10-3-2013 8-21-54 AM

Singapore Airlines is dropping its exclusive all-premium non-stop flights to Los Angeles and Newark over the next two months.  These flights are possible by using the A340-500 with its 9,000 mile range.  Only the 777LR is in that league with approximately 9,400 miles range, with two engines instead of four.  Only 34 A340-500s were delivered.   Boeing has 59 777LR and 56 have been delivered.  For Singapore Airlines this means the niche market of 100 seat aircraft flying non-stop are over.  It will now have to compete for the super premium travelers in the market with the same one-stop routes as other airlines.  Clearly the attraction of the non-stop service did not justify its continuation.  The airline’s load factor across its network is 80%.  Even at 80% the non-stop flights could not have been profitable.  Airbus is taking these aircraft back, no doubt as part of the airline’s big commitment.

Second hand values on the A340-500 are not great, a few are for sale here.  Note how many days these airplanes have been listed for sale.

The desire by certain airlines to be able to fly from their home base to any spot on earth non-stop is economic folly for an OEM.  The US-Singapore flights are about three hours shorter than a one-stop, and hardly worth the trouble of a sub-fleet.  Even 8,000 mile range aircraft are pushing it.  There are too few thick routes to exploit this range given the vagaries of airline economics. Lowest costs wins every time.

The A340-500 follows the path of an earlier four engined long range aircraft, the Boeing 747SP.  The SP ended up being a useful VVIP aircraft, probably the smallest niche there is.  We will probably see the A340-500 moving into this niche.  When cost is no object, as with VVIPs, being able to fly anywhere non-stop is the “killer-app”.  But for an airline this is the wrong goal because the revenue typically does not justify the investment.

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