Regional Roo

“There’s been an amazing amount of change, development and growth in our business,” QantasLink Group General Manager Narendra Kumar told Australian Aviation.

Although much of the Qantas Group’s growth has been focused on Jetstar, which operates on some of the same routes as QantasLink, the regional airline has been growing its capacity steadily.

“For the last three years, capacity growth has been running between 15 and 20 per cent per annum,”

said Kumar.

The net result is that QantasLink now has much greater capacity spread across the nation than ever before. It has bases throughout Australia, including at Brisbane, Cairns, Canberra, Melbourne, Newcastle, Sydney and Tamworth, and employs over 1000 staff.

In addition to this, National Jet has bases in Darwin and Perth where it operates a number of Boeing 717s on QantasLink’s behalf.

Recently, QantasLink closed down its Mildura engineering base, where line maintenance on the Dash 8-100 fleet was done, after these aircraft were retired. A number of engineers have since been offered positions at other Qantas facilities elsewhere, and the carrier has not cut back on flights from Mildura with most now operated by the larger -300s which are based elsewhere.

Over the last five years, the biggest change for the airline has been in its fleet. “In the last five years we have replaced what was our BAe 146 operation with an all Boeing 717 operation,” said Kumar. “We took a capacity increase in just the size of the aircraft, going from what were 65, 76 and 87-seater BAe 146s to 115-seater 717 aircraft.

“At the same time, on the turboprop side of our fleet, what used to be 36-seaters and 50-seaters, we now have up to 72 seats with our Q400s. We are making the single largest investment ever in regional aviation. We have spent in excess of $700-$800 million just on“For the last three years, capacity growth has been running between 15 and 20 per cent per annum. ”our turboprop fleet in the 10 Q300s and 12 Q400s ordered in recent years. ” The older Dash 8-100s, once the backbone of the QantasLink fleet, were retired in August. The fleet is now comprised of five Dash 8-Q200s, 16 Q300s and nine Q400s, as well as 11 717s operated by National Jet Systems. The carrier has also recently wetleased two Fokker 100s from Brisbane based Alliance Airlines on short-term contracts to cover strong demand on some routes from Brisbane and Perth (see AA August issue).

The flagship of the turboprop fleet is now definitely the 72 seat Bombardier Dash 8‑Q400, the first of which entered service with QantasLink in 2006. In October last year, Qantas ordered 12 more Q400s and took out 21 options on the type, which will drive growth in the regional segment, and complement the existing fleet of smaller Q200s and Q300s.

The extra capacity, jet-like performance and relative efficiency of the Q400 over its smaller brethren has been a great asset for QantasLink, and allowed it to increase capacity on key routes around Queensland and also add additional frequencies on the Sydney and Brisbane to Canberra routes, which has been particularly useful to the Qantas Group since Virgin Blue introduced its Embraer E-170s/190s onto the routes in late 2007.

“It’s a total whole of Group approach,” said Kumar about how flying is allocated to QantasLink. “So our fleet decisions have been underpinned by exactly that to make sure we have the flexibility and the right type of aircraft in right market segments. ” Three Q400s from that order for 12 will arrive this year, the first on August 4, which will bring about some major capacity increases across the current turboprop network.

“They will basically be going to the larger markets that we operate at the moment with 50-seaters, markets such as Albury, Coffs Harbour, Tamworth, Gladstone, Emerald, Rockhampton, Bundaberg, Townsville,” said Kumar.

“The important point to note is it is not just a case of growing capacity on markets that we are putting in the larger Q400s. What that is doing is releasing the 50-seaters, which we are able to put on markets that we were serving with 36-seaters, which in turn we are retiring,” he added.

Nevertheless, the newer Q200s will remain an important part of the fleet, as will the

We have spent in excess of $700-$800 million just on our turboprop fleet in the 10 Q300s and 12 Q400s ordered in recent years. ”

50-seat Q300s, to allow for up- and down-gauging on some markets. “The Bombardier turboprop 36, 50 and 72-seat family provides us with the maximum flexibility to offer the right balance of frequency and capacity to the regional markets,” said Kumar.

This has given the carrier the ability to easily adjust as required, which Kumar says has helped it in the marketplace.

“We are very, very comfortable with the flexibility we have and our ability to respond quickly. ” Most of QantasLink’s Dash 8s are involved in flying to remote centres in Queensland, where it provides a vital link to a number of outback towns, including some of which are subsidised by the Queensland government under its ‘QConnect’ program. But its route network also includes a number of major ports in New South Wales, Canberra, Victoria and down to Launceston and Devonport in Tasmania.

As well as its substantial turboprop fleet, QantasLink’s 11 Boeing 717s plays a major role in serving the booming mining industry and other regional communities in Western Australia, plus the Northern Territory and north Queensland.

The 717s were inherited from Qantas’s takeover of Impulse Airlines in 2001 and operated for a short time as QantasLink aircraft on the Impulse Air Operator’s Certificate before the decision was made to transform the former Impulse structure into Jetstar, which commenced service with 14 717s in May 2004, and were gradually phased out in favour of the Airbus A320 fleet.

The 717s were then chosen to replace the BAe 146s and were operated as a wet-lease by National Jet Systems on long flights from Perth and Darwin.

Once again, National Jet was chosen to operate the Boeings, and started service with an initial eight aircraft in 2005.

Three more have been added since late 2007 to serve strong demand in Western Australia.

That relationship with National Jet Systems has, according to Kumar, been successful for both parties. “We’ve had a long standing, successful relationship with National Jet over 15 years,” he said.

“It’s a relationship we value very, very highly, hence why more recently when we moved from the 146 to the 717s, National Jet successfully secured that contract. ” Recently though, this relationship has been tested a bit with the recent hard landing accident of a National Jet operated QantasLink 717, VH-NXE, at Darwin on February 7 which resulted in significant damage to the aircraft. The interim report from the ATSB highlighted organisational problems within NJS which led to the pilot in command of the aircraft not receiving sufficient training on landing the aircraft.

Although the aircraft was operated by National Jet, Kumar says that the investigation was examined closely by QantasLink and Qantas Group Safety.

“We look at it as a Qantas operation. We have a very close working relationship with them from Qantas Group safety. ” Nevertheless, Kumar says that National Jet has worked closely with Qantas on that issue, and that overall they have both dealt well with the accident.

“NJS, full credit to them, have proactively taken a lot of actions before the final report has been issued,” he said. “The fact is that we continue to deploy the services and the operational performance has been up to the standards that Qantas would expect of its own operations, and there’s no concern there at all. ” Nevertheless, the first sign of a departure from that came in February this year, when the company announced that it had signed an agreement to wet-lease an Alliance Airlines Fokker 100 to operate daily flights from Perth to Karratha and Port Hedland.

This has been followed by a similar wet-lease for another Fokker 100 to operate 13 Brisbane-Mackay flights on behalf of QantasLink, which commenced in June. As with the Perth flights, this is on a 12 month contract, and sees the Fokker 100 remain in Alliance colours.

“The Alliance relationship we entered into last year was at two levels. One of them was the Adelaide-Olympic Dam codeshare arrangement we entered into. . . But then we subsequently added the F100 in WA. That was purely a function of being responsive to the market requirements,” said Kumar.

“I give full credit to Alliance in being able to mobilise the operations as quickly as they were able, and to do that for us to meet the Qantas customer needs,” he added.

But he also stressed that the agreements on both routes were only short term, and that the carrier was not using Alliance to put pressure on National Jet.

“There’s nothing to suggest that there has been any change in our [National Jet] relationship. They are an important wet-lease provider,” he said.

Kumar went on to explain that the services in WA were only a short term response to customer demand, and that they would be replaced by mainline Qantas capacity at the end of the contract.

“The contract period actually tiedin beautifully to our plans for some of Qantas’s 737-800 deliveries which come in late this year and early next year. ” In addition, the service from Brisbane to Mackay would return to QantasLink once it had stabilised its pilot attrition rate (see later).

While QantasLink currently operates more flights than any other airline in the Qantas Group, it also has close affiliations with other independent regional carriers and in some cases codeshares on some services rather than fly its own aircraft. Key affiliates for the airline include Airnorth, Brindabella Airlines, and Aeropelican, which help to provide additional capacity for Qantas’s customers to regional areas.

Pilots

As with other regional airlines, securing and retaining pilots has been a challenge for QantasLink in recent years, recently forcing it to scale back some of its operations. This has included withdrawing completely from Newcastle, as well as some frequency reduction on flights to Armidale, Rockhampton and Mackay.

“We had a higher than previously experienced level of attrition,” said Kumar, noting that due to the overall shortage at a number of major airlines, many pilots had moved on, while those who were staying tended to stay for shorter periods.

“We took a lot of proactive steps, and that included not only looking at our existing pilots and retention strategies, but also on the other side of the equation accelerating the pipeline for pilots into our business,” said Kumar.

This included launching the QantasLink ‘pilot traineeship’ program.

Unlike a cadet program, the traineeship was aimed at pilots who already have a CPL but may not have built up enough hours to qualify as a direct entry first officer candidate, or may not have obtained their ATPL.

The program now sees these pilots undertake a specialised program at General Flying Services at Moorabbin which is focused on building the knowledge of airline procedures, gaining a Dash 8 endorsement and being checked to the line as a first officer on the turboprop fleet.

The program has already started bearing fruit for QantasLink. “We have anywhere between 70-80 pilots [in the program]. Over 50 of those are already in the Dash 8 endorsement stage,” said Kumar, noting that the carrier has taken between 12-14 pilots each month since it started in March.

“Combined with the other streams, we will have trained about 100 pilots this year into the system,” he added.

While the addition of these pilots into the system has helped relieve the pressure on the airline, Kumar says that the traineeship program will continue in the longer term, although the numbers may vary. “What we will do is obviously moderate the numbers to bring it into line with anticipated future requirements,” he said.

Pilot retention pressures have also receded, mostly as Qantas, Virgin Blue and Jetstar have cut their capacity growth projections for the year, meaning more pilots are choosing to stay with QantasLink.

The end result is that in some cases, flights which have been cut are gradually coming back on line. “We are progressively restoring and adding capacity on markets we’ve had to cut back as a result of the pilot attrition we’ve had,” Kumar said.

Future outlook

While outgoing Qantas CEO Geoff Dixon has talked about a ‘new world order’ in global aviation as a result of the high fuel price, Kumar says that QantasLink, as part of the wider Qantas Group, is well positioned over the medium and longer term.

“We are reasonably positive about growth and all our plans and strategies we have in place, including the injection of new aircraft and the addition of capacity over the next 12 months, we’re well poised to adjust and adapt our business,” said Kumar.

“It will not be without challenge, and I think we will go through a challenging 12-18 month period, but we are getting in a young fleet and we remain quite positive about the regional markets as we have seen the growth over the last few years. ” Although key competitor Virgin Blue has threatened to up the stakes with its fleet of Embraer E-170s and E-190s, it appears that further competition from these smaller jets is likely to be contained to Canberra, Albury and Port Macquarie as Virgin has scaled back its growth plans and deferred deliveries on E-Jets which were due in 2009 out to 2010.

“We remain undeterred on what others may do, it’s more about what we can do to respond to the changing market,” said Kumar. “We have not changed our plans in terms of the deliveries of the Q400s. All of it is in line with what we planned. Yes, we made some decisions in terms of accelerating the retirement of the 36-seat 100 series, and that is a function of the fact that we’re getting the new aircraft anyway. ” External factors are likely to be a short-term threat to the carrier, such as the effects a slowing economy may have on demand. “We may see some flattening, some slowing in the rate of growth,” said Kumar, but he added that this would not dampen the long term outlook of the airline.

“The marketplace is forever changing, so our focus is on our business plans and our strategies which continue to develop and adapt as appropriate depending on the market circumstances. ”