Qantas ULH Business Case Looking Bright

Seven years after announcing Project Sunrise in 2017, Qantas says that the business case for ultra-long-range flights is still valid. Yes, today’s world and economics are different, but the airline reiterates the original target that a fleet of 12 Airbus A350-1000ULRs will bring $400 million in incremental EBIT. “The business case remains resilient and a $400 million uplift in passenger and freight earnings is possible”, said Cam Wallace, CEO of Qantas International. Together with Group CEO Vanessa Hudson, he was at Airbus in Toulouse to have a look at the first A350-1000ULR in full Qantas livery. The aircraft, the second 1000ULR off the production line, was presented in front of the delivery centre, but still without its Rolls-Royce Trent XWB-97 engines. Hudson announced that Qantas will launch ULR services from Sydney to London Heathrow in October 2027. Tickets will go on sale in February. The carrier had planned to start services in early 2027, but delivery of the first aircraft has slipped from November this year to April at the earliest. The first A350-1000ULR first flew on June 2. Business case Qantas shared some insights into the business case of the ULR concept. Once all 12 aircraft have been delivered by 2030, six will be deployed on ultra-long-haul routes of 19 to 22 hours from Sydney to London, New York and other destinations. The other six aircraft will operate on 15 to 17-hour flights to Europe and North America and replace the Boeing 787-9 on these routes. The Dreamliners can be redeployed to other routes of 13 to 15 hours, either in Europe and North America or to South Africa and South America. [caption id="attachment_193524" align="aligncenter" width="698"] Qantas ultra-long-haul network[/caption] Just the A350s grow ASKs by 14 billion. While seat capacity is low at 238, the A350s and 787s offer additional capacity for freight. The 1000ULR comes with six First Class suites, 52 Business Class suites, 40 Premium Economy and 140 Economy seats. Qantas is forecasting a continued underlying demand of three percent CAGR due to a rising population and a higher GDP per capita. The recent Middle East conflict did have an effect on short-term demand, but in the longer term, the effect is only temporary. In a survey, Qantas asked people about the likelihood that they will book a non-stop ultra-long-haul flight. For premium cabins, demand grew from 68 percent pre-conflict in February to 80 percent in May. In the Economy cabin, this is 53 to 63 percent. In Australia, eight million citizens will have access to non-stop Project Sunrise flights to London and New York from the eastern hub in Sydney. 99 percent of Australians and New Zealanders can choose between a direct or one-stop option by A350-1000ULR, 787-9 or A380. The western hub in Perth offers direct flights to London, Paris, Rome and Johannesburg by A350-1000ULR and 787-9. In this two-hub strategy, Melbourne is missing, although it was part of the original business case. Premiumization Despite higher fuel and labour costs, a weaker Australian dollar, inflation and higher airport charges, the business case is still valid. Compared to a previous version in 2022, Qantas is seeing accelerated premiumization, resulting in higher yields. At today’s parameters, RASKs would be up by 20 percent for an ULH flight compared to a one-stop flight. The airline is already seeing this on ULH flights out of Perth on the 787-9, which are the most profitable ones in the network. The Dreamliners offer 42 Business, 28 Premium Economy and 166 Economy seats. Melbourne to Dallas and Auckland to New York are also performing very well. [caption id="attachment_71400" align="aligncenter" width="675"] Qantas First A350 3 scaled[/caption] Offering the A350-1000ULR brings an 11-point premium lift compared to the 787s and A380s. Cargo belly capacity is 25 percent bigger on the ULR than on the Dreamliner, supporting growing demand on routes to the US and Asia-US. For customers, flying ultra-long-range and non-stop saves them time. “Eliminating the stopover saves customers up to four hours of travel time”, Vanessa Hudson said. “This aircraft has been designed from the ground up for ultra long-haul travel, with a cabin built around science and combatting jetlag, with an onboard experience purpose-built for the length of the journey.” With the first aircraft now to be completed in Toulouse, Qantas has started pilot training for the A350. A group of A330 pilots has been trained for Project Sunrise, using Qantas’ own simulator in Sydney and one at British Airways in the UK. Forty pilots will form the first group of A350 pilots, but this will grow to 360 once all A350-1000ULRs have been delivered. Remember that Qantas ordered 12 A350-1000s with long-range capability in 2023 for delivery in FY27, together with another 12 787-9s and -10s.

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