Think Big

The motivation was the suggestion by Airbus CFO Harald Wilhelm at an investor conference that the aerospace giant is considering closing the A380 line in 2018 because of a lack of orders.

Clark was furious and in an exclusive interview with this writer for Australian Aviation and airlineratings. com vented his displeasure at the lack of foresight and gumption on the part of his competitors.

And he also issued a blunt warning that with travel due to double inthe next 10 years to seven billion passengers, airlines and airports will need giant jets like the A380.

“The A380 is a passenger magnet.

We operate five-a-day from Dubai to London’s Heathrow and they are 95 per cent full,” Clark told this writer.

“Airlines are too conservative and have not put the right interiors into their A380s. Some of the interiors are a disgrace and use DC‑10 and TriStar [1970s] thinking. ” Clark added that it was critical to get the layout right.

“We put all our premium seats on the upper deck and economy on the main deck, but others have mixed them which is very inefficient. Our competitors laughed at us when we put showers and a lounge in the A380. But passengers love the showers and they love the lounge. ” Indeed, Emirates is the only airline to truly embrace the potential of the A380 with showers and a bar – albeit for premium travellers. But they are the ones that drive the profits.

The bar on the Emirates A380 is enormously popular and contributes significantly to the appeal of the aircraft. And by putting all its premium passengers on the upper deck the airline has been able to build its operations and terminal layouts around this feature with boarding directly from premium lounges to the upper deck.

By way of contrast British Airways has first class, business class and economy on the main deck and business, premium economy and economy on the top deck.

Clark said he resisted the push to have an 11-across interior on the main deck for economy.

“I wanted to ensure we had the maximum comfort for our passengers and I think we have the best economy on the A380. ” Clark said that if airlines can’t fill the A380 they shouldn’t be in the business.

“The A380 is a great aircraft. If airlines don’t believe they can fill an A380 then their business model is wrong,” he said.

“If they can’t fill it there is something wrong with their marketing. ” Emirates has 56 A380s in service with orders for a further 84.

However, sales to other airlines have almost dried up and a number of orders are in question.

In August last year Airbus CEO Tom Enders told Bloomberg: “Without referring to any specific airline, I can assure you that we have cases where airlines are in the order backlog but not in the production plan. We are watching the situation carefully, and know about the strengths and weaknesses of customers. ” One key customer who is yet to decide to take the giant is Virgin Atlantic with six, while it is generally considered that Qantas’s remaining eight will not be delivered.

Through November 2014, Airbus had orders for 314 and had delivered 147 to 13 operators.

New operators in 2014 were Asiana, Qatar and Etihad Airways.

But hard jumbo times are not confined to Airbus with Boeing announcing in December that it will cut production of its 747-8 to 1. 3 planes per month from 1. 5 per month, starting September 2015.

Boeing said that the cut is being made “because the near-term recovery in the cargo market has not been as robust as expected. ” However, Boeing said it remained committed to the 747.

“We continue to believe in the long-term strength of the freighter market and the 747-8 is uniquely positioned to capture this demand,” Boeing said.

Since it was launched in 2005 the 747-8 has attracted 119 total orders with 68 of those orders for the cargo model and the remainder for the 747-8I passenger version.

To November 30 Boeing had delivered 80 747-8s with 39 unfilled orders.

However, Boeing says privately that there are still good prospects for the passenger version, while in the freight market the 747-8F is a standout. Airbus, meanwhile, has been mulling an upgrade of the A380, dubbed the A380neo, with new engines and aerodynamic improvements.

Clark said the new model, if built, will have excellent economics, as good as the Boeing 777X that Boeing will introduce in 2018/19.

“And we will buy 140 of the A380neos,” Clark promised.

Asked what about the 140 A380s he would retire, Clark referred back to his comments about the lack of imagination of some airlines.

“You can fill this plane, just the same way that Michael O’Leary fills his 737s at Ryanair. ” In fact Clark once touted a low-cost long model for the A380 flying from Stansted in the UK to Adelaide via Colombo.

Clark added that “as long as I am around I am going to continue to fight the battle for the A380. This is a great aircraft and the world needs it. ” And not unsurprisingly Airbus Chief Operating Officer Customers John Leahy agrees.

“Some airlines are quicker to realise the huge productivity benefits of the A380, and they are reaping the rewards today,” Leahy told Australian Aviation.

“There’s no doubt the A380 is already a magnet for the flying public. ” Leahy’s boss, Airbus chief executive Fabrice Bregier, said the company is committed to developing an upgraded A380 with new engines and a longer fuselage.

Speaking at an investor conference the day after Clark had leapt to the aircraft’s defence, Bregier says there is plenty of potential to build an A380neo, or new engine option, at some point in the future. However, no timeframe was given for the launch of that product.

“We will one day launch an A380neo and I will tell you asecret, we will one day launch a stretch of the A380,” Bregier said during an Airbus investor presentation in London.

“It is so obvious that there is extra potential and the market is growing in size. ” Bregier noted that the A380 program was “almost fully booked” for the next three years.

“We will get additional customers on the A380,” he said.

“We have to find ways to convince more customers that there is much more upside with the A380 than there is the downside due to the market situation. ” Part of that upside could come from a lack of airport capacity, as there can be little doubt that many airports are responding to air traffic growth at glacial pace with additional runway projects being pushed further and further back.

Clark is just exasperated by the debate over the third runway for Heathrow.

The Emirates chief said that it is anyone’s guess when that third runway will be built.

“Airports will not keep pace with demand,” he warned.

“British Airways should have ordered 50 A380s,” said Clark.

In Australia runway capacity is already a hot topic with Brisbane, Sydney and Perth at capacity at peak times.

Even with the downturn in the economy Perth Airport is at capacity for 70 per cent of the day Tuesday to Thursday inclusive.

And the second Sydney airport is no certainty anytime soon warns industry observers.

Clark’s comments about a lack of nerve and imagination in too many airline boardrooms possibly reflects a change in the dynamics and scale of the industry.

Fifty years ago, when the majority of passengers were first class thus ensuring profits and airline chiefs were great showmen and aviators rather than lawyers and accountants, taking risks was easier.

Today the landscape has changed dramatically with travel on a scale not imagined even 20 years ago.

Gone are likes of CR Smith (American), Bill Patterson (United), Juan Trippe (Pan Am), Donald Douglas (Douglas Aircraft) or Bill Allen (Boeing) who were lifelong leaders in their respective companies.

Today most airline CEOs stay around for 10 years and then exit to another industry.

There are of course exceptions and the most notable is Clark, who can recall at the age of five trying to fly in Borneo with palm fronds tied to his arms.

The inspiration for Clark about mass travel came from Sir Freddie Laker’s DC-10 Skytrain across the Atlantic.

Clark, working for British Caledonian at Gatwick Airport in 1977, was amazed that passengers would sleep in the terminal for 24 hours waiting for the next flight as there were no bookings.

“When I came to work I had to walk around the sleeping Laker queue in the terminal for the daily Skytrain flight. ” Sir Freddie Laker’s DC-10 Skytrain service was charging one quarter of the fare of the legacy airlines but there was no booking and if you were passenger 346 (the DC-10 was configured for 345) on the day you became number one for the next day’s flight.

“I was amazed at what people would do to get a cheap fare. ” Perhaps the A380 was born too late and was made for another era, or can Clark persuade his competitors to take a risk and make it happen? “Remember when Boeing was struggling with sales for the 747 in the mid 1970s. It bounced back. ”