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Qantas Sunrise's corona boost to Perth-London corporate non-stop

The threat of picking up coronavirus at stopovers en route to London has delivered Qantas a major endorsement of its Sunrise strategy.

As part of a large scale readjustment of its international flying, the airline will increase its Perth-London non-stop service from once daily to double daily, effective 20-Apr-2020.

For decades Qantas has had to compete with high quality intermediate (“Sixth Freedom”) airlines like Singapore Airlines on all of its westbound and northbound services.

The introduction of its Sunrise flights meant that passengers between Perth and London could dispense with an intermediate stop, at the same time offering Qantas a competitive advantage.

 Summary

  • Qantas commenced its non-stop Perth-London service with a specially configured 787 in Mar-2018
  • It has reported excellent results since day one
  • As coronavirus makes Australian (and presumably British) travellers and businesses more wary about air travel, Qantas is leveraging its advantage, adding a daily service to its existing daily

Qantas’ capacity changes lend weight to the Sunrise strategy, avoiding potential health risks

Effective 20-Apr-2020, Qantas will add another daily service to its highly successful Perth-London non-stop operation.

At the same time it is significantly decreasing its Singapore capacity, aiming to divert many of its health conscious (and Duty of Care sensitive) corporate travellers onto a route that doesn’t involve an intermediate stopover, for example in Singapore or via Dubai, where it shares services with close partner Emirates.

But for those sensitive travellers, there is a price to pay. Flexible business class fares bought on Qantas’ website for travel Perth-London, for example travelling 21/29-Apr-2020, will cost a tidy AUD15,920 for the round trip. Premium economy for the same trip will add up to AUD8,068 and a flexible Economy fare AUD3,216.

And, while large corporate buyers are usually able to extract a better than market price, the word is that they are also paying top dollar, with discounts hard to come by.

These are hard times for the airline industry overall. Qantas’ share price has tumbled from a high of AUD7.40 in Dec-2019, slipping below AUD4.00 in morning trade on 10-Mar-2020. Amid the cuts, a successful Perth-London non-stop service would provide a welcome boost for Qantas' fortunes.

Qantas has made a raft of international capacity changes to give “more certainty to the market”

Announcing the changes, Qantas Group CEO Alan Joyce, said: “In the past fortnight we’ve seen a sharp drop in bookings on our international network as the global coronavirus spread continues.

“We expect lower demand to continue for the next several months, so rather than taking a piecemeal approach we’re cutting capacity out to mid-September. This improves our ability to reduce costs as well as giving more certainty to the market, customers and our people.

“We retain the flexibility to cut further or to put capacity back in as this situation develops.”

Asia capacity cuts are the biggest, but the US is also down 19% as Melbourne- and Brisbane-San Francisco are dropped

Compared with the same time in 2019, the additional reductions announced on 10-Mar-2020 will bring Qantas and Jetstar’s total international capacity reduction from the previous drop of 5% down to 23%.

The biggest reductions are in Asia, now down 31% y-o-y; the US is down 19%, the UK down 17% and trans-Tasman is reduced by 10%.

All of these cuts reflect “forward booking trends” and are “planned to remain in place at least until mid-September 2020”.

Sydney-New York "Sunrise" non-stops still in the wind; coronavirus offers a tailwind

Qantas CEO Alan Joyce hopes to operate the big non-stop trophy, linking Sydney to New York. Negotiations are continuing with Airbus, selected to operate the service with A350-100s, as well as with Qantas pilots union, uncomfortable over pay and conditions for the service.

Today's announcement of a double daily Perth-London will only emphasise the value of these non-stops for the future.

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