Super gamble as the superjumbo rolls out

TONY Blair will join French President Jacques Chirac, German Chancellor Gerhard Schroder and Spanish Premier Jose Luis Zapatero in Toulouse tomorrow for the roll-out of the biggest commercial aircraft the world has seen.

At $160m (£85m), the double-deck, 550-seat A380 superjumbo, developed at a cost of $12.3bn, is also the world's most expensive civil plane, yet the world's airlines ordered 149 of them before it has even flown.

The plane isn't just a gamble for manufacturer Airbus, 80% owned by European aerospace group Eads and 20% by Britain's BAE Systems. It is also a remarkable roll of the dice by the world's airlines on air traffic over the next two decades.

Use of the aircraft in capacity-constrained airports such as Heathrow to service long-haul routes to Australia, Asia and North America will change air travel. JP Morgan aviation analyst Chris Avery says it could also determine which airlines prosper and which decline.

The plane, which has its first flight in March, is scheduled to enter service with Singapore Airlines in June 2006. The carrier has ordered 10, Air France 10, Lufthansa has booked 15, Qantas 12, Virgin six and Emirates an astonishing 43. British Airways has kept its cheque book closed.

{1} Airports operator BAA estimates that by 2016, one plane in eight arriving at Heathrow will be an A380. The appeal of the plane is twofold, says Avery. First, it can carry more passengers between congested airports at times when they want to travel - on the flights that get into Heathrow from the Far East at 6am-7am, for example.

Second, it promises big cost savings over its largest rival, the 413-seat 747-400 from rival Boeing. Airbus guarantees the A380 will be 15% cheaper to operate than the 747, and reckons to widen the gap to 24% with maintenance and similar savings. As the 747 has the lowest existing costs per seat, that is appealing.

The plane also has significantly more floor space per passenger, which is expected to make it a favourite among travellers. Singapore-has already started advertising the superior flying experience.

But the game is far from won. Cathay Pacific has chosen instead to buy second-hand Boeing 747-400s, whose prices have collapsed below $50m. British Airways, which operates 57 747s, is focused on premium business passengers, with no present need to grow its young fleet.

Avery reckons BA chief executive Rod Eddington will eventually buy between 10 and 20 A380s if global passenger growth meets the forecast 4%-6% a year. But Eddington knows Airbus needs to sell 248 A380s to break even. As it is still 100 short of that target, he reckons he will get a good deal, even if he waits to see how the dice roll.