Game Changer

Down to the wire

The agreement, which involves government funding, came after months of often tense negotiations with Perth Airport preferring Qantas to operate the service from the dedicated International terminal (T1) , located on the eastern side of the airport.

It was also concerned that if Qantas was allowed to set up international operations at its domestic terminal it would delay the airline’s eventual move to the eastern side of the airport, which is a key part of the airport’s masterplan.

Qantas, however, maintained that its domestic terminal was the only option as feed traffic from around WA and Australia is critical to the viability of the service.

It argued that passengers from Sydney or Melbourne feeding into the service also had the option of going through Dubai Airport which involved no cross-airport transfer.

An impasse developed late in November prompting a powerful group of business leaders to exert pressure through The West Australian on Perth Airport and the WA state government to get the deal done.

Wesfarmers Limited chief executive Richard Goyder, Macquarie Group WA chairman Mark Barnaba and Hawaiian property group chief executive Russell Gibbs all expressed concerns that the once-in-a-lifetime opportunity to develop Perth into a regional tourism and business hub would be lost because of the stand-off between the airline and Perth Airport.

Sir Rod Eddington, former chief executive of Cathay Pacific Airways and British Airways, joined the group urging the airport and the Government to seize the moment.

This is a game-changing route flown by a game-changing aircraft.
Alan Joyce

“Non-stops are a substantial boost to tourism and Perth can be developed into a major gateway to Australia,” Sir Rod told The West Australian.

The potential economic benefit to WA and Australia if the first daily flight to London evolves into four non-stop flights a day to Europe is put as

high as $650 million a year and as many as 7,000 jobs based on a 50-50 split of inbound tourists to WA and Australia and Australians travelling outbound.
Goyder told The West Australian that he was “horrified” by the prospect of missing out on the non-stop hub opportunity.

“It is incredible that this may not happen over seemingly minor issues,” he said. “We don’t have the fine detail of the negotiations but this has to be a no-brainer.”

Goyder said business executives in the eastern states could not understand why there was any debate about Qantas’s requirements.

Those sharply focused comments backed up by numerous phones calls to federal and state politicians moved negotiations into overdrive and a deal was struck within 14 days.

Key to the deal was an agreement by the state government to pay $14 million for the fitout for customs and immigration facilities for the T3 domestic terminal. The federal government also committed to fund the additional Australian Border Force staff required.

This terminal started life as home for Ansett’s domestic operations and later became Virgin Australia’s base. Then last year, with the move of Virgin Australia to a new dedicated precinct off T1, Qantas took over T3 to handle all the flights that were previously served by busing passengers to remote stands from its adjacent T4.

WA Premier Colin Barnett said that the price the state had agreed to pay to secure the deal was worth it because he expected there would be a significant lift in tourists visiting the state.

He also maintained that it was the role of government to ensure passengers using T1 were not disadvantaged or delayed by duplicating border force services at Qantas’s T3 facility.

“It very much makes Perth an international destination for air travelers. “That’s incredibly important — it elevates Perth to one of the major sites around the world.”

Game-changer?

Qantas CEO Alan Joyce said in announcing Perth-London nonstop that the new route “is a seismic development” and a “watershed for travel, tourism and trade.”

“When Qantas created the Kangaroo Route to London in 1947, it took four days and nine stops. Now it will take just 17 hours from Perth non-stop.”
“This is a game-changing route flown by a game-changing aircraft. Australians have never had a direct link to Europe before, so the opportunities this opens up are huge. It’s great news for travellers because it will make it easier to get to London. It’s great news for Western Australia because it will bring jobs and tourism. And it’s great news for the nation, because it will bring us closer to one of our biggest trade partners and sources of visitors,” Joyce said.

Perth Airport’s Kevin Brown said that the “direct flight is an exciting opportunity for Perth Airport, Qantas and Western Australia in the development of Perth as a western hub and a gateway to the United Kingdom.”

Brown said the airport and Qantas will work to ensure that T3 is upgraded to allow for the commencement of direct flights to London from 2018.
“Perth Airport and Qantas will work closely with all relevant government departments at a state and federal level to ensure the ongoing delivery of high standards of customer experience, for both the new route as well as existing flights,” said Brown.

The WA government was under intense pressure to broker the deal with the end of the major construction phase of major resources projects sending unemployment up in WA.

It has also come under significant criticism for having too many eggs in the resources basket.

However, next to the $55.9 million the state government is spending on upgrading Busselton Airport in WA’s south-west, the spend at Perth airport is insignificant. (The state government hopes that the upgrade of the Busselton Airport, which will be renamed Margaret River Airport despite being 50km away, will lead to flights from Sydney and Melbourne to the area.)

On the Perth to London non-stops Joyce said that while the airline was not locked into any guarantees on the continuity of the service he said that Qantas is “making a big commitment … and you don’t do that lightly”.

One of the major sticking points of the proposal was the date at which Qantas would move to the eastern side of the airport.

While Qantas said it was committed to moving, Premier Barnett’s request for a guarantee of 2022 was not seen as realistic.

The Premier told The West Australian that he was “seeking an assurance from Qantas that it will within a reasonable period of time — say less than five years — move across to T1, the international terminal.

“The long-term planning for Perth Airport is about all international and domestic flights going through that terminal and that’s part of the reason we’re building an underground rail line to service that terminal.”

In the end the agreement that has been struck is for Qantas to move by December 2025 – a full three years later.

In fact, Perth Airport’s highest priority is the building of Terminal 5 which will be a satellite terminal from the international terminal (T1) to cater from growth.

Qantas head of international Gareth Evans said that planning was almost complete for the T3 terminal upgrade and construction would start in April.
“We expected it to be completed by December,” said Evans.

He said the international facilities will be located at the southern end of T3 and there will be three aerobridges. Up to 8am the area will be used for domestic services and then swing to international until 8pm each night.

Qantas will move its daily Singapore and seasonal Auckland services to T3, however low-cost subsidiary Jetstar’s Bali flights will stay at T1.

Evans said the fit-out of the international precinct would be to a very high standard similar to the airline’s lounges in Singapore and Hong Kong.

While the schedule hasn’t been finalised it is expected that the Perth to London flight will depart at about 7.30pm and arrive in London at 6am.
The aircraft will in fact most likely operate Los Angeles-Melbourne-Perth-London, with Qantas revealing just days after the Perth-London announcement that its first international 787-9 service would be Melbourne-LA from December 2017.

Return flights will depart London at around 11am and arrive in Perth at 10am the next day.

Qantas will use one of its London Heathrow slots currently leased to British Airways for the service.

Evans said that the airline will get its first 787-9 in October (line number 615), followed by one in December (L/n 640), January 18 and February 18.
Qantas gets three more in 2018 – in July, August and November – and the last of the initial order of eight in April 19.

Evans reiterated earlier comments on the fleet mix that options were open to delay the retirement of the 747-400s if needed to deploy more 787s on the new non-stop operations.

A much-needed boost

Reaction to the news was extremely positive with business and tourism leaders touting the benefits to WA and Australia.

Goyder and Sir Rod praised the Premier for his role in brokering the deal.

“I am thrilled, it’s great news for Perth and WA,” Wesfarmers’ Goyder said. “Well done to Colin Barnett, everyone stepped up to the mark on this and that is what was needed to get it done. We cannot overstate the value of this to WA at such an important time.”

Sir Rod echoed Goyder’s sentiments, noting it was “fantastic news for WA and a real opportunity”.

“Now it’s up to us to deliver the very best connectivity at the airport to take advantage,” he said.

Hawaiian Group’s Gibbs said the announcement should give the tourism industry a much needed boost in confidence and hopefully lead to more investment in the sector. “We need to seize on this opportunity and promote the benefits of living, visiting and doing business in Western Australia,” he said.

The business leaders were joined by the head of Tourism Australia, John O’Sullivan, who hailed the potential of the Qantas investment in ultra-long-haul aircraft as a game-changer for the tourism industry.

O’Sullivan said the introduction of the service was perfectly timed, with Perth and WA attracting an unprecedented level of tourism investment, including the recent opening of Crown Towers Perth and development plans for Elizabeth Quay.

“Europe is such a critical source market for us, and the introduction by Qantas of direct flights between London and Perth really is a game-changing moment for Australian tourism,” he said.

Going the distance

Enthusiasm for Perth-London is based on the traditional desire of passengers to go non-stop.

In a recent report, the world’s largest flight schedule data provider OAG said that while price has long been one of the most important considerations when selecting a flight, today’s travellers demonstrate a willingness to pay more for convenience.

Its survey found more than 70 per cent of travellers were willing to reach deeper into their pockets to get a non-stop route.

The popularity of non-stop routes, made increasingly viable by advances in aircraft and engine technology that have boosted range and increased efficiency, is underscored by the massive growth in this type of flying.

From 1985 to 1996, the number of city pairs connected with non-stop flights grew from 6000 to 8000 and in the nine years to 2005, that number had grown to 10,200. Today it’s 14,523.

Australian tourism authorities say direct services are a key to driving visitor growth and a big benefit to tourism.

“All islands which depend so heavily upon tourism, as Australia does, rely upon strong aviation access,” said Tourism Australia’s O’Sullivan.
He said the fact that Australia was a considerable distance from many key tourism markets meant the importance to the industry of direct services could not be overstated.

Tourism and Transport Forum head Margy Osmond said the latest generation of passenger jets was reshaping global travel, and delivering huge benefits to tourism.

“New long-range aircraft like the Boeing 787 and the Airbus A350 are replacing larger, older types like the Boeing 747, enabling airlines to open new long-haul routes or increase frequencies on existing routes far more efficiently,” she said.

“The Australian visitor economy is already a beneficiary, with loads of new non-stop services from markets including China, India, the United Arab Emirates and Canada, and the potential is great for even more growth.

“Perth is perfectly positioned to benefit from these new aircraft, with various airlines floating possibilities such as non-stop flights from the UK or Europe or even Hawaii — none of which has ever been achievable or viable before.

“The opportunities for our visitor economy are incredibly exciting.”

UK government statistics show Britons made 61.5 million visits abroad in the year to April 2015 but Australia did not figure in the top 20 countries.
The top 20 destinations had one thing in common — they were all non-stop from Britain though many were a significant distance, such as Singapore and Bangkok.

Perth also doesn’t even rank in Euromonitor International’s top 100 destinations — Sydney and Melbourne are on the radar, albeit at the bottom of the table.

Balancing that dismal ranking, in an increasingly insecure world a US survey says Australia is the world’s fifth safest travel destination.

Boeing studies also support the non-stop routes growth story with traffic increasing by up to three times.

One example is British Airways’ introduction of a non-stop Boeing 787 service between London Heathrow and Austin, Texas, in 2014 which boosted passenger numbers 94 per cent. Since it entered service in 2011, the 787 fleet has opened up more than 100 non-stop routes.

If the initial global media coverage is any guide, Qantas is on a winner with the 787 non-stop.