Listen in as Aviation Week's Joe Anselmo and Jens Flottau and Teal Group's Richard Aboulafia discuss why the world’s largest passenger airplane never gained market lift — and what it means for the widebody segment.

Here is a rush transcript of the October 28 podcast.

Joe Anselmo:              Welcome to Aviation Week's Check 6 Podcast. I'm Joe Anselmo, editorial director. The last Airbus A380 is set to be delivered to Emirates later this year, marking a shutdown of the program, just 14 years after entering service as the world's largest passenger aircraft. Launched with great fanfare, the A380 never came close to meeting the company's lofty sales goals. Executive Editor Jens Flottau has just published a blow-by-blow analysis of the A380's rise and fall in the current edition of Aviation Week & Space Technology magazine. He's here to talk about it. Also joining us is Teal Group Vice-President and aviation sage, Richard Aboulafia.

                                   Jens, I read your stories, a few of the key takeaways that I noticed. One, demand for very large passenger jets was already declining when Airbus launched the A380 to unseat the Boeing 747. Two, the aircraft's design was optimized for larger variants that never came, meaning it was too heavy. Three, the A380's engines were out of date essentially by the time it entered service, compared with the newer airplanes such as the Boeing 787. And four, Airbus vastly overestimated its attractiveness in the critical China market. Did I hit the main points?

Jens Flottau:               Yes, you did. I mean, if you look back at the launch phase, Airbus was still in this mindset of trying to catch up with Boeing and they thought, "What do we need to do? What are we missing?" And what they were missing in their view was a big aircraft. Well, of course they launched the 380 several years after sales and production of the 747-400 had already begun to decline, and several years after the 777 had hit the market in the mid-90s. And then of course, years later, the 777-300ER came which became a huge, huge success. So the mindset was the wrong one. I strongly believe they were after the wrong target, the 747. They should have chased the 777 rather than the 747.

And then yes, I mean, the timing on engines was very unfortunate. You have to remember the 380 was launched in 2000 with an existing generation of engines at the time. And then in 2003, when the aircraft hadn't been delivered to Singapore Airlines -- that happened only in 2007 -- but in 2003 GE and Rolls came up with engines for the 787, which were much, much better. And then later, for variants of those engines to power the 350. So that has been a huge, huge blow that made the 380 in a way uncompetitive, right from the start. And yes, that's a structural issue as well. I mean, you just don't design an aircraft for a growth variant. You optimize the design for what it's going to be and then the stretch is something to consider later, but that was just a huge mistake from basically Airbus engineering.

Joe Anselmo:              Richard Aboulafia, Jens talked for his story with John Leahy, who was Airbus's chief salesman. One of the things I found interesting was Leahy claims that there was, "an enormous amount of politics involved from the US and Boeing to pressure China, not to order A380s." Do you buy that?

Richard Aboulaf:         Well, thanks for asking Joe. And first of all, just a congratulations to Jens on a fantastic job, doing a post-mortem of a plane that richly deserved to die. Over to the question of politics, not only do I think it's a completely false statement, but I also think it's a somewhat toxic statement. He's accusing the U.S. government of violating the WTOs agreement on trade in civil aircraft that precludes that sort of nonsense. And there is no evidence that there's any such political pressure these days for major campaigns. I'm sure there are markets which are not covered by the WTO, but China is, and there is no evidence that that exists. And of course, as I'm fond of saying, this is why so many American airlines have great Airbus jets. This does not exist, it's a thing. But it's even worse than that, because of course this sort of thinking allows the Europeans to retaliate and say, "Well, they do it. We can do it too."

                                   So that's the toxic aspect. And then on top of that, it's accusing the U.S. government of extreme incompetence because you're postulating that there's this U.S. government that has... Well, they've kept the 747 safe, meanwhile, China is buying hundreds of fantastic Airbus A32Os, A330s, A350s. They're just that desperately stupid in the U.S. government that they didn't realize the real commercial threat was elsewhere. I'm thinking they did. And they said, "Gee, there's not much we can do. Airbus is winning in China". And they have been winning in China with some really big initiatives like the Tianjin [final assembly] for the A320 series, kudos to Airbus for its tremendous China victories. The idea that somehow in the middle of this, you have some incompetent clown in the U.S. government saying, "We got to protect the 747" and exerting political influence is nothing short of laughable.

Jens Flottau:              Yeah. I mean, if you look at why didn't it sell in China, it's interesting, but I think the real reasons are different from what's been claimed. You have to look at the way the Chinese Airlines look at themselves. They are very, very conservative, they're very, very cautious in everything they do. At the time when the A380 was launched, they didn't feel like they were competitive, vis-a-vis the European carriers or the Singapore Airlines' of the world on the product side. So they just didn't think that they could fill these huge aircraft. And then there was an element of rivalry, internally I think, that didn't help either.

                                   Remember China Southern did order five aircraft, but Air China didn't, and at the time, there was this rivalry between the two airlines between the two CEOs there even. And I think there's a little feeling of Air China wanting to prove, to China Southern, that that was the wrong decision. So even more, they chose not to buy the aircraft. But you know, on top of that, I think Airbus always overestimated the potential of the China market. I mean, some of them told me, if we can sell 120 to Dubai, how many can we sell to China? You know, that must've been hundreds, but that was never going to happen.

Richard Aboulaf:         If I could just add to that, I'm an incorrigible pack rat when it comes to documentation and I saved the original A3XX marketing material from about a quarter century ago, and included in their rather absurd rationalization for launching this thing, was a list of routes that were thick and growing and would justify it. And I believe a little under half were routes that were not even 1000 nautical miles. So in other words, when it came to China, they might've deluded themselves into thinking, Beijing to Shanghai, why not? And I think that was actually a route, they didn't anticipate high-speed rail. It didn't anticipate so many other factors. So it could be, they were completely deluded about China and rationalized their failure there by saying, must've been political pressure rather than, infrastructure issues, and all of the airline factors that Jens just mentioned.

Joe Anselmo:              I remember being at the 2005 Paris Air Show and the A380 was the highlight of that show. It was shortly after it made its first flight. And I remember a French newspaper with a picture of President Jacques Chirac walking down the steps from the A380 and the headline was "How Europe Will Beat America". At the time they were aiming to get up to 45 A380s per year on the production line. What did they ultimately achieve?

Jens Flottau:              The peak was 31, I think in 2012 and 2014, two years there they achieved 31, but from then onwards, it was in decline until around 2016, when it became very clear that there wasn't going to be a market for the A380neo. No one was going to buy even an upgraded version with the same engines that had weight taken out, a more efficient cabin and so on. Then, the real decline starts at halving of production and it was kind of the beginning of the end. That drags on for a number of years, as they hoped to keep at least Emirates on board. But the sad and ironic thing in the end is that, to me at least, that even Emirates, the biggest fan of the aircraft, in the end, didn't want to take more of them. And I do think that kind of speaks volumes as to the real market potential of the 380, in the end.

Joe Anselmo:              Richard, as we noted the last A380 is going to be delivered, I think in December. The final 747s are slated to be delivered next year, after a long and storied run dating back to the end of the 1960s. After more than half a century, are really big airplanes a thing of the past?

Richard Aboulaf:         You know, it sure seems that way. You know, the big question I think is the [Boeing] 777X, the A380 of its time. And we're watching the expectations for that plane in terms of commercial sales, shrink in real time. And, it takes me back to the start of this. And I gave a speech in Hamburg in market analysis back in 1998 saying, "Hey, you know, we should really let this route fragmentation thing play out.” And I thought route fragmentation would lend itself to lots more smaller widebodies. I was right, but I didn't know how right I was. And I think a lot of other people were surprised that they thought the same thing. This route fragmentation thing keeps pressuring aircraft sizes downward.

                                   And I think that the center of gravity, if you will, for the market is now firmly on the [Airbus] A321neo. It looks like it's in the right place at the right time. And the pandemic and the associated downturn has reminded us of the timeless maxim that small is beautiful. And you never went bankrupt flying a plane that was too small, as I believe Robert Crandall said. So I think we've all been surprised by just how endless this downward process seems in terms of average aircraft size on even trans-Atlantic and international routes.

Joe Anselmo:              Jens are you surprised as well, that the market has fragmented like that?

Jens Flottau:               I wouldn't say surprised. I mean, it's come a long way. We've noticed this and we've watched it for many years. As far as the XLR is concerned, I agree with Richard, coming to 95%, but the remaining 5% is the cargo aspect, right? The one big disadvantage the aircraft has is it doesn't really have space for cargo. And given the shift towards cargo in long haul flying. That may be saving some of the widebody markets. Where even in markets or on routes where airlines would otherwise prefer to use a large, long, narrow body. But yes, it's gone further down than I had thought.

Joe Anselmo:              Well, you set me up for my next question Jens, which was, what does all this mean for the Boeing 777X?

Jens Flottau:               Well, there's no doubt that the 777X is too large for now. No doubt. I mean, for this current market, no doubt about that. The question to me is will it be too large, five years from now, 10 years from now? And frankly, I mean, the honest answer is, I don't know, but given where things are going or have been going over the past few years, I'm becoming increasingly worried that the market for the X will be much smaller than Boeing thought. I mean, they will sell it of course, to some airlines, but how many, not sure.

Joe Anselmo:              Richard, what is your forecast say on 777X?

Richard Aboulaf:         Well, it's as Jens says, this is a great belly cargo machine, and that has its attractions. And of course there are people who are slot constrained and people who need more than 5,000 nautical miles--there's a market here. It's just that they peaked for a while at rate 8.5 on 777-300ER. This looks like they're going to have to survive at rate three for some time, eventually getting to rate four. It's a disappointment, but it's not nothing, there were rumors, could they cancel this? You know, no, the answer is no, but it's just going to be somewhat disappointing. You know, the belly cargo aspect is very interesting because the 777 was designed with belly cargo in mind. And I'd also point this out about the A380, because of that double deck configuration. It had a shockingly low fraction in terms of belly cargo. It was just miserable for belly cargo. So that was just yet another factor that helped undo it.

Joe Anselmo:              So Jens, let's wrap up with a wider view of the market. I mean, Airbus can certainly digest this market failure, but it's sitting, vis-a-vis Boeing in a pretty enviable position right now. Is it not?

Jens Flottau:               Yes. I mean, if you look at an Airbus for sure, it's got this great lead over the 737 MAX, that surely will keep for many years, if not forever. On the widebody market, the 350-900 is looking good, the 330neo isn't looking so good to be honest. So it's not all great on the other side either. And you know, we've talked about the 777X, but you know, Atlas has a big twin too the 350-1000. And I do see quite a few orders on the Airbus backlog that I have doubts about there too. So it's not black and white.

Joe Anselmo:              Richard, let's give you the final word.

Richard Aboulaf:         Oh, well, thank you. And yeah, I think Jens summed it all up very nicely, but you know, the center of the market is shifting towards single aisles, even for international routes. And that's where Airbus really shines. So the question becomes, when does Boeing do the right thing and launch a mid-market jet of some kind, right now they appear to be lying quietly, horizontal, and still. And if they keep lying horizontal and still, we've added up all the numbers, I think a lot of people have added up all the numbers and Airbus gets to 60% of the market by the end of the decade, in terms of value of deliveries. It's really tough to recover from a 10 point market share drop. So I would urge Boeing to do something otherwise airbuses is going to power ahead.

Joe Anselmo:              Okay. Well on that note, we have to wrap things up. Thanks for joining us, Richard. Jens,  Jens's story is available to subscribers Aviation Week and Space Technology magazine and the Aviation Week Intelligence Network. That is a wrap for this week's Check 6, which is now available for download on iTunes, Stitcher, Google Play and Spotify. Special thanks to our dedicated producer in Washington, D.C. Donna Thomas. Thanks for your time and join us again next week for another Check 6.