10-10-2020, 10:32 AM
Via the Oz:
COVID’s chaos a big opportunity for little airlines
![[Image: 5f83ad2051eb4d38aab19db1328ee43d?width=650]](https://cdn.newsapi.com.au/image/v1/5f83ad2051eb4d38aab19db1328ee43d?width=650)
Alliance Aviation has seen opportunity in the COVID crisis to expand its fleet, and will take delivery of its first Embraer 190 jet by the end of October. Picture: Supplied
Both Regional Express and Alliance admit the fleet expansions both airlines are undertaking were not even imagined at the start of 2020, which was to be Qantas’s year — marking the airline’s centenary.
Instead, Qantas has been forced to axe more than 8000 workers, ground dozens of aircraft, many indefinitely, and take on about $3bn more debt to survive the pandemic.
Virgin Australia is also shrinking its fleet and workforce but through the process of administration will at least emerge with fewer financial constraints than its larger rival.
Rex deputy chairman John Sharp said it was as if the COVID crisis had reset the industry and taken it back to square one.
“It’s like we were running a race and Qantas was way out in front and Virgin was some way behind and Alliance and Rex and all the other airlines were well back from there,” Mr Sharp told The Weekend Australian.
“All of a sudden a rope was thrown across the course and tripped up Qantas and tripped up Virgin, tripped up everybody and we all had to go back to the start and do it again.
“It means there’s a fresh start for the industry coming up and anyone could do well in this race.”
To that end, Rex was in the process of finalising finance for six Boeing 737s formerly leased by Virgin Australia to operate on the Golden Triangle routes of Melbourne-Sydney-Brisbane.
The new additions would expand Rex’s fleet to 50 aircraft, with the possibility of another four 737s by the end of 2021.
Similarly Alliance was awaiting delivery of the first of 14 Embraer 190 jets, taking its fleet to 57 aircraft by June 30.
Managing director Scott McMillan said expansion had not been part of Alliance’s plans for 2020, until the pandemic turned the world on its head.
“Our history has been punctuated by opportunistic aircraft purchasing,” Mr McMillan said.
“When we started Alliance we bought our first aircraft post-September 11, when aircraft values got smashed. We bought some more in the middle of the global financial crisis and again in 2015, and we’re doing exactly the same with the Embraer 190s.”
Unlike Rex however, Alliance’s sights were not set on the competitive regular public transport sector.
Mr McMillan said the demand for charter services had skyrocketed during COVID and he was convinced the new customers they had acquired would be permanent.
“A lot of people and a lot of companies have come off scheduled airlines services in the regions and on to charter, and realised how good it is. They’re not going back,” he said.
In a further twist to the market reset, pilots, engineers and cabin crew were returning to the regions where many began their aviation careers.
The Victorian-based owner of Sharp Airlines, Malcolm Sharp, said the halt in the attrition rate had been one of the few silver linings of the pandemic.
“It’s actually steadied the ship for what was probably not sustainable for the regional aviation industry,” Mr Sharp said. “We were forever in a training environment where we were bringing new people on, training them, only to see them move on to the larger airlines.”
Qantas declined to comment but indicated it would protect its market share. On Friday the airline announced it would add Sydney-Merimbula to its network in a blow to Rex, which operates the only service on the route.
Virgin Australia CEO Paul Scurrah has previously said the post-administration airline would likely lose some market share by cutting unprofitable routes. The carrier has already dumped seven destinations.
MTF...P2
COVID’s chaos a big opportunity for little airlines
Alliance Aviation has seen opportunity in the COVID crisis to expand its fleet, and will take delivery of its first Embraer 190 jet by the end of October. Picture: Supplied
- ROBYN IRONSIDE
AVIATION WRITER
@ironsider
Both Regional Express and Alliance admit the fleet expansions both airlines are undertaking were not even imagined at the start of 2020, which was to be Qantas’s year — marking the airline’s centenary.
Instead, Qantas has been forced to axe more than 8000 workers, ground dozens of aircraft, many indefinitely, and take on about $3bn more debt to survive the pandemic.
Virgin Australia is also shrinking its fleet and workforce but through the process of administration will at least emerge with fewer financial constraints than its larger rival.
Rex deputy chairman John Sharp said it was as if the COVID crisis had reset the industry and taken it back to square one.
“It’s like we were running a race and Qantas was way out in front and Virgin was some way behind and Alliance and Rex and all the other airlines were well back from there,” Mr Sharp told The Weekend Australian.
“All of a sudden a rope was thrown across the course and tripped up Qantas and tripped up Virgin, tripped up everybody and we all had to go back to the start and do it again.
“It means there’s a fresh start for the industry coming up and anyone could do well in this race.”
To that end, Rex was in the process of finalising finance for six Boeing 737s formerly leased by Virgin Australia to operate on the Golden Triangle routes of Melbourne-Sydney-Brisbane.
The new additions would expand Rex’s fleet to 50 aircraft, with the possibility of another four 737s by the end of 2021.
Similarly Alliance was awaiting delivery of the first of 14 Embraer 190 jets, taking its fleet to 57 aircraft by June 30.
Managing director Scott McMillan said expansion had not been part of Alliance’s plans for 2020, until the pandemic turned the world on its head.
“Our history has been punctuated by opportunistic aircraft purchasing,” Mr McMillan said.
“When we started Alliance we bought our first aircraft post-September 11, when aircraft values got smashed. We bought some more in the middle of the global financial crisis and again in 2015, and we’re doing exactly the same with the Embraer 190s.”
Unlike Rex however, Alliance’s sights were not set on the competitive regular public transport sector.
Mr McMillan said the demand for charter services had skyrocketed during COVID and he was convinced the new customers they had acquired would be permanent.
“A lot of people and a lot of companies have come off scheduled airlines services in the regions and on to charter, and realised how good it is. They’re not going back,” he said.
In a further twist to the market reset, pilots, engineers and cabin crew were returning to the regions where many began their aviation careers.
The Victorian-based owner of Sharp Airlines, Malcolm Sharp, said the halt in the attrition rate had been one of the few silver linings of the pandemic.
“It’s actually steadied the ship for what was probably not sustainable for the regional aviation industry,” Mr Sharp said. “We were forever in a training environment where we were bringing new people on, training them, only to see them move on to the larger airlines.”
Qantas declined to comment but indicated it would protect its market share. On Friday the airline announced it would add Sydney-Merimbula to its network in a blow to Rex, which operates the only service on the route.
Virgin Australia CEO Paul Scurrah has previously said the post-administration airline would likely lose some market share by cutting unprofitable routes. The carrier has already dumped seven destinations.
MTF...P2