Northern expansion

The Darwin based airline is considering options for new domestic routes, including the potential to feed Jetstar’s expanding services through its Darwin hub into Asia, and opening new Asian routes itself.

Airnorth is the launch customer for the E‑170AR, which will have an extended range of about 2000nm (3700km) with a full payload. Its introduction in April will relieve pressure on the present single aircraft, which works “very, very hard”, according to the airline’s sales, marketing and contracts manager David Gooch – although that workload has been eased by the temporary wet season suspension of Perth flights, saving six hours’ flying a week.

But, coupled with the withdrawal from Bali from the end of January ’09 because of excess capacity generated by Jetstar and Garuda, the second aircraft will enable Airnorth to add new jet destinations – probably a mix of domestic and near-Asian destinations, he says.

Chief executive Michael Bridge points out that the E-170AR will have sufficient range to reach every Australian capital direct from Darwin, and such regional centres as Jakarta, Singapore, Kuala Lumpur and Manila.

Deputy chief executive Simone Saunders says Airnorth is “working with Qantas on other possible destinations’’ after extending the Darwin-Kununurra-Broome services to Perth in 2008 and introducing the codeshare services to Bali in 2007.

However, Saunders says, existing contract clients are keen to get access to the jet as well. The appeal and reliability of the first E-170 – its first year was almost trouble- free apart from a couple of incidents, including one with wayward ground equipment – has justified the heavy investment in taking Airnorth into the jet age, she says.

David Gooch says the first $32 million aircraft was effectively under-written by the airline’s important contract with mining company Xstrata, owner of the McArthur River base metals mine on the Gulf of Carpentaria. The busy E-170 flies four return services a week to the isolated mining venture, and also operates some services to Xstrata’s Mount Isa mining centre.

The second E-170 is due to arrive in Darwin from Embraer’s Brazilian plant in April under a lease/purchase deal with Florida based Jetscape.

Despite the Bali setback, Saunders says

The airline’s board is considering a fleet of four E-170s by the middle of 2010. How they would be deployed is a question Airnorth is not prepared to answer just yet.

“It’s a moving feast,’’ Gooch says, although some decisions are imminent and will involve the second E-170.

Meanwhile, the airline is preparing to use its single 76-seat E-Jet on the Darwin- Dili route. It has been running 11 services a week to the East Timor capital with two of its 30-passenger Brasilias and has been awaiting approval for the jet service (Timor Air, a joint venture between Australian East Timorese businessman Jerry Desousa and Brisbane’s SkyAirWorld, also has plans to operate a jet service on the route from February with the larger 94- seat E-190 E-Jet).

There are hopes that the new Darwin- Dili jet service may become a holiday route in time, but its present role is largely logistical for the East Timorese and peacekeeping forces.

Airnorth began flying to Bali in a codeshare arrangement with Qantas in October 2007 with a twice-weekly operation with the E-170, which increased to three return services last March and moved to four in October, just as Jetstar revealed its Bali plans.

The airline added Perth to its domestic destinations last year under another Qantas codeshare, as an extension of its Kununurra and Broome services.

A key area is serving Northern Territory communities, including Arnhem Land, where it operates two return services each week day to Maningrida and Milingimbi with its 19-passenger Metroliners (substituting a bigger Brasilia for its Saturday service). It also serves the neighbouring mining communities of Gove (six times a week) and Groote Eylandt (eight times a week). Airnorth says it remains committed to serving the NT communities.

Rising In The North

Airnorth was founded in Darwin in 1978 by a consortium which included local aviation identity John Tilley.

Darwin based construction and engineering group Henry Walker Ltd became

The airline’s board is considering a fleet of four E-170s by the middle of 2010. How they would be deployed is a question Airnorth is not prepared toa shareholder as the company sought to expand, employing a variety of aircraft including a DC-3 which was used for cargo flights – and is still in Darwin, owned by John Hardy of Hardy Aviation.

Airnorth was acquired by the present owner, aviation and tourist services company Capiteq Ltd, in 1993. Capiteq, independently chaired by Barry Coulter, a former deputy chief minister in the NT government, has a range of aviation and tourism interests. Its activities include airline operations, aircraft charters and leasing, aircraft maintenance, aerospace equipment, travel agencies and tours.

It also operates an aircraft engineering and maintenance company, Aircraft Logistics, at Darwin Airport. Apart from maintaining the Airnorth fleet, Aircraft Logistics, which was established in 1985, carries out third party maintenance work for Cobham Australia’s National Jet Systems, Chartair, Hardy Aviation and Trans Capital Air. It carries a spare parts inventory worth about $6 million.

At the time of its acquisition by Capiteq, the little airline served several Northern Territory communities with a fleet of four Cessna 402Cs and had annual revenue of about $3 million.

Over the next 10 years, Capiteq retired its Cessnas and built up a fleet of three 19-passenger Metroliner 23s and seven 30-seat Brasilias.

It took on new routes and won mining, defence and government contracts, including a deal with Rio Tinto subsidiary Argyle Diamonds in June 2001. Under a new contract, Airnorth has retained services out of Darwin, but because of reduced capacity requirements, Kununurra-based Sling Air has won the Kununurra-Argyle route. The work for Rio Tinto has grown to include the mining giant’s other operations in the country’s north, including the iron ore operations in the Pilbara region of Western Australia. Other major mining clients include BHP Billiton and Newmont.

The expansion included flights from Darwin to Dili, which began in 1999 as the East Timor province moved to independence. The RegionalLink

the demise of ASA and Emu, but Airnorth is the only airline with the Southern Cross emblem on its aircraft. Airnorth’s link to Ansett caused a major disruption when the Ansett group collapsed in September 2001, and Airnorth tumbled to a loss of $1. 6 million. But it recovered well, picking up new contracts – including charters for international petroleum giant Conoco-Phillips, which has operations in the Timor Sea. The Conoco contract began on the Darwin-Dili route in December 2002 with five services a week, and for a time also involved a Dili-Denpasar link with a Brasilia.

The petroleum exploration and development activity around Australia’s northern coast brought more work, including contracts with Woodside, Santos and Japan’s Nippon Oil.

“It’s become a growth area with good potential for us,’’ Gooch says. The work includes flights from Darwin to Truscott, the former RAAF base which now hosts a fleet of four Super Puma helicopters servicing the offshore oil and gas industry.

In May 2004, under a joint venture with Indonesia’s Merpati Nusantara Airlines, Airnorth reopened a route from Darwin to Kupang in West Timor, which Merpati had abandoned in 2001. The joint venture ended in 2008 after incurring significant losses.

Meanwhile, in October 2003 Capiteq brought Airlines of South Australia (formerly Port Augusta Air Services) and Kangaroo Island operator Emu Airlines under its wing, and the following year founded the RegionalLink franchise, with heady expectations of becoming a major regional grouping.

ASA beefed up its services in early 2005, increasing services on its Adelaide-Port Lincoln ‘flagship route’ with a 30-seat Brasilia, moving to four return services each weekday, while continuing to operate 16-seat Bandeirantes and nine-seat Piper Chieftains on its exclusive Adelaide-Port Augusta route.

At the time, Michael Bridge described the SA expansion as “another step in the planned roll-out of the RegionalLink brand’’.

But by October 2005, with QantasLink about to enter the Kangaroo Island and Port Lincoln routes in competition with Regional Express (Rex) and ASA, Bridge pulled the plug on the SA operations, citing “significant losses’’ over the prior two years.

Airnorth saw no prospects of turning the finances around in a tough competitive environment (which later – together with aircraft serviceability problems – claimed Mount Gambier based O’Connor Airlines, after it had picked up the exclusive Port Augusta licence – see AA March 2008).

Before ending its South Australian services, Airnorth had boosted annual revenues from $3 million to almost $50 million, with 152 scheduled departures a week. It had six 30-seat Brasilias and three 19-seat Metroliners in service in the NT, and another Brasilia in SA, where the ASA and Emu services each employed three 16-seat Bandeirantes and three nine-seat Piper Chieftains.

The RegionalLink concept remains alive, despite the demise of ASA and Emu, but Airnorth is the only airline with the Southern Cross emblem on its aircraft.

Bridge, who originally described it as “a bold step’’ in regional aviation, has not given up on the idea.

An even bolder step was the decision to invest in the new Embraer E-Jets. Airnorth jumped into a new league with its decision to introduce jet services, which opened new horizons for the airline.

Airnorth remains reluctant to reveal too much about its operations, but has been growing strongly, both on contract resources industry work and scheduled passenger services. It has built up scheduled passenger numbers to about 160,000 a year, and its capacity has grown to about 250,000 seats on annual RPT and long term charter contract services, which is almost double the capacity five years ago. The present RPT operations, although they vary through the seasons, are around 140 a week, with another 40 charter departures a week for clients.