Qantas has announced it has come to an agreement with Brisbane-based Alliance Airlines to utilise three of its Embraer E190 aircraft, and cash in on an expected post-COVID surge in domestic tourism.
Under the new three-year deal, Alliance will operate three E190 regional aircraft, based in Darwin and Adelaide, on behalf of Qantas’ regional offshoot, QantasLink.
The agreement also includes the possibility of expanding Qantas’ access to Alliance aircraft by a further 11 E190 regional jets, dependent on market conditions.
Initial routes touted under the deal include Adelaide-Alice Springs, Darwin-Alice Springs, and Darwin-Adelaide.
The E190s will replace Qantas’ Boeing 737s currently tackling these routes, in a bid to increase frequency of flights.
According to Qantas, there is no set schedule for when the deal covering these new E190 routes will begin, although June 2021 has been tentatively earmarked.
Instead, the timing will “depend on the rate of recovery in travel demand”, as well as the overall recovery of Qantas’ domestic network.
The airline has also specified that it intends to make its move once Australia “moves beyond sudden COVID-related border closures”.
QantasLink chief executive John Gissing stated the deal reflected the kind of flexibility needed to respond to opportunities without committing any capital.
“We know this current climate of snap border closures will pass and we want to be ready for the recovery and for what is a structurally different market to what we had pre-COVID,” Gissing said.
“The ability to switch on extra capacity with Alliance will help us make the most of opportunities in a highly competitive environment and having the right aircraft on the right route helps us deliver the schedule and network that customers want.”
Alliance welcomed the delivery of 14 new E190s into its fleet in October last year following a $111 million deal for the jets. The new E190s joined its existing fleet of 24 Fokker F100, 13 Fokker 70LRs and five Fokker 50 turboprops.
Gissing noted that the Embraer E190 is a “perfect mid-size regional jet” for the suggested routes throughout central and northern Australia.
“It has longer range than our 717s and it’s about half the size of our 737s, which means the economics work well on longer flights between cities and towns outside of the top five population centres.
“Instead of one or two flights a day with a larger aircraft, we can offer three or four flights a day on the E190, which gives customers in these cities a lot more choice about when they travel.”
The E190 offers 10 seats in Business Class and 84 seats in Economy, with a range of about 4,500 kilometres.
The major Australian airlines have long seen the benefit in collaborating with regional airline Alliance, though not without criticism.
In February 2019, Qantas bought a 19.9 per cent stake in the regional airline, a move that was flagged by competition watchdog the ACCC as anti-competitive.
The ACCC warned Qantas it was considering “enforcement action” for not first approaching the watchdog for permission to acquire the nearly 20 per cent stake in the airline.
The deal was potentially problematic because Alliance and Qantas are the only two operators for regular passenger flights between Brisbane and Bundaberg and Gladstone.
Qantas told Australian Aviation then that it rejected the notion the acquisition had any impact on competition and said its shareholding was “entirely passive”.
Qantas has since shown its interest in acquiring a majority stake in the regional airline.
Meanwhile, in November 2020, the ACCC granted interim authorisation for Virgin and Alliance to collaborate on 41 regional routes, a decision that Alliance competitor Regional Express called “irreversible” and anti-competitive.
However, Australia’s competition commission said sharing capacity and pricing information would result in a “public benefit” by helping Virgin to re-establish its network as borders open.
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