An eight-figure sum was offered to Qantas in return for seven commitments from the airline, including launching Project Sunrise from Sydney. In late April, the New South Wales Government put AU$50 million (US$39.7) on the table in exchange for Project Sunrise bragging rights.
Sydney to be Australia’s only Project Sunrise airport for five years?
As reported in Simple Flying on Tuesday, the government made the offer after Qantas indicated it might move its headquarters out of Sydney. Qantas has since agreed to stay based in Sydney. However, the airline says the final agreed payment and terms from the New South Wales Government are still being negotiated.
With Qantas suggesting it was revisiting Project Sunrise soon, the New South Wales Government is keen to lock in their capital city as the Project Sunrise launch city and exclusive flight base for the following five years.
Sydney was likely to be the launch city and base for Project Sunrise flights anyway. In that sense, it seems like a fairly easy condition for Qantas to agree to in exchange for a bucket load of cash. But that is not necessarily the case.
Project Sunrise is an ambitious Qantas plan to fly nonstop from Australia’s key east coast cities to London and New York. To date, no aircraft can fly the distances and make money at the same time. But Qantas had settled on a modified version of the Airbus A350-1000 with an enhanced flying range. Project Sunrise was set to go ahead when the worldwide travel downturn struck.
Qantas didn’t abandon their plan. But they did put Project Sunrise aside while they navigated the downturn. However, Qantas CEO Alan Joyce has recently said he is keen to revisit Project Sunrise within the next year.
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Is the New South Wales Government about to subsidize Project Sunrise flights?
In his offer to Qantas, New South Wales Treasurer Dominic Perrottet laid down seven conditions for the cash. Regarding Project Sunrise, the Treasurer’s letter stipulated;
“Commitment to proceed with the Project Sunrise project with this being based exclusively in Sydney for at least five years from commencement.”
The phrasing suggests Qantas must go ahead with Project Sunrise if they take the payment. That is a far bigger commitment than merely agreeing to launch and base flights in Sydney. Perhaps this is one reason why Qantas and the New South Wales Government are still working out the final details of the deal.
Qantas has always said they’ll only proceed with Project Sunrise if the business case stacks up. At the start of 2020, with Project Sunrise about to get the green light, that seemed to be the case. Eighteen months later, the airline industry and travel patterns have significantly altered. Among the hardest hit corners of the industry is long-haul flying.
If the offer does constitute underwriting of Project Sunrise, the AU$50 million suddenly sounds less generous than it first did. The money won’t go far when you are flying brand new Airbus jets to far-flung cities on a daily basis.
Also raising eyebrows is the exclusivity clause. Plenty of local flyers argue a case for running some Project Sunrise flights out of Australia’s second-biggest city, Melbourne. Under Dominic Perrottet’s preferred plan, Melbourne-based Project Sunrise passengers would inevitably use a tag flight to or from Sydney.
In the process, they’d add to foot traffic through Sydney Airport and generate that airport some cash via local taxes and in-terminal spending. With Sydney a less than optimal transit airport, whether Qantas and its Melbourne-based passengers embrace a Sydney-centric Project Sunrise and Dominic Perrottet’s offer remains to be seen.