In 2006 Airbus, the European consortium that competes with Boeing in the aerospace market, suffered setbacks in its production of the new A380 aircraft. Originally promised by April 2006, the delivery date has been repeatedly delayed.

Singapore Airlines (SIA) is one of the clients whose plans have been disrupted by the delays. When asked, in October 2006, how SIA would be affected by the A380’s problems, a spokesman replied, “The consequence of the A380 delay is the inability to grow capacity on the flights where we would like to replace 747-400s with the larger A380s, … It would mean a delay in capacity increase, rather than a decrease in the number of flights we already have.” (Sreenivasan, Ven. “Opportunity cost adding up for SIA with A380 delay”. The Business Times Singapore, October 3, 2006.) SIA was not going to spend any more money to acquire its airlines, so what kind of cost was the spokesperson describing? How does this cost affect SIA?