Qantas Moves Forward Airbus A380 Retirement, And Ticket Prices Will Go Up

Qantas has announced that it will move forward its Airbus A380 retirement by four years, and they’ll now be phased out as of 2028. If you’re like me, and are a fan of the A380, that’s obviously bad news. I should also mention that if you don’t like paying a fortune for airfare, it’s also bad news. Let me explain. Qantas retiring A380s, replacing them with A350sQantas is bragging about higher A350 ticket costsBottom line Qantas retiring A380s, replacing them with A350s Qantas has a fleet of 10 Airbus A380s, which are an average of around 17 years old. The airline stored these for a few years during the pandemic, and actually only recently reactivated the last A380, so the fleet sure saw an interruption in service. Up until now, Qantas’ plan has been to start retiring the A380s as of 2032. However, the airline has now decided to move forward that timeline by four years, to 2028. The idea is that the process will start then, though it remains to be seen how quickly they all leave the fleet. I’d guess it’ll probably take at least a couple of years, but who knows. Why did Qantas decide to move forward its A380 retirement? Interestingly, the airline isn’t citing high jet fuel costs, but instead, is giving the following two reasons: Increasing operational risks and maintenance costs due to supply chain challenges with the A380 fleet, given that the plane is no longer in production Confidence in the delivery schedule of new wide body aircraft, including Airbus A350s and Boeing 787s, which allows the airline to better fleet plan In terms of its wide body order book, Qantas is currently expecting 24 Airbus A350-1000s (half of which are “ULRs”), four Boeing 787-9s, and eight Boeing 787-10s. The intent is for the A380s to primarily be replaced by the A350s. This is separate from the half dozen A350s that will be used for “Project Sunrise” flights, from Sydney to London and New York. Beyond Qantas, there are nine A380 airline operators — All Nippon Airways, Asiana, British Airways, Emirates, Etihad, Korean Air, Lufthansa, Qatar Airways, and Singapore Airlines. Qantas Airbus A380 first class cabin Qantas is bragging about higher A350 ticket costs Qantas is making it pretty clear that the Airbus A380s will be replaced by the premium configured Airbus A350-1000s. The capacity adjustment between these planes is absolutely massive, as it will be reduced by well over 50%: Qantas Airbus A380s feature 485 seats, including 14 first class seats, 70 business class seats, 60 premium economy seats, and 341 economy seats Qantas Airbus A350-1000s (at least the first batch) will feature 238 seats, including six first class seats, 52 business class seats, 40 premium economy seats, and 140 economy seats Airline pricing is largely a function of supply and demand, and as you’d expect, the less capacity you offer, the more you can charge per seat. Here we’re not just talking about a small capacity decrease either. In laying out the case to investors for retiring the A380, Qantas gives the example of a flight between Sydney (SYD) and Dallas (DFW). With the plane swap, the airline is expecting a 10% increase in unit revenue, and a 12% increase in contribution margin per departure. So Qantas’ goals here aren’t really a secret. 10% unit revenue growth means the airline wants to increase fares by an average of 10%. Admittedly those increases won’t be the same in all cabins, and I imagine in economy, we’re going to see the biggest increases, given the 60% reduction in capacity. Qantas A350s represent a major capacity cut Bottom line Qantas has announced that it will retire Airbus A380s as of 2028, instead of the initially planned timeline of 2032. The airline is making this decision due to increasing maintenance costs and challenges with these planes, plus improved certainty with future aircraft deliveries. Qantas’ plan is to replace A380s with A350s. That might not sound so bad, except those planes have under half as many seats, and the airline hopes that this will lead to a 10% increase in unit revenue. So expect your tickets will cost more. What do you make of Qantas’ A380 retirement plans?