More Details On Hi Fly’s Upcoming A380 Acquisition

A couple of weeks ago, Portuguese aircraft leasing company Hi Fly announced that they’d be acquiring two A380s in the coming months, which they’ll be flying by Spring 2018. There has been very little activity when it comes to the A380 lately, which is why this announcement was so exciting. The only remaining new A380 order is from ANA, though they only have three on order. Other than that, only existing carriers are awaiting delivery on some more of these planes.

Hi Fly presently has a fleet consisting primarily of A340 aircraft, which they lease out to airlines on a temporary basis. For example, I recently flew a Hi Fly A340 from Ponta Delgada to Lisbon, which had a retro ex-Emirates interior.

When Hi Fly’s A380 acquisition was first announced, we still had a lot of questions — where would Hi Fly be getting these planes, what airlines would they lease them out to, etc.

While we still don’t have all the answers, we do now know more than before.

AirInsights did a podcast interview with Hi Fly’s CEO, Paulo Mirpuri, to discuss their plans to acquire two A380s. The interview is about 12 minutes, and during it he reveals some interesting information. In case you’re not interested in listening to the whole thing, here’s a brief summary:

  • Hi Fly started looking at the possibility of phasing in the A380 about two years ago, to expand their product offering, as their clients wanted more seats, good product quality, and a lower price per seat
  • Hi Fly is getting these two A380s from Singapore Airlines, as they plan to retire the first five A380s they took delivery of
  • Airlines are too afraid to buy the A380 because they don’t think they can justify the plane year-round, which is where Hi Fly is adding value, by offering it on a seasonal basis
  • The plane will have a minimum of 560 seats, and they’re even considering going to 600 seats
  • For longhaul flights, they think they can cut the cost per seat by about 20%
  • Hi Fly thinks that their first contract will see an airline leasing an A380 for an entire year, while the other plane will be leased to an airline that has a seasonal need for the plane
  • Since the planes have been in service for a decade, they’ve been amortized by about half, and are available at a cost that makes sense financially for Hi Fly
  • If the first two aircraft do well, they plan to grow the fleet to 4-6 A380s over the next 4-5 years, depending on how many A380s go back into the market
  • Hi Fly believes that some airlines they lease to will eventually acquire A380s for themselves on a full-time basis, after seeing how well they perform

While Hi Fly makes it sounds like their decision was a no brainer, it seems like a big risk to me. However, the people running Hi Fly know what they’re doing, and I imagine they do have some potential customers lined up. I’ll be very curious to see which airline they’re working with for a year-long lease.

Keep in mind that Hi Fly is wet leasing these planes, meaning that while the food and amenities will be chosen by the client (airline), the flight will be operated by Hi Fly cockpit and cabin crews. So for a long term arrangement, it’ll be very tough for an airline to manage the service quality when it’s not their own employees delivering the experience.

I can’t even begin to speculate what airline they’re talking to, though I sure am curious. Last year IAG’s CEO indicated that he could see a place for the A380 in Aer Lingus’ or Iberia’s fleet. Could we see one of those airlines operating the plane? I guess we’ll have to wait and see…

What airline(s) do you think Hi Fly is talking to regarding a seasonal or year-round A380 lease?

Comments

  1. I have no idea wht airline it will be, but I am prepared to bet that it will not be a carrier in North America, Oceania or Africa.Also, a correction: Virgin Atlantic has ordered six A380s, all of which are yet to be delivered.

  2. Looking at Hi-Fly’s performance at delivering service on an A340 for Finnair last year, it would have to be an airline which does not have much to lose image-wise. Leaving Air Koryo out for many reasons, I could see PIA, TAP on Brazilian routes (lots of traffic), Royal Air Maroc or Biman for pilgrim flights, or, as per the seating you indicate, a major Low Cost pulling a surprise deal in capacity/traffic rights, thus attracting attention: The kind of thing Mike O’Leary just loves.

  3. I have to believe that there is a market for 600-seat planes between major hubs that are slot-constrained like London, NYC, Hong Kong etc

  4. My dad is the CEO. He said Air Koryo is the likely client for year-round service on their Peking to Pyongyang route.

  5. In a wet lease arrangement, will they typically do end up painting the planes in the livery of lessee airline?

  6. @lucky
    Unrelated, but GA just announced they’re moving CGK-SIN-LHR to non-stop in both directions, with the following schedule:
    GA086 CGK1205 – 2000LHR 777 246
    GA087 LHR2155 – 1855+1CGK 777 246

  7. Compared to previous schedule of:
    GA086 CGK0745 – 1035SIN1200 – 1755LHR 777 26
    GA087 LHR2010 – 1730+1CGK 777 26

  8. Why not fly these old birds from DEL or BOM to DXB? There are a shitload of Indians who from all over India to Dubai. If say Indigo (6E) were to codeshare, they can shuttle Indian folks from all across the country to DEL anD BOM allowing for a full capacity load to DXB.

  9. For the new Garuda flights, what do the 246 and 26 refer to? I’ve seen them on the routesonline website and did not know what they refer to.

  10. @John

    Funny that you talk about that. HiFly and Saudia got into a “fight” a couple of years ago because HiFly was leasing a couple of planes to them, in Saudia livery, and one of the planes was spotted in Israel while on a maintenance stop. Saudia terminated the lease immediately. So yes, when it’s a long term lease, they may use the lessee livery.

  11. @Ben, nearly. The 246 does indeed relate to the days of the week they are operating – but 1 is always Monday, so 246 = Tues/Thurs/Sat in each direction.
    Looks like it’s from 31 October that SIN is being dropped on the return from CGK.

  12. Not sure why you think Hi-Fly will operate solely on a wet lease basis. Damp lease seems the best for the airline that takes on the aircraft for a year especially if they end up taking the 380 full time as their own aircraft. Will mean cabin crew are already trained etc. And will keep the product offered onboard by staff consistent.

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