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Emirates, Qantas are likeliest A380 candidates for DFW airport

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Rumors have been circulating for nearly a week concerning Dallas/Ft. Worth airport readying up in preparation for scheduled Airbus A380 service. Several credible news sources have reported that the DFW airport board will be asked next week to approve construction at International Terminal D to accommodate the wide-body plane by October. The project is estimated to cost $2,847,777 USD in order to modify gates D15 and D16 to provide a second jetway to load passengers on the double-decker aircraft, according to Terry Maxon's Airline Biz Blog in The Dallas Morning News. 

Speculation has ranged across several foreign air carriers serving Dallas/Ft. Worth airport as viable candidates with the likeliest bids going to Emirates Airline of Dubai or Qantas, both of which serve DFW on daily services from their respective home countries.

Interestingly, of the thirteen international airlines which currently provide, or are slated to provide, scheduled service to DFW, seven are current, or future, Airbus A380 operators. However, relative to the others, Emirates and Qantas are miles ahead of the others on the A380 business road-map to win the race to touchdown in North Texas. 

Current foreign flag carriers serving DFW airport:

AeroMexico Connect
Air Canada
Avianca
British Airways*
Cayman Airways
Emirates*
Etihad*^
KLM
Korean Air*
Lufthansa*
QANTAS*
Qatar*^
WestJet

*A380 operator
^future operator
NOTE: Cayman Airways, KLM and WestJet serve DFW on a seasonal-only basis. 

The first A380 operators into DFW will not hail from SkyTeam nor Star Alliance

Neither Lufthansa nor Korean Air will be sending their Airbus A380s to DFW airport. Though both carriers have the longest history of serving the Dallas/Ft. Worth market dating back to the 1980s (Lufthansa) and 1990s (Korean Air), for each carrier, DFW does not rank among their top performing long-haul stations. The competitive landscapes within the long-haul transatlantic and transpacific sectors from North Texas have altered dramatically within the past 5 years alone, with even more shake-ups ahead, particularly for Korean Air as DFW gears up for new nonstop service to Shanghai and Hong Kong on hometown hub carrier American Airlines. Korean has also fluctuated between scaling DFW back to a less-than-daily service, which more or less confirms that the market experiences some volatility with regards to year-round demand cycles. 

Lufthansa has historically categorized DFW as an average performer in its North American route network. Though the Texas - Germany market is fairly large, Lufthansa vies against American for similar traffic to Frankfurt. Lufthansa is capable of carrying onward visiting friends and relatives traffic to points in Europe, Africa, Central Asia, the Middle East and South Asia, but is also lined up against British Airways, KLM, Emirates and soon to be Etihad and Qatar. Less than a decade ago, Lufthansa pretty much had this market entirely to themselves until Open Skies went into effect. Deploying an A380 to DFW, a non-Star Alliance market, would be highly loss-making for the carrier. 

Etihad and Qatar Airways are too behind on the curve to consider A380 ops to DFW

Etihad Airways has 10 A380s on order, with options to place additional 5 airframe orders. Two deliveries are slated for 2014, four for 2015, 3 for 2016, and 1 for 2017. Etihad has already stated that it plans to deploy its A380 equipment to London, Melbourne, New York and Sydney. 

Qatar Airways also has 10 Airbus A380s on order, with options for an additional 3 orders. Three of the birds are to arrive in 2014, 2 in 2015, 2 in 2016, and 3 in 2017. Qatar's first A380s will come in June of this year and the carrier has announced that the first round destinations will come from Europe. Early-identified candidates have been London and Paris.

Put simply, it is impossible that either carrier has intentions to send the A380 to DFW airport within three months of starting a nonstop route (Qatar) or before the route actually commences (Etihad). The DFW routes, for both carriers, need time to mature before up-gauges are possible. Note that Emirates has maintained a consistent level of capacity in DFW since it launched service in February 2012, with a daily 777-200LR. 

Moreover, Qatar and Etihad need to send their highest-density fleets to destinations that both 1). see competing A380 service from Emirates and 2). have been long-standing, high visibility markets that both carriers have served for many years. Both Etihad and Qatar serve several of their longest long-haul market on aging Airbus A340-500/600 variants that are screaming for a more cost-efficient and higher-density fleet type. DFW satisfies neither of those requirements. 

British Airways has too few A380s to send to DFW, and has bigger fish to fry

British Airways has four Airbus A380s in service, with an additional 8 on order. The carrier has deployed the A380 to Hong Kong, Johannesburg and with further plans to send the A380 to Los Angeles, Singapore and Washington Dulles. There has been no indication that the A380 will go to Dallas/Ft. Worth thus far, and the likelihood is scant within the realm of possibilities anytime soon given. Linking London to markets with larger GDPs such as Tokyo, New York and Chicago is far ahead of the priority list before trickling down to Dallas' ranking.

The good news is, Dallas to London is a strong, healthy and growing market, with capacity up by nearly 1,200 weekly seats during the slower periods in Q1 2014 compared to the prior period a year ago. But, in the grand scheme of things, frequency will prevail over capacity to appeal to business needs. 

Emirates and Qantas are the only carriers primed for A380-readiness to DFW

By and large, the reasons supporting business cases for Emirates and Qantas to send the A380 to DFW are much stronger than any of the other candidates, and one of these two will be the first to launch if indeed the airport will receive an A380 to D15/D16 by October, if not possibly both. 

Moreover, the strengths of each individual cases in an Emirates vs. Qantas scenario run very much neck-and-neck, indicating that the possibilities could fall in either direction, if not for both. Some of the underlying reasons are mutual, while others are unique, but the pendulum is moving at full-speed. 

First, it's first imperative to note that both of these two carriers have been long-time operators of the Airbus A380 compared to the other airlines in the running. Emirates and Qantas were the 2nd and 3rd respective carriers to launch A380 service, after Singapore Airlines. Emirates' first commercial flight took place on August 1, 2008 while Qantas' took flight on October 20, 2008. Singapore Airlines beat everyone to the table by nearly a year when its first A380 took commercial flight on October 25, 2007.

Also notable is that both carriers have an exceptionally high-volume of A380 planes in service, and/or A380 aircraft orders ahead of them. Emirates has 140 Airbus A380s on order, in addition to 44 already in operation. Next comes SIA with 19 in operation, and additional 24 on order. Qantas comes in third with 12 A380s in service, and 20 on order, although 8 will be deferred after yesterday's announcement due to (another) restructuring program ahead in the 2H of the FY2014.

The rankings drop off sizably from there, with Lufthansa coming next with 10 A380s in service, but only 14 on order. As such, these figures rule out much possibility for the other airlines to deploy the aircraft to DFW. 

It's then important to analyze the role that DFW airport plays into each carriers' respective long-haul networks. Measuring the importance of the DFW station vs. the rest of the cities each carrier serves across the globe provides some very interesting data points.

Qantas has whittled away its int'l network, but within it, DFW's prominence has risen

The beleaguered national airline of Australia has cut so much of its international network over the years that long-haul route cancellations have become the norm rather than the contrary.

What is fascinating is that while the carrier serves a total of 76 nonstop destinations, of these, 55 are domestic, leaving only 21 markets served outside of Australia. Thirteen of these stations fall within the Asia - Pacific region, which leaves a mere 8 destinations served in other parts of the world: Four in North America (Los Angeles, New York JFK, Dallas/Ft. Worth and Honolulu), and one each in Europe (London), Latin America (Santiago), the Middle East (Dubai) and Africa (Johannesburg). 

As is, Qantas deploys the A380 to three of these eight markets: Dubai, London Heathrow and Los Angeles. Services to Johannesburg are offered 7 weekly on a Boeing 747, Santiago is 3 weekly on a 747, and Honolulu is thrice weekly on a 767. Both New York JFK and Dallas/Ft. Worth are each served daily on a 747. However, New York is connected to Los Angeles, which flies onward to Sydney. Dallas/Ft. Worth operates in a triangular DFW - Brisbane - Sydney - DFW fashion. 

The fact is, one of these five markets will receive an A380 sooner rather than later. Qantas announced yesterday that it intends to re-time its QF 009/010 flights that currently operate Melbourne - Dubai - London Heathrow. Currently, QF 9 leaves MEL at 16:15 in the afternoon with a 23:25 arrival into DXB, then leaves DXB at 1:20 AM with a 5:10 arrival into LHR the next morning. The plane proceeds to sit at Heathrow for over 18 hours before QF 10 leaves LHR at 22:15 with a 9:10 (+1) arrival into DXB the following morning, then with a 10:55 AM departure from DXB and arrival at 7:35 AM the next day into MEL. 

Although the new timings have not been announced, Qantas did indicate that the flight would be re-timed for a minimum turn-around at London Heathrow, which will free up an A380 to deploy the aircraft on another route.

With a freed-up A380, Qantas has multiple options for deployment. Its first array of options could hail from Asia, a highly under-performing region for the carrier. However, it's questionable whether the A380 is the appropriate fix for one of its Asian routes. The competitive landscape between Australia and Singapore, Hong Kong, Tokyo, Bangkok, Shanghai and Jakarta are all over-saturated with seating capacity at present. There are so many forces competing in both the short and long-haul full service and low-cost carrier segments, with little to no clarity on how to optimize yields and stem losses. There seems to be no distinct market leader in the region, with nearly every player reporting losses for Q4 2013, from Malaysia Airlines to AirAsia X. 

The only remaining Asian market served by Qantas is Manila, but the Philippines - Australia market, while underserved, does not merit A380 service due to the low-yielding nature of Filipino - Australia traffic, which sees virtually no business travelers. Also problematic is the troubled Australian dollar, as well as the depreciated Malaysian ringgit, Indonesian rupiah and Japanese yen.

Ruling out Asia, the list circles back to the remaining 5 non-A380 long-haul markets Qantas serves outside of Asia-Pacific: Honolulu, New York, Johannesburg, Santiago and Dallas.

Honolulu and New York can be easily ruled out as the A380 provides too much seating capacity appropriate for those markets. Australia - Hawaii is also all-leisure, with Qantas competing against its low-cost subsidiary, Jetstar, on the SYD-HNL route. Qantas also has no local pick-up rights on its New York - Los Angeles service, meaning that all traffic on this route must be flying between NYC and continuing onto Australia from Los Angeles. An A380 would be unsuitable for this operation. It's also questionable as to whether Qantas truly needs to be serving this route for commercial purposes other than glamour, as it is likely unprofitable and costly to operate. 

Qantas codeshares with LAN on Santiago - Sydney, which LAN also offers as a 1-stop product from SCL to Sydney via Auckland, NZ on a daily basis. An Airbus A380 substitution on a three-weekly 747 operation is not necessitated for a market of that size. 

That leave DFW and Johannesburg. One is a OneWorld hub, the other is a Star Alliance hub. South Africa is also an end-of-line country, like Australia, with limited onward connectivity to major regions of the world without significant backtracking and minimal connection opportunities. Qantas also recently ended code-sharing agreements with South African Airlines on this route, which many speculated spelled the eventual discontinuation of its Jo-burg station. 

Without question, this leaves DFW as a prime candidate for the Airbus A380. Although a mere freed-up A380 frame may not be enough to be utilized on a daily basis, it's quite possible that Qantas may operate the A380 on a thrice weekly basis, and continue utilizing a 747 on the remaining days of the week. The A380 could eliminate the need for the 1-stop in Brisbane, which would help improve connectivity on both the Sydney and DFW ends by allowing a nonstop product bi-directionally. 

Emirates has the most bandwidth to send the A380 to DFW for political purposes

Relative to its Middle Eastern counterparts, Etihad and Qatar, Emirates offers the largest seating capacity to India, with over double the amount of Qatar Airways at nearly 100,000 weekly seats. 

Emirates has also just revised its air service agreements with India, receiving the green light to add additional seats into Indian markets and also operate its A380s to Indian airports, specifically Delhi, Mumbai, Bangalore and Hyderabad. 

With the explosive growth in the Dallas/Ft. Worth - Indian market, there could be major potential for a Middle Eastern carrier to send the A380 to DFW. In addition to the reasons outlined above in reference to Qatar and Etihad, Emirates emerges as the likeliest possibility as its hub scale at Dubai is the largest of all the major Gulf Coast carriers. Emirates has several hub banks throughout the day linking the South Asian cities with transit points around the globe. 

According to CAPA route data, Emirates' load factor percentages to Dallas/Ft. Worth consisently fell above 90% between the months of January through August 2013, a distinction that none of its other US stations (Washington Dulles, New York JFK, Houston, Los Angeles, Seattle and San Francisco) achieved during the same time frame. Of course, DFW is unique in that its Emirates' only US station, other than Seattle, which receives the 266-seat Boeing 777-200LR instead of a higher-gauge aircraft, such as the 350+ seating 777-300 (sent to New York, Washington, Houston and San Francisco) or the 489+ seating A380 (sent to New York and Los Angeles). This, of course, does alter the numbers significantly since EK has the fewest number of daily seats to fill on its DFW route. Arguably, also, Emirates competes against a much smaller array of foreign carriers for traffic to Dallas/Ft. Worth. 

In accordance with this, it would be a big jump for Emirates to upgauge DFW from 266 daily seats to 489/517 seats. However, similar to Qantas, it is possible that Emirates may initially begin doing so on a less-than-daily basis as an initial test to see how the market responds. It would represent a major increase in premium seating capacity by 2-fold, which would be appealing to business travelers. 

There could also be a political motive behind the move. With its two largest regional competitors announcing service to DFW within a mere week of each other last fall, Emirates may be simply acting in a territorial fashion to grow its weekly seating share by deploying a larger-gauge aircraft to Dallas. However, it's likely that Emirates will need more justification for this other than simply flexing its muscles. It's plausible that EK may be in talks again with American Airlines, something that started back in fall 2012, but later fell against the backdrop of Qatar Airways' entrance into OneWorld. The rule of thumb in the airline industry is, and always will be, never to say never. 

Overall, A380 deployment to DFW is more urgent for Qantas than for Emirates

There isn't a clear-cut victor given the remaining data provided, as both DFW airport officials, as well as both carriers, have been nebulous about expressing more details. Some people expected Qantas to annouce plans to send the A380 to DFW airport during yesterday's restructuring announcements, but it appears that the carrier as reluctant to provide many details other than the re-timing of the MEL-LHR flight. Still, this does indicate a forward-stepping direction as a window of opportunity for DFW.

However, the actual need is much stronger, from a finance and operations perspective, for Qantas to send the A380 to DFW as a curative measure. For Emirates, the decision is much more centered around preventative medicine. Qantas needs to take advantage of any avenue it has to save its ailing long-haul network. While no signs point to DFW being an unsuccessful performer for Qantas, any additional revenue subsidies and cost-curbing measures have to be exploited. Time is not on its side. 

Regardless of who wins the race, DFW airport is finally finding its place in the sun, after so many tireless years of hard work to get some recognition from the big boys in the global market place. Not able has DFW been able to successfully attract, and maintain service from these carriers, but also, it has been able to capture the eyes of others. 

Even though Houston was first to beat it to receive the A380 from Lufthansa, DFW airport can only be pleased to get an aircraft that's truly "Texas-sized" once the gate construction is complete. 

Comments

You make some very valid points as to why QF will launch the A380 to DFW, but I just have a real hard time wrapping my hands around that, given that they just announced yet another Five Year Plan. My money's on EK. I'm guessing it's at least partially to help feed those new A380s to India, especially to HYD, given the large Telugu population in the Metroplex.

I could easily see QF adding DFW to their A380 flights, DFW has been a huge success for QF and has been much more profitable for them then SFO was.

Also note in your analysis you said BA is going to send a A380 to LAX, they already fly a daily A380 to LAX + a 747, and they are actually getting ready to upgauge the 747 to a second daily A380 ;)

#3
Rohan March 3, 2014 at 11:18 am

@MeanMeosh agreed, I think that EK sounds like the most plausible, but I also think that there are some compelling points for Qantas. It's just a personal opinion. My analysis is really centered around isolating which of the 7 possible candidates have the likeliest chances of emerging as the winner, and there are some very far-fetched ones (5 of the 7) and some really possible ones (2 of the 7) but we shall wait and see!

#4
Rohan March 3, 2014 at 11:18 am

@Rocky: danke shoen! thanks for the correction!

#5
Emmy Phillips March 5, 2014 at 10:47 am

Personally. I think the pendulum will swing in favor of EK for traffic from India. Two reasons:

  1. US Govt. will be opening Visa Clearance Facility at DXB Airport. So passengers arriving at DFW will be like domestic traffic. Huge advantage from a convenience perspective.

  2. Indians always prefer to fly on the latest equipment. 'Bragging' phenomena in their social circles. DXB Duty Free is always on top of their list. EK has several destinations in India which are directly served from DXB. Don't forget, unofficially, EK is still considered the "National Carrier" of India.

#6
Rohan April 3, 2014 at 10:01 am

@Emmy interesting points.

  1. This is something that AUH and DOH will eventually implement as well.

  2. Bragging phenomena is fair and valid, but Indians will always go for price.

And we have our answer. EK it is.

http://aviationblog.dallasnews.com/2014/04/emirates-to-bring-airbus-a380-to-dallasfort-worth.html/

BTW, I finally took your advice and put my blog on Twitter. You can follow it @MeanMeosh.

#8
Bill April 3, 2014 at 12:32 pm

Rohan, I hope that you are well. I'm excited that Emirates is starting 380 service to DFW! I'm also curious to hear your opinion on its possible effects on Qatar Air and Etihad's upcoming service.

Bill

#9
Rohan April 3, 2014 at 12:46 pm

Thanks guys!

Blog post is now published

http://upgrd.com/aerospace/emirates-to-send-airbus-a380-to-dallasft-worth-starting-october-1.html

#10
D May 7, 2014 at 01:16 am

Well a little over a month after this post and this happened: http://www.ausbt.com.au/qantas-to-start-airbus-a380-flights-to-dallas-from-september

Rohan it seems you were right with QF as well, and although EK announced it first it looks like QF will beat them to the actual touchdown at DFW

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