(Bloomberg) -- Qantas Airways Ltd. started direct flights between Australia and London this weekend, passing a major milestone by reducing to 17 hours a trip that once took 12 1/2 days.
Flight QF9 landed at London Heathrow at 5:02 a.m. Sunday following a 14,498-kilometer (9,000-mile) trip from Perth. The route marks the first nonstop passenger service between the continents, putting Europe’s financial center one night’s sleep from the center of Australian mineral wealth and the operations of companies including BHP Billiton Ltd. and Rio Tinto Group.
For Qantas, the Perth flight 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 flight to London rather than make a stop in Asia or the Middle East.
“You have the resources sector on both sides, you have banks, you have lawyers that all want to fly fast and reliably and comfortably,”’ said Rico Merkert, professor of transport and supply-chain management at the University of Sydney’s business school. “I think they’re prepared to pay the premium.”
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. The sector also supports financial-services firms such as Hartleys Ltd., whose Perth-based director of corporate finance Steve Kite was booked on Sunday’s departure -- the second direct 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, operated as the continuation of a flight from Melbourne, by stripping excess weight from a Boeing Co. 787 Dreamliner and stacking it with top-tier passengers.
Publicity surrounding the flight has aided forward bookings and the London route should make money “from day one,” Joyce said in an interview with Bloomberg TV Monday after traveling on the service.
Provided the operation pays its way, Qantas plan to offer similar flights to Paris and Germany and aims to convert options to buy more 787s into firm orders later this year, the CEO said.
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, 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, he said.
Andrew McGinnes, a spokesman for Qantas in Sydney, said 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,” he 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.
Success on the Perth-Heathrow service would lay the foundations for even longer routes. Qantas has challenged Boeing and Airbus to build a jet by 2022 that can fly fully loaded from Sydney to London without a break, and Joyce said direct operations to New York, Chicago and Washington are also on the agenda.
“It’s really just the beginning,” said Merkert at the University of Sydney.
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