Why Qantas ordered the A321 XLR without lie-flat business class seats?

We recently wrote on the impact of the A321neo LR on Qantas and Jetstar, highlighting how the LR has taken over the bulk of Jetstar’s medium-haul flying from the B787 thereby allowing Jetstar to redeploy the B787 on longer sectors into Asia. Jetstar’s capacity expansion has covered Qantas’s capacity losses in the region resulting from their acute fleet shortage and accelerated the group’s market segmentation strategy.

Qantas and Jetstar have a significant order book for the A320 family including large number of confirmed orders and options and flexibility to specify the exact type over time. The most recently released delivery schedule (half year results released in February 2024) shows that Jetstar will continue to receive A321neo LRs between now and June 2026, while Qantas will receive its first XLR in FY 25 (Table 1).

Table 1: Qantas and Jetstar A320/A321 delivery schedule

The XLR has a larger nominal range than the LR due to an increased fuel capacity, requiring a higher maximum take-off weight (101t on the XLR, compared to 97t on the LR and 93.5t on the A321neo). Airbus advertises the XLR as having a range of 4,700nm compared to the LR’s 4,000nm range.

An interesting observation is that Qantas have chosen to equip the first XLR deliveries with a domestic configuration of 20 business class and 180 economy class seats. The business class seats will be typical short-haul recliner seats rather than lie-flat business class seats. This has led to speculation that Qantas will not deploy the XLR on longer routes into Asia like Singapore, but rather deploying them on domestic and regional services as a B737-800 replacement. This configuration has not been confirmed across the whole XLR fleet or even all ten due for delivery by end of FY26 but simply the first deliveries. But this raises the question as to why Qantas has ordered the XLR if it does not intent to exploit it for its range?

Is the XLR over specified for Qantas?

The XLR is more costly to acquire, operate and maintain than the LR or baseline neo model. The additional construction components mean it’s more expensive to buy, but it will also be more expensive to operate. It’s higher MTOW will result in higher landing and overflight fees, while additional fuel tanks will generate higher maintenance costs (fuel tank inspections are a typically time-consuming and expensive maintenance task).

The costs of over specified aircraft are significant enough for airlines to take extraordinary steps to reduce over specification. For example, it is common practice for airlines to artificially reduce the MTOW of an over specified aircraft to reduce landing and overflight fees. Singapore Airlines was a notably exponent of this method, reducing the registered MTOW on the B777-200ERs to reduce landing and overflight fees as they were mostly used on regional services. While this is mostly a paperwork and software process, it nevertheless limits the aircraft from exploiting the full MTOW. Increasing the registered MTOW may encounter significant costs, including software upgrades, maintenance, inspections, and even recertification. The airline simply can’t change the MTOW as desired.

Contemporary aircraft tend to be offered with a wide range of MTOW options from the factory with reduced MTOW versions often having various components or options excluded to reduce costs, while higher MTOW options with additional components or options. For example, the A330-200 and -300 both have a “center” fuel tank, however for many years the -300’s center tank was sealed and not usable. Invariably, the center tank was not required as the total payload and fuel could be carried without using the center tank. Filling the center tank would increase the weight of the aircraft beyond the MTOW. Sealing it meant that the typical maintenance inspections were not required savings customers significant costs. However, the higher 242t version of the A330-300 brought the center tank into play and was offered to customers as an option. Nowadays, Airbus makes the A350-900 and -1000 available at the various MTOW ratings, some with additional fuels tanks as options. This highlights the lengths to which airlines and aircraft manufacturers will go to not over specify an airline due to the additional operational costs that it may incur.

On face value, it then might seem obtuse that Qantas will use the XLR and not exploit its range. Is the aircraft over specified? We’ve heard various theories why they have ordered the aircraft. It’s not a trivial decision of just taking the best performing or most up-to-date version as evidenced by Jetstar continuing to take LRs. Qantas are also not a vanity airline, with recent orders showing a very pragmatic and even conservative approach to ordering. We propose a theory, but this requires a more detailed analysis of some of the structural differences between the LR and XLR.

Difference between LR and XLR

The LR and XLR gain their increased range from its additional fuel carrying capacity. The baseline A321neo has a fuel capacity of 23,580 litres carried in typical wing and center tanks. The LR’s fuel capacity is increased by adding several “Additional Center Tanks” (ACT) located in the forward and rear cargo holds. Airlines can choose between two or three ACTs, each carrying 3,120 litres (Table 2).

Table 2: A321neo LR and XLR fuel capacity options

Since the ACTs are located in the cargo holds, the additional fuel capacity is gained at the cost of cargo space which is used for passenger baggage and freight. The baseline A321neo has 10 positions for LD-45 containers (also known as AKH containers). Adding two ACTs reduces the capacity from 10 to 7 containers, while adding a third ACT takes up one more container position, reducing capacity to 6 containers (Table 3).

Table 3: A321neo LD-45 cargo container capacity

The XLR’s fuel capacity is increased by the addition of a much larger “Rear Center Tank” (RCT) with a capacity of 13,100 litres. The RCT takes up only two container positions and is located in the rear cargo hold. The XLR’s fuel capacity is 3,688 litres more than the LR but more importantly it trades away far less cargo capacity. The XLR can carry 8 containers compared to just 6 on the LR. It carries more fuel and more cargo, highlighting the improved design the XLR benefits from. The XLR can also be fitted with a single ACT, providing even more fuel capacity but giving up two more cargo container positions.

The cargo hypothesis

The B737 and A320 families have been rivals in the narrow body aircraft market for over three decades. In most cases there is very little to choose between them for airlines, but that does not mean there are no differences. One difference is cargo!

The B737 and A320 are primarily passenger aircraft and do not typically carry large cargo payloads. On longer missions they will often lack available payload for cargo due to higher fuel loads. On a shorter mission, the available payload will encounter volume limitations (i.e. they will exceed the available volume before exploiting the available payload). The XLR might just be changing this!

Differences between the A320 and B737

One significant difference between the A320 and B737 is the way baggage and cargo are handled. The A320 family allows baggage and cargo to be loaded via LD-45 containers. While not all airlines use the containers and prefer to use bulk space instead, it nevertheless gives customers significant flexibility. The B737 cannot load baggage and cargo in containers, instead relying only on bulk space. This is because the B737 has a smaller cargo door (forward and aft cargo door: 1.21m x 0.88m) compared to the A320 (forward and aft cargo doors: 1.82m x 1.19m).

The use of containers on the A320 means that the aircraft needs to stand higher from the ground to allow the use of container loading equipment. The A320’s cargo doors stand 1.98m to 2.12m (depending on model, position, and loading) from the ground meaning that baggage cannot be loaded and unloaded without baggage loading equipment, even if containers are not being used.

Meanwhile, the B737’s cargo doors stand 1.3m to 1.8m from the ground depending on model, position, and loading, meaning that the aircraft can be loaded and unloaded without ground handling equipment, allowing the B737 to operate to a wider variety of airfields.

These are intentional design features, resulting in different advantages and disadvantages. One isn’t better than the other, but it highlights that there are differences and nuances that airlines may seek to exploit. One specific advantage that the A320 family has is the ability to exploit containerised cargo.

While narrow body aircraft don’t typically carry large cargo payloads, this does not mean that they don’t carry cargo or that it’s unimportant. Let’s consider the payload implications on a typical Sydney to Perth sector (all flight planning examples are estimates on the longest leg, i.e. Sydney to Perth is a longer sector than Perth to Sydney due to prevailing winds).

Assuming the same passenger configuration and load (200 passengers), crew, baggage, fuel load and reserve, the baseline neo, LR and XLR could have up to 7t, 10t, and 14t available for cargo (Table 4). All three aircraft have 10 positions for LD-45 containers, however the LR and XLR will require 4 and 2, respectively, for ACTs and RCTs (since we are comparing the LR to the XLR, we assume that all three ACTs are installed on the LR). However, not all are available for cargo as up to 5 will be required for checked bags. While bag size vary, suggestions are that LD-45 containers average about 35 bags, meaning about 5 containers would be required for baggage (remaining bags stored in bulk space). 

The baseline version will have volumetric space for 5 LD-45 containers, but only 7t of payload remaining. Since the maximum carrying capacity of each container is 1t to 1.5t, it may not be able to fully exploit it. The LR would only have space for 1 container, despite 10t of payload remaining, but the XLR would have space for 3 containers, and ample payload remaining.

Table 4: A321neo flight planning Sydney-Perth

We might consider that both the LR and XLR are over specified on such a mission with the baseline version looking quite capable, however flight planning of short haul aircraft/flights is sensitive to assumptions regarding passenger mix, baggage, fuel burn, etc. For example, changing the passenger mix to older and more male, increasing average checked bag weight from 15kg to 20kg and adding an additional hour of fuel increases the TOW to 91t, eating into most of the available payload for cargo on the baseline version.

While we argued that the domestically configured XLRs likely won’t be deployed onto longer Asian sectors due to the lack of lie flat seats, it’s quite possible that they’ll be deployed on shorter Asian sectors like Jakarta or Bali. A 7.5-hour Sydney-Jakarta sector would require approximately 6t more fuel, reducing the available cargo payload on the LR and XLR to 4t and 8t, respectively, or zero and 4t if higher passenger and fuel loads were carried (it is not unusual for flights to Indonesia or the Pacific to carry larger fuel reserves, e.g. TEMPO fuel). Furthermore, the baseline version is immediately excluded since its fuel capacity is limited to 19t whereas the fuel load for the 7.5 sector would be at least 24t.

Conclusion

Qantas had a choice of three specifications for the A321neo. While the baseline A321 neo is very capable on shorter missions, its fuel storage limitations are a significant constraint for Qantas’s route profiles. Even on a 5-hour sector from Sydney to Perth, the required fuel load would be nearing its fuel capacity. While it would have a strong cargo carrying capability on short missions, its cargo carrying capacity on a longer sector to Perth would be limited by its lower MTOW.

The LR is a great people carrier, but highly limited in carrying cargo on all missions due to the lack of container space. It may have as few as 1 container position available for cargo and unable to exploit its generous payload on shorter missions. Simply put, the additional fuel tanks take up the space that could be used for cargo.

The XLR’s efficiently designed RCT means that it carries more fuel and cargo than than the LR. With 3 containers positions available for freight, and a very generous available payload due to its higher MTOW, it will allow Qantas to carry a meaningful cargo load, on both shorter and longer missions. The use of containers for cargo also allows relatively efficient loading and unloading of cargo. Pressure on rapid turnarounds on short haul flights, carrying loose cargo can be unappealing for airlines.

Our hypothesis is simple: Qantas have purchased the A321neo XLR due to its cargo carrying capability. The baseline version has the volumetric space but not the fuel or lifting capacity for missions beyond four or five hours. The LR has improved fuel and lifting capacity but gives up too much of the volumetric space to carry that fuel. The XLR makes up for the deficiencies of the LR, allowing the fuel and lifting capacity to be exploited by limiting the loss of cargo space to carry the fuel.

The cargo hypothesis is just that, a hypothesis. We have no inside information but this is not speculation either. Rather, we have taken an analytic approach to understanding the aircraft and mission profile to identify why Qantas would voluntarily over specify the aircraft. Over specification comes with costs, so it follows that there must be a commercial reason to do this. Let us know what you think. Is our hypothesis plausible? Are there other or alternative hypotheses?