In the past 15 years, various ultra long-haul routes were operated by airlines from different regions across the globe. Between 2004 and 2013, the majority of ultra long-haul routes were axed mainly due to the increase in jet fuel prices. Despite negative developments in the past, current airlines still operate or intend to operate ultra long-haul routes while other airlines and various experts highly question the feasibility of cost-intensive services.
Can ultra long-haul flights be profitable at all? Due to the lack of clear academic evidence, the author Linus Benjamin Bauer aims to enhance and update the current debate, whether ultra long-haul flights in general are either commercially viable or not.
Key findings from Bauer’s comprehensive analysis and developed revenue-cost model conclude that due to the improvement of fuel-efficient long-range aircraft such as the Boeing 787 Dreamliner and Airbus A350, ultra long-haul operations nowadays may prove to be resilient. The cost advantages of such cost-intensive operations may be slight compared to one-stop services. However, ultra long-haul routes are likely to make up for it in market positioning by targeting premium customer segments with lower price sensitivity, one of the main drivers of the profitability of the 21st century airline business.
Table of Contents
- 1.0 Introduction to Final MSc Project
- 1.1 Introduction
- 1.2 Definition of Ultra Long-Haul Flights
- 1.3 Review of Previous Ultra Long-Haul Operations
- 1.3.1 Causes for the Suspension of Ultra Long-Haul Operations
- 2.0 Current Market Overview of Ultra Long-Haul Flights
- 2.1 Overview of Current Ultra Long-Haul Routes
- 2.2 Overview of Unserved and Underserved Routes
- 2.2.1 Unserved Ultra Long-Haul Routes
- 2.2.2 Underserved Ultra Long-Haul Routes
- 2.2.3 Unserved Routes with Operational Limitations
- 2.3 Key Influencing Drivers for the Launch of Ultra Long-Haul Flights
- 2.3.1 Economic Performance and Outlook of the Airline Industry
- 2.3.2 Development of Jet Fuel Price
- 2.3.3 Development of a Fuel-Efficient Fleet
- 2.3.4 Development of Global Wealth
- 2.3.5 Development of Demand in Premium Travel
- 2.3.6 Yield Development in Premium Classes
- 2.3.7 Increasing Importance of the Premium Economy Class
- 2.3.8 Global Forecast 2016 – 2036
- 3.0 Perth-London Market Analysis
- 3.1 Overview of Markets
- 3.2 Main Competitors
- 3.3 Qantas’ Strategy and ULH-Business Model
- 3.4 Composition of Travel
- 3.5 Customer Archetype
- 3.6 Customer-Perceived Value
- 3.7 Market Development Perth-London
- 3.8 Network
- 3.9 Revenue Management and Pricing
- 4.0 SWOT Analysis
- 5.0 Revenue-Cost Model
- 6.0 Risk Analysis
Objectives and Key Themes
This project investigates the commercial viability of ultra long-haul (ULH) flights. It aims to provide evidence, using Qantas' Perth-London route as a case study, on whether ULH operations can be profitable under various scenarios. A revenue-cost model, supported by market analysis, sensitivity analysis, and risk assessment, is employed to achieve this objective.
- The economic feasibility of ULH operations.
- The influence of fuel efficiency and aircraft technology on ULH viability.
- Market analysis of the Perth-London route and its unique characteristics.
- The role of premium passengers and ancillary revenue in ULH profitability.
- Risk assessment of factors affecting ULH operations.
Chapter Summaries
1.0 Introduction to Final MSc Project: This introductory chapter defines ultra long-haul flights and reviews past attempts, highlighting the reasons for their failures, primarily focusing on the impact of high fuel prices and intense competition. It outlines the project's methodology, which involves a detailed market analysis of Qantas' Perth-London route and the development of a revenue-cost model to assess the current viability of ULH operations.
2.0 Current Market Overview of Ultra Long-Haul Flights: This chapter provides an overview of existing ULH routes, identifies unserved and underserved routes, and explores key drivers for the recent resurgence of ULH flights. These drivers include the improved economic performance of the airline industry, lower fuel prices, the development of fuel-efficient aircraft like the Boeing 787-9 and Airbus A350-900, and the growth in demand for premium travel.
3.0 Perth-London Market Analysis: This chapter presents a detailed analysis of the Perth-London market, focusing on Qantas' strategy and business model. It examines the market's composition, identifying key customer segments and their perceived value. The analysis further investigates the competitive landscape, network dynamics, including feeder traffic and on-time performance, and revenue management and pricing strategies employed by Qantas.
Keywords
Ultra long-haul flights, commercial viability, Qantas, Perth-London route, revenue-cost model, fuel efficiency, Boeing 787-9, Airbus A350-900, premium passengers, ancillary revenue, risk analysis, market analysis, sensitivity analysis, airline network strategy, hub-and-spoke, point-to-point, economic factors, jet fuel prices, competition.
Frequently Asked Questions: Final MSc Project - Commercial Viability of Ultra Long-Haul Flights
What is the main topic of this MSc project?
This project investigates the commercial viability of ultra long-haul (ULH) flights, using Qantas' Perth-London route as a case study. It aims to determine whether ULH operations can be profitable under various scenarios.
What methodology is used in this project?
The project employs a revenue-cost model supported by market analysis, sensitivity analysis, and risk assessment to evaluate the economic feasibility of ULH operations.
What are the key themes explored in this project?
Key themes include the economic feasibility of ULH operations; the influence of fuel efficiency and aircraft technology on viability; market analysis of the Perth-London route; the role of premium passengers and ancillary revenue in profitability; and risk assessment of factors affecting ULH operations.
What aspects of the Perth-London market are analyzed?
The analysis includes Qantas' strategy and business model, market composition, key customer segments and their perceived value, competitive landscape, network dynamics (including feeder traffic and on-time performance), and revenue management and pricing strategies.
What are the key drivers for the resurgence of ULH flights?
Improved economic performance of the airline industry, lower fuel prices, development of fuel-efficient aircraft (Boeing 787-9 and Airbus A350-900), and growth in demand for premium travel are identified as key drivers.
What factors are considered in the risk analysis?
The risk analysis considers various factors affecting ULH operations, although the specific factors are not detailed in this preview.
What is included in the Table of Contents?
The Table of Contents covers an introduction to the project, a current market overview of ULH flights, a detailed Perth-London market analysis, a SWOT analysis, a revenue-cost model, and a risk analysis. Each section is further broken down into sub-sections.
What are the key words associated with this project?
Keywords include: Ultra long-haul flights, commercial viability, Qantas, Perth-London route, revenue-cost model, fuel efficiency, Boeing 787-9, Airbus A350-900, premium passengers, ancillary revenue, risk analysis, market analysis, sensitivity analysis, airline network strategy, hub-and-spoke, point-to-point, economic factors, jet fuel prices, and competition.
What is the purpose of the chapter summaries?
The chapter summaries provide a concise overview of the content and findings of each chapter in the project.
What is the overall objective of this project?
The overall objective is to assess the commercial viability of ultra long-haul flights, specifically focusing on the Qantas Perth-London route, by using a comprehensive analysis incorporating market factors, costs, revenues and risk assessment.
- Quote paper
- Linus Benjamin Bauer (Author), 2019, The Commercial Viability of Ultra Long-Haul Operations. Evidence from Qantas' Perth-London Service, Munich, GRIN Verlag, https://www.grin.com/document/469332
