Written by: Vinay Bhaskara

SINGAPORE – Qantas is once again changing direction in its strategy for flights to the United Kingdom, as it will move its daily Sydney-Dubai-London Heathrow flight to a Sydney-Singapore-London routing beginning March 25, 2018.

Along with the previously announced shift of Melbourne-Dubai-London Heathrow to Melbourne-Perth-London Heathrow, the move means that Qantas will exit the Dubai market entirely, just five years after shifting its Kangaroo route to flow over the Middle Eastern hub.

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To support the move, Qantas will also up-gauge its current Melbourne – Singapore service from 10 weekly flights on the Airbus A330 to a daily flight apiece on the A330 and the Airbus A380 superjumbo.

Singapore will also serve as a London connecting point for flights from Brisbane and Perth. Despite the move away from Qantas metal in Dubai, Emirates and Qantas have agreed to a five-year extension of the joint business agreement (JBA) for Australia-Europe routings.

Qantas estimates that the revised agreement will make a $80 million (AUD) contribution to its net profits on an annual basis.

When it was first announced, the Qantas-Emirates partnership was seen as a watershed moment for developed country airlines in the Eastern Hemisphere. The Middle Eastern airlines and hubs were growing at a breakneck pace in both Australia and Europe, and the move by Qantas was seen as more or less a capitulation to this trend.

In the intervening five years, the state of the world has shifted. The Middle Eastern airlines are certainly not pushovers by any means, but the shine has come off their business model to an extent in the wake of elevated nonstop competition and low fuel prices.

Meanwhile, Qantas has a robust domestic market and has finally begun to capitalize on the Asian market that the MEB3 cannot touch (for geographic reasons). So the balance of power has shifted away from Emirates to an equal partnership.

And in that vein, Qantas has now begun to flex its muscles. The Perth – London Heathrow launch next spring will take place outside of the scope of its JBA with Emirates, indicating a fundamental strategy shift from five years earlier.

In its press release, however, Qantas continues to emphasize the relevance of Dubai as a stopover point between Australia and Europe. However, Qantas’ exit from Dubai effectively removes duplication between it and Emirates: effectively, customers wishing to transit specifically between Australia and London will be routed via Perth and Singapore, whereas those heading to other points in Europe will have the option of traveling via Dubai, and purely on Emirates metal.

The other element to keep in mind is that Qantas is steadily moving to make the transit stop irrelevant to its business, with audacious moves such as the nonstop Perth-London service and the plan to launch nonstop Sydney flights to New York JFK and London Heathrow by 2022.

If Qantas can make this kind of nonstop flying to the UK work, it will change the game for geographically isolated carriers who are currently at the mercy of the MEB3. The Dubai hub will still have value for Africa, the Middle East, and secondary Europe. But fundamentally, Qantas over the past 4-5 years has ascended into an equal position of power in its relationship with Emirates.

Furthermore, the demarcation strategy, aided by the advent of ultra-long range aircraft like the 787-9, enables Qantas to focus on markets like Perth – London where there is significant demand.

Compared to the Airbus A380s, which are too large and costly to utilize on routings such as Perth – Dubai to connect onward to Europe and London, Qantas can gain much more by utilizing a 787-9 to cater to the large local market in Western Australia that is of English descent.

To that end, Perth also gains a major selling point as a burgeoning Western Australia hub for Qantas, and Qantas is studying options to facilitate more efficient domestic to international transfers at Perth in advance of the London Heathrow launch.

Qantas appears to be encouraged by forward bookings of the Perth – London Heathrow nonstop and has mulled the prospects of considering additional nonstop links to continental Europe if the route is successful.

Frankfurt and Paris have been mentioned in the past as markets under consideration. However, the much stronger talking point is the possibility of connecting markets like London Heathrow and New York to Sydney on a nonstop basis, using the Boeing 777X or Airbus A350 to enable such unheard of flights to become reality.

While the concept of spending up to 20 hours in a metal tube sounds unappetizing to many, Qantas is no stranger to operating ultra-long haul services and tailoring its cabin configuration and

While the concept of spending up to 20 hours in a metal tube sounds unappetizing to many, Qantas is no stranger to operating ultra-long haul services and tailoring its cabin configuration and inflight products to provide a premium in-flight experience for customers.

The 787-9 configuration, for example, will not offer a First class cabin, but rather include 42 Business Class seats, 28 Premium Economy class seats and 166 Economy Class seats.

Comparatively, Qantas’ Airbus A380s, while still relatively new and well-regarded by customers across most measures, seats 14 customers in First, 64 in Business, 35 in Premium Economy and 371 in Economy, thereby providing a much denser configuration.

Qantas 787-9 mock-up (source: Qantas)

Above all, the renewal of the JBA with Emirates is pragmatic and helps Qantas retain access to a critical market (Europe) using a partner that was instrumental to its financial turnaround between 2013 and 2016.

The Emirates market is still massive and exceptionally relevant to Qantas’ customers even as the “Kangaroo route,” as was once used to refer to Qantas’ stopover point in Singapore,  is coming back into the game. The “Falcon route,” as was used to refer to the game-changing strategy to shift all transit points via Dubai, will remain: just purely on Emirates.