Though first launch is four years away, Airbus is already advancing the claim that its A380 freighter-the first fully double-decked aircraft with a wingspan a third longer than the Boeing 747-will remake the world of airfreight. The case Airbus makes for the aircraft is that its size, range and suitability to air cargo shipping will bring a 15 to 20 percent reduction in operating costs for freight delivery. That savings, its manufacturer believes, will justify the aircraft's $250 million selling price on the balance sheets of customers.

One air cargo carrier that accepts Airbus' logic is FedEx, which, with 643 aircraft, operates the world's largest commercial fleet. The $20 billion giant will be the launch customer for the freighter, having signed firm agreements for ten Airbus A380s, with deliveries starting in 2008. Commercial launch of the A380 comes with Emirate Airlines in 2006, two years ahead of the FedEx freighters.

Packed full, the aircraft will lift and deliver 330,000 pounds of freight, nearly double the capacity now offered by a McDonnell-Douglas 11. Range, at 6,500 miles-plus, will allow the A380 to cross the Pacific in a "single bound," foregoing refueling stops and expanding the scope of next-day delivery.

That combination means an airline can carry a given load with fewer aircraft and fewer crew. Further, Airbus claims longer runs will promote service life, with relatively fewer of takeoffs and landings that cause most of the wear and tear on the aircraft.

Interest in the A380 is considerable. Last December, Malaysia Airlines announced it would spend $1.5 billion to acquire six A380s, bringing the number of firm orders to 129.

Development of the A380 began in 1996, when Airbus approached the market with tentative plans for an aircraft much larger than the Boeing 747. The question posed then, said Philippe Jarry, Airbus Senior Vice President for Product and Service Policy, was, "Are we mad, or does this make sense?" The response, Jarry stated, was that demand for such an aircraft was there.

Airports and air shippers were invited to consult on the A380's design, focusing on such matters as aircraft size, systems, cabin design, construction materials and airport compatibility-"All the main subjects you have to look at when designing an airplane." Through this collaborative process landing gear and wheels were added so the A380-1.2 million pounds when fully loaded-could operate on existing runways. The upper deck passenger compartment was reshaped, providing more volume above and beside those onboard. And, the wings were redesigned and the engines modified to cut noise at takeoff.

Focusing on freight

Normally in aircraft design, one industry source noted, "the freight version is something of an afterthought. Usually, it's a heavier version of the passenger airplane. Through time, analysis and experience-when loads and stresses are better known-they increase the weight to make a freighter version."

Airbus, on the other hand, decided to simultaneously launch its passenger and freighter versions, including both in the original design cycle. Jarry stated, "All work on the A380 was done with freight in mind."

For carriers who focus on airfreight, a key consideration was the A380's compatibility with currently used loading and shipping equipment. Jim Parker, FedEx Vice President of Fleet Development and Acquisitions, stated, "Container compatibility was key. If you can't use existing size containers, then you have to change trucks, ramps, carts, dollies, everything-it gets pretty complex." The A380, he added, is almost a "perfect match" for the containers FedEx now uses: the AMJ and AYY standard narrow width containers and the LD3, which fits the lower deck on large aircraft. "The A380 cross section," Parker concluded, "is almost custom made to fit those three containers."

As another feature, the A380 will solve its center of gravity problems during loading by a simple expedient: the upper deck will load front to back; the lower deck back to front.

Airbus is sizing the A380 to the anticipated freight demand, forecasting that air cargo volume will increase at a 5.5 percent annual clip through 2020, as rising global living standards trigger increased demand for the high-value goods that more commonly move by air. Further, airfreight is expected to grow as global competition is matched by globalization of production, which will push use of Just-in-Time inventory and other clock sensitive steps, prompting greater shipment of components by air.

The market Airbus foresees is huge. In 2000, 1,540 dedicated air freighters were in service worldwide-many of them Boeing 747s and McDonnell-Douglas MD11s. By 2020, Airbus predicts, 3,338 freighters will be required. With perhaps three-quarters of the current fleet being retired by then, Airbus forecasts a need for 2,943 additional freighters, either new or converted from passenger use. The price of the new aircraft alone is pegged at $106 billion.

Boeing's 'counter argument'

The first A380 wing was removed from its main assembly jig at Airbus' factory in Broughton, North Wales (UK) on November 4, 2003.

There is, of course, a counter argument to the A380; one launched-not surprisingly-by Airbus' main competitor, Boeing. "We don't see the market as being that strong in very large aircraft," says company spokesman Bob Saling.

Although it has been feeling the heat from its European rival (in 2003, Airbus for the first time edged ahead of Boeing in new aircraft deliveries, by a margin of 300 to 285), Boeing's read on the market is quite different. One reason larger planes are needed, Airbus argues, is to ease the congestion that is clogging traffic at major hubs. Boeing's view is that flying larger aircraft into existing hubs is not the best way to avoid congestion. A better approach would be to spread the business around.

Boeing's planners share Airbus' optimistic view of the future of air cargo, indeed bumping the annual growth rate up to 6.4 percent, but doubts whether much of that increase will be carried by the A380.

One reason is cost. "Some older 747s," Saling observed, "those delivered eight to fifteen years ago, now have depreciated values that make them more attractive as freighters." Conversion, he said, can cost $20 to $30 million, providing added freight capacity for much less than a new A380.

At least for the present, major U.S. freight carriers other than FedEx are holding back with purchase orders. "We have not ordered any A380s," says Mark Giuffre, spokesman for UPS Airlines. "Our long-range plans focus on the MD11 as our long-range freighter."

Still, Giuffre suggested that UPS is open to persuasion. "The question is: what will its actual cost be per ton/mile? Dropping a fuel stop should improve transit times and allow for later departures but same-time delivery. And, size can be an advantage. If you have only one slot at a given airport, you can put your biggest plane there for higher efficiency."

At least one carrier, KLM, sees Boeing as remaining at the core of its freight operation. Mattjis Ten Brink, Vice President, the Americas, KLM air cargo, reported, "We just acquired three 747 extended range freighters." The purchase, he said, was influenced by timing: "The A380 was just not ready" when KLM needed to buy. Further, there is a question of scale. While KLM is in the top ten in freight delivery, Ten Brink noted, "It is not a giant like FedEx."

Wait and see

One highly regarded industry analyst-Ray Keiser, founding president of Keiser Phillips Associates-sees a big future in freight for the new Airbus offering.

"The A380," he stated flatly, "will make a difference. It matters a great deal how it's deployed. For the long haul carriers, like FedEx, the best utilization will be on the very long legs, like Singapore to Chicago, and move the 747s to shorter legs."

A 15 to 20 percent cut in costs, he noted, could pull freight traffic from sea to air, particularly shipments of high-tech components flowing from Asia to North America or Europe. And, if the aircraft's range allows elimination of refuel and reload stops now made in Anchorage, service could be more dependable.

Keiser also sees benefits for freight forwarders, who now handle perhaps 70 percent of the cargo sent by air. A forwarder, Keiser said, "makes his profit on his ability to consolidate into containers. This will be a container operation; more containers will be available." These two factors-dependability and cost-are the key concerns of those who ship by air. David Benton, Vice President of International Services at Menlo Worldwide, stated, "If you ask 100 customers what they want, you'll get 60 or 70 answers. Predictability is the key customer concern. No matter what the economics of air cargo, it's still the most expensive choice, and so it damn well better get there."

Still, many freight forwarders are now taking a 'wait and see' approach to the A380. These include leading companies like Menlo Worldwide and Panalpina.

"I have an arm's length curiosity about it," said Menlo's Benton. "I see it as being somewhat in the future," said Doug Britten, Vice President at Panalpina. "Predicting growth is tricky. We've seen projections in the past that have not come through."

Indeed, Airbus' claims of vast new carrying capacity come at a time when demand is slack. Menlo's Benton said, "My perception-and I think this is fairly pervasive in the market-is that there is a lot of lift flying around chasing business. Supply is strong and demand is slack. The A380 will not help with that."

And, both are skeptical about the impact of quicker delivery times. Benton commented, "Shave a day? I've been in this business for 30 years and I need to hear more than that." Britten added, "Time of transit does affect the cost of goods sold; but if you cut a day, eventually people work it into their supply chain and take it for granted."

Issues remain. One is airport readiness. A second is how to load the A380's upper storage deck, which sits higher than current equipment can service. FedEx's Parker commented, "The upper deck will require the invention of a new loader, but that's a task rather than a real challenge. It's not like we have to re-invent bologna." A third is that the A380's upper and lower storage decks will have an 8-foot inside height. The 257 747s now in cargo service have 10-foot heights. Mark Giuffre at UPS Airlines commented, "The 10-foot versus 8-foot may be an issue for big bulk items, but shouldn't be a problem for the express items that make up most of our business."

Doug Britten of Panalpina sums up the industry point of view: "When the A380 comes to pass, there'll be time to get the details. If the cost is less and the service is faster, then certainly there will be an interest."