Airbus is polling airlines that fly the massive double-decker A380 for interest in converting the out-of-favor plane into a freighter, while keeping the top level for passengers, to take advantage of demand for e-commerce shipping, according to sources with direct knowledge of the matter.
The trial balloon is a reflection of how far the super-jumbo’s stock has fallen as a people mover and the industry’s thinking that passenger traffic isn’t going to come back enough after the pandemic to support what once was the manufacturer’s crown jewel.
Developing a hybrid cargo jet with passengers on the upper deck also underscores the A380’s limitations as a pure freighter and that dual revenue sources are needed to make the business case work. Analysts expressed skepticism that Airbus (DXE: AIR) can pull off the project because a freighter conversion would be costly to engineer and uncompetitive with other all-cargo aircraft.
“We are always looking into advancing our products, keeping them at the leading edge of technology. We are in constant dialogue with our customers about the latest state-of-the-art technologies and ongoing innovations,” Airbus spokesman Bart Greer told FreightWaves in an email, adding that a passenger-to-freighter conversion of the A380 would be technically feasible.
“If we see sufficient customer interest in an A380 converted freighter, we would investigate this possibility further,” he said.
A source within the Airbus corporate family, who asked not to be named, confirmed the airframer is shopping around the conversion concept. Another person, who also spoke on condition of anonymity, said two airlines privately confirmed they have been approached about the matter.
An A380 converted freighter has merit, but only if there is significant interest to recover the non-recurring development, testing and certification costs associated with a major alteration, said Stan Wraight, co-founder and president of Strategic Aviation Solutions International, an aviation consultancy.
“They better get 50 or 60 orders to make that work,” he said.
Meanwhile, Reuters recently reported that Airbus is also testing the waters for a freighter version of the A350 passenger jet.
Unmet Expectations
Cargo could give the A380 a new lease on life. Otherwise, it is going to end up stored in the desert, stripped for parts or scrapped, aviation experts say.
The pandemic was the last nail in the coffin for the sky bus that never met expectations. In 2019, Airbus announced it would stop producing the A380 and in March the last one left the assembly plant in Toulouse, France. Only 251 A380s will be delivered compared to original market forecasts of more than 500; the earliest versions are just 14 years old.
The four-engine behemoth was designed for high-density passenger markets. But soon after development, it was eclipsed by Boeing’s efficient, long-range twin-engine 787 with high-tech composite materials that tapped into consumer preference for direct flights rather than connecting through major hubs. Airline executives were also focused on the environmental benefits of powering aircraft with fewer engines, so Airbus shifted resources to the A350.
The 787 Dreamliner and the 777-300 Extended Range have passenger yields that rival the A380’s with significantly lower trip costs, according to analysts.
When passenger travel plunged with the pandemic, Air France-KLM retired its fleet of A380s in favor of more fuel-efficient and modern aircraft. Lufthansa (DXE: LHA) did the same with six of its planes, and another eight are expected to be mothballed. The carrier last year said the aircraft would only be reactivated in the event of an unexpectedly rapid market recovery.
Last month, CEO Tony Douglas said Etihad Airways likely won’t bring back the giant planes. Instead, the state-owned carrier will downsize and focus on smaller aircraft such as the 787.
Thai Airways recently solicited interest from potential buyers for two of its A380s.
“The way the values of those aircraft have dropped, I mean they’re almost worthless,” Phil Seymour, president of London-based IBA Group and veteran aircraft appraiser, said in an interview.
As of late January, only China Southern, Emirates and Korean Air were operating A380s, according to Simple Flying. British Airways, which has 12 of the aircraft in storage, plans to return them to service, CEO Sean Doyle recently said at a conference. The airline, however, did retire its entire fleet of 31 Boeing 747-400 jumbo jets last summer.
Despite its enormous size, the A380 was never prized for cargo transport because so much space is devoted to passengers and baggage. Fully loaded, it holds 20% to 60% less cargo than other widebody jets. Depending on passenger loads, cargo often is offloaded at the last minute, making the plane unreliable for shippers. And the extra passenger weight further restricts cargo on ultra-long flights.
Pound for pound, logistics professionals say the Boeing 777 is the best long-haul cargo jet, both as a pure freighter and passenger jet with lots of belly capacity.
The ‘combi’
Airbus, which is part of a joint venture that does modification work, is offering a combination aircraft in an apparent effort to help customers that are stuck with the aircraft. The A380’s limitations, including potential restrictions on container size even after retrofitting, means the only addressable market is existing customers because the plane still needs passenger revenue to make the economics work.
The airfreight market has been booming since last summer. With passenger airlines operating a fraction of their fleets, capacity has not kept up with extremely strong cross-border trade fueled by manufacturing and e-commerce activity.
Air cargo rates on key routes are four to five times more than normal for this time of year. Airlines have taken advantage of high yields by operating dedicated cargo service with passenger aircraft.
Freighter conversions typically occur when aircraft come to the end of their useful life serving passengers. They allow owners to extend the timeline for depreciation and achieve greater investment returns. Airlines can sell the planes into the secondary market. The buyers, or leasing companies repurposing the aircraft, send them to specialized maintenance shops to gut and cut the airframe.
But so-called “combis” have a checkered history.
KLM, which is the only mainstream carrier to have made money with the unique aircraft, recently got rid of its last 747-400 combi. Today, the dual-use planes are mostly used to serve remote areas because they allow airlines to split flights with freight and people for locations where there isn’t huge demand for either. Experts say they are difficult to manage because airlines are trying to serve two markets at the same time, often requiring them to make operational compromises and comply with increasingly stringent fire safety standards.
In a typical “combi” configuration, cargo and people coexist on the main deck, divided by a reinforced bulkhead. Airbus is floating a concept in which the main deck would be restructured for cargo and the smaller upper cabin would remain for passengers.
One reason for such a configuration is that the ceiling of the A380’s main deck may not be high enough to fit 10-foot pallets, said Steve Fortune, who heads investment consulting firm Fortune Aviation Services. The floor height of the passenger aircraft was different than what FedEx (NYSE: FDX) needed before Airbus canceled plans in 2007 to build a freighter version over concerns about sales and different engineering requirements.
Fortune, who worked in FedEx management at the time, said he assumes if the deck height was an issue, then it could still be one for an all-cargo airline.
The aircraft’s two-story design renders conversion impractical, other analysts agree.
“We do not believe that a passenger-to-freighter conversion of the A380 would be viable, especially given the high empty weight of the aircraft relative to its potential freight payload,” said Chris Seymour, head of market analysis at Ascend, the consulting arm of aviation data provider Cirium. “Specifically, the passenger design and location of the upper deck are not optimal for cargo use and the aircraft would be relatively compromised in the context of payload, with significant volume but with potential weight restrictions.”
Target audience
The Airbus likely will target its pitch to major A380 operators such as Emirates. Those with only a few aircraft will simply write off the assets, a source familiar with the situation said.
Emirates has 103 A380s in its fleet. In November, it began flying the super-jumbo jet in cargo-only operations, sometimes with cargo in the seats, a tactic many passenger airlines employed during the past year to take advantage of the red-hot cargo market. The company said it can carry about 50 tons of cargo in the belly.
Emirates also has a fleet of 11 Boeing 777 pure freighter aircraft, as well as 16 modified 777-300s with seats removed to temporarily increase capacity while cargo business is up and passenger is down.
An Emirates spokesperson was noncommittal about a converted freighter, but said the Skycargo division is “well positioned to meet global air cargo demand with our current fleet mix.” She noted that as a mini-freighter, the A380 has the ability to safely transport larger quantities of dry ice, which allows more temperature-sensitive cargo such as COVID vaccines to be transported.
“We do not see any feasible deployment scenario for an A380 passenger-to-freighter conversion,” Lufthansa spokesman Andreas Pauker said.
“Singapore Airlines remains committed to the A380 passenger aircraft and will have 12 aircraft in our fleet as we recover from COVID-19,” a spokesperson said without making reference to the cargo configuration.
IBA’s Seymour said retrofitting the main deck of the A380 for cargo while maintaining access stairs to the upper deck could pose an engineering challenge for smoke and flame suppression because the ventilation systems need to be isolated.
“It’s not really a case of putting up a partition and few fire extinguishers. The whole air conditioning infrastructure needs to change as well,” he said in an interview.
Developing a freighter conversion program takes years. Fortune estimated Airbus would have to invest about $100 million to design a modification and installation kit, not including production costs.
“The A380 aircraft is, therefore, likely to be uncompetitive against other converted aircraft types such as the 777-300 Extended Range, 767 and the Airbus A330,” Seymour said. Israel Aircraft Industries last year launched a 777 conversion program and will charge about $30 million per unit, FreightWaves has learned. Airbus would need to similarly price the A380 makeover to make it reasonably competitive, Seymour added.
One factor that might work in the A380’s favor as a combination freighter is that the massive shift to e-commerce means more light boxes are being shipped today than ever, with planes often filling up before they hit the maximum payload weight.
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