Qantas says it’s recently made a profit on its London routes for the first time in an astounding 10 years. As there is no direct route from Sydney or Melbourne to London, other airlines have been just as competitive in flying passengers between the largest cities of Australia and the U.K. with a single stopover. Amidst all this intense competition, however, Qantas has shown they can hold their own.
If you’re from Sydney or Melbourne and looking to head to London you’ll have plenty of options available. You’ll find that you can transfer through Kuala Lumpur, Bangkok, Doha, Dubai, Abu Dhabi – the list goes on and on. Flying with the ‘home team’ doesn’t offer much more advantage in terms of having a stopover, as it still means a layover in either Perth or Singapore.
That would likely explain why Qantas has not seen a profit on its flights to London in 10 whole years. Many of the airlines competing on the same route offer exceptional levels of service. With so many carriers competing, prices are driven down to stay competitive as well.
While Qantas offers a fine product and flight experience, it’s pretty tough to compete with the service and quality of Emirates, Qatar Airways, Singapore Airlines, and Cathay Pacific. In addition, other airlines can end up being cheaper than flying with Qantas.
What has changed?
As Will Horton at Forbes says, Qantas is a driving factor in the change. In this case, profitability doesn’t equate to volume and the airline has certainly reduced its volume over the years. At one point, Qantas had as many as four daily flights to London using its 747s. However, the airline has restructured and frequency is down.
The keyword that has led to this newfound profitability is efficiency. There was clearly not enough demand to meet Qantas’ four daily frequencies with 747s amidst all this competition. Beyond that, operating a one-stop Airbus A380 and a nonstop 787 is a smart choice.
Qantas, in effect, can pick up passengers on the Singapore-London haul while also maintaining their passengers on the overall Sydney to London route.
And, when it comes to long-haul flying, the 787 is one of the most fuel-efficient long-haul twinjets. This enables Qantas to have a little more wiggle room for turning a profit on this ultra-long-haul flight, since fuel expenditures are not astronomical. And the 787 proved to offer the right capacity as Qantas picked up a 94% load factor on the direct flight.
Project Sunrise and the future
Qantas is now looking forward to Project Sunrise flights. These will operate directly from Sydney to London. However, it is not a guarantee that these flights will be profitable either instantly or within the first few years.
This is a highly competitive market and it will be interesting to see how or if Qantas adjusts their existing services to instead drive passengers to their direct flights. One of the key components to these flights are premium cabins. Qantas’ new business class seats, though not the groundbreaking Qsuites, are comfortable and offer some privacy.
Ultimately though, the question is whether or not passengers would want to spend an upwards of 20 or 22 hours on a plane in favor of a one-stop connection where they can stretch their legs. Or, of course, if Qantas can fill up their planes with (paying) avgeeks who prefer longer itineraries and flights then that’s another way this can work out 😉
Would you prefer a nonstop flight or a one-stop connection from Australia to Europe? Do you fly Qantas on this route? Let us know in the comments below.
Simple Flying’s Chris Loh assisted with this reporting.