Be sure to see the first part of this article on the Norwegian new ‘first-class’ option on the HiFly A380.
Currently, Norwegian airlines have wet-leased the HiFly A380 to service its route between New York and London.
But this temporary solution has made others start to wonder if it’s possible that Norwegian could profitably run an A380 service between the two countries.
A Quick Background
We have spoken many times about this current situation that led to Norwegian renting this plane, but simply Norwegian is unable to run their normal Boeing 787 due to technical problems with the engines. They have a wet least (essentially the same as chartering) an entire ex-Singapore Airlines A380 from the airline company HiFly, to help manage their summer Atlantic Ocean trade.
As the A380 is an ex-Singaporean Aircraft it has three different class distinctions, an economy class, business class and the very luxurious first-class suites (which in a previous article we mentioned that are now being sold as Norwegian first foray into a ‘first class’ offering).
What would a Norwegian A380 look like?
Before we can dive into whether or not an A380 would be profitable for Norwegian in the long term we need to paint a picture of what a Norwegian A380 would look like.
A typical A380 has a seating capacity of 12 first class suites, 60 business class lay flat seats and 399 economy class seats (A lack of 47D is to blame for the non-round number). But if Norwegian gets to choose their configuration, they would remove the first class suites for either more economy or more premium economy seats. Whilst this ‘monstrosity’ doesn’t exist yet, an all-economy A380 could seat 868 passengers (538 on the main deck and 330 on the upper, 11 seats across).
Now to account for a two-class configuration, On the Norwegian 787-9 Dreamliner, they are configured as 35 premium economy seats and 309 economy seats. If we were to use this to estimate their ratio of seating (344 total seats divided by how many are premium economy) we would predict a split of 10% premium economy and 90% standard economy on their planes.
Applying this to an A380 seating capacity would be a Norwegian configuration of 86 premium economy seats and 782 economy seats.
How much would they charge?
If we take a typical airline ticket cost for Norwegian, for London to New York, we would estimate an economy ticket would cost $271 per seat and a premium economy seat costing $732.
Naturally, Norwegian does not include baggage, meals or other extras, so they would need to be factored into the flight sales. One item of baggage on Norwegian is $44 (35 GDP) and a meal is $32 (or 25 GDP). This flight is eight hours long so I believe that 80% of economy passengers will be buying a meal and equally 80% will also buy one item of baggage, so the optional fees on a flight would be $47,576 per flight.
Premium includes a meal and baggage and will be the same price of $732.
If we had an 80% full plane, we could estimate they would sell 69 premium economy seats and 626 economy seats (695 Passengers in total).
This would be sales of $50,508 in premium economy and $169,646 in standard economy. We can also include the optional extras of $47,576, for a total of $267,730 per flight. Let’s include an additional $10,000 for added extras, such as headphones, blankets, drinks etc.
What are the costs?
In a previous article we outlined if Norwegian is making any money from running the A380 HiFly service (and most likely that they are not paying for this replacement plane, but Boeing or Rolls Royce are) by comparing it to a full service Qantas flight (based on data from the Australian Bureau of Infrastructure, Transport and Regional Economics). Let’s try and be a bit more accurate and take into account the Norwegian bare minimum costs.
Warning, this may get maths heavy!
We can take some of these calculations and guesstimate the following:
Fuel – High end, $44.82 per nautical mile, or at 448 nautical miles per hour (cruising speed) = $20,079 per hour
Crew – 1 flight attendant per 50 passengers (18) = $35 per hour x 18 = $630 per hour
Pilots – two cockpit crew at $150 an hour each = $150 x 2 = $300 an hour* (I honestly believe this is too cheap, but let us assume the cheapest option).
Total cost: $21009 per hour
These figures are not realistic unless we use a real-life flight time. Let us guesstimate a flight New York to London flight as an example:
Flight time would be 8 hours: $21009 per hour x 8 hours = $168,072 for the flight
Food and Drink: We can guess this would be $5,000 in costs.
Total running cost: $173,072
At JFK $6.27 per 1000 pounds of weight, an A380 weighs 611,000 pounds (empty) and a passenger payload of 185,000 pounds plus 559,937 pounds of fuel. Therefore the fee would be $6.27 x 1356 thousand pounds = $8,501. We can also assume a passenger fee of $4.50 per passenger, with 695 passengers in total this would be $3127.50. Plus, there is a charge of $100 for every flight leaving between 3pm and 10pm. This means a total fee of $11,728.50
For simplicity, we will assume that the fee is the same in London Heathrow (That also includes slot fees) for arrival, for a total of $23,457.
There are also other fees to fly the plane over a countries land and water, however, as the route is almost entirely over water we will ignore it for now.
Norwegian will also have to rent or buy the plane; According to Wikipedia, a second hand 2008 A380 costs about $78 million. Spread over 20 years expected useful life, the price would be $8928 per hour, even if the plane flies or not. For our flight, let’s say eight hours flight plus two hours at each end: 12 hours x $8928 = $107,136
Lastly, let us include a maintenance and cleaning for a fee of $10,000 per flight, plus another $10,000 for baggage handling and support staff at each terminal.
Running Costs: $173,072
Taxes and Fees: $23,457
Fixed Costs: $127,136
Total cost: $323,665
Would it be profitable?
New York to London
Total sales: $277,730.
Profit per flight: -$45,935
What if the plane was entirely economy and full?
We would see roughly 868 passengers on board and would be $235,228 in ticket sales and $75,968 in optional sales if every customer bought a meal and luggage. Let’s see if we make a profit now.
New York to London all economy
Total sales: $311,196
Profit per flight: -$12,469
For perspective, a full-service Qantas charges $13,129 for one of its 14 first-class suites, $10,425 to travel in business, $2975 in premium economy and $1599 in economy, return Sydney to LA (14 hour flight). Roughly $1,548,360 in sales, or $774,180 one way. Their costs are around the same at $400,000 per direction.
These guesstimation numbers show that you would be very tight for Norwegian to run this plane, they could potentially get cheaper fuel a potentially have many more customers on board but this article is a good example of why the A380 has not been so successful outside of its usage by full-service airlines.
Norwegian might need to still crunch the numbers before buying an A380 just yet!
*Fees and taxes have been broadly rounded up and pilot fees are possibly very cheap (Industry ranges from $50 an hour to $300 an hour depending on experience). Insurance is not taken into account either.
Have we missed something? Is one of our price points over exaggerated? Do let us know in the comments below!