Qantas Bets Big On Domestic: Ups Embraer E190 Fleet

From zero to hero in about six months, the Embraer E190 is fast finding favor at Australian airline Qantas. On Thursday, Qantas announced it was expanding a deal with local wet-lease airline provider Alliance Airlines that lets Qantas fly Alliance’s Embraer E190 regional jet aircraft.

Alliance QantasLink Embraer 190 (3d) flying LR
Qantas is increasing its Embraer E190 options. Photo: Lila Design

Qantas boosts its Embraer options

Earlier this year, Qantas said it had signed a three-year deal with Brisbane-based Alliance Airlines to wet-lease three E190s. Qantas said the Embraers were a perfect fit for its mid-size regional jet routes. The first Embraers began flying for Qantas in May.

In May, Qantas also announced it would be exercising the option to take five more Embraer E190 jets, with plans to base them at Adelaide Airport (ADL). The original deal gave Qantas the option to take up to 14 Embraers. Yesterday, Qantas renegotiated the deal. Qantas now has the option to take 18 Embraers.

“Since travel demand started to recover about a year ago, our strategy has been to think creatively about how we use our fleet to add capacity back in, generate revenue, and get more of our people back to work,” said Qantas CEO Alan Joyce on Thursday.

“Expanding our long-standing relationship with Alliance gives us access to a different aircraft type without spending any capital. The E190 is perfect for connecting capital cities and regional centers. Its size, range, and economics have already let us start seven new routes that wouldn’t have worked with our existing fleet.”

Alliance QantasLink Embraer 190 (3d) ramp LR
Alan Joyce says Qantas’ strategy has been to think creatively about how it uses its fleet. Photo: Lila Design

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Embraer E190s began flying for Qantas in May

On Thursday, Qantas teased about increasing frequencies on some domestic sectors as a result of the deal. However, beyond boosting flights on the Canberra – Adelaide run, the airline did not provide further details.

Since late May, Qantas passengers have seen Alliance’s Embraers pulling up at Qantas gates in Adelaide, Alice Springs (ASP), and Darwin (DRW) as the planes began flying between these cities. It marked the first time Qantas had deployed regional jets on second-tier routes, despite many airlines elsewhere doing so.

Passengers are generally responding favorably to the Embraers, with many liking the increased frequencies on the routes the planes now fly. So far, the Alliance Airlines Embraers are operating the Qantas flights using aircraft still painted in Alliance’s colors and Alliance flight crew dressed in Qantas uniforms.

But the new deal will see Embraers painted in Qantas colors. By doing so, Qantas will build a stronger link between the aircraft type and the airline. Until this year, Qantas had never used Embraer aircraft on its services.

Qantas says using Embraers will free up its Boeing 737-800s to fly elsewhere. Photo: Getty Images

Qantas wants to focus on the positives

While the Embraers are not new (they come from Copa Airlines and American Airlines), insiders see the decision to fly the planes as a clever way to right-size the fleet and expand services without high upfront costs.

Qantas already has a 20% stake in Alliance Airlines. While the two airlines have an arm’s length working relationship, Alliance Airlines has gradually moved into regular passenger flights in addition to its core charter and fly-in-fly-out (FIFO) work.

Some say this is a deft move by Qantas to subdue Alliance’s scheduled passenger service aspirations. Qantas is soaking up Alliance’s spare planes and tipping revenue into Alliance Airlines. It is a win for both airlines. However, there are some concerns that deals like this can undermine competition.

But Qantas prefers to focus on the positive outcomes. The airline says taking the Embraers mean frequencies on existing routes will increase. Boeing 737-800s previously used on routes like ADL-ASP and ADL-DRW are now cut lose to boost capacity elsewhere.

“It puts the Group in a good position to deliver for the traveling public,” says Alan Joyce.