Cost of decommissioning A380’s is huge so why do it now?

Leasing is one thing, like any rental you can give it back and pay a penalty usually pre-negotiated in the contract and based on a sliding scale of how long is left to run. It’s a relatively inexpensive way of ditching unwanted aircraft- but even so it costs millions and often varies depending on when the aircraft was leased and the then current market value, or the estimated worth of the aircraft, at the end of the lease term.

No leasing company ever gets that spot on, it’s 10 years down the road on most, and as many as 12 to 15 years is not as uncommon as it used to be. Nobody though, could have predicted that A380’s would go into free-fall; because right now they’re worthless except as spare parts.

And remember we’re talking aircraft only here, for most airlines the engines are leased as well, usually separately, but as part of the overall package.

Owning an A380 is quite a different matter.

AirFrance is basically paying €100 million per aircraft it owns, to write off the costs – that’s €500m in total that will come out of an already massive operating loss for this year.

Part of the reasoning to write them off and decommission now, is to make 2020’s balance sheet worse than it would have been deliberately, accept the loss, but inside the massive loss everyone expects for the pandemic, and start the next financial year 2021-22 with a clean sheet.

The idea of stretching out the write-off costs on A380 over another four years, never mind the cost of operating just five, probably at a loss, simply couldn’t be justified.

In AirFrance’s case there is also an urgent need to have refurbished the fleet, that cost was estimated at €100m over five aircraft in the early group and about €120m in the second group.

Constant operational issues of maintaining a small fleet of 10 with an unreliable engine (The Engine Alliance version is now seen as the least desirable of those available), with at least one and often two unexpectedly grounded on a weekly basis, was yet another headache. With the chance of operating five and at least one out of service every week, it would be even more difficult to keep one available as cover. For the most part it takes three aircraft to operate one long-haul route daily (say SFO) and two on a mid-haul like JFK.

Another pressing issue for AirFrance was the bailout money that came with some fiscally undesirable environmental conditions. Let’s be honest, businesses don’t want to do anything to contribute to the environment unless they’re either made to, or it looks good as PR (and in which case its mostly cosmetic anyway), or they have a financial incentive to do so.

AirFrance, already facing the loss of some 90% of its domestic fleet by the end of 2024, because the government insisted on it as part of the bailout, has also been told to cut the entire fleet emissions by 50% based on 2005 as a starting point. And we’re not just talking Co2.

A typical A380 flight was Paris CDG to SFO, 8,985Km great circle distance, so it uses around 155 tons of jet fuel. An A350-900 uses a little over 75 tons of fuel for the same distance. Even if two A350-900’s flew each day, its still less than 1 A380.

Cost wise an A380 fully fuelled and expensed, with crew runs out at around US$41,000 an hour. Even with depressed fuel prices, figures don’t move too much because crew and airport, ownership costs and so on are relatively fixed, and it also lowers for all aircraft.

A Typical 744 is around $28,000, and an A350-900 is around $18,000. Again, two AirFrance A359’s carry 648 passengers while the A380 only carries 516. The math is decidedly running against the A380.

Many times the AF A380’s were seen flying over Leamington Spa from LAX or SFO to CDG

When it comes to Co2 an A380 is running around 600kg per passenger, while an A359 is running at around 500kg per passenger on a route like CDG-SFO. (This is a very different calculation and not just based on fuel burn, but occupancy, and number of passengers per aircraft).

Add to all of this the A380’s unique demands – triple air bridges, huge passenger waiting areas, reinforced concrete bases for stands, wider taxiways, never mind huge hangars and all of the modified catering trucks to reach the upper decks, are all an added maintenance expense that make landing fees and airport charges far higher.

I had a long chat with a TSA immigration agent who dreaded A380 arrivals, they simply overwhelmed the facilities. Other airlines hated how much time it took for their passengers to get through border controls if one had disgorged in front of them. Time your arrival badly somewhere like SFO and an AF A380 arrived almost at the same time as the BA one – nearly 1000 passengers and crew all at once, getting off a 787-9 in the middle of that lot was not ideal.

So all these things and more besides, have led to the demise of the A380 at AirFrance. The first airline to totally remove them from service is in the country where they are assembled (at least for the next few months). That’s a twist of the knife that only history will immortalise.