
of their existence,
05:59Airbus had relied heavily
on its fleet of Super Guppy
06:02and later, Belugas,
to move large aircraft parts
06:05across its factories in Europe,
06:07but this was never going
to work for the A380 parts.
06:10They were simply just too big.
06:13Instead, Airbus would need to rely on,
06:15for example, barges
to move finished wings
06:17from Wales in the UK down
a river and then over to France.
06:22The Belugas were eventually also used
06:24to fly some smaller parts,
06:25while other bits travelled
via road convoys, for example.
06:29It was also obvious
that the plane's enormous size
06:32would continue to be a problem
even after its introduction.
06:36To accommodate these giants,
06:37airports would need long runways,
06:39wider taxiways and extra large gates,
06:42larger than the gates
meant for even the 747.
06:45So a lot of airports had to modify
06:47their jetways and other infrastructure
06:49in order to be able
to handle this new giant.
06:52But I'm getting a little
bit ahead of myself here.
06:54The point is that both making
06:56and selling the A380 to the airlines
06:58would be a risky
and costly project to do.
07:02And as I explained before,
07:03some of the early reasons why Airbus
07:05was even looking at making
its aircraft like prestige
07:08and keeping its designers
or engineers busy
07:11were a little bit questionable maybe.
07:15But in the decade that
followed those initial plans,
07:18more and more people at Airbus
started getting convinced
07:20that the Ultra High-Capacity
Aircraft made perfect sense
07:24after a bit of cajoling by
Boeing, according to some,
07:27and I'll explain exactly what
I mean by that after this...
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Now back to the video.
08:53To understand how
Airbus became convinced
08:55that they needed to develop the A380,
08:58it's worth taking a quick look
at the Airbus A330 and A340.
09:02Specifically we need to look
at how Airbus prioritized
09:04the development of
those two wide bodies.
09:07The A340 entered service
first in March of 1993,
09:10about 10 months before the A330.
09:13Now other than the
number of the engines,
09:16their lengths and one
extra main landing gear
09:19on the A340, these two
aircraft were nearly identical
09:22and because of that, they
also shared a pilot type rating
09:25along with almost all
of their other systems.
09:28They even shared the
same wing which meant
09:29that the legacy A330 became a
bit heavier than it needed to be
09:33and that was a conscious
development cost saving for Airbus
09:36which seemed to be
worth it because the A340
09:38was actually going
to be the higher priority.
09:42And why was that then?
09:44Well, as a four-engine aircraft,
09:46the A340 could fly long oceanic routes
09:49without something
known as ETOPS restrictions.
09:54Extended Twin-Engine
Operations Performance Standards
09:57and as I explained before,
these standards have to do
10:00mainly with long oceanic flights.
10:03You see, before the 1970s,
10:04twin-engine aircraft weren't allowed
10:06to fly more than 60 minutes
away from a diversion airport
10:10but aircraft with more
than two engines could.
10:13But as jet engines became
more and more reliable,
10:16these rules were gradually
extended; first to 90 minutes
10:19and then to 120 and now,
some twin-engine aircrafts
10:22have the 330 minutes or five
and a half hour ETOPS approval.
10:27Now not everyone
expected ETOPS approvals
10:30to go that far including Airbus
10:32which is actually a little
bit ironic since it was actually
10:35the Airbus A300 that became the first twin
10:37to get a 90-minute ETOPS
approval back in 1976.
10:42Either way, this way of
thinking was what convinced Airbus
10:45that especially when it came
to a really large jet
10:47which would compete with the 747,
10:49ETOPS wasn't really a concern;
10:51it would need more than two engines.
10:55But what about the size then?
10:57Now passenger capacities
vary quite a lot between airlines
11:01but in general, a Boeing 747-400,
11:03for example, typically seats
around 370 to 400 passengers.
11:08But in the case of the Airbus A380,
11:10most airliners have
500 or more seats
11:13and a few have even
pushed that past 600.
11:17And that, of course, begs
the question how big
11:20was the world's demand
for aircraft that were that huge?
11:24Estimating the size of that
market became a key goal
11:27for both Airbus and Boeing
11:28and that was because during the 1990s,
11:31Boeing was also considering
its next steps with the 747.
11:34Was it worth enlarging it
11:36or was there even a
market for an all-new replacement?
11:40I've discussed the details
of the hub and spoke
11:42versus point-to-point models
in previous videos
11:44so I'm not going to go
into great detail here
11:47but what you need to know
is that the hub and spoke
11:49was the prevailing model at the time
11:51and Airbus expected
it to stay that way.
11:54As its name suggests, this is a model
11:56where an airline has
one or sometimes,
11:58a couple of really
big bases or hubs
12:00which it mainly operates out of
12:02and from those, the airline then flies
12:04to smaller destinations or spokes.
12:07This model favors big aircraft
since the landing slots
12:10will quickly become limiting at the hubs
12:12but it only works for really big aircraft
12:15if the smaller spoke destinations
12:17also have enough potential
passengers to fill them.
12:20The newer point-to-point
operating model
12:22is where an airline flies
between multiple city pairs
12:25without congesting
one airport in particular.
12:27And this system generally
favors slightly smaller aircraft
12:30and passengers also tend
to prefer this model
12:33since it offers more
options for non-stop flights.
12:37For the airlines, which
system is better depends
12:39on where and how many
big hubs they actually have
12:42and also what the rest
of their network looks like.
12:46And here is where Boeing
had an edge over Airbus.
12:50You see, since they were
a bigger seller of widebodies,
12:52Boeing could clearly see
that there was an appetite
12:55for a switch from hub and spoke
12:57over to the point-and-point model.
13:00That's actually why they had developed
13:01the all-new 777 instead of making
13:03an updated version
of the Boeing 747SP.
13:07The 747SP had worked
reasonably well but only
13:10in some niche markets
since its efficiency
13:12didn't make it desirable for other routes.
13:15Now Boeing had looked at a version
13:16with the updated engines
of the 747-400 but ultimately,
13:20the twin-engine 777
was just a much better
13:22and more versatile aircraft.
13:25Even the smallest early
777-200 had seats
13:28for over 300 passengers
and it also had ETOPS approval
13:31for 180 minutes right from its launch.
13:34And that, the growth
of potential destinations
13:37that could now be better-serviced
with jets like the 777,
13:40made judging the market
for future superjumbos
13:46And here is where things
gets a little bit more interesting
13:48and perhaps also a bit conspiratorial.
13:51When I said earlier
that both Airbus and Boeing
13:54were trying to estimate the
size of a future jumbo market,
13:57I meant that they were doing
that research partially together.
14:01In 1993 Boeing and DASA,
a German aerospace company
14:05that was then a key member
of the Airbus consortium
14:09announced
a joint research project
14:11to evaluate the viability and market size
14:13for an ultra-high-capacity aircraft.
14:16You see at the time,
Airbus wasn't a single company,
14:18instead it was a group of companies
14:20who worked together
to produce a line of airliners.
14:24And technically, each company could,
14:26not only do its own research,
14:27but also develop aircraft
with an outsider,
14:30like, for example, Boeing.
14:33The only catch was that DASA
and other consortium companies
14:36couldn't design aircraft with a capacity
14:38between 100 and 350 passenger seats.
14:41In other words,
they couldn't design something
14:43that was directly
competing with Airbus jets.
14:46But they could do whatever they liked
14:48outside of those parameters.
14:51That cooperation was a surprise move
14:53and authors Gay Norris
and Mark Wagner explained
14:56that a lot of people
in the industry saw this
14:58as an attempt by Boeing
to try and destabilize Airbus,
15:02which seems quite plausible.
15:04But, of course,
Boeing strongly denied this
15:07and argued that launching
an all-new aircraft
15:10for such an unknown market
15:11would be an incredibly
risky thing to do alone.
15:14Such a plane would cost at
least 10 to 15 billion dollars
15:17to develop, so joining
forces with another manufacturer
15:20would make a lot of sense,
15:22especially if the market wasn't
15:23big enough for two competitors.
15:26And, of course, if that made
some Europeans uneasy
15:29while researching it, well,
that didn't hurt either, I guess.
15:33But when many thought
that Boeing did this
15:35to destabilize their competitors,
15:37others had a different theory.
15:39And that was that
Boeing was actively trying
15:41to trick Airbus into launching
its Superjumbo project.
15:46Boeing was well aware
that Airbus was suffering
15:48from what some aerospace
analysts called fuselage envy.
15:52So the theory was that
if Boeing could stoke this desire
15:55by using this joint market research,
15:58showing that some sort of double-decker
15:59would follow the existing 747,
16:02this could nudge Airbus
in the right direction.
16:06This would be, while in reality,
Boeing had already settled
16:09on an aircraft the size
of the Boeing 787
16:12and not on a 747 replacement.
16:15So was this what actually happened?
16:19Well, it's actually hard
to know for sure.
16:21There were some indications
16:22that the German company
who collaborated with Boeing
16:25ended up being skeptical
about Airbus' plans
16:27to build the A380 and if that's true,
16:30then that would talk
against that kind of conspiracy.
16:33Actually from what we have been able
16:35to find when
we've been researching this,
16:37it's actually more likely
that Boeing just wanted
16:39to delay Airbus' decision until they knew
16:42what they wanted to do themselves.
16:44What is an absolute fact though,
16:46is that no matter what
the reason was for it,
16:48Boeing and Airbus eventually
16:50drew radically different conclusions
16:52from that joint market research.
16:54The different companies within Airbus
16:56didn't fully agree, like I mentioned,
16:58but in the end, they concluded
16:59that there was a potential
market for 1,200 Superjumbos.
17:05And they hoped to
make at least 750 of them
17:07to make the program profitable.
17:10Boeing, on the other hand,
17:11believed that the total
size of the market
17:12was just 800 aircraft or so
17:15and that included a freighter variant.
17:17Now with the benefit of hindsight,
17:19we know that both Airbus and Boeing
17:22were very, very wrong
in these market estimates.
17:26Airbus ended up only selling
a total of 251 A380s
17:29and even if we add to this,
the 36 passenger 747-8s
17:33that Boeing sold, we are well short
17:36of those other lofty numbers
that they were talking about.
17:39In any case, Boeing had
correctly concluded
17:41that even their
prediction of 800 orders
17:43weren't enough for two
competing all-new jets.
17:46So they instead just examined
17:49the possibility of
launching an enlarged
17:50and re-winged version of the 747-400.
17:54Boeing went public with
those plans back in 1996,
17:57announcing versions called
the 747-500X and a 600x
18:01and even a more radical 700x.
18:04But the airlines just weren't interested,
18:06not even in a later proposal
for a more modest 747 stretch.
18:11But although that was the case,
18:12initially a lot of people in the industry
18:14criticized Boeing for remaining idle
18:16while Airbus continued to innovate.
18:18But Boeing were adamant that
they had done their homework,
18:22the market just wasn't there.
18:24Having said that though,
Scott Hamilton explains
18:26in his book, "Air Wars"
that when Singapore Airlines
18:29rejected the 747-500 in favor of the A380,
18:33that really startled the
Boeing sales teams.
18:36Maybe they had done
a huge mistake here.
18:40And Airbus, they even
offered to help airlines
18:42with some of the airport
infrastructure changes
18:44that the A380 would require
18:46in order to convince
them to start buying it.
18:48Now, Airbus formally launched
the A380 in December of 2000,
18:52with 50 orders from
six different airlines
18:54and then due to a number
of technological issues
18:57and just some general problems
18:59arising from the sheer size of the jet,
19:02they were hit by delays
of over two years.
19:05As a result of that,
Airbus abandoned their plans
19:07for a possible freighter version,
19:09losing 20 orders from FedEx
and UPS in the process.
19:13But even more importantly here,
19:15remember those development
costs that Boeing had estimated
19:17to be between $10 billion and $15 billion?
19:21Well, estimates vary here,
but most analysts believe
19:24that the A380 actually ended up costing
19:27between 20 and 25 billion to develop.
19:30And if that's true,
it never stood a chance
19:33of ever becoming profitable.
19:36Arguably though, Airbus
were actually a bit unlucky here.
19:39The A380's engines were
already getting a bit out of date
19:41at the time that it entered service,
19:43and in terms of the efficiency of it,
19:45the plane also had another issue.
19:48You see, the full name of this jet
19:49is actually the Airbus A380-800,
19:52and that's because Airbus
originally planned
19:54to introduce an even bigger
A380-900 at a later date.
19:59Now, that obviously never happened,
20:01but the A380's wing, even
though it's incredibly efficient,
20:04was sized to work with
the even greater weight
20:08similar to how Airbus
had dealt with the A330
20:11and the A340 earlier.
20:14But that fact, meant, of course,
20:16that the wings that were fitted
to this version of the A380
20:18that we've all seen is actually
a bit heavier and bigger
20:22than they need to be, and,
therefore, also less efficient.
20:26In the end, Emirates was the only airline
20:28that has the kind of hubs and network
20:30that allows it to scale operations
with the A380 effectively.
20:33They bought 123 of them,
20:35almost half of all A380s ever made,
20:37and they would have bought more if Airbus
20:39had offered a re-engined variant.
20:42With no more orders in the books,
20:43Airbus, in 2019, announced that
the very last ever Airbus A380
20:48would go to Emirates in 2021,
meaning that the aircraft
20:51would be cemented as a financial flop,
20:54even though both passengers
and pilots absolutely loved it.
20:58Now, Airbus had obviously felt
20:59where the winds were
blowing way earlier,
21:02because already in 2006,
21:04with the Airbus A380 still in development,
21:06Airbus had launched the A350,
21:08realizing that they had to provide
21:10an efficient twin-engine alternative
21:12to their four-engine behemoth,
21:14and that aircraft has obviously
been doing exceptionally well.
21:17Boeing eventually built the
747-8 for a fraction
21:21of what the A380 cost to make,
21:23but it ended up mostly
being sold as a freighter.
21:25No US airline ever bought the 747-8,
21:29nor any Airbus A380 for that matter.
21:32Finally, one interesting
late news piece
21:34about the A380 story
is Global Airlines.
21:38This new British company
hopes to start operations
21:40with four A380s and has
already acquired two of them,
21:43with Hi Fly Malta
listed as their operator.
21:46Now, I might get back
to this airline in the future
21:49as I find their business
idea quite fascinating,
21:51but it seems obvious
that scaling up operations
21:54in the Emirates' way
isn't really in Global's plans.
21:58For now, the odds seem
to be stacked against them,
22:01but time will tell if
Global will be just a footnote
22:04in the A380's history
22:06or an unexpected
start of its resurgence.
22:10Let me know in the comments below
22:11and leave a like if you
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22:40Have an absolutely fantastic
day wherever you are
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