Alliance Aviation to send all aircraft to Europe for heavy maintenance

written by australianaviation.com.au | August 4, 2015
An Alliance Fokker 50. (Rob Finlayson)
An Alliance Fokker 50. (Rob Finlayson)

Alliance Aviation Services is closing its Brisbane heavy maintenance base and will send its all-Fokker fleet to Europe for their regular heavy checks as part of cost-saving measures.

The heavy maintenance checks will be undertaken at Lufthansa subsidiary Austrian Technik Bratislava, which started working on Alliance aircraft in April when the company ended heavy maintenance in Adelaide and has successfully completed heavy maintenance overhauls on two aircraft.

Alliance said the move would result in an “immediate cash saving”, which meant total capital expenditure was forecast to be reduced by about of A$20 million per year.

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“The cessation of heavy maintenance in Brisbane will impact 22 staff positions within the Alliance operation in Brisbane along with a small number of contractor positions,” Alliance said in a statement on Tuesday.

“The company will be able to offer some of the staff alternative employment within Alliance, and will support those who are being made redundant to transition to other employment.”

Redundancy costs would be about $800,000.

Alliance managing director Scott McMillan said the end of heavy maintenance in Brisbane was “part of ongoing structure and operating changes to improve the company’s long term profitability”.

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The airline has moved to reduce costs and improve fleet utilisation, as well as protect existing contracts and secure more non-mining related work, in response changing market conditions and after posting to a first half loss.

In addition to sending heavy maintenance work overseas, Alliance also sold two Fokker 100s in May.

“Through these and other measures we will maintain our position as the leading provide or contracted aviation services in Australia,” McMillan said in a statement on Tuesday.

“The change at Brisbane will have no effect on our services to the resources sector, or our diversification into tourism-related and other sectors across Australasia.”

Alliance said it would continue to perform line maintenance work at Brisbane, Perth, Adelaide, Cairns, Townsville, Melbourne and Auckland.

The company was due to hand down its 2014/15 full year results on August 13.

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9 Comments

  • Dave

    says:

    It’s amazing how it is cheaper to fly the aircraft to the other side of the world, than to perform maintenance here. I understand there is labour costs involved, but I would have thought the fuel alone to fly them across would make any savings next to minimal.

  • Raymond

    says:

    Dave, I would have thought the same. Goes to show, doesn’t it.

  • Johnny

    says:

    When it comes to the heavy maintenance, you are talking thousands of man hours. I used to work for a single-engine turbine charter company and some regular inspections would easily take 100 hours of man hours. You can easily see that if it takes 2,000 hours x $120 / cost per hour, then that is $240,000. Plus parts, which are likely to be created in Europe so you will save on freight and you will also reduce down time as AOG freight items can take up to a week to make it to Australia. The total cost for a heavy inspection could easily be in the $400,000 range.

    Fuel burn of a F100 is about 2250kg/hr x 14 hour flight, is 31,500L approx.. Multipled by the approx. fuel price of $1.70, is $53.550 in fuel.

    It is not ideal but you can see that there are multiple factors at play here and it’s not hard to see how they could be saving money. The savings on freighting of parts alone, would likely pay for the fuel costs.

    An extra few days down time from not having particular parts and them having to be freighted to Australia (which can cost thousands for AOG freight for larger items). This can also ripple effect through changes in schedules and cancelled flights. And when you consider the availability of spare parts on Lufthansa’s doorstep, it is a no brainer.

  • BANKS

    says:

    Johny, check your calculations.

    Flight time to Bratislava is a minimum of 29 hours from Brisbane. Based on your 2250kg/hr fuel burn that’s 65,250L ONE WAY… 130,500L multiplied by $1.70L is approximately $221, 850 just in fuel. Add crew, catering, hotels, meals, car hire, visas, return airfares, flight permits etc over a typical 6 week check that will quickly be North of $300,000.

    I’m sorry but additional freight on AOG items does not equal the $300,000 it will cost just to get there, let alone the hassle and high risk of managing a check on the other side of the world and the impact on flight operations due to reduced fleet availability during the additional time taken to get there and back.

    Unless they are getting the check for nothing, the numbers don’t add up. It’s a tax right off, the cost of getting the aircraft there would be claimable expenditure. The savings on not having to operate and maintain and heavy maintenance base here, loosing their heavy maintenance certificate just boost the bottom line at the expense of not being able to maintain their own aircraft in house.

    What amazes me is that they would rather fly to Bratislava, then have them serviced in Fokker Singapore.

    My theory, they’re gearing up to be sold, most likely to Virgin.

  • Tony

    says:

    When VH-FKC went to BTS from PER, it took around 21 hours.

    The ferry flights are contracted out to a ferry crew and would be cheaper ex PER than BNE.

  • Craigy

    says:

    Alliance have said that they expect to save $20 mill capital per year by sending the aircraft offshore for heavy maintenance. Heavy maintenance costs are not just about the man hours to do the work but is also about the licences required and the costs to maintain the infrastructure that allows the company to do the heavy maintenance.. For example, there is the equipment, spares and hangar space that costs money to maintain. Then you have the compliance costs of the heavy maintenance approval from CASA, ongoing staff wages which you have to pay even if there are no aircraft in the hangar. A small fleet makes heavy maintenance expensive. Qantas have their A380’s services offshore because it is cheaper. And Skywest F100s are serviced in in Asia if my memory serves me correctly. You really cant blame Alliance trying to save money because at the end of the day, the business has to be viable otherwise it folds.

  • Jason

    says:

    I appreciate we have a standard of living we should be proud of, and that we have fought hard for that privilege. But at what point do we (the unions in particular) have to take responsibility for the loss of jobs and industry off-shore. Australia could have been an aviation hub for Asia but instead we are closing shop. You cant solely blame the airlines profit motivation for that.

  • James

    says:

    Why don’t Alliance auction their repositioning flights for charity ? Bratislava is less than an hours drive from Vienna & very close to Prague & Budapest.

    Some airliner nuts would pay a $1000 or 2 to fly a Fokker to Europe. Of course there would be overnight stops en route.

    Surely they could sell 50 seats on an F100 which could raise a lot of money for charity & put Alliance in good books, as far as PR concerned. Can see it now, Alliance handing over a big cheque literally to some charity.

  • James

    says:

    the greedy unions have stuffed maintenance in this country.

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