OP INION
Playing the long game
Ultra long-haul routes can be difficult to sustain, but there is potential with the right strategy
J OHN STRI C K L A N D DIRECTOR OF JLS CONSULTING
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Francisco. In the past couple of years we’ve seen Qantas introduce a successful nonstop Perth-London service and both Qatar Airways and Emirates begin nonstop flights from their Gulf hubs to New Zealand. Ultra long-haul flights are not new, but
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when SIA first offered them to the US some years ago it did so on large A340s fitted with fewer seats than they were designed for and using four gas-guzzling engines. Why the sudden flurry of activity?
Are such flights sustainable and will we see more of them? What’s changed? Te big difference is the availability of new aircraſt and the technology advances that they embody. Airbus’s A350 and Boeing’s B787 are the keys to the financial success of the model. Tese aircraſt are lighter in weight, longer in range and much more fuel-efficient, burning up to 20 per cent less fuel per passenger than earlier aircraſt. Being smaller, they also reduce risk for airlines by avoiding offering too much capacity. Tere are nevertheless extra costs that have
to be factored in. Increased fuel is required as a function of distance, but there is also the requirement for additional cabin attendants and a double flight-deck crew to cover the need for rest. Tese extra people need to be accommodated at hotels, too. It all adds up. Another important consideration is
the opportunity cost of aircraſt usage. An ultra long-haul round trip between Asia and the US or Australia and the UK takes about 36 hours for two sectors. In that time
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ingapore Airlines (SIA) has just launched its fourth ultra long- haul service, from Singapore to Seattle, joining similar routes to New York, Los Angeles and San
on a shorter route – Europe to the East Coast US, for example – an aircraſt could accomplish three revenue sectors. Tat’s a lot of money to sacrifice if the traffic mix on ultra long-haul isn’t right. All of which means that the business case must clearly stack up – so what about the market rationale for ultra long-haul? First, the model shouldn’t be confused
with the increasingly popular, but so far largely unprofitable, low- cost long-haul model. Te two are poles apart. While low-cost long-haul is about volume travel driven by low prices, ultra long-haul is about tapping into the more lucrative premium market segment. Time saving is the commodity being sold, and for airlines it’s essential to attract sufficient higher-margin premium demand to justify the allocation of expensive aircraſt and crew to such services, and to dedicate a higher ratio of seating to business class and premium economy cabins. Te model doesn’t work in the absence of this demand.
Finding routes that can sustain sufficient premium travel throughout the year is a challenge
in a downturn, leaving many empty seats in premium cabins. It was the financial crash of 2007-08, combined with poor aircraſt economics and higher fuel prices, that put paid to SIA’s earlier attempt at ultra long-haul. If airlines are going to commit aircraſt to ultra long-haul routes and fit them with more premium seats, they cannot afford that such external influences leave them underutilised for periods of the year or require them to be used suboptimally on other routes. Given the demanding
preconditions for success, I’m not convinced that we will see a widespread adoption of ultra long- haul services, but there is potential for a number of new routes. Qantas laid down the gauntlet to Airbus and Boeing, in what it calls “Project Sunrise”, to come up with the technology to permit a commercially viable nonstop Sydney/Melbourne-London
service. Te “Kangaroo Route” is a
OUTSIDE INFLUENCES Finding routes that can sustain sufficient premium travel throughout the year is a challenge. Many long-haul routes are driven by high-volume, price-sensitive economy traffic so are not candidates for the model. Business travel accounts for much premium demand and is subject to significant seasonal peaks and troughs. It is also influenced by macroeconomic cycles, typically tumbling
large market, albeit with much price-driven demand, so it really would be the holy grail. But as we’ve seen too much lately, both airframe and engine manufacturers have struggled in delivering new technology, resulting in significant service-entry delays and lengthy aircraſt groundings owing to engine problems requiring complex fixes. Te proof of its long-term success will
be in a downturn, or a high fuel-price environment. I’d give much better odds this time around with the aircraſt technology now available, but it’s not a slam dunk. BT
bus ine s s tr a v el ler .c om
BENJAMIN SOUTHAN
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