Virgin Australia Inks Long Term Agreement With Alliance Aviation Services

18th Aug 2016

Virgin Australia and Alliance Aviation Services are taking their proposed strategic partnership to a new level by signing a long-term deal. The strategic partnership between the two carriers, announced back in February this year, will now include a charter partnership.

In addition to helping each other grow their charter services, the two airlines have also agreed to work together on some other things. Virgin Australia and Alliance Aviation have also agreed to provide and procure services for each other. This includes procuring aircraft, maintenance, spare parts pooling, ground handling services and customer services.

Speaking about the new deal with Alliance Aviation, Merren McArthur Chief Executive Officer at Virgin Australia Regional Airlines (VARA) said:

"We are looking forward to partnering with Alliance to build upon the strengths of each airline and to grow our charter businesses."

In a statement on Thursday, Alliance Aviation Managing Director Scott McMillan said:

"Today's announcement, in conjunction with our acquisition of the Austrian Airlines Fokker fleet in November 2015, continues our transition into a broad based aviation company that offers an extensive range of services that will have the potential to significantly grow our revenue base over the coming years."

McMillan also said that this partnership means both airlines would be "better placed to compete for charter tenders, with the ability to offer a wider range of aircraft, connectivity, services and facilities".

Back in May this year, VARA CEO McArthur told Australian media that Virgin and Alliance have complementary businesses. He pointed out that VARA mainly operates in Western Australia, while Alliance's bases are in South Australia and on Australia's east coast.

Alliance Aviation Services and Virgin Australia Regional Airlines both operate Fokker 100 aircraft. In November last year, Alliance acquired the entire Austrian Airlines' Fokker fleet, including 15 Fokker 100s and six Fokker 70s for a US$9.5 million payment in cash and issuing a set of new shares to Austrian Airlines worth US$5.5 million.

In addition to Fokkers, VARA also operates Airbus A320s, while it also had eight Fokker 50s until February, but has decided to sell these.

The proposed strategic partnership is now awaiting approval from the Australian Competition and Consumer Commission (ACCC).