Alliance Aviation Services Limited

ASX:AQZ

Alliance Aviation Services Limited

ASX:AQZ
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$2.60 (-1.9%)
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#204
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Forum Topics AQZ AQZ Wet Leasing
Dominator
Added 2 years ago

@Timocracy to answer your question about the arrangement. There is probably a few different variations to the arrangements but in simple terms Alliance provides has what is normally termed as "wet leasing" to both Qantas and Virgin. Which means Alliance is the operator of the flight with an Alliance aircraft and staff provided for Virgin or Qantas for a fixed price. Virgin and Qantas sell tickets just like any other flight and make the difference between the fares and the cost of the wet leasing. It is different to a codeshare which you might see on international or connecting flights. So an Alliance pilot could be flying under a Virgin ("Velocity") callsign one day and Qantas the next.

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Timocracy
Added 2 years ago

Very interesting idea to run a low-margin business on even lower margins but I guess it works!

6
Dominator
Added 2 years ago

At first glance it doesn't seem profitable but I should have added the reason that I think it works well for both parties.

  • Alliance - provides a fixed price service so they know they can make money from providing the wet lease. No risk of not selling enough tickets.
  • Virgin/Qantas - provide a service with the right-sized aircraft for a known cost. For example, Virgin only has Boeing 737s (180ish seats) . If they find a route they think can be profitable with an 80 seater capacity daily. They will wet lease from Alliance who has the right sized aircraft for the route. Virgin doesn't have to go through the very costly exercise of adding another type to the fleet.
  • Virgin/Qantas - Wet leasing allows them to have surge capacity by adding flights during busy times or put a smaller aircraft on during quiter periods. Or just simply when they can't get there hands on aircraft quickly enough wet leasing fills the gap.

7