The 14,498-kilometer (9,000-mile) flight from Perth, one of the world’s most isolated cities, marks the first direct passenger service between the continents. It puts Europe’s financial center one night’s sleep from the capital of Australia’s mineral wealth and the operations of hundreds of resources companies including BHP Billiton Ltd. and Rio Tinto Group — both listed in Australia and the U.K.
For Qantas, the Perth connection is a high-profile test for a planned ultra long-haul network that the airline hopes will span the world by 2022. To succeed, the route must defy the boom-and-bust commodities cycle that has preyed on Western Australia. And Qantas needs business travelers to pay up for the shorter, one-hop flight to London rather than make a stop in Asia or the Middle East.
“They’re targeting the business community that wants a seamless journey,” said Rico Merkert, professor of transport and supply-chain management at the University of Sydney’s business school. “It will be a game changer for the resources sector.”
Mining companies in Western Australia dig up more than a third of the world’s iron-ore and bring in some of the largest hauls of gems and rare earths. Across Australia, the sector employs almost a quarter of a million workers. It also supports financial-services firms such as Hartleys Ltd., whose Perth-based director of corporate finance Steve Kite is booked on Sunday’s flight to London for just a four-day trip.
“It’s effectively an overnight flight for me and that feels like I’m saving a lot of time,” said Kite.
Qantas Chief Executive Officer Alan Joyce is betting he can make money from the daily service to London by stripping excess weight from a Boeing Co. Dreamliner and stacking it with top-tier passengers. Almost one third of the 236 seats on the aircraft are in business or premium-economy class. That compares with less than a quarter on the airline’s Airbus SE A380 super jumbo to London from Singapore.
Public relations Stunt
Not everyone is convinced of the route’s commercial future.
Aircraft leaving Perth for London will need feeder passengers from around Australia, said Volodymyr Bilotkach, senior lecturer in economics at Newcastle University in the U.K. and author of the book “The Economics of Airlines.” But flying from Sydney to London via Perth saves little time over a transfer in Asia or the Gulf. And for travelers heading from Perth to continental Europe, a connection in the Middle East would be more convenient, he said.
“The Perth-London service looks more like a PR stunt than a network-building tool,” Bilotkach said in an email.
Andrew McGinnes, a spokesman for Qantas in Sydney, said bookings on the new route “have been strong” and corporate clients in eastern Australia have indicated they’ll stop in Perth for meetings on their way to London. “It’s a very competitive market but this is a unique flight,” McGinnes said.
An analysis of flight times and prices highlights the challenges Qantas faces.
Flying business class from Perth to London with Qantas in mid-June would cost A$6,614 ($5,121). Opting for Singapore Airlines via Singapore would take an extra 2 1/2 hours but cost just A$4,843, according to fares on Webjet.
Still, the Perth-London route will deliver a “significant boost” to Western Australia’s $191 billion economy, said Chris Rodwell, chief executive officer of the Chamber of Commerce and Industry.
Rodwell expects “substantial investment” in travel, trade and infrastructure from the new service.
Qantas has challenged Boeing and Airbus to build a jet by 2022 that can fly fully loaded from Sydney to London without a break. Success on the Perth-London service would lay the foundations for even longer routes to Europe.
“It’s really just the beginning,” said Merkert at the University of Sydney.
–With assistance from David Stringer
©2018 Bloomberg L.P.
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