‘The commercial viability of ultra long-haul operations’ – a niche that might just get a tiny bit bigger thanks to Project Sunrise

22 January, 2020

A big question mark remains over the validity of ultra long-haul air travel. New, more efficient and longer-range airliners now mean that you can effectively fly up to 19 hour missions. But, just because we can do something, doesn’t mean we should!

Ultra long-haul travel is not new. The arrival of the Airbus A340-500 permitted Singapore Airlines to launch non-stop flights from Singapore to New York and Los Angeles back in 2004. But, with four-engines the aircraft may have had the range, but not necessarily the fuel efficiency to serve this niche and as fuel prices creep up the service was eventually grounded.

The arrival of more fuel efficient twins in the form of the 777-200LR and 777-300ER and more recently the A350 and 787 have put ultra long-haul travel back on the agenda. The more advanced technology of the latter and smaller capacity have made them particularly suitable for such missions.

Singapore Airlines has resumed the Singapore-New York and Singapore-Los Angeles routes – the former is currently the world’s longest by distance at over 9,500 miles – while Qatar Airways and Qantas now fly Doha-Auckland and Perth-London non-stop, routes that are over 9,000 miles in distance.

The Australian airline has grabbed lots of media attention with the introduction of the first commercial non-stop flights between Australia and the United Kingdom, and is now pushing the boundaries further with its Project Sunrise project to bring such ultra long-haul connectivity to the Melbourne and Sydney markets.

While Qantas has now confirmed its intent to acquire 12 A350-1000 aircraft to introduce the world’s longest commercial routes from the east coast of Australia to London and New York, it has still not formally committed to pushing ahead its ultra-long-haul Project Sunrise plans, albeit a final decision is now expected by Mar-2020.

Qantas CEO Alan Joyce has said recent research flights on new 787 deliveries and what the airline has learned from two years of flying Perth to London, that there is a “lot of confidence in the market” for the new non-stop services it plans. The amount of money and time the airline is investing in this pre-launch phase highlights just how big a decision this is. You can read our many insights here: Qantas Project Sunrise.

It is not just the question of being happy to sit on an aircraft for 19 hours. The benefits of a non-stop flight are obvious, but the impacts it will have on our health and well-being are not. And, it is not just the passengers the airline need to be mindful of, but also the crews flying and operating on the aircraft.

Corporate travellers are especially interested in the results of Qantas’ investigations as questions remain around the occupational health and safety issues associated with travelling onboard an aircraft for 19 hours. The toll of business travel is already a widely discussed issue within organisations both from a physical and mental perspective. Qantas is well aware this is a key hurdle and is taking every precaution to limit the impacts of ultra long-haul travel.

In early Jan-2020 Linus Benjamin Bauer, a senior consultant with PROLOGIS, spoke at the Heathrow Branch of UK’s Royal Aeronautical Society on the commercial viability of ultra long-haul operations using evidence from Qantas’ Perth-London service, a topic that was the subject of his City, University of London masters’ degree.

The former Etihad Airways and Singapore Airlines executive noted that previous ultra long-haul services with Airbus A340s had mixed success, but ultimately were not viable, but with 787-9 costs averaging 15% less, using it or the A350-900ULR is potentially profitable.

On the Perth-London route, where over a third of passengers were transiting via one of the Gulf hubs, and the remainder via southeast Asian airports, the new flight immediately captured nearly a quarter of the overall market, and at much higher fares. This was especially true of the premium classes, but also of economy class, a phenomenon that Mr Bauer described as “remarkable”.

His research highlighted that one-stop alternatives were around 48% lower than the non-stop offering, a key driver for price-sensitive economy passengers during the first six months of the new flight. In the business cabin, where the benefits of the faster and more convenient non-stop service are more significant, that price premium was much higher at 78% between Mar-2018 and Sep-2018.

Qantas is said to have made a profit of USD1.37 million in the six-month period that Mr Bauer examined, but the profitability was impacted by higher enroute charges because of the required routings. At an 82% load factor, the Qantas service is just 2.2 percentage points above break-even, he said (the breakeven load factor was estimated at 79.8%).

His research also identified fuel costs are up to 30% greater than one-stop flights, making their viability particularly susceptible to even the smallest of increases. The geopolitical influences we are already seeing just weeks into the new decade are already impacting flights through the Middle East, none more so than on the Perth-London service, highlighting how vulnerable such a route can be to changing market conditions.

Mr Bauer’s investigations quite rightly concluded that ultra long-haul services will remain a niche, but it is clear today that the extensive research work behind Project Sunrise, may just make that niche a little larger.