Why Qantas dropped Melbourne leg of Perth-London

Last week, Qantas inaugurated the first Sydney-Perth-Paris flight (QF 33/34), adding a third European destination to its burgeoning Perth hub. This follows the the success of Melbourne-Perth-London that began in early 2018 (QF 9/10), and the seasonal Sydney-Perth-Rome seasonal flight that began in 2022 (QF 5/6). Somewhat lost in the fanfare was that the additional of Sydney-Perth-Paris coincided with the removal of the Melbourne leg from QF 9/10.

If this flight was as successful as Qantas claim, then why did they remove the Melbourne leg?

Firstly, load factor data shows that the Perth-London has been fairly successful. While load factors do not imply profitability, outbound and inbound load factors averaged 95% and 91% over the last 12 months (April 2023 to March 2024). This corroborates Qantas’s claim that its the most profitable international flight in the network. What they mean by profitability aside, this is a very good load factor.

Secondly, a consideration is where these passengers originate, and how these patterns have evolved over time. This is easier said than done and requires substantial cleaning and analysis of BITRE data.

In the first full year of operation (April 2018 to March 2019 , 24% of QF 9/10 passengers originated in Melbourne (specifically on the QF 9/10 flight). The remaining 76% of passengers originated in Perth or any other destination. Technically, these could include Melbourne, but connecting from another flight other than QF 9/10.

This number has fallen steadily. By March 2020, this proportion fell to 22%, and by March 2024 (the first full year of operation post pandemic) it fell further to 18%. Comparatively, the proportion of Sydney originating passengers on QF 5/6 averaged 30% between June 2023 and October 2024. The seasonality of this flight might draw a false comparison since it runs only during the European summer, however comparing the same shorter period for Melbourne shows only 21% of passengers originating in Melbourne.

Why has the proportion of Melbourne passengers declined?

Firstly, unlike Qantas’s Sydney-Rome passengers, their Melbourne-London passengers have other Qantas alternatives (i.e., via Singapore). Qantas’s double-daily Melbourne-Singapore flights offer very good connections between QF 37 and QF1 on the outbound (QF 38 arrives 10:05pm; QF 1 departs 11:15pm), and QF2 and QF 36 on the return (QF 2 arrives 5:25pm; QF 36 departs 8:15pm). Meanwhile, Sydney-Rome passengers don’t have the option on Qantas via Asia.

Secondly, and somewhat more speculative, passengers flows may simply be driven by Perth O&D traffic! Perth originating traffic has grown steadily from 117,720 passengers in the first full year to 124,676 in the last year. While this only represents a growth of 6% in absolute terms, once normalised for capacity, it shows a Perth originating load factor increasing from 70% to 76% during this time. Assuming that Qantas are able to achieve higher yields from Perth originating passengers, terminating the Melbourne leg likely allows more profitable Perth originating passengers.

A critique of this analysis is that the Perth traffic includes connecting traffic. Whether these passengers are originating in Perth, or connecting in Perth is besides the point since a key factor in Qantas’s strategy is to develop Perth as the “western” hub. This has been further reinforced by the recent announcement of the development of a new terminal for Qantas at Perth.

What is important is that the proportion and volume of connecting traffic from Melbourne has declined, likely connecting through Singapore rather than Perth. The domestic sectors between Melbourne and Perth are just that, domestic sectors with a potentially inefficient use of equipment, utilising a B787-9 which can be redeployed elsewhere. Instead, Perth-London can still be fed from existing domestic flights including QF 775 which connects well to QF 9 (QF 775 arrives 4:35pm; QF 9 departs 6:30pm), and QF 774 which connects well from QF 10 (QF 10 arrives 11:40am; QF departs 1:15pm).

Looking forward

Qantas have refocused their network on Asia and Europe over the last year, particularly as demand to/from the United States remains weak. We have analysed the US market extensively in recently months and highlighted Qantas’s capacity discipline. Expansions to Asia have included India and Japan, however attention seems to be focussing on Europe, exploiting the burgeoning Perth hub. Rome and Paris are strategically different to London for Qantas, given that neither are served via Asia on Qantas equipment, rather through various partnerships.

It remains to be seen whether Qantas might add more European capacity via Perth. Importantly, Perth is not a singular strategy as London receives significantly more Qantas capacity via Singapore than it does via Perth, highlighting Qantas’s dual strategy to/from Europe.

An intriguing question is how this will evolve in 2026 when the first Project Sunrise A350-1000 aircraft are delivered leading to non-stop flights to London from Melbourne and/or Sydney. How does this affect the dual strategy? Will Qantas maintain London connections via Singapore? And what will become of the Perth hub? These are questions for another time …