Alliance Aviation Services and Virgin Australia’s proposed strategic partnership has taken a step forward with the signing of a long-term agreement.
In a statement to the Australian Securities Exchange on Thursday, Alliance said the strategic partnership, which was first announced in February, would involve a charter partnership to jointly grow their charter businesses.
The two carriers would also provide and procure services for each other on a preferential basis, including aircraft procurement, spare parts pooling, maintenance, ground handling services and customer benefits.
Alliance managing director Scott McMillan said the partnership meant both carriers would be “better placed to compete for charter tenders, with the ability to offer a wider range of aircraft, connectivity, services and facilities”.
“Today’s announcement, in conjunction with our acquisition of the Austrian Airlines Fokker fleet in November 2015, continues our transition into a broad based aviation company that offers an extensive range of services that will have the potential to significantly grow our revenue base over the coming years,” McMillan said in a statement on Thursday.
Virgin Australia Regional Airlines (VARA) chief executive Merren McArthur said: “We are looking forward to partnering with Alliance to build upon the strengths of each airline and to grow our charter businesses.”
In May, McArthur told Fairfax Media Alliance and Virgin has complimentary businesses given Alliance’s operations were mainly on Australia’s east coast and South Australia, while VARA’s biggest base was in Western Australia.
The proposed partnership required Australian Competition and Consumer Commission (ACCC) approval.
On face value the partnership appears to make a lot of sense. Fly-in/fly-out (FIFO) flying has declined following the end of the so-called mining boom, leaving the market – where other major players include QantasLink (Network), Cobham Aviation Services and Skippers – considerably more competitive.
Further, Alliance and VARA also both operate the Fokker 100 jet. (VARA also operates A320s and in February withdrew its Fokker 50s).
With its recent acquisition of Austrian Airlines’ entire Fokker 70 and Fokker 100 fleet, Alliance has moved into aircraft and spare parts brokerage and leasing.
On August 11, Alliance reported net profit of $13.5 million for 2015/16, returning to profitability after a statutory net loss in the prior year when the company wrote down the carrying value of its fleet in response to changing market conditions.