On the up

Alliance already has extensive operating from Cairns as an ‘offline’ hub. “We already operate out of Cairns for two of our customers and a third customer came to us with a request that they would be looking at operating to their site from Cairns,” Alliance managing director Scott McMillan explained to Australian Aviation. “We were already ferrying an aircraft up from Townsville at the beginning of the week and bringing it back at the end of the week, and that’s a pretty inefficient. Rather than continue to do that with the additional services out of Cairns we took the decision to set up a permanent base there.”

Currently, the airline operates 10 contracted charter services a week from Cairns with the two aircraft, and is also expected to look at further opportunities across northern Queensland, as well as into the Northern Territory.

The Cairns base also gives Alliance further reach into the regional international market around the South Pacific. One such opportunity may come from Papua New Guinea. “Clearly, once the PNG LNG project gets up and running there’s going to be lots of activity out of Cairns up into PNG,” he said.

Other carriers are also hoping to gain from the rise in Cairns-PNG traffic, with QantasLink recently announcing plans to operate up to 12 services per week to Port Moresby using Bombardier Q400s, while Airlines PNG and Air Nuigini also operates flights on the route.

The other major announcement for the carrier came in April, when it announced that it had acquired eight additional Fokker 100s from a European vendor. “We saw that as a perfect opportunity to grab aircraft which are of a similar specification to the ones that we’ve already got,” said McMillan, referring to the fact that the aircraft were originally built for US Airways, as nine of its existing fleet of 11 were.

But despite the impression that the carrier would rapidly add to its fleet, not all eight aircraft will enter the fleet in the short term. “I’d see that we’ll be adding at least four of those aircraft to our fleet this calendar year, and the rest of the aircraft will be leased out in Europe on medium term leases so that they’re available for us as and when we need them,” said McMillan.

“Over time we believe that there is opportunity for all of those eight aircraft in Australia, but that may be in a two or three year period.”

The purchase represents something of an insurance policy for Alliance to ensure that it does have additional capacity as and when it is required, particularly as it does not envision replacing the aircraft any time soon. “Obviously we look around at all other aircraft types and we see that there is no replacement for the F100 for at least 10 years, so it’s all about making sure that we have a pipeline of aircraft that we can access.”

He remains full of praise for the capabilities of the aircraft which have allowed Alliance to grow in leaps and bounds since 2002. “By some quirk of engineering and design, you have a Dutch aircraft with an English engine that performs particularly well in the heat,” he adds.
And while those aircraft are now edging towards 20 years old, McMillan notes that he does not expect that to be a major issue. “Our highest time aircraft is only 32,000 cycles and it has a fatigue life of 90,000. We’re never going to get there because we only do about 1,000 a year.”

In the meantime, he confirms that the four aircraft destined to arrive in Australia this year will hit the ground running. “The nature of the acquisition is that all the aircraft come fully serviceable, ready to enter service and we will do a repaint and a minor interior upgrade, then we’ll be spreading those aircraft around our existing operating bases in Perth, Townsville and Cairns,” explained McMillan.

While the stock of jets is destined to give Alliance’s operations on resource contracts and ad hoc charters a major boost, there are no plans at this stage to add to its fleet of Fokker 50 turboprops. Based at Adelaide, the six turboprops operate exclusively to Olympic Dam on behalf of BHP Billiton. Qantas also sells regular passenger tickets on the service through a codeshare arrangement.

Nevertheless, McMillan says that the aircraft work well in that niche. “They’ve proven to be the perfect aircraft in terms of reliability and operating characteristics,” he said.

Competitive advantage

As the resources industry heads out of the global financial crisis, Alliance and other carriers are bracing for an increase in flying, particularly for fly in, fly out (FIFO) contracts.

While competitor OzJet has seen its demise, the rise of Strategic Airlines as another charter focused, high capacity operator is expected to lead to some added competition in the sector, particularly in WA.

“The continued growth of the WA mining industry has triggered increased enquiries for the aircraft to operate into dedicated mining airfields,” said Strategic’s head of commercial, Damien Vasta in February, announcing that the carrier would seek resource charter contracts for its growing Airbus A320 fleet to operate into.

In doing so, the airline is understood to be working with CASA to gain approval for the aircraft to be operated into Code 3C airports, which Strategic says would allow it to operate into most of the larger minefield sites.

In addition, Skywest has now taken delivery of its first A320, which is expected to be used on a combined charter/RPT service from Perth to Karratha on behalf of CITIC Pacific Mining. With at least three A320s set to enter the fleet, Skywest is also understood to be seeking out other charter opportunities for the aircraft.

Also in WA, Cobham has recently taken delivery of new Avro RJ100s which it will use on flights between Perth and Barrow Island to serve the massive Gorgon petroleum project over the next six years.

Despite the added capacity aimed at the resource sector, McMillan says that the company is not intending to change course from the formula which is has worked with since it started operations in 2002. “One of the things that we have relied upon very heavily in the eight years that Alliance has been around is that we buy our own aircraft, we maintain our own aircraft, we have very high engineering standards and therefore very high reliability. At the end of the day the customers want safety and reliability, and that’s what we offer,” he said.

Neither is he concerned at the growing number of RPT services operated by Virgin Blue and Qantas at ports such as Karratha and Mackay, many of which are being supported by the resources industry. “At Ports like Karratha where you have Qantas flying from Brisbane, Sydney, Melbourne and Perth – that’s not our game, so we stay out of that and let other people do what they need to do there,” said McMillan.

Instead, Alliance remains focused on providing aircraft for long term contracts, rather than operating RPT services, which it continues to deliver on. “Our focus is absolutely on on-time performance, and I think if you spoke to our customers they would be very happy with that, particularly because we’re not cross utilising our aircraft on RPT which tends to be problematic,” said McMillan.

Resources aside, McMIllan adds that the company also operates a number of ad hoc services for various clients, and with the additional aircraft due in over the next few years, this will remain a valuable segment that it is well positioned to cater to. “With five operating bases, we do a fair bit of ad hoc charter. We’re really the only true national operator of charter aircraft.”