Airbus, Boeing close in on Qantas' ultra-long haul dream

Jamie Freed

* Non-stop Sydney-London flight possible within five years

* Viability could be hit if oil price tops $70/barrel -

analysts

* Airbus says extends range of A350-900ULR

* Qantas could charge 20 pct premium for tickets - analyst

SYDNEY, April 6 (Reuters) - Both Airbus and Boeing

now offer aircraft that appear capable of flying non-stop

commercial flights from Sydney to London - the "Holy Grail" for

Australian carrier Qantas Airways Ltd.

As long as oil prices don't go much higher than around $70

per barrel, the 20-hour flight can be financially viable, and

could be on schedules within five years, aviation experts say.

Airbus has increased the range of its A350-900ULR to 9,700

nautical miles (17,960 kms) from the 8,700 nautical miles

announced when it sold the plane to Singapore Airlines

in 2015 for delivery next year, a spokesman told Reuters.

Including headwinds, the Sydney-London flight is equivalent to

9,600 nautical miles.

"These aircraft, we think, are potentially real goers on

these routes," Qantas CEO Alan Joyce told Reuters of the

A350-900ULR and the bigger but less advanced Boeing 777-8. "You

know from what they have done on other aircraft that

Sydney-London and Melbourne-London has real possibility."

For Qantas, a non-stop Sydney-London route that cuts three

hours off the flight time would allow it to charge a premium and

differentiate its product from the around two dozen other

airlines plying the so-called Kangaroo route with stop-offs in

Singapore, Dubai and Hong Kong.

The route accounts for only 13 percent of Qantas'

international capacity, but carries the prestige QF1 flight

number and is important to its global brand.

Qantas could charge around a 20 percent price premium for a

non-stop Sydney-London flight as it would attract business and

premium leisure travellers wanting to complete the trip as fast

as possible, said Rico Merkert, a professor specialising in

transport at the University of Sydney's business school.

"It's something that can be presented as a unique selling

point for Qantas," he said.

FUELLING DOUBTS

Qantas begins non-stop flights from Perth to London next

year, using the Boeing 787-9 Dreamliner. For this scheduled

flight, the Dreamliner will have fewer seats than usual, will

use the most advanced flight path modelling methods, and will

reduce the weight in areas seemingly as minor as the dishes and

forks.

The Perth flight will take 17 hours - a far cry from the

four days and seven stops it took when Qantas created the

Kangaroo Route to London in 1947.

Qantas can offset the higher cost of carrying more fuel to

complete the flight by saving on stopover costs, such as airport

charges, ground handling, taxes, crew hotel rooms and lounge

usage.

"In terms of economics, much depends on fuel prices," said

Teal Group aerospace analyst Richard Aboulafia. "If they stay at

$50 a barrel or less, it should be possible to keep costs

reasonable. But as fuel goes up, the disadvantages of flying a

very heavy plane begin to make ultra-long haul problematic."

He said the flight should remain economic at prices below

around $70 a barrel, though Leeham Co analyst Bjorn Fehrm said

the actual level could be far higher as one-stop rivals would

also be squeezed by higher oil prices.

Singapore Airlines ended its New York and Los Angeles

flights using the four-engined A340-500 in 2013 when oil prices

topped $107 a barrel. The carrier is now waiting for delivery of

the far more fuel-efficient twin-engined A350-900ULR next year.

HEADWINDS

Qantas is pushing the planemakers hard on a stretch goal of

completing the Sydney-London flight with 300 seats to give it

the highest possible revenue and fleet flexibility.

However, Fehrm said the aircraft would likely fall short of

that goal if Qantas wanted to avoid a fuel stop on the westbound

leg when headwinds are strongest. If such stopovers became

frequent enough, Qantas would lose its ability to charge a

premium on the route.

Two aviation industry sources said the Airbus A350-900ULR

would fit more than 250 passengers on the Sydney-London route,

up from the 170 mainly business-class seats on Singapore

Airlines' configuration for flights to New York and Los Angeles.

Boeing's 777-8, due to enter service early in the next

decade, could carry around 280 passengers on the westbound leg

of the Sydney-London flight, the sources said. The sources

declined to be named because the configuration details are not

finalised. Airbus and Boeing declined to comment specifically on

the seat count.

"We think our airplane has the legs and the capability,"

said Dinesh Keskar, Boeing Senior Vice President Sales

Asia-Pacific and India. "If the 787-9 can do Perth-London, we

think that when the 777-8 comes out in the 2021 timeframe we

will have a lot more improvement in technology."

Airbus, Boeing and engine manufacturers are constantly

investing to reduce fuel usage, extending a plane's range and

its ability to perform in hot conditions like the Middle East.

That means the planemakers don't have to invest specifically

for any Qantas order, the size of which is still unclear.

Pushing the seat count towards 300 would also give Qantas

the flexibility to use these aircraft on other long routes, such

as a mooted Sydney-New York flight, as it looks to replace six

ageing 747-400ER planes and eventually its fleet of 12 A380s.

BEST PRICING

Qantas' Joyce has raised publicly the possibility of

ordering the 777-8 for ultra-long haul flights for the last two

years, but the A350-900ULR has entered the equation more

recently.

"It has added competition, and we would be crazy if we

didn't do a competition at the right time," Joyce said. "That

gets you the best pricing and ... the most capable aircraft."

Qantas has yet to launch a formal tender process for the

prestige order, as it waits for Boeing to finalise the

specifications on the 777-8. But the first Sydney-London flights

are possible around 2022, Joyce said.

"The Kangaroo route is probably the most competitive on the

globe," Joyce said. "(Flying non-stop) takes us off this

superhighway of very competitive conditions of capacity which is

priced, in many cases, under costs."

(Reporting by Jamie Freed; Editing by Ian Geoghegan)