Virgin Australia hands regional routes to Alliance

Australia’s Alliance Airlines says agreements to operate services for Virgin Australia will boost its flying by 45 per cent as it continues to diversify operations after the end of the nation’s resources boom.

Brisbane-based Alliance announced Thursday that it had entered a “heads of agreement” with Virgin that will see it take over four Queensland regional routes July 17 as Australia’s no. 2 carrier halves its turboprop fleet.

Virgin’s decision to withdraw its own planes from Queensland regional routes is part of a previously announced plan to optimise its fleet and network as it struggles to boost profitability. This includes reducing its ATR fleet of 14 aircraft to six 72-600 aircraft from the middle of this year.

It will now codeshare with Alliance on routes between Queensland capital Brisbane and regional Queensland centres of   Bundaberg, Gladstone and Moranbah as well as Port Macquarie in neighbouring New South Wales.

Alliance said it would launch the services from July 17 using faster jet aircraft. Any passengers booked with Virgin on these routes would be reaccommodated.

It will also operate flights for Virgin Australia on a “wet lease” basis (where the lease includes the crew) for 12 months on routes between Brisbane and the regional destinations of Mt Isa, Cloncurry and Rockhampton.  These, and a continuing Brisbane-Emerald service, will still be operated as Virgin Australia services.

“The operation of the regional Queensland and wet-lease flights will acquire an additional three operational aircraft that have already been acquired from Austrian Airlines,’’ Alliance said in a statement to the Australian Stock Exchange. “In aggregate, the additional services announced above will increase the company’s fleet by 11 per cent and total flying activity by up to 45 per cent.’’

In addition to regular public transport flights, Alliance operates resource company and other charter flights using a fleet of Fokker 50 turboprops and F70 LR and F100 jets.

It reported a 77.5  per cent increase in net profit, to $A8.7m,  for the six months to December 31, 2016, as it broadened its revenue base to include areas such as tourism and parts sales as well as aircraft sales and leasing.

It has applied for approval to join forces with Virgin Australia Regional Airlines on tenders for corporate fly-in, fly-out contracts but this was rejected in a draft determination by the Australian Competition and Consumer Commission in December.

The ACCC has yet to make a final decision.