Over the weekend, Qantas Airways set a new record with a nonstop ultra long haul flight from New York to Sydney. At a distance of 16,200 kilometers and a duration of 19 and a half hours, this is now the world's longest flight. Though, this was still a test voyage. It remains to be seen whether this will be a commercially viable route. The company also plans to offer a similar ultra long haul from London.
It's fascinating to think about the logistics that go into a flight like this. The flight took off with its fuel tanks maxed out at 101 tons. But according to Wired, the loss factor on each additional ton of fuel is about 60% simply because of the additional weight. In other words, most of the incremental fuel to get all the way to Sydney just gets cannibalized by the heavier load. Wow. That doesn't feel all that sustainable.
Similarly, every ten passengers roughly equates to one ton (200 pounds per person). So there's a balancing act between reducing weight (optimizing fuel consumption) and maximizing revenue (adding lots of people). There's also a question of how best to price discriminate across economy, premium economy, and first class.
Initially these ultra long haul flights were imagined to be flying hotels, where people could sleep, workout, and do all sorts of other things while they traveled halfway around the world. But the economics didn't work. Too much wasted space on non-revenue generating items.
The other interesting thing about these ultra long haul flights is how much work goes into passenger comfort, specifically around our body's natural rhythms. Angus Whitley of Bloomberg was onboard this maiden voyage and he talks about how the food they served -- spiced with things like chili and lime -- was designed to fire up your clock when you shouldn't be sleeping.
And this isn't new a feature of ultra long hauls. Qantas already employs things like hot chocolate laced with tryptophan in order to help people sleep onboard. I'm not great at sleeping on planes, generally because I don't fit in the seats very well. But maybe it's because I've been passing on the hot chocolate.
Image: Qantas via Bloomberg
The below graphs are taken from a recent (June 2019) report by Knight Frank on "prime" residential pricing across the world. They define "prime" as generally being the top 5% of each market by value. What these graphs show are the spread between the average price of a prime property and the top price achieved in that market.
The Sydney Morning Herald recently reported that an oversupply of apartments has started to put downward pressure on rents and upward pressure on vacancy rates in the city. Here are a few excerpts from the article:
Sydney is in the grip of an apartment building boom, with 30,880 multi-unit dwellings built last year, a record for any Australian city. There were 16 multi-unit projects finished in the first three months of 2019, adding another 1948 units.
These numbers are flowing through Domain.com.au, where 17,500 units were listed for rent in June 2017, and ballooned to 32,680 listings in June 2019. The result has been landlords asking for $25 a week less median rent than last year.
Sydney-wide rental vacancy rates have almost doubled from 1.7 per cent 2017 to 3.2 per cent this year. But on the upper and lower north shore, in the hills district and Sydney CBD, apartments are sitting vacant at more than twice this rate, SQM data shows.
The narrative here is that you can build your way to lower rents. Make supply exceed demand, and this is what will happen. But in this case, something else has also impacted the demand curve: China. Beijing has made it harder to get money out of the country in recent years and their overall economy has slowed. China's economy is thought to be growing at its slowest rate since 1992 (which is when the country started official record keeping). The above article suggests that about 80% of new construction apartments in Sydney were sold to investors over the last few years. More than a few were probably Chinese. Though I have no idea if that is an accurate number. What is unclear, to me, is whether this doubling of rental listings over the last two years is a result of previously bought supply simply making its way through the system, or if current market conditions have encouraged more owners to put their units up for rent. Whatever the case may be, supply is up and apartment rents appear to be coming off slightly in Sydney.
Over the weekend, Qantas Airways set a new record with a nonstop ultra long haul flight from New York to Sydney. At a distance of 16,200 kilometers and a duration of 19 and a half hours, this is now the world's longest flight. Though, this was still a test voyage. It remains to be seen whether this will be a commercially viable route. The company also plans to offer a similar ultra long haul from London.
It's fascinating to think about the logistics that go into a flight like this. The flight took off with its fuel tanks maxed out at 101 tons. But according to Wired, the loss factor on each additional ton of fuel is about 60% simply because of the additional weight. In other words, most of the incremental fuel to get all the way to Sydney just gets cannibalized by the heavier load. Wow. That doesn't feel all that sustainable.
Similarly, every ten passengers roughly equates to one ton (200 pounds per person). So there's a balancing act between reducing weight (optimizing fuel consumption) and maximizing revenue (adding lots of people). There's also a question of how best to price discriminate across economy, premium economy, and first class.
Initially these ultra long haul flights were imagined to be flying hotels, where people could sleep, workout, and do all sorts of other things while they traveled halfway around the world. But the economics didn't work. Too much wasted space on non-revenue generating items.
The other interesting thing about these ultra long haul flights is how much work goes into passenger comfort, specifically around our body's natural rhythms. Angus Whitley of Bloomberg was onboard this maiden voyage and he talks about how the food they served -- spiced with things like chili and lime -- was designed to fire up your clock when you shouldn't be sleeping.
And this isn't new a feature of ultra long hauls. Qantas already employs things like hot chocolate laced with tryptophan in order to help people sleep onboard. I'm not great at sleeping on planes, generally because I don't fit in the seats very well. But maybe it's because I've been passing on the hot chocolate.
Image: Qantas via Bloomberg
The below graphs are taken from a recent (June 2019) report by Knight Frank on "prime" residential pricing across the world. They define "prime" as generally being the top 5% of each market by value. What these graphs show are the spread between the average price of a prime property and the top price achieved in that market.
The Sydney Morning Herald recently reported that an oversupply of apartments has started to put downward pressure on rents and upward pressure on vacancy rates in the city. Here are a few excerpts from the article:
Sydney is in the grip of an apartment building boom, with 30,880 multi-unit dwellings built last year, a record for any Australian city. There were 16 multi-unit projects finished in the first three months of 2019, adding another 1948 units.
These numbers are flowing through Domain.com.au, where 17,500 units were listed for rent in June 2017, and ballooned to 32,680 listings in June 2019. The result has been landlords asking for $25 a week less median rent than last year.
Sydney-wide rental vacancy rates have almost doubled from 1.7 per cent 2017 to 3.2 per cent this year. But on the upper and lower north shore, in the hills district and Sydney CBD, apartments are sitting vacant at more than twice this rate, SQM data shows.
The narrative here is that you can build your way to lower rents. Make supply exceed demand, and this is what will happen. But in this case, something else has also impacted the demand curve: China. Beijing has made it harder to get money out of the country in recent years and their overall economy has slowed. China's economy is thought to be growing at its slowest rate since 1992 (which is when the country started official record keeping). The above article suggests that about 80% of new construction apartments in Sydney were sold to investors over the last few years. More than a few were probably Chinese. Though I have no idea if that is an accurate number. What is unclear, to me, is whether this doubling of rental listings over the last two years is a result of previously bought supply simply making its way through the system, or if current market conditions have encouraged more owners to put their units up for rent. Whatever the case may be, supply is up and apartment rents appear to be coming off slightly in Sydney.
The most expensive market is Hong Kong. The average price of a prime property in 2018 was USD 4,251 per square foot (or USD 45,760 per square meter) and the top price achieved was in 2016 at USD 28,154 per square foot (or USD 303,051 per square meter).
Using the 2018 average, a 350 square foot studio apartment would run nearly USD 1.5 million (or almost CAD 2 million), assuming there are "prime" studios available in the market. Remember, we are talking about the top end of the market.
If you'd like to download a copy of the full report, you can do that over here.
The most expensive market is Hong Kong. The average price of a prime property in 2018 was USD 4,251 per square foot (or USD 45,760 per square meter) and the top price achieved was in 2016 at USD 28,154 per square foot (or USD 303,051 per square meter).
Using the 2018 average, a 350 square foot studio apartment would run nearly USD 1.5 million (or almost CAD 2 million), assuming there are "prime" studios available in the market. Remember, we are talking about the top end of the market.
If you'd like to download a copy of the full report, you can do that over here.
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