Sept. 8 (Bloomberg) -- Karl Ong hoped to find a quiet spot on his Singapore Airlines Ltd. flight home, betting that the recession and a drop in air travel would leave the double-decker Airbus SAS A380 half empty. He was wrong.

“I can’t believe that the plane was packed and I couldn’t find another empty seat anywhere else,” said the 49-year-old investment executive, who was traveling coach from Hong Kong on the world’s largest commercial aircraft. “Where is the recession? If there was one, you can’t tell from this flight.”

Singapore Air’s advantage as the only airline to fly the A380 to financial centers such as Hong Kong and Tokyo is helping it lure customers like Ong. The plane’s appeal in the two years it has been in service could ease the pain from empty seats on other aircraft and cheaper tickets that are threatening to push the carrier into its first annual loss since 1985.

“It’s certainly a competitive offering by Singapore Air to win over travelers who have not flown the A380 before,” said Steven Lim, who manages about $200 million at Daiwa SB Investments in Singapore. He declined to say whether Daiwa owns shares in the carrier.

Singapore Air flew more than 1.6 million passengers on the A380 since flights with the 471-seat plane began in October 2007, filling more than 80 percent of seats on average, said Nicholas Ionides, a spokesman for the airline. In contrast, the carrier packed an average 71.6 percent of total available seats in the quarter ended in June.

“The A380 remains very popular with customers on all routes,” Ionides said. The $327 million plane features beds in 12 “suites” and the widest available business-class seats.

Emirates, Qantas

Besides Tokyo and Hong Kong, Singapore Air’s 10 superjumbos, the most of any airline, fly to London, Paris and Sydney. The carrier, which took delivery of its latest aircraft yesterday, will add Melbourne this month. In addition to the daily A380 flights between Singapore and Hong Kong, it also flies Boeing Co. 777-300ERs and 777-200s on the route.

“The A380 is deployed on very popular routes,” said Rohan Suppiah, a Singapore-based analyst at Kim Eng Securities Pte. “If you have a choice, you would want to fly the A380 rather than a regular service.”

Emirates, the largest Arab carrier, has five A380s, and Australia’s Qantas Airways Ltd. has four.

Singapore Air gained 0.3 percent to S$13.14 at the close of trading in the city-state today. The shares have fallen 24 percent since the carrier’s first A380 flight on Oct. 25, 2007, outperforming a 54 percent drop for British Airways Plc and a 59 percent decline for Qantas.

‘Under Pressure’

Packing the double-decker plane alone won’t be enough to pull Singapore Air out of a travel slump caused by the deepest recession since World War II. The A380 accounts for just 9 percent of the carrier’s fleet of 109 planes.

“They could be filling the A380, but yields may be under pressure,” said Jim Eckes, managing director of industry adviser Indoswiss Aviation. “Carriers such as Singapore Air depend a lot on premium traffic and that’s still falling.”

Revenue from premium seats sank an estimated 41 percent in the second quarter, compared with a 33 percent drop in the first, according to the International Air Transport Association.

Singapore Air, which gets about 40 percent of its revenue from premium travelers, has slashed fares to stimulate demand. Passenger yield, or average revenue per seat, tumbled 18 percent to 10.2 Singapore cents a kilometer in the three months ended in June, the steepest quarterly drop in at least six years.

A380 Delay

Passenger numbers fell 14 percent in July, the ninth consecutive month of decline and the longest losing streak since at least 1991, according to Bloomberg data. Singapore Air posted a net loss of S$307 million ($214 million) in the three months ended in June, the first since 2003. The carrier said it may report an annual loss for the first time since it went public more than two decades ago.

The airline has cut pay and work days and plans to remove 11 percent of capacity in the year through March. It’s also pushing back delivery of the last eight of its total order for 19 A380s by as long as one year, to avoid having too many seats when travel demand hasn’t picked up.

“The deferral will help reduce capacity, fill up their existing planes, and profitability,” said K. Ajith, an analyst at UOB-Kay Hian Research in Singapore.

World’s Biggest

Airbus set out in December 2000 to build the world’s biggest passenger plane to ferry people between global hubs. Airbus ran into difficulties wiring the A380, triggering cost overruns, penalties for late deliveries and pushing parent European Aeronautic, Defence and Space Co. into losses.

The Toulouse, France-based planemaker in May scaled back its delivery schedule for the superjumbo as airlines resist accepting large planes when demand is depressed. Airbus aims to hand over 14 A380s this year, down from the 18 previously planned. It has orders for 200 A380s from 16 customers, including British Airways.

Singapore Air will take delivery of its next A380 before the end of March as customers such as Ong plan to fly again.

“Just the size of the aircraft alone will take your breath away,” Ong said at Singapore’s Changi airport. “If I had to pick again, I will still probably choose to fly it.”

To contact the reporter on this story: Chan Sue Ling in Singapore slchan@bloomberg.net

Last Updated: September 8, 2009 05:32 EDT