Skift Take

Connecting to the ends of the Earth with nonstop flights is an increasingly attractive prospect for flyers. The growing popularity of nearly day-long flights, however, is set to disrupt the economics of the airline business. Adapting will be crucial as demand from the travel industry grows.

Series: Megatrends 2020

Skift Megatrends 2020

We recently released our annual travel industry trends forecast, Skift Megatrends 2020. Download a copy of our magazine here and read on for highlights online.

Qantas in October 2019 scored a coup with its first-ever direct flight from New York to Sydney, a record 20 hours of nonstop travel. The ultra-long-haul flight garnered plenty of headlines, but more meaningful is that it underscored a trend that will change flying in the years to come.

Airlines for decades often sought to fly the biggest aircraft they could on routes between the largest cities, pushing passengers through megahubs in New York, Frankfurt, London, Tokyo, or Dubai, where they could switch to a smaller airplane to take them to Nashville, Osaka, or Nairobi. Two new aircraft, the Boeing 787 — the one on the Qantas flight — and Airbus A350, however, have changed the model, and in the coming decades, more passengers will be able to fly nonstop to more places than ever on ultra-long-haul flights.

This is excellent news for many airlines, which can fly to new markets that never would have worked with previous-generation airplanes. In most cases, the larger airplanes had the range, but the economics stunk. All of them burned too much fuel or carried too many passengers to make niche routes viable.

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It is, however, less auspicious for airlines that still rely on massive megahubs, including the big three in the Gulf — Emirates, Etihad Airways, and Qatar Airways. Since they represent countries with few local travelers, the trio has thrived by connecting passengers between cities, through their hubs. They may struggle as more airlines test new long-haul routes between cities that could never support them in the past.

Already, we are seeing signs that this trend is changing how people travel. Worldwide, airlines are using the newest twin-engine technology to remake where they fly. On the 787, customers already can fly nonstop from London to Nashville, Newark to Cape Town, Boston to Tokyo, Santiago, Chile, to Melbourne, and Warsaw to Ho Chi Minh City. Airlines will use the airplane for more growth in 2020, with Air New Zealand adding New York to Auckland and American Airlines starting Los Angeles to Christchurch.

“We’re flying to places people haven’t gone to before,” Vasu Raja, American Airlines’ senior vice president for network, said last year before announcing the Christchurch route. “With the new shiny 787, we want to continue that. That’s the airplane that’s going to take us eventually to India and to Africa and markets which are very different than the ones that we’ve been in historically.”

This trend is just beginning. Within the next decade, airlines will use these airplanes to push aviation’s final frontiers. In some cases, they will fly farther than ever, like the Qantas flight. In many others, they will add a nonstop flight where none had been viable.

Conceivably, travelers in all types of markets could be winners. Passengers in smaller markets, like Denver, New Orleans, Berlin, or Osaka, should see more nonstop connections with major cities, while travelers in big markets will increasingly see more flights to secondary or tertiary markets, like Cape Town, South Africa.

“The 20-hour flights will get the headlines and serve as marketing and PR tools for airlines,” said Madhu Unnikrishnan, editor of Skift Airline Weekly. “But the real power behind this movement is the 10- or 12–13-hour flights between two cities that can’t be profitably served by a larger aircraft.”

This is Real

Over the past two decades, manufacturers and some airlines made other predictions about future trends. European manufacturer Airbus bet on giant aircraft, promoting the A380 as solution to the capacity crunch at some connecting hubs, including London, Hong Kong, and Dubai.

Some bought the hype, but it never was backed by evidence. Airbus has delivered roughly 240 A380s in more than a decade, nearly half to Emirates. No airline in the Americas wanted it, and although several European carriers have small fleets, many chose it more for continental pride than economics. Airbus soon will stop building them, and some airlines, including Air France, will retire them early.

Airlines actually want the 787 and A350. Airlines and lessors have placed orders for 1,450 Boeing 787s, with about 900 deliveries so far, while Airbus has filled about a third of 900 orders for the A350. Demand is strong, and most airlines will use these airplanes as they were intended, to fly nine or more hours, often on new routes.

And for good reason, as both airplanes have two major advantages over the A380. One is cost, since both rely on the newest technology to reduce fuel burn. But size is important too.

Not every route will work. Some airlines have pulled back from aggressive moves: United discovered the secondary Chinese cities of Xi’An and Hangzhou weren’t ready for nonstop transpacific service from a U.S. carrier.

But Skift Airline Weekly’s Unnikrishnan said there will be more winners than losers as airlines choose new markets for their newest assets. That includes 787 or A350 flights to Europe and North America from secondary Chinese cities, though Chinese carriers may have an edge.

“If there is sufficient demand,” he said, “these routes are now possible, and this is what the passenger will want to fly.”

Winners and Losers

Most airlines should benefit from this new trend, since they can access new markets that could produce higher margins. Big airlines like United can experiment with unusual routes, while smaller ones like Kenya Airways finally have a tool to fly to New York with reasonable economics.

But a few have a lot to lose.

Most airlines at high risk are located in the Gulf. Over the past two decades, Emirates, Etihad, and Qatar built megahubs that can efficiently connect passengers between just about any two points. Bit by bit, however, competitors are chipping away at what makes those hubs so valuable.

If United’s customers can fly nonstop from San Francisco to Delhi, many will no longer want to stop in Doha or Dubai, even if the Gulf airline passenger experience is slightly better. Customers in other regions are making the same calculation. Why should a passenger in Nairobi connect in Doha when Kenya Airways has a nonstop?

Good question. And the answer seems obvious. Airlines are already starting to accommodate.

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Tags: airlines, megatrends 2020

Photo credit: More airlines are launching ultra-long-haul flights, making it easier for travelers to fly nonstop between large cities. Skift

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