Qantas is embracing the Embraer E190. In a just-announced deal with Alliance Airlines, Embraers will start flying for the QantasLink brand in mid-2021. Alliance Airlines has recently taken delivery of Embraers to supplement its fleet of Fokkers used on charter, resource, and regular passenger service work. Qantas will initially access three of those E190s and base them in Darwin and Adelaide.
“The E190 is a perfect mid-size regional jet for routes like these ones in 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 centers,” said CEO of QantasLink, John Gissing.
QantasLink primarily operates regional and skinny flights in Australia that connect to mainline Qantas flights in the bigger airports. QantasLink presently has 76 planes in service, ranging from DHC-8 Dash 8s to Boeing 717s and Airbus A320s.
The initial Embraer deal runs for three years. The aircraft is expected to start flying for Qantas in June, but Mr Gissing notes the exact start date will depend on the rate of recovery in travel demand. There is also the option to secure an additional 11 Embraers, but QantasLink can also “switch off” capacity depending on market conditions.
Alliance Airlines has recently purchased 27 Embraer E190s. They are former Copa Airlines and American Airlines planes. So far, just three have landed at Alliance’s Brisbane HQ, with the remainder due over the next couple of years.
With Qantas already owning 20% of Alliance Airlines and reportedly keen to increase its stake in it, the Embraer deal is a natural fit. Less natural is Alliance’s work (including wet leases) with Qantas’ arch competitor Virgin Australia. To date, Qantas has kept its stake in Alliance Airlines at arm’s length, giving the smaller airline the airspace to do what it does well – make money. Today’s announcement draws on that under the radar but longstanding relationship.
“We’ve worked with Alliance for many years, and they have flown literally thousands of flights for Qantas over that time, with the same service and standards that customers expect when they buy a Qantas ticket,” said the QantasLink CEO.
While the deal will see up to half of Alliance’s E190 out on lease, making money for Alliance Airlines, it’s also a canny move by Qantas. Outside the big east coast airports and key regional hubs like Cairns and the Gold Coast, finding the rightsized aircraft for smaller capital city airports and centers like Alice Springs can be tricky. The Qantas workhorse, the Boeing 737-800 can be too big for the route. To date, Qantas has never had smaller regional jets to complement the 737 product.
This leasing deal addresses that gap. Fitted with the standard two-class Qantas product, it’s a good fit for destinations like Alice Springs, Uluru, and Darwin. The QantasLink E190 will offer 10 seats in Business Class and 84 seats in Economy, with a range of about 4,500 kilometers. As more E190s come into service with Qantas, they’d have to be looking at airports like Hobart and Launceston.
Mr Gissing says the E190s opens up a lot of possibilities for Qantas. He’s right about that. It’s a clever deal and a super interesting move.
What do you think? Is Qantas making the right move leasing the E190s? Post a comment and let us know.
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