Singapore Air won't extend lease on Airbus A380 jet next year

[NEW DELHI] Singapore Airlines Ltd said it won't extend the lease on its first A380 superjumbo jet, a move that is set to test second-hand demand for the world's biggest commercial aircraft.

The carrier, the first operator of the Airbus Group SEplane, will see the contract expire in October 2017 and doesn't plan to exercise an option to extend it, Singapore Air said in an e-mail Wednesday. The airline's first five A380s are on 10-year leases, and a decision on the other four planes will be made later, it said.

Airbus has said demand for A380s has fallen far short of its original projections, forcing the company to drastically cut output earlier this year. The jet-maker has said it sees a second-hand market for the plane as major carriers including Emiratesand Singapore Air come to the end of their initial lease terms, potentially offering low-cost Asian airlines an option of flying more people on six- to eight-hour routes.

In May, aircraft-leasing firm Doric said the company and fellow owner Dr Peters Fund KG of Germany are preparing for a possible return and needed refurbishment of the five A380s from Singapore Air starting next year, reserving time in paint shops and exploring the availability of hundreds of replacement seats.

Demand for the A380 has dwindled in recent years with the introduction of more nimble twin-engine jets. While Emirates has ordered more than 140 of the planes and has about 80 in services, only two other operators, Singapore Air and Australia's Qantas Airways Ltd, have bought 20 aircraft or more.

The aircraft faced a further setback when Qantas said in August it is deferring deliveries of eight A380s it has on order. Malaysia Airlines Bhd said last week it is in talks with carriers in China and other countries in the Association of Southeast Asian Nations about offloading its six A380s because the giant double-deckers are no longer needed in the fleet.

BLOOMBERG