Royal Brunei to rely heavily on London connections as it launches A320neo service to Brisbane

Royal Brunei Airlines is resuming expansion in Australia with the relaunch of services to Brisbane. Royal Brunei will rely heavily on sixth freedom traffic to/from London to fill the new Brisbane flight, which is being timed to ensure quick connections in both directions with its new nonstop Heathrow service.


Highlights:

  • Royal Brunei is launching four weekly flights to Brisbane in June using A320neos;
  • The Brisbane flights are timed to connect with London, which will account for most Brisbane-Brunei passengers given the small size of the local market;
  • Royal Brunei is offering Brisbane-London fares starting at less than USD800 return.

The Asian carrier announced on 18-Jan-2019 the launch of four weekly flights between Bandar Seri Begawan and Brisbane from 11-Jun-2019. It will operate the route with its new fleet of Airbus A320neos, which are configured with 12 recliner business seats and 138 economy seats featuring seatback IFE.

The airline operated Boeing 767s to Brisbane until 2011, when it suspended the route as part of a major restructuring. It also suspended Auckland and Perth in 2011. Melbourne has since been its only destination in Australia/New Zealand. Darwin and Sydney were dropped in 2008.

The decision to relaunch Brisbane does not come as a surprise. The Blue Swan Daily initially (and exclusively) reported in Jun-2017 that resuming Brisbane and upgrading London to nonstop was being considered as part of an ambitious network expansion plan made possible by the expansion Royal Brunei’s fleet from 10 to 14 aircraft.

Less than a year later, in May-2018, Royal Brunei announced the launch of a nonstop daily service to London from Oct-2018. This service has significantly reduced the transit time between Melbourne and London as previously Royal Brunei only offered a two-stop product from Melbourne to London via Brunei and Dubai.

The decoupling of London and Dubai was made possible by the delivery of a fifth Boeing 787 in mid 2018. Royal Brunei also has expanded its narrowbody fleet over the last eight months from six to nine aircraft as seven A320neos have been delivered. Four A320ceos have been returned while the other three A320neos are being used for growth.

While Royal Brunei has so far used the growth narrowbody aircraft to pursue expansion in North Asia, The Blue Swan Daily revealed in an Oct-2018 report the airline was again was looking at resuming expansion in Australia with Brisbane, Darwin and Gold Coast under consideration for 2019.

It is not surprising that Brisbane got the nod over Darwin and Gold Coast as it is a larger market. However, it was not an easy decision given the relatively challenging economics of the Brunei-Brisbane route.

The cost of the route is relatively high because of the long stage length (around seven hours) and the fact the aircraft has to sit in Brisbane for over 12 hours to ensure quick connections with London. The new flight lands in Brisbane at 04:45am and does not depart until 05:30pm. This is hardly ideal given the A320neo is an expensive new asset that needs to be utilised frequently in order to cover the relatively high monthly payments.

Royal Brunei cannot have a quick turnaround in Brisbane as this would result in a very long layover for London passengers in one direction, making its Brisbane-London product uncompetitive. With the long ground time in Brisbane Royal Brunei is able to offer a 1hr25min layover in Brunei for Brisbane-London passengers and a 2hr05min layover for London-Brisbane passengers.

The airline needs to rely mainly on sixth freedom traffic to make Brisbane work as the Brisbane-Brunei local market is tiny. Specifically, it will have to rely almost entirely on London because timing Brisbane to connect with London makes it impossible to offer same day connections within Southeast Asia with the exception of Kuching (it is able to offer quick connections to Dubai and some destinations in North Asia but these markets are small from Brisbane).

Brisbane-London is a very competitive and low yielding market. Return fares of less than USD1000 are often available on several airlines. Royal Brunei is already offering Brisbane-London fares below USD800 for travel on select dates in 2H2019. With such low fares it will be hard for the new Brisbane-Brunei route to deliver sustained profitability – even with incentives from Brisbane Airport and Queensland.