A significant advantage of the AQZ business model is that most...

A significant advantage of the AQZ business model is that most flying is undertaken with a direct pass through of fuel costs to the customer (except for RPT services, which are only a small proportion of revenue). Therefore changes to fuel costs don't have a material short term impact on profit, other than suppressing client demand as the overall cost increases. Contact flying in the resources sector will be impacted by a range of factors, with the largest being commodity prices.

If fuel prices remain elevated over the longer term, less fuel efficient aircraft become relatively less attractive. The Qantas fleet renewal is some years away, so current fuel costs may not be relevant a few years down the track.

If Qantas reduce the use of AQZ aircraft under the wet leasing arrangements in say three years, this opens up additional capacity for AQZ to chase new work. Looking at the average revenue per flight hour in the results announcements, contract flying produces greater revenue per flying hour, so maybe less reliance on wet leasing overtime will be beneficial to AQZ’s bottom line.

There are suggestions of labour shortages in the resources sector. Does this result in more flights as AQZ’s customers are prepared to fly staff greater distances to secure them? For example, with the BHP Olympic Dam site, in addition to Adelaide, AQZ is now providing direct flights in from both Brisbane and Perth.