The City has a phrase for investments that look good on paper but ignore the human cost: dead money. British airlines, with the enthusiasm of a salesman pushing extended warranties, are now backing flights that last more than 20 hours. This is the new frontier of aviation, and the numbers are, on the surface, compelling. British Airways and Virgin Atlantic have ordered the Airbus A350-1000 and the forthcoming ultra-long-range variants, touting non-stop routes from London to Sydney or Perth. The promise is a reduction in travel time, eliminating the layover in Singapore or Dubai. But let us examine the bottom line.
The operational costs are staggering. A 20-hour flight burns significantly more fuel per passenger mile than a shorter haul, due to the sheer weight of fuel required to lift off in the first place. Airlines will need to charge premium fares, targeting business travellers willing to pay for the privilege of not stopping. But the market for such tickets is thin. The average business traveller can work on a plane, but can they work for 20 hours? Diminishing returns set in after hour eight. The marginal benefit of a direct flight versus a one-stop with a decent lounge is questionable.
Then there is the human capital. Pilots and crew will require extended rest periods, increasing labour costs. The regulators will demand strict fatigue management, potentially requiring four pilots for these flights. That is a lot of salaries for one plane. The bean counters at Heathrow must be sweating.
But the real concern for the markets is capital flight. Airlines are committing billions to these aircraft, money that could otherwise be returned to shareholders or used to shore up balance sheets. At a time when the industry is still recovering from the pandemic, with debt levels high and margins thin, this is a bet on a very specific future. If oil prices spike, if a recession hits business travel, these planes become expensive white elephants.
And what of the environment? The government talks of net zero, yet here we are extending the longest, most carbon-intensive flights in history. The Treasury will face pressure to levy a frequent flyer levy or increase Air Passenger Duty on these routes. That would further dent demand.
The bond market will be watching. Gilt yields are already under pressure from inflation and government spending. Airlines issuing debt to fund these purchases will find buyers only if the risk premium is right. I suspect it will not be.
In summary, the push for ultra-long-haul is an exercise in engineering prowess, but poor financial engineering. It is a vanity project for airlines, a macho competition to see who can fly the farthest. The prudent investor should look elsewhere. The bottom line is this: sometimes the shortest path is not the most direct one. It is the one that makes economic sense. And 20 hours in a tube does not make that cut.
