Royal Brunei could upgrade its daily London Heathrow service to nonstop following the delivery of a fifth 787-8 and the completion of a runway surface improvement project at Bandar Seri Begawan. The expansion of the 787 fleet in mid-2018 provides an opportunity for Royal Brunei to resume long haul growth, following a major network restructuring and reduction in the widebody fleet in the early part of this decade.
Royal Brunei is considering the resumption of expansion in Australia as it evaluates potential opportunities made possible by the upcoming expansion of its overall fleet from 10 aircraft (six narrowbody and four widebody) to 15 aircraft (10 narrowbody and five widebody). Using the new A320neo fleet to relaunch flights to Brisbane, which was served with 777s until 2011, is under consideration.
Royal Brunei could use a fifth 787 on order to launch London nonstop flights
Royal Brunei could potentially use a fifth 787 to upgauge regional routes, particularly to slot constrained airports such as Hong Kong, Jakarta, Manila and Shanghai. However, these markets are not quite big enough to support a 70% increase in capacity on a year-round basis.
Royal Brunei therefore also needs to examine potential opportunities to expand and improve its long haul offering. One option under evaluation is upgrading London to nonstop, even though the local Brunei-London market is not big enough to support a nonstop flight.
Despite this, a nonstop flight to London would significantly improve Royal Brunei’s position in sixth freedom markets. Royal Brunei now offers a two-stop product in connecting markets from London and has to offer aggressive fares to attract passengers.
Royal Brunei could resume expansion in Australia
Royal Brunei is considering resuming expansion in Australia, which could become more feasible if the airline launches nonstop flights to London. Australia is regarded as a long haul market, and requires significant sixth freedom traffic due to the small size of the local Australia-Brunei market.
Australia expansion can potentially be pursued with the new A320neo fleet or with the fifth 787. Sydney can only be operated with the 787, and the same is the case with Melbourne. However, Brisbane is feasible with the A320neo.
Royal Brunei currently has slightly less than 1,800 one-way seats to Australia/New Zealand, compared to nearly 5,000 weekly seats in 2011.
Royal Brunei weekly one-way seat capacity to Australia/New Zealand: Sep-2011 to Sep-2017
Source: CAPA – Centre for Aviation & OAG.
Brisbane is the most likely Australia route to resume
Several destinations in Australia could potentially be chosen but Brisbane seems to be the highest priority.
“The neo brings Brisbane into the mix”, Royal Brunei CEO Karam Chand told CAPA in Jun-2017. “We did Brisbane before so we will relook at it pretty hard.”
Royal Brunei is closely assessing the economics of operating the A320neo on Bandar Seri Begawan-Brisbane to determine whether it can generate sufficient revenues and yields to cover the relatively high cost of a seven hour narrowbody flight. As most of its traffic from Brisbane on highly competitive city pairs such as Brisbane-London and Brisbane-Bangkok would transfer beyond Brunei, the average yield may not be sufficient to cover the operating costs and justify launching the route.
New destinations in North Asia are generally the focus for Royal Brunei as the airline expands its narrowbody fleet from six to nine aircraft by early 2019. Brunei-North Asia is mainly a point-to-point market, potentially offering higher yields than Brunei-Australia, given that Royal Brunei will have to rely mainly on low yielding transit traffic from any new Australia destination.
Brisbane would feed London
The potential launch of nonstop services from Brunei to London could sway Royal Brunei to resume Brisbane, despite the relatively bleak yield prospects for the Brisbane-Bandar Seri Begawan route.
Royal Brunei would need more than just Melbourne and Kota Kinabalu traffic to fill up Bandar Seri-Begawan-London. Brisbane is ideal for this, given the large size of the Brisbane-London market and the fact that Brisbane-Brunei is a tiny local market, enabling Royal Brunei to allocate a large proportion of Brisbane-Brunei capacity to London.
Brisbane would also help support potential new flights to southern India. India-Australia is a large and fast-growing market, but is relatively underserved. Royal Brunei could offer among the fastest connection times from Melbourne and Brisbane to southern India, and would have highly competitive fares.
Royal Brunei is still by all measures a small flag carrier. However, the resumption of expansion over the next two years is impressive, given the tiny size of the Brunei market and intense level of competition in the Asian marketplace, including most of its one-stop city pairs.