Commentary

Does China really need the Airbus A-380?

The first Airbus A380 delivered to China Southern Airlines takes off from Toulouse-Blagnac Airport, near Toulouse on Oct 14, 2011. PHOTO: REUTERS

French President Emmanuel Macron gave a horse to his Chinese counterpart Xi Jinping this week, but handing over the Airbus A-380 has proved more difficult.

The visit started with talk about Airbus offering China a production role on its superjumbo aircraft to secure a programme-extending order for the slow-selling jet. While discussions were held on sales of the A-380, according to Mr Macron, there's no sign yet of any new orders or industrial deal for the double-decker plane.

There was a time when China taking a production role on the A-380, a symbol of European industrial cooperation and technological accomplishment, would have been unthinkable. Times have changed.

Offering China what amounts to largely cosmetic work on the A-380 - things like the cabin equipment and paint job would be added locally - would be a small price to pay to rescue the programme, which risks being shut down due to a dearth of fresh orders.

If China can be persuaded to accept in the coming weeks or months, in return for purchasing more of the aircraft, Airbus should seize a much-needed helping hand. There's no guarantee China will offer one though.

On paper at least the A-380 is well-suited for the Chinese market. The world's most populous country has congested skies and airports, which frequently leads to long delays. And air traffic in the country is poised to increase, a lot.

Cramming as many people as possible onto a plane might therefore make sense on particularly busy routes.

That's the theory, but the A-380 has been a lesson in how business plans that look good on paper can disappoint in reality.

So far China has only purchased five superjumbos and operator China Southern Airlines has at times struggled to find ways to use them profitably. So any discussions with Airbus will probably focus on what China gets in return.

China holds a stronger hand today. Overall, Chinese deliveries account for almost one quarter of Airbus' aircraft production. Though it will need thousands more new planes in coming decades, China doesn't necessarily need A-380s. Beijing is also unlikely to be giddy at the prospect of gaining only a modest part of the A-380's value-added.

Designed almost two decades ago, the double-decker is no longer cutting edge. Smaller wide-bodied aircraft such as the A-350 and Boeing 787 make greater use of composite materials.

"For aviation, China isn't a cheap or stupid market to peddle unwanted goods," Mr Will Horton at CAPA Centre for Aviation told Bloomberg Gadfly. "If A-380 sales were up to Chinese airlines, they wouldn't buy it - but of course orders are political."

With Airbus running out of options for the A-380, expect the Chinese to hold the whip-hand.

BLOOMBERG

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A version of this article appeared in the print edition of The Straits Times on January 11, 2018, with the headline Does China really need the Airbus A-380?. Subscribe