Cobham Aviation Services Australia is eyeing new opportunities in the mid-tier mining sector after inducting the first of two Bombardier Q400 turboprops into its fleet – even as it prepares for a likely sale.
The first of the turboprops, wearing registration VH-IYJ, arrived at the company's Perth base in late July, and entered service on 14 August when it operated a charter flight to Jundee.
Chief executive of Cobham Australia, Ryan Both is upbeat about how the new turboprop in its fleet will help to solidify its presence in the fly-in, fly-out (FIFO) charter market.
"This is a story about growth. For us, we want the Q400 to be the growth platform, and so the flights that we will be doing with this primarily serves both existing and new customers," says chief executive Ryan Both.
Cobham Australia's focus has been on serving mid-tier mining companies that have operations in the remote parts of Western Australia. In addition, it has a long-term contract to fly staff to energy giant Chevron's operations on Barrow Island, which is the base for the Gorgon gas project.
But the FIFO industry has been increasingly competitive, with Brisbane-headquartered Alliance Airlines taking a large stake of the market thanks to major contracts with miners such as Rio Tinto and BHP. Qantas and Virgin Australia also have their own charter units that, like Alliance, largely fly Fokker 100 jets.
As with their clients, the operators have had to weather the ups and downs of the mining industry in Western Australia, the fortunes of which have largely been tied to iron ore prices and demand from China. Having been through a lull period, activity in the mining sector is beginning to pick up again, which Both expects will drive new business.
"The industry is recovering, we are seeing all the signs of the industry beginning to accelerate again," he says, pointing to increased exploration in the Goldfields region as a sign that mid-tier miners are once again looking to expand to take advantage of stronger mineral prices.
Both adds that while others chase contracts with the larger mining houses, Cobham is best equipped to serve the second-tier operators, especially with the 76-seat capacity of its newest aircraft.
"We really pride ourselves in serving the mid-tier of the mining industry, and the launch of the Q400 today is about providing that mid-tier mining segment, really the up-and-coming miners, with a high-reliability service," he said during an official unveiling of the turboprop on 19 August.
Both is also adamant that the operating economics of the Q400 will make it compelling against the out-of-production jets that dominate the FIFO market in Australia.
"It gives us a lot of options, because economics wins at the end of the day. This airplane is not just competitive against a Fokker 70, it is competitive against a Fokker 100."
RIGHT AIRCRAFT, RIGHT TIME
Cobham will take its second Q400 in September, and both aircraft were formerly operated by Air Berlin, and have been leased from GECAS.
Both says that it evaluated a wide range of aircraft before choosing the Q400, including the rival ATR 72, but the relatively low fuel carrying capacity and lack of an auxiliary power unit that could run the aircraft's air conditioning system while on the ground largely ruled it out. Both items were important considerations as it flies into hot areas where refuelling infrastructure is not always available.
Another factor is the type's ability to operate from gravel airstrips, which is something that Cobham Australia has long done with its BAe 146s and Avro RJs that are fitted with gravel kits.
The Q400 comes into the fleet only a few months after it welcomed a single E190 back into its operations. Cobham operated one E190 between 2015 and March 2018 on a contract for Chevron.
Both says that while both parties benefited from its first experience with the E-Jet, "it wasn't an accessible product for everybody at the time."
"It was an expensive thing to do and you needed to fly at a very high utilisation and have a lot of staff to justify that sort of an aeroplane."
The sole E190 back in its fleet was formerly operated by Virgin Australia, but Both is noncommittal about adding more of the type. "We're looking at it again, we're obviously operating it now and we continue to evaluate that fleet, but we haven't made any decisions on that at this point."
Rather, Both expects that more Q400s will join the fleet in the near term, based on the interest that customers have shown.
"Based on the market reaction, which is already quite strong, we'll start a pipeline of deliveries next year for whatever the customer demand is."
NEW OWNERS BECKON
At the same time it is adding new aircraft to its fleet, Cobham Australia is undergoing a strategic review by its UK-based parent company that will likely see it sold off.
"There has been a lot of interest from potential buyers of the business," says Both. "We're very confident that the story that we've got to tell about being the largest aviation group in Australia after Qantas and Virgin, a diversified group with special mission, government, defence and fly-in,fly-out – it's a very interesting story."
FIFO aside, the company also operates four BAe 146 Freighters for Qantas, while also operating 20 Boeing 717s under the QantasLink brand. Cobham's other operations in Australia include a special missions unit that operates surveillance and search-and-rescue aircraft on behalf of government agencies.
Both adds that the sale is in its "advanced stages" and an announcement is planned by the end of the year.
At the same time that Cobham Australia is on the market, there are signs that another regional operator, Darwin-based Airnorth, is also set to be sold by its struggling parent company, Bristow Group.
Curiously, the Australian Financial Review newspaper suggested that Cobham could be an interested bidder for Airnorth, which operates a mix of scheduled and charter services with a fleet of EMB-120s and E170s.
Both says, however, that any decision on that will be for its new owners when that time comes.
"It’s broadly interesting because it's something that is in our industry, but not the right timing for us at the moment."