Qantas Group signs up for the new A321XLR, but will they fly under the mainline or Jetstar brand?

20 June, 2019

Qantas Group is among the first tranche of airlines to sign up for the new XLR variant of the Airbus A321neo that was launched at the start of the week on the opening day of the Paris Air Show.

Alongside the Australian flag carrier this list includes legacy operators such Aer Lingus, American Airlines, Iberia and Middle East Airlines and low cost carriers such as Cebu Pacific, Frontier Airlines, JetSMART and Wizz Air and highlights the adaptability of the aircraft to meet the long-range mission needs of varied business models.

Much of the conversations about the current in-service LR version of the A321neo have focused on its ability to fly the highly-competitive trans-Atlantic market and it is the same with the XLR which allows more of North America to be linked with more of Europe, but, it also opens up numerous new city opportunities that can be sustainably served with a single-aisle airliner across Asia and the South Pacific.

Airbus describes the A321XLR as “the next evolutionary step” from the A321LR and responds to market needs for even more range and payload, creating more value for the airlines. Available from 2023 it will offer a range of up to 4,700nm – 15% more than the A321LR, albeit it remains unclear what operational limitations it could face at its maximum range.

Across this mission envelope it will permit operators to open new routes in Asia and the Pacific between Australia and destinations in China and Japan. For the Qantas Group the aircraft could allow both its mainline Qantas operation as well as low cost carrier Jetstar to improve network and fleet flexibility to better serve point-to-point markets in Australia, Asia and the South Pacific.

Under the terms of the deal revealed during the Paris Air Show, the Qantas Group has secured up to 36 Airbus A321XLRs for delivery from financial year 2024 onwards, in an update of its existing order. This sees 26 of the Group’s existing A321neo orders converted to A321XLR version and a further ten XLRs being added, for a total of 36 and taking the total order from 99 aircraft to 109. Qantas says the order “includes significant flexibility” to make adjustments to delivery schedules depending on market conditions.

Qantas Group CEO, Alan Joyce says the new aircraft changes the economics of lots of potential routes that are under consideration from Australia into Asia. Alongside the range to serve these new markets, the up to 244 seat configuration of the aircraft delivers the right capacity and seat costs to also make them financially attractive.

“We already know the A320 is a great aircraft and this new variant can fly further and more efficiently than any other single aisle jet on the market. It can fly routes like Cairns-Tokyo or Melbourne-Singapore, which existing narrowbodies can’t, and that changes the economics of lots of potential routes into Asia to make them not just physically possible but financially attractive,” he says.

But, it is not just about new routes, but better serving existing ones and the A321XLR provides the opportunity to right-size capacity in some markets where widebodies are being used but where demand perhaps doesn’t merit there deployment. This could be just on a seasonal basis to better meet demand trends, and as well as to reduce capacity could be used to grow capacity to introduce an additional frequency to complement existing services.

Qantas Group has yet to decide exactly where the new aircraft will be used. There are numerous city pairs where they could be introduced, so there will be a long list of options. Perhaps more significantly will be the decisions around how the aircraft will be flown – either under the Qantas or Jetstar brand, or perhaps even both.

“We’ll take a decision closer to the time about which parts of the Group will use these aircraft, but there is plenty of potential across Qantas and Jetstar,” acknowledges Mr Joyce. “We’ll also take a view on whether they are used to replace older aircraft or whether they are used for growth, which will depend on what’s happening in the market.”

As announced in early 2018, the first deliveries from the Group’s A320neo Family order will begin with 18 A321LR aircraft for Jetstar, arriving between mid-2020 and mid-2022. These will operate a mix of domestic and international routes. The first A321neoXLR would be available to the Group from the 2024 financial year onwards. With the revision and expansion of its order, the Qantas Group commitment to the A320neo Family now comprises 28 A321LRs, 36 A321XLRs and 45 A320neos, but with continued flexibility around timing and structure of its orderbook, this could again change.