The Commercial Viability of Ultra Long-Haul Operations. Evidence from Qantas' Perth-London Service

Master's Thesis from the year 2019 in the subject Economics - Other, grade: GPA 4.0, City University London (School of Mathematics and Engineering), course: Air Transport Management, language: English, abstract: 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.