Australian regional operator Alliance Airlines has inked a wet lease agreement to provide flexible capacity to the QantasLink network with three of its recently acquired Embraer E190s.
The agreement is for an initial three-year period and the aircraft will be based in Adelaide and Darwin, servicing the Adelaide-Alice Springs, Darwin-Alice Springs and Darwin-Adelaide routes, Alliance said today in a disclosure to the Australian Securities Exchange.
Qantas expects this arrangement to commence in June, it said in a same-day statement, when the group’s domestic network returns to pre-Covid-19 levels, but that depends on the recovery of travel demand.
It adds that the deal will “help the Qantas Group meet an expected surge in local tourism demand once the country moves beyond sudden Covid-related border closures”.
“Passengers can expect an increase in frequency made possible by the size, range and economics of the E190 compared to the Boeing 737s that are currently used on these routes,” Qantas states, adding that the narrowbodies will be redeployed elsewhere in Australia.
QantasLink chief executive John Gissing says the E190 is “a perfect mid-size regional jet for routes like these ones in northern Australia”.
“It has longer range than our 717s and it’s about half the size of our 737s, which means the economics work well on longer flights between cities and towns outside of the top five population centres,” Gissing states.
“Instead of one or two flights a day with a larger aircraft, we can offer three or four flights a day on the E190, which gives customers in these cities a lot more choice about when they travel.”
The agreement also gives Qantas options to access another 11 E190s – each configured with 10 seats in business class and 84 in economy – from Alliance, depending on market conditions.
The regional operator states: “Alliance’s enviable operational footprint enables it to provide services from any major city to the region.”
Alliance’s managing director, Scott McMillan says the transaction expands upon previous wet leasing arrangements between the parties, in place since 2012.
He states: “This further cements Alliance as the pre-eminent wet lease operator in Australia and the Pacific and confirms Alliance’s view that the circa 100 seat regional jet will be the sweet spot in the global aviation market’s post-Covid-19 recovery”.
Qantas says the deal reflects “the kind of flexibility needed to respond to opportunities without committing any capital”.
QantasLink’s Gissing states: “We know this current climate of snap border closures will pass and we want to be ready for the recovery and for what is a structurally different market to what we had pre-Covid.”
He adds: “We’ve already opened up 20 new city pairs with our existing fleet as more people [choose] to holiday at home, so there are a lot of possibilities once we get past this cycle of sudden border closures.”
The arrangement also offers the opportunity for Qantas Group’s international pilots and cabin crew to operate the E190s, “given it will be some time before overseas markets fully recover”.
Gissing adds: “By the time we switch on this extra capacity with Alliance, we expect all of our own domestic crews will have already returned to flying.”
Cirium fleets data shows that Qantas subsidiary Cobham Aviation Services Australia is the only 717 operator in Australia, with a fleet of 20 aircraft between 15 and 21 years of age.
The data also shows that Cobham and Pionair Australia are the only other E190 operators in Australia, with one example each.
Alliance recently acquired 30 second-hand E190s for plans to expand into capital city flights within Australia. Previously, it operated an all-Fokker fleet comprising of F100s, F70s, and F50s.
In August, it acquired 14 E190s from US-based lessor Azorra Aviation, due to deliver progressively over eight months from September 2020. In December, it signed for another 16 E190s from US-based Jetran, scheduled for delivery over 11 months until November 2021.
According to Alliance Aviation’s latest annual report for the financial year ended 30 June 2020, Qantas is the single largest shareholder of Alliance Airlines’ parent company, holding 19.99% of issued shares.