Qantas’ Perth-London service won’t beat Emirates on price, but it might still be a winner

Once the pride of the so-called “Kangaroo Route” from the UK to Australia, Qantas has been losing market share to Middle Eastern hub airlines over the last decade and a half, and in 2016 operates just two rotations per day to Europe. However, the latest announcement of non-stop services from Perth to London could be a game-changer.

Last Sunday, Qantas announced its intention to launch the first ever nonstop service between the UK and Australia. This 14,500km route would be the furthest non-stop scheduled passenger service in the world. However, surprisingly, the saving in block time over flying via Dubai could be as little as just 45 minutes according to RDC’s Apex route performance software. The slightly less geographically convenient transfer-point of Singapore is also just 65 minutes further away than the nonstop route.

Map from AirportCharges

Source: airportcharges.com

Of course this does not take into account time for transfer/transiting through an intermediate airport. Qantas’ flagship Kangaroo route from Sydney (QF1/QF2, SYD-DXB-LHR) takes transit stops in Dubai of 2hrs on the outbound service and 1hr 50mins on the inbound service. Meanwhile there are no flights from Perth without changing aircraft, and passengers currently travelling on services with Emirates (Qantas’ partner on Kangaroo routes) via Dubai are offered connecting times rarely faster than 2 hours, based on an analysis of the company’s website. So this nonstop service represents a total time saving of at least 2 hours and 45 minutes to the average Perth-London passenger.

For the airline the advantages are more subtle. While on the face of it cutting air-time and stopping at one less airport should bring costs down and allow Qantas to offer more competitive fares, this is not necessarily the case.

One area where the airline will save costs is on airport charges, due to using two airports rather than three. However, airports with large transfer flows such as Dubai offer substantial discounts for passengers in transit; and Heathrow is substantially more expensive than the other airports on the routing. Emirates also uses a considerably larger aircraft to spread per-movement costs such as landing charges across a much greater number of passengers  (the airline’s A380s have between 489 and 615 seats depending on configuration, while Qantas’ 787-9 will have just 235). So as can be seen from the chart below, the saving for Qantas is minimal.

Graph from airportcharges

Source: airportcharges.com

A second cost-saving will be achieved through being able to fly a more direct routing. Using RDC’s En Route Navigation tool, we can see that (based on a great-circle routing) the charges Qantas will be paying for the PER-LHR route, are £4,000 lower than for the two Emirates flights via Dubai. However when the cost is spread across the passengers, due to the size of the aircraft, the cost for Emirates and Singapore is 18% and 5% lower than Qantas respectively.

Graph from airportcharges

Source: airportchages.com

Interesting side note – Singapore Airlines pays 15% less in en route navigation charges than Emirates, despite taking longer and routing over South-East Asia. This is due to the flight spending 2,083 fewer kilometers in Australian airspace, which is comparatively more expensive (see map).

Analysis of the overall route performance of a nonstop Qantas service versus two Emirates services (LHR-DXB and DXB-PER) shows that the breakeven revenue per passenger is 7% lower on the Emirates services. This is partly due to the points that we have already discussed and partly due to the compounding cost of flying fuel for 14,500km.

Graph from airportcharges

Source: RDCApex.com

The average leisure passenger will accept having 3 additional hours on an 18 hour journey, in exchange for lower fares and a chance to stretch their legs. But the critical advantage of this service will be its appeal to time-sensitive premium passengers. It is for this reason that Qantas have laid out their 787-9 in a roomy 236-seat configuration (42C/28W/166Y).

So, whilst many travellers will be delighted to see the first non-stop flight between Australia and the UK, they shouldn’t expect it to be offered at cut-price fares; and for some, the opportunity to break the journey and stretch out will be more appealing than spending 18 hours on board.

By Dan Irvine / Connect on LinkedInDan Irvine