Analysis: 9V-SKA – The Beginning of the End for the Whale?

James Cahalin

On Friday, the 25th of August, after just shy of 10 years of service, Singapore Airlines announced the first withdrawal of an A380 from a launch customer’s fleet. Airbus A380-841, 9V-SKA is the third of its type off the assembly line, 11 years old, and may possibly carry the distinction of being the first A380 to face the axe.

The aircraft is scheduled to be returned to Dr. Peters’ Group, an aircraft leasing firm, in the coming months following its full exit from the fleet. Normally, an aircraft leaving service with its original operator or even launch customer would not be a remotely noteworthy topic as it’s quite a common occurrence. Yet, with the retirement of the first commercially operated A380, Airbus, and to a lesser extent, the aircrafts’ owners now face the problem of a potentially unwanted aircraft with a non-existent resale market.

For Airbus this isn’t an entirely new problem, as they faced similar trouble when the world’s Airbus A340 fleets started being retired — especially with the larger A340-500 and -600 variants. Faced with an angered customer base, who were frustrated with high operating costs and low-to-no yields, along with Boeing engaged in an expensive buyback scheme in an attempt to curry favour and win A340 replacement orders, Airbus’ financial exposure to the rehoming fiasco has been considerable. Indeed, even when demand for the aircraft type lulled, Airbus signed guarantees with customers ensuring aircraft value and in some cases signed buy back clauses in order to shift frames. As a potential oil crisis loomed (the retirement of the A340 fleet began around the time that oil prices reached US$100/barrel), an aircraft renowned for its ability to burn fuel simply became an easy target for accountants, desperate to cut costs by any means possible. While there has been a lull in Airbus A340-600 retirements, (as oil prices have declined, their large size means they are still capable to operate reasonable economies of scale) and some aircraft have found new homes in emerging markets like Iran, the -500 series has all but disappeared from the skies, with a handful finding new homes with private owners or niche ACMI (aircraft, complete crew, maintenance, insurance leasing) operators like HiFly.

With the experience it has gained from its A340 programme, it would be natural to assume that another type exiting fleet would be met with an owner or manufacturer ready to place the frame with its second owner. This time it’s different. The A380 is known the world wide for one thing above all – its stupendous size. This size has garnered it prestige and infamy across the globe. An A380 possesses the largest size imprint of any passenger aircraft on any ramp worldwide. We’re talking about an aircraft so big, it’s been designated a SUPER call sign as the wake created behind it is unbelievably enormous. An aircraft so wondrously large yet brilliantly economical it has fans the world over. But, even after all of this weird brilliance, an A380 requires special treatment, from double boarding jetways to special ramp and taxiway reinforcing. And a simple fleet of one or two, unlike its older A320 siblings, do not an airline make.

British Airways staff posing in front of the airline’s first Airbus A380. The airline’s CEO, Willie Walsh, is one of a few industry voices who see second-hand demand for these aircraft. Photo Credits: Gist Italia

While Willie Walsh (CEO, IAG) has expressed interest in acquiring second hand A380 aircraft, and Singapore’s Rolls-Royce powered examples would be the correct fit for his fleets, his opinion is a rare in an industry that is shifting to smaller aircraft. Many believe the A380 is the one that has gone too far — potential customers, and existing owners included. The real threat to the whalejet’s existence is the potential of immediate retirement to the scrapyard, so the aircraft can be scrapped for parts and metals; in the case of 9V-SKA, Dr. Peters’ have already discussed the possibility of such a move, believing it would potentially support the rest of the existing fleets. However, for Airbus, this decision would certainly be a death knell for the program, as aircraft are being retired young and no airline would purchase an aircraft brand new when they can buy a relatively lightly used, recently retired model.

The coming months will be interesting for the A380 program. Further Singaporean and Malaysian examples are expected to retired as lessors scramble to place them. Production is also being reduced to just below one per month, while the A380plus program is nearing its start, as what many consider a last ditch attempt at reigniting sales. In the meantime, 9V-SKA, an aircraft once considered the future of travel, now faces an empty airfield amongst her formerly lesser peons. What remains to be seen is how many will follow, and for how long will they last.

Featured photo by Aero Icarus via Wikimedia Commons.

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