QantasLink deal to NJS

The Western Australian aviation skies are set for a significant colour change as a result of last Friday’s decision to award National Jet Systems (NJS) the contract to operate Boeing 717s for QantasLink on intra-WA routes and around Australia.

After a tough bidding process NJS edged out Qantas’ low cost airline Jetstar, which has used the 717s to launch its very successful head-to-head battle with Virgin Blue, which has sent that airline’s share price into a spiral.

Jetstar is now replacing the 125-seat 717s with the larger 177-seat A320s and the airline plans to extend its operations across the Tasman to New Zealand next year.

The first of eight 717s in QantasLink colours will arrive in Western Australia in late July and take over from the 65 to 75-seat BAe 146 on routes from Perth to Broome, Kalgoorlie, Karratha, Paraburdoo, Port Hedland and Newman. The 717, which will be reconfigured for just 115 passengers, will also operate from Alice Springs.

While the Boeing 717 can trace its pedigree back to the DC-9, which first flew in 1964, it is virtually a new aircraft. It retains the rugged DC-9 fuselage – considered one of the toughest ever built – but has latest generation, super quiet Rolls Royce-BMW engines and an all-new, state-of-the-art fully computerised cockpit. It has a perfect safety record.

NJS will continue to operate its own fleet of 13 BAe-146 jets for years to come as there are many airports in this state and nationally that are not suitable for the 717 or larger 737.

The effect of NJS’s hard-fought win on the sometimes bitter and always cutthroat Western Australian aviation market is far reaching.

Clearly Qantas wants to continue its 14-year association with NJS, which in its own right has virtual stranglehold on the extensive jet fly-in-fly-out operations associated with the mining industry in WA and around Australia.

Qantas CEO Geoff Dixon said that in the end it was “the strength of the relationship” and the fact that NJS was a “highly respected provider of aviation services to Australian corporate and government organisations” that won it the contract.

That relationship may be developed further with the State Government seeking tenders for what are termed WA turbo-prop routes. This contract is currently handled by Skywest Airlines for routes to destinations such as Albany and Esperance as well as some Goldfields towns.

Typically, these routes cannot justify two operators of jet aircraft.

Qantas executive general manager subsidiary businesses, Narendra Kumar, told WA Business News that “QantasLink had registered its interest in the tender process”.

“We are in the evaluation stage and are seeking the facts and figures,” he said.

Local observers suggest that there are some facts and figures that make for some interesting dynamics that may result in QantasLink and NJS jointly tendering for the turbo-prop routes.

QantasLink has just ordered eight Dash-8-400Q turbo-props for delivery early in 2006 for eastern states operations, which will release a number of the smaller 36-seat Dash-8-200s, while NJS operates two Dash-8-300s for fly-in/fly-out operations in WA.

With NJS’s own Dash-8 capability, mounting a passenger operation in WA for the turbo-prop routes would be straight forward. Adding appeal to any bid would be NJS’s spare jet capacity on weekends – peak tourist time for the south-west routes.

The value to WA tourism of a QantasLink bid would be considerable with full  ainterlining of fares from the eastern states plus earning and usage of frequent flyer points.

Qantas had struck a limited interlining deal including frequent flyer points with Skywest Airlines but that deal foundered when Skywest launched its Broome jet service and attempted – largely unsuccessfully – to poach Qantas’ corporate customers.

The prospect of Skywest Airlines retaining the routes while it was WA owned were considered strong by observers, but now that the airline is majority owned by Singapore based CVC, that advantage has waned. It is expected that tenders will be called after the state election.

NJS managing director Daniela Marsilli told WA Business News that adding the 717 to the fleet would provide greater flexibility to meet growing market needs.

 “The B717’s will present a new and exciting era for this company, which has built its reputation on operating a diverse fleet of aircraft for specialist roles,” she said

A delighted Hugh Davin, NJS business development manager, said that with the 115-seat 717, 65 to 75-seat BAe146 and 36-seat Dash 8-300, -800s the NJS/QantasLink group had solutions to virtually all major regional passenger and contract requirements.

“Winning the QantasLink 717 contract is the result of an enormous effort put in by all the NJS staff over the past three months,” he said.

The unsuccessful bidder Jetstar told WA Business News that Perth was still on its radar. The low-cost Qantas subsidiary had indicated that winning the QantasLink contract would influence its launch of Jetstar transcontinental flights as it would have ground handling and management in place in Perth.

However, manager corporate relations Simon Westaway said the airline was currently considering routes to Perth and it was in the business plan.

“Our aircraft are committed through October and we are currently evaluating options,” he said.