Qatar Airways to shake up Canberra-Europe market

Qatar Airways will offer Canberra-Europe passengers a generally faster transit time than Singapore Airlines despite Qatar’s decision to serve Canberra with a stop in Sydney. Qatar will also likely offer aggressive fares from Canberra to Europe, driving down average fares after it launches services to Canberra in Feb-2017.

As Blue Swan previously outlined, Qatar Airways will become the second foreign airline in Canberra on 12-Feb-2018, when it launches a daily service on the Doha-Sydney-Canberra-Sydney-Doha route. Canberra’s only foreign airline is now Singapore Airlines, which began in Sep-2016 four weekly flights on the Singapore-Canberra-Wellington-Canberra-Singapore route. Singapore and Wellington are also the only international destinations for Canberra, which does not have any international services from Australian carriers.

See related report: Qatar adds daily Canberra and doubles Sydney capacity: Everyone’s a winner (almost)

With the launch of nonstop flight from Canberra to Singapore, SIA was able to offer Canberra passengers the first and only one-stop option to Europe. Singapore Airlines has since significantly increased its share of bookings in the Canberra-Western Europe market, from only 9% in May-2017 to 25% in May-2017, according to OAG Traffic Analyser.

However, SIA’s Canberra-Singapore flights are not timed well for connections to or from continental Europe. Only in the Canberra-London market does SIA offer a decent – although still not great – transit time. For SIA’s other 14 European markets, passengers have to spend all day in Singapore in both directions in order to catch the nonstop flight to/from Canberra.

Not surprisingly, most of the Canberra-Europe passengers SIA has picked up since launching Canberra-Singapore have been in the Canberra-London market. In May-2017, SIA captured a 44% share of total bookings from Canberra to London. The Canberra-London city pair accounts for approximately one third of total Canberra-Western Europe bookings.

Singapore Airlines’ current one-stop product in the Canberra-London market offers a total journey time of 25 to 26 hours. Emirates, Etihad and Qantas offer similar journey times but the inconvenience of an extra stop – and the need to transfer from the domestic to international terminal if connecting in Brisbane or Sydney. Etihad uses Virgin Australia for domestic connections to Canberra while Emirates uses Qantas. SIA also has a partnership with Virgin Australia, which it uses to provide a two-stop product from Canberra to Europe via Brisbane, Melbourne and Sydney.

Qatar will offer a similar total journey with its two-stop product from Canberra to London but the convenience of a quick one hour stop in Sydney using Sydney’s international terminal. The transit time in Doha will be approximately three hours on the outbound leg from Canberra and less than two hours on the return leg from London. Similar transit and total journey times are available for passengers flying between Canberra and several destinations in continental Europe.

SIA’s one-stop product in the Canberra-London market will become less appealing in Oct-2017 when it retimes its Canberra-Singapore flight. The new SIA schedule will add another hour to the journey in both directions, which will benefit Qatar (and the other two-stop competitors).

SIA’s transit time in Singapore will increase from 3hr20min to 4hr25min on the outbound leg from Canberra to London and from 4hr50min to 5hr45 min on the inbound leg from London to Canberra. SIA has four daily flights to London but only one connects with Canberra – and not very well.

For all of SIA’s destinations in continental Europe except Frankfurt, SIA has one daily frequency or less, offering late night departures from Singapore and early morning arrivals back in Singapore – neither of which connects with Canberra. SIA has two daily frequencies to Frankfurt, but neither connects with Canberra.

SIA is able to offer connections to all European destinations from all its other gateways in Australia (as well as SilkAir’s Australia gateways) by offering multiple departure times on Singapore-Australia routes. It also offers shorter connection times to London from all its other Australia gateways.

SIA may need to consider introducing a split schedule to Canberra (with different departure times depending on the day of the week) and add frequencies in order to provide better connections with Europe and South Asia. As Blue Swan previously analysed, the new Canberra schedule SIA is introducing in late Oct-2017 improves connections from several destinations in East Asia – but only in one direction.

See related report: SIA to retime Singapore-Canberra-Wellington improving connection times for travellers

The new Singapore-Canberra schedule consists of an 1155pm departure from Singapore instead of the current 11pm, enabling connections with some intra-Asia flights that previously did not connect with Canberra but resulting in an extra hour in Singapore for passengers coming from London (and some other destinations). The new Canberra-Singapore schedule includes a 435am landing back in Singapore, compared to 540am currently, resulting in longer connections for virtually everyone (including London and most passengers heading to other points in Asia).

SIA generally charges a premium in the Canberra-London market but may have to review its pricing given the extra hour of transit time and new competition from Qatar Airways. Economy fares in the Canberra-London market start at approximately AUD1700 return including taxes on Etihad and Qantas while SIA offers fares starting at approximately AUD2100.

Qatar will likely offer Canberra-Europe passengers lower fares in an attempt to fill up its new Canberra flights and gain market share. Qatar currently accounts for approximately a 1% share of total Canberra-Europe bookings, according to OAG Traffic Analyser data for May-2017. Rival Emirates and Etihad each account for approximately a 15% share while SIA and Qantas both have approximately 25% shares.

Emirates and Eithad have an advantage over Qatar as they have partnerships with Australian carriers, enabling them to access secondary markets such as Canberra. Qatar’s only option for capturing a significant share of the Canberra-Europe market is therefore to launch its own flights to Canberra.

Qatar’s entrance should push down Canberra-Europe average fares (as well as fares in the much smaller Canberra-Middle East market) as competitors respond. Qantas will be able to offer a faster connection from London to Canberra when it launches nonstop London-Perth flights in Mar-2018. However, its Canberra-Perth route only connects with the new Perth-London route in one direction. Qantas will continue to have only a two-stop product from Canberra to London (unless it retimes the Canberra-Perth flight) as well as from other destinations in Europe.