Sales of the Airbus A380 produced by Airbus Group have not lived up to expectations, but there is one major airport where the super-jumbo jet is growing in popularity: London’s Heathrow International
But while Heathrow is a prime environment for the Airbus A380 now, could changes coming to London’s airports change the entire A380 equation?
Airlines can’t just land their planes anywhere they want, and at high-demand airports, rights to airport access are prized possessions. A takeoff or landing is referred to as a “slot,” and airlines have been known to pay millions for additional slots at in-demand airports.
Heathrow International is one such airport. Due to its proximity to the financial capital of London, Heathrow is a hub for European and transatlantic business travel. As expected, it is a capacity-constrained airport where slots fetch high prices.
One recent example of the fight for slot access at Heathrow comes from the $360 million investment in Virgin Atlantic from Delta Air Lines in 2012. In exchange for this sizable investment, Delta received a 49% stake in Virgin Atlantic, but more important, it opened up the opportunity for a joint venture between the airlines, giving Delta greater access to Virgin Atlantic’s Heathrow slots.
Home of the super-jumbos
Thanks to a combination of limited space and surging demand, airlines are looking for ways to fly more passengers in and out of Heathrow. As it turns out, the Airbus A380 is an effective way to increase passenger capacity at Heathrow without paying up for more high-priced slots.
Since a slot generally allows a plane to land even if it’s very large, using the Airbus A380 allows carriers operating at Heathrow to offer more seats per slot. Right now, British Airways, part of International Consolidated Airlines Group, and Qatar Airways are taking advantage of the A380’s size to increase per-slot capacity.
This year, British Airways added five new Airbus A380 aircraft at Heathrow and Qatar Airways brought in its first one, with plans to add more in the near future.
Although no U.S.-based carriers have added the Airbus A380 to their fleets, European and Middle Eastern carriers have been more receptive to the super-jumbo. And with London Heathrow demand remaining strong, the current setup looks poised to put more A380s on Heathrow’s tarmacs.
Not everybody likes the tight situation at Heathrow, and there have been several proposals to expand the airport to relieve congestion and allow more capacity. Proposals have included adding another runway to Heathrow, lengthening an existing runway, expanding London’s Gatwick Airport, or even building a new airport in the Thames Estuary.
With the Estuary airport — dubbed “Boris Island” after the current London mayor — ruled out for the time being, attention has turned toward Heathrow’s runways and Gatwick expansion.
Delta Air Lines is among those in favor of expansion at Heathrow — even if there is also expansion at Gatwick. The Telegraph noted that Delta does not intend to shift services to Gatwick even if the airport is chosen for expansion instead of Heathrow. In explaining Delta’s preference for Heathrow over Gatwick, Delta executive Perry Cantarutti noted, “Business travellers opt for Heathrow.”
Changes are far from finalized, although it appears there is a growing push for Heathrow expansion. The Telegraph noted that the heads of five regional airports have written the chairman of the Airports Commission, Sir Howard Davies, in support of adding a third runway to Heathrow. This regional airport support follows a report from the Airports Commission finding that expanding Heathrow would convey the greatest economic benefit of the examined situations.
Heathrow and super-jumbos
So far, the push for the Airbus A380 at Heathrow has primarily stemmed from slot constraints at the airport. But would opening a new runway end A380 growth at Heathrow?
It won’t happen immediately, at least. While it looks like the proposal for a third runway may be gaining an edge, it’s still nowhere near a done deal. The Airports Commission report is available for public comment until Feb. 3, and action is not guaranteed after that.
Until a decision is made and expansion is completed, the slot shortage will remain, and with demand still moving along, the Airbus A380 will still be an ideal aircraft for taking maximum advantage of limited slots.
If expansion is completed, the future of the A380 at Heathrow will be decided by whether demand will increase to fill the newly available slots, thereby keeping slots scarce and prices high. At this point, I would not expect Heathrow expansion to get rid of the super-jumbo at the airport, but it may impact growth of A380 presence at Heathrow.
Prime real estate
In many ways, bringing in the Airbus A380 at Heathrow is like building a taller skyscraper in Manhattan. Both situations involve selling more capacity in a limited amount of high-priced space.
But Heathrow could see some expansion, making more slots available and likely reducing the market value of each slot. Industry followers should keep a close eye on changes at Heathrow, since what happens there could play a critical role in airline route networks and in whether the Airbus A380 will continue growing its presence at the airport.