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Alliance Airlines: More planes to fly-in, fly-out

Alliance Airlines: More planes to fly-in, fly-out

Not an airline we hear much about. It doesn’t fall into the mainstream commercial category in Australia, but occupies a charter niche market.

Background

Alliance Airlines, founded in 2002, mainly services the resources industry, providing fly-in and fly-out (FIFO) charter services to remote worksites in Australia. Because it is not primarily a ‘consumer’ airline, it gets overlooked as a serious playerin the Australian Airline market. It has recently expanded into other areas of charter flying, including government contracts and tourist flights, including winning subsidies for flights between Brisbane and the Whitsundays from the Queensland government.

It’s a pandemic, lets buy some aircraft!

Bucking the industry trend which is currently focussed on sending planes to desert locations for storage or canibalisation, or negotiating delayed deliveries, or in some cases cancelling orders, Alliance has just raised AU$112 million (US$80 million) to buy new aircraft. It has its heart set on expansion.

Current and Future Fleet

Alliance currently runs (according to Wikipedia) a 41 aircraft strong Fokker heavy fleet:

  • 5 x Fokker 50 turboprop
  • 11 x Fokker 70 LR jet
  • 25 x Fokker 100 jet

Recent disclosures show them having 38 aircraft at the end of financial year 2019, so regard these figures as approximate.

Alliance sees its potential expansion needing narrow body jets with a capacity around the 100 passenger mark.

However, instead of purchasing more planes from Dutch manufacturer Fokker, the new aircraft will be coming from Brazillian based manufacturer, Embraer.

Given their need for narrow-body models seating ~100 passengers, that looks like the E190, with a single class, and a pitch of 29 inches that can seat 114. Alternately the E195 can carry about 124 passengers at a similar pitch.

The list price for these planes is US$50 million-ish, so given their US$80 million capital raising, I presume there is some leasing arrangement, especially since the purchase is expected to include some General Electric CF34 engines and options to add in a flight simulator.

Time to buy

If you have the money this is definitely the time to be buying aircraft. Manufacturers are desparate for sales, when most of their customers are delaying or cancelling their orders. Indeed, you might even be able to get one ‘off the shelf’ instead of having to get in the queue for a manufacturing spot. Maybe even a 2for1 deal!

Embraer E190

2PAXfly Takeout

It’s looking like the niche airlines are weathering this COVID-19 storm the best. In Australia, it is REX, the regional airline with ambitions to expand into capital city routes, and the charter operator Alliance that are walking the floor of new plane showrooms of Boeing and Embraer with money in their pockets.

By contrast, Qantas is parking a lot of its current fleet, delaying any orders it can, and the in-administration Virgin Australia, looks like it will renege on a bunch of A330 leases, as it is reborn later this month in the hands of purchaser Bain Capital.

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