Originally Posted by
TWOTBAGS
I think some of you guys are missing the point of a business particularly Qantas' regional ops and is Alliance really that good.
The easier to handle part is Alliance, and the answer is pretty good if you are a shareholder and interested in the business.
For years it has been well known that the F100 has an end date at some point and that aircraft obsolescence has proven that Australia is the Fokker graveyard of the world. Several manufacturers put on their dog and pony shows a few years ago for the QF execs to flog their new toys and it was quietly pointed out to them that in the QF "regional" business model there was no way that the business model made money with new airframes. High capital costs, long thin routes, reduced revenue sectors per day, and price sensitivity simply dictated that there was not going to be any order for hot new jets from Montreal or the jungle.
Fast backwards to the 90's and the noughties...... Eastern, Sunstate were keen to get jets just like southern....... until southern got shirt fronted and Cobham took on the 146's. Then we had Gerry and no-pulse that morphed into Jetstar and the 717 that worked out economically but had dreadful engine TBO's but needed a home...... off to Cobham they go. The reason is one of the oldest in the book, divide and conquer keep it at arms length. The Qlink pro-prop team got all hot under the collar about jets again and everyone was played off against each other both internally and externally. All the while Frightwest got deep sixed by Ansett and the son in law and the chairman rebirthed it as Alliance.... how good is that.
A few years later we need to go back to Coward St when AN fell over and while Sept-11 kicked international in the groin for a bit QF yield management were ready to pop the champagne corks as they now had 90% market share, (aka the purpose of the "business") Joycie is then apoplectic when the ACCC set up camp and rain on his next bonus.
Using the time twister from the TVA we are now back into the last lets call it a decade. Network becomes a gift horse for the big Q to get stuck into Skywests once dominance and to tease Stan while at the same time Alliance is sitting there putting the Dirty little ones out at rock bottom prices to generate revenue on low CapEx equipment. SkyW becomes VARA, Stan is still asleep at the wheel, Network has it puppet masters trying to dump old 320's and Alliance is getting bigger by the month.
QF sees an opportunity and cuts VA grass by taking a nat under 20%, Cobham are under pressure to get out of marginal profitability contract ops during their EU takeover opportunity and QF to save their own skin take over the crew liabilities (yes that what it's know as) in line with the existing airframe liabilities. Along comes COVID, VA coughs and almost drowns on their own vomit, and low and behold QF now accidently dont have a method to divide and conquer because everyone works for them.
So now we have the same thing, the group has 90%+ market share in the regions and need to ensure that they are at least seen to be doing the right thing by John and Jane Citizen and the ACCC yet they really do control the lot. Enter the 190 post COVID.
The Capex is now minimum, to the point where you can by 2x 190's for less than what Q was paying for 1x Q400, Getting mainline back to work was one thing, however making the 737's work harder to cover a lack of Dom A330s and let s call it "new opportunities" aka make Bain really work for their money. Faster than an FO on a promise a plan is hatched that puts all the Capex and risk on Alliance and make themselves look good at the same time by adding network opportunities Bonus all round..... except that they are still on the government tit.
So instead of bitching about who's flying what for whom on how much, who really gives a rotund rodents rectum. There are literally hundreds of capable Australian crews that would love the opportunity to get back in the seat but if they all want to be a all LindaEvangelista about it then I'd suggest they enjoy their time on the front 9 and lets see a few businesses do exactly what they are meant to. If rumor has it right then the first 30 jungle jets are just the tip of the iceberg and the days of the dirty little Fokker may be somewhat limited, with the 100's becoming organ donors to keep the 70's plodding along.
How good is Alliance..... right place, right time, first mover advantage and market opportunity. Pretty darn good right now i'd suggest.
Thank you for the summary - well written.