Interview – Laurie Jones & David Price

JS: A lot of people are moaning gloom and doom about general aviation. What is your feeling about that area at the moment?

LJ: We are bullish. Our general aviation activity is one of the most promising that we have. Its performance last year was very good indeed and 1981 will be up very considerably in the volume of sales.

Our sales are almost restricted by the number of King Air Super 200s and other King Airs we can get. Last year was the largest selling ever and 1981 should surpass it by a very substantial percentage, both inside and outside Australia but Australia in particular.

We also sold an incredible number of second hand aeroplanes which is not our business, but they happened to be trade-ins. Our overall sales total was far and away the best we have ever had – 11 sold in 1980 and eight delivered. This year we expect to sell about 50 per cent more than last year.

JS: The King Air is obviously the star seller.

LJ: We have just sold our first F90- the slightly smaller version of the King Air designed primarily for the executive market- and we expect to sell any we can get our hands on this year. King Airs in their various forms, from the 90 series through to the 200 series, are the important aeroplanes to us. We are holding orders for quite a lot of King Airs at this moment – two specialist photographic aircraft for Indonesia, for instance.

I handed over to the Minister for Transport in Malaysia an airways facility checking aeroplane which is probably the most sophisticated of its type.

It has been about 18 months in building because it is the first-off system of its kind which was specified by the Malaysians under the guidance of Australia DOT people to some extent. It will now be adopted by the FAA in the US as their standard fit.

This was a very complex aeroplane, full of computers and other things. It gives an instant readout of everything and you can correct the facility such as DME or VOR as you go. Any deviation shows on a screen, as well as the usual piles of EDP paper- you wonder how the aeroplane can carry the amount of paper it churns out. You simply call up the operator monitoring the thing on the ground and tell him to twitch up whatever is required and you read the correction as you fly along. It all happens in real-time.

JS: What about the bigger versions of the King Air, with the two pilot rule coming up. I understand there are stretched versions being developed.

LJ: There are. The pressurised King Air 1900 is coming down the track. The unpressurised Model 99, which first hit the market some years ago but was dropped for some time, is coming back in a modified version and will be on the market fairly soon.

We hope to be able to deal with this need for a larger aeroplane on the commuter side for about 19 passengers. We see the 90 and 200 series going more and more into the specialised duties and executive roles, with larger aeroplanes coming into charter and commuter operations.

JS: On a sourer note, there has been a series of incidents locally over the last 18 months involving Super King Airs, most of them quite obviously involving no fault at all of the aeroplanes. But do you have any concern at all that this could lead to a DC-10 syndrome over the image – however unjustified – of the aeroplane?

LJ: None whatsoever. It has been quite obvious throughout that there was no problem with the aeroplane. The answer is clearly in the Beech order book. All distributors are on a quota. We cannot get the number of Super King Air 200s that we would like. That applies worldwide.

It is used by so many heads of state throughout the world. In our area, the Prime Minister of Papua New Guinea has one. The Premier of Queensland has one. The US Ambassador has one. Over 50 heads of state operate King Airs as their personal transportation.

JS: What about the stability of the commuter airline market. There are always movements in that area and with one operator striking trouble there may be a considerable number of secondhand King Airs on the market. What is your perception of the commuter market generally? Do you see it growing instability, with a reduction in the number of airlines, and what effect do you see it having on sales of your product?

LJ: I believe the commuter industry will stabilise. It has always inherently had a degree of instability, in all honesty. I believe it will stabilise, probably with fewer operators using larger equipment.

The very pressures on airfields throughout Australia are going to make it necessary for fewer flights and, therefore, with an expanding commuter requirement, it will drive you into the larger aeroplane.

For instance, we are holding letters of intent for the de Havilland Canada Dash 8 aircraft for delivery around 1985.

We can see from our point of view a growing market for aeroplanes like the Beechcraft 1900, the Twin Otter, because of the additional seating capacity, and we see Dash 7 and Dash 8s coming into the system. I think there will be a shakeout where some of the smaller people get out of the business and I believe we will see the larger commuter aeroplanes coming in, simply to relieve the traffic situation at aerodromes and also to deal with increasing numbers of commuter passengers.

JS: What about the rest of the Beech range? I gather you have done well with sales of the Duchess. Do you see any trend among buyers of medium twins and higher-performance singles? I gather many private operators are moving away from twins to higher-performance singles as a fuel economy measure.

LJ: The market for the large horsepower piston engine twin has definitely slowed down. People are conscious of fuel costs and are being more critical in their evaluation of new aeroplanes. We have still been selling quite a few Barons of various models but we can see a definite swing into something like the Duchess, where you have twin engines but a much more economical aeroplane to operate in this day and age. We sold 21 Duchesses last year.

I think that is inevitable until manufacturers come along with more fuel efficient engines – which have been slow in coming in the aviation field.

We see the advent of turbine-powered smaller aircraft. At present, the smallest turbine power aeroplane we have in our range is the F90. We think we will see the introduction of smaller turbine-powered aircraft.

There is a move to retrofit aeroplanes of the Queen Air type and smaller with turbine engines.

We are the representatives in Australia and Asia for Soloy Conversions, which is concerned at this point with converting piston-engined helicopters to Allison turbines. Soloy’s program is to develop conversion schemes for a wide range of general aviation aircraft. This is going to be the pattern of the future, we think.

JS: Do you see any problem with the private pilot, who is used to a relatively simple piston engine, upgrading to turbines, where it is easier to do nasty things?

LJ: It is easier to do nasty things but on the other hand we have seen a lot of people adapt very readily. We have sold a lot of turbine-powered aeroplanes over the years. We have been responsible for seeing helicopter pilots move from piston engines to the Allison turbine engine.

There have been occasions where people have not quite understood the different operating techniques. This is the reason we have an engine training school here to give pilots a basic turbine course and then a specialist turbine engine course on the particular engine they are transferring to.

JS: What are the prospects for the de Havilland Canada range? The Dash 7 seems to have been slow to start so far in this area.

LJ: I think on de Havilland Canada you should talk to David Price. The Dash 7 has been, we felt, slow to start, but one qualification. We were not even offered aeroplanes for sale in the early stages. De Havilland Canada took a very wise decision. Because it was a relatively new concept they determined that the first 25 or 30 aircraft should be sold on the North American continent if at all possible so that they would be within the control and technical support of the factory.

Any attempt we made to encourage them to help us promote sales out here did not receive much sympathy. One cannot but agree with their policy. It is very wise, when you are putting a relatively sophisticated aeroplane into the hands of a relatively unsophisticated operator.

JS: Is the Dash 7 purely an F-27 replacement or does it have a much broader role, and what is the future of the large turbo-prop market generally?

DP: The role of the Dash 7 has been somewhat misunderstood by the industry as a whole. We are delighted, of course, to get three into Air Nuigini, with the first two to start operation later this year. Air Nuigini also has two options.

I think once it gets into operation the true characteristics of this remarkable aeroplane will be adequately demonstrated to the public. The ability of an aircraft, carrying up to 54 passengers, to utilise airstrips as short as 2500 feet under hot and high conditions of the worst kind is a significant step forward in aircraft technology.

It is not only an F-27 replacement, It is a very much more capable aircraft. One of the things I see with the Dash 7 for the future is the operation into and out of short stub-type runways such as the possibility of utilising Mascot where you have a traffic problem building all the time with the operation of many little commuter operators. The Dash 7, if it was coming from one focal point such as Newcastle into Sydney, would provide a more than adequate service on a frequency basis and replace many of the smaller commuters operating from that area.

We were delighted to sell three new Twin Otters to Aero Pelican but in time I see that sort of operation going down the Dash 7 path.

JS: You see places like Newcastle becoming a sort of hub for smaller commuter operators?

DP: I believe it should become a hub and I also believe the DOT should look very seriously at what is going on in the US with Ransome Airlines, and use of stub runways at Washington and Philadelphia airports.

JS: They are actually using conflicting runways, I think.

DP: Intersecting, yes. I know that Lan Lesley of the Department of Transport has had a look at the operation of Ransome and has been highly impressed.

JS: What about the Dash 8. That seems to have been accepted with alacrity by a number of operators in Australia.

DP: Yes, I think it could be an ideal aircraft for both the larger, more rationalised commuter airlines, and indeed the TAA or Ansett operation. It slots in very well underneath the jets and has the right sort of capacity-32-36 passengers with about 300 cubic feet of baggage capacity, which is more than an F-27 or HS748. Its high-wing design is attractive; with low-pressure tyres and a typical de Havilland Canada performance capability of landing on 3000 ft under hot and high conditions. But also, this time, the cruising quite fast-over 310 miles per hour.

JS: A number of other aircraft manufacturers are working towards introducing new aircraft in that bracket. Do you feel yours is more attuned to the Australian situation?

DP: As well as STOL and low-pressure tyres for rough strips, prop clearance is terribly important in Australia, as witnessed recently with the Metro problem in the Northern Territory. It has an airline-type cabin with virtually the same dimensions as the Dash 7 ‘which, in itself, is wider than the F-27 or HS748.

JS: What about the Twin Otter? That seems to be soldiering on quite happily.

DP: De Havilland Canada is producing seven Twin Otters a month still. They are now into the mid-800s in production. They see a continuing life for the aircraft. For Australia, we think the Twin Otter still remains one of the best aircraft for an emerging commuter operator to purchase. It carries 19 to 20 passengers very economically out of short fields. People always felt the Twin Otter was a relatively slow aircraft. We did some studies only just recently in major detail of the Twin Otter versus the Metro over the Northern Airlines route network.

The better payload of the Twin Otter over that network is very significant and indeed there is virtually no difference in the time and no runway length problems.

JS: What does a Twin Otter sell for compared to a Metro?

DP: It is about $1. 1 million. The Metro is very much more expensive. The important thing today is fuel cost per seat kilometre and the Twin Otter is very fuel efficient, even in today’s society.

JS: What is the relationship between the Twin Otter and the Nomad? Some people regard them as being in competition.

DP: I have never regarded that to be true. You can bracket the Islander, Nomad and Twin Otter. The Islander is down the bottom of the scale with nine or 1 0 passengers, the Nomad 12 to 16 and the Twin Otter 19 or 20. They all fulfil a market and the Nomad was in fact designed to slot into the middle.

JS: What about the Nomad, for which you are an agent in most of Asia, but not in Australia? There have been a lot of different opinions voiced about the Nomad. What about the aircraft itself? Some pilots like it. Many do not. Then the situation in which you have to work to market the aircraft?

LJ: I took the trouble to fly the Nomad myself just to see what I thought of it and I found it a very nice aeroplane to fly.

JS: Did it have any particular characteristics you think some pilots might object to?

LJ: l do not think any experienced pilot would find anything he objected to in it. The only thing he might find – and this does not apply in normal commercial operation – is that if you are operating the aircraft to its extreme STOL limitation in a military role – then you do get different characteristics, just as you do with a Caribou and a Buffalo and so on. Any STOL aeroplane, when operated to the edge of its performance, requires a lot of flying.

The main point about the Nomad is that where it is being properly serviced and maintained, as one would expect it to be, it is proving to be an astonishingly good aeroplane. The aircraft flying with the Indonesian Navy have been in service for a long time and they have an excellent and outstanding serviceability record. They have no problems even worth thinking about and they are probably the longest-serving, largest fleet of Nomads apart from the Australian Army.

The hardest-working Nomads we know of are the three with Trans Micronesian Airways. They have the highest time Nomads in the world and again they have a remarkable trouble-free record. They had some of the normal teething problems you have with engines and airframes but these days they are really clocking up the hours.

The majority of the stories one has heard about Nomad have been due to prejudice against an Australian product, or inadequate servicing. Where we have watched military applications, in the case of the Indonesians with a very substantial fleet, and the straight intensive commuter services being operated by Trans Micronesian, the aeroplane is performing extraordinarily well.

My understanding from our people who were at the US helicopter convention recently is that the US operators are very happy with it indeed. Half of Nomad production is now going to the US and the aeroplane is being well-accepted over there.

Our problem with Nomad is lack of production. We have a number of major prospects in Asia at present. The Asian scene is different to Australia. We normally sell aeroplanes in numbers there, not just one-off as you tend to do in Australia.

We have some requirements in Asia numbering in the 20s and 30s. Our biggest difficulty, if we succeed in negotiating one of those contracts, will be to supply, because 20-plus Nomads at the present time is a year’s production.

That has been an inhibiting factor in our marketing in Asia. It makes it very difficult not knowing when you can get aeroplanes. Despite our best endeavours we really only have one N24 allocated to us for 1981 delivery. It makes it very hard to sell aircraft when the supplier cannot back you up with production.

JS: Any N22s of any type?

LJ: I think if we get into an extreme situation they could muster a couple for us. They are spoken for by about three distributors, I think. Production is the greatest problem in Nomad marketing. You have a good aeroplane which makes sales we cannot deliver. We have had real problems in India. I think we would have been able to sell Nomads in India long before this if we had been able to promise any sort of deliveries, but we were unable to make the specific commitments that India required. We just could not do it because the commitment required from India was at a time when the production of Nomad was in complete hiatus. The Government had not given approval for the batch which has now been agreed.

JS: The Nomad did, more or less by chance, happen to be the right aircraft at the right time from the point of view of cost-efficiency- obviously within a certain size sector. There is a new generation of aircraft now being designed around the size of the Nomad with fuel efficiency more in mind than it has been with aircraft in that bracket. Do you see the Nomad gradually losing its advantage in that area? Do you see it as having only a certain life as a saleable item?

LJ: I think it will be a long time before the Nomad is overtaken by comparable fuel-efficient aeroplanes. This is what Nomad is all about- its incredible fuel efficiency. Though we sell Twin Otters and Nomads, for the operator who requires the ultimate in fuel efficiency then the Nomad is the aeroplane he is looking for. That is normally the smaller man where day-to-day profit and cash flow is vital to him.

Also, there is an increasing requirement in Asia for Nomad in specialised roles, as distinct from the commuter type operation- for a variety of para-military type roles. We are getting and nurturing a lot of inquiries in Asia. I think it will be quite a while before anybody comes up with an aeroplane that is going to push the Nomad out.

It would be a good thing if Nomad could be progressively upgraded along the lines of most overseas aircraft of its type, by the incorporation of upgrading mod programs and so on. I hope we will see some of those in time to come.

But even in its present form, with its specialised role, particularly in Asia, we see a continuing demand for a long time.

JS: It has been said that the Nomad is being produced at a loss just to keep aircraft industry capability alive in Australia. If the price was increased substantially, say by 50 per cent, would you still have a saleable commodity?

LJ: We would have a saleable commodity if the price was increased because of the economy of its operating costs. I would not know the percentage where you reach a buyer resistance or cross over some competitor which would become more overall cost effective.

Price has been going up in fairly large leaps in recent times and it has not resulted in any particular buyer resistance. So I think the nature of the beast is that it could cope with a higher price.

JS: It is selling on its merits?

LJ: Yes.

JS: You have said previously that as a supplier of helicopter parts and engines this precludes you from selling helicopters. I hear, however, that you are looking now at the MBB-Kawasaki machine and also the Aerospatiale Squirrel agency.

LJ: They are ill-founded rumours. We do represent Westlands for military-type helicopters and we have sold a lot of Westland products over the years – Wessex, Sea King and so on.

On the civil side, our commitment to the engine manufacturers does preclude us from selling commercial helicopters apart from our recent arrangement with Soloy of the US of conversion kits for piston helicopters. This does not conflict with our engine representation because a very large part of the conversion kits is of course an Allison turbine engine.

We think this is going to be a very important part of our activity. We are going to hang a lot of our helicopter interest on this Soloy conversion. Our first conversion of a Bell 47 is in the hangar now. The range of helicopters that you can convert with Soloy are Hughes, Bell and Hiller.

We expect to do some major fleet conversions in Asia because in Asia there are some countries with fleets of 60 and 70 Hughes. There is a definite indication that those countries may well wish to convert the whole fleet to the Allison engine.

In Australia, we would expect to interest some of the local operators in converting helicopters from piston to turbine. It does not expand passenger capacity but it gives a lot of extra performance. We do not expect the number of sales in Australia to be enormous but they will be substantial.

We will be establishing complete backup servicing facilities to support any of these helicopters that have the Allison engine in them. This will be in Sydney. There is a chance it may have the greater part of the support base at Mascot rather than Bankstown.

We are offering to Kawasaki support facilities for the BK117 and in common with some other people are negotiating on the support of that aeroplane.

JS: What about the Falcon jet range?

LJ: We have been negotiating with Falcon for about 18 months to tie up a marketing arrangement satisfactory to both parties. It has been an enormously long time and we still have not signed the final agreement. We hope it will be within the next few weeks.

Consequently, we have not been able to do very much about marketing. We had a demonstration flight with the Falcon 50 last January but we were not able to really progress Falcon sales in the way we would like to. If this agreement is finalised shortly, we will have our own Falcon 20 demonstrator here during 1981. We have placed an order.

JS: The Falcon 50 is about $US10 million.

LJ: And the Falcon 20 is about $US5 million. We believe there will be a good market, although obviously not a large one, for the Falcon 20 and the Falcon 50, in particular in Australia. Quite a lot of companies in Australia over the last few years have made their first step into jets and have basically got into the smaller jets- the Lears and Cessnas and so on.

They have now discovered the advantages of jet aeroplanes, but they have also discovered the disadvantages of the small cabins and the cramped arrangements. This is where the 20 and 50 come into the picture. You have very spacious cabins and therefore there is a lot more attraction to the busy executive to use that sort of aeroplane than the small Lears and Cessnas.

This is particularly so when you talk about the requirement which is so strong to move people from the Melbourne area to Perth and the northwest non-stop.

JS: Airbus have stated that they expect huge sales in Asia and Australia.

DP: TAA is looking at its fifth Airbus for 1983 delivery.

TAA are looking at their future fleet for a DC-9 replacement. Some will be retired when the Airbus enters service. They also have some 727s which from 1985 could be retired.

Airbus Industrie has been looking at its overall marketing strategy. Two major aircraft manufacturing companies are expected to emerge in the eighties. One obviously is Boeing and the other is Airbus. Those two will fight out the major aircraft markets throughout the world from the 1980s.

Airbus needs new models, other than the A300 and A310, which have already sold tremendously well, with over 470 sales to 44 airlines committed to the Airbus program. Airbus can already see some 800-900 confirmed sales for A300 and A310 aircraft into the 1990s.

Their strategy is to go for the stretch, the TA9 as it is called at the moment, or the long-range, intercontinental aeroplane, the TA11, which is a four-engined Airbus.

Or, alternatively, do they do a new aeroplane underneath, which they are calling the SA1, for single-aisle? It is my belief that we shall see Airbus opt for the SA1, and maybe perhaps delay the TA9 decision-making process for another two or three years.

They can still do that aeroplane quite easily. The stretch is not hard to do. Power plants are obviously important and upgrading of power plants takes time.

For the single aisle aeroplane they need a completely new fuselage and wing and there are power plants coming through the system now which could be very adequate, particularly the new Pratt and Whitney PW2500 and the new CFM 56 engines. There is also the new RJ500 Rolls-Royce.

So, it is my belief that we shall see, within the next few months, and probably sooner than most of us think, Airbus Industrie make a decision to run with that program.

They might even make the decision at the Paris Air Show.

Obviously, TAA is a likely launch customer. Airbus Industrie has done quite a bit of work with TAA in matching TAA’s long-term requirements to the proposed SAT design.

Discussions with TAA have resulted in the SA1’s fuselage capacity and freight loading capacity being enhanced.

The fuselage, dimensions, range and payload are critical for operations in Australia and the North American continent where you need to go a long way with a lack of diversions.

So the payload range and the hot and high performance associated with that very closely match the requirements of TAA.

JS: Do you mean the aircraft has been stretched and given a longer range specifically or largely for TAA?

DP: It is a paper aeroplane and paper aeroplanes are meant to be adapted to the requirements of the operator, and that is exactly what has been going on with the SA1.

JS: Is it possible to define the SA1 any more at this stage?

DP: It is a twin-engine, low-wing aeroplane which looks very like a small Airbus.

JS: Or a 757?

DP: No, we do not copy 757s. Don’t need to.

JS: It will be a little fatter, will it not?

DP: Yes, you are quite right. The fuselage dimensions are wider than the 757 or the 737 or 727.

JS: I don’t suppose the underbelly takes LD3 containers?

DP: It does not take LD3s, but it will take a container which is compatible with the base of the LD3. In other words, you can use an SA1 container in an Airbus or any wide body because your base configuration and fittings will be similar. It would be very simple to tranship from an SA1 to an A300, 747, DC-10 or L1011.

JS: What about the offset proposals generally for Airbus? They have gone ahead quite rapidly and the situation looks fairly good, apart from the hassles Mr Anthony seems to be having with the EEC.

DP: I think that side of the exercise is over for the moment because TAA has been given the authority to go ahead and procure the aircraft. The offset situation is being processed by Hawker de Havilland. They are producing wing-spar ribs as a sole source for the A310 program, which is a big program, and they are in right from the start. Obviously their costs are going to be good. They are going to come down the learning curve in a very competitive manner with everybody else.

The other thing of course is there will be a new program called the SA1. It would be an opportunity for Australian industry to further enhance its participation with Europe if they were to be involved in the SA1.

The competition will be tremendous, but Australian costs can be made comparable or compatible with those overseas.

JS: What about the Canberra operation? I would like to know what your people in Canberra do. I gather you have a small but quite expert team.

DP: Well, we like to think they are experts. They have had a good record of success. The electronics area has been going particularly well and last year they assisted our principals overseas in some very good sales – the UHF program to the RAN, for instance, was a very large order. Recently they have made a clean sweep of flight simulation visual systems to Qantas, TAA and Ansett. The ones in Qantas and Ansett will be enhanced from the standard SP1 system by wide-angle optics and Qantas and Ansett will be the first to operate these systems anywhere in the world. Qantas has had a great deal of influence on the development of this system, channelled through us. It is a very important business and we now have a complete sweep.

With 180-degree wide-angle optics, you can have aircraft creep up alongside you and in a military application you can have fighter interceptions. From an airline point of view, if you are doing an approach circuit, you look out the side and see the airfield lights out there before you start making your turn. At the same time, you have everything happening in front of you, and you can introduce other aircraft.

In Canberra, we also handle a number of other programs.

The big helicopter battle for the FFG, which is somewhat late in acquiring its helicopters, is emerging. In the early days, the Lynx was quite well-favoured for the RAN. Then, of course, the LAMPS 3 came along. It is an extraordinarily big and expensive helicopter. Like everything in this life, it is a question of what you can pay for. If you have $35 million in the program for LAMPS 3 plus support costs, fine.

I have seen everything from $20 to $35 million bandied around as the price of the LAMPS. On a program cost, it must be at least about $30 million a copy. It is a very sophisticated helicopter.

JS: What about the company of Haw- ker Pacific generally, despite your recent cleaving in different directions from the other side of the operation in Australia? It is not terribly clear in a lot of people’s minds just what the company is. There is an immediate situation with the big factory across the way.

Also, there is a certain feeling among some members of the GA community that you are one of those big fellows with a sort of monopoly. I would not call it resentment, but there is a feeling that the big companies do rule the industry a bit. What do you see as Hawker’s stance and role in the marketplace, bearing in mind that you are obviously very much the major operator in this area?

LJ: Well, there is very little connection these days between Hawker Pacific and Hawker de Havilland. We impact in only two areas. If we succeed in selling aircraft where there is an offset requirement then we can assist Hawker de Havilland by getting them into the act very quickly in relation to that offset package, as with the A300s and with the Westland sales to the RAN.

The other area is we do sell Hawker de Havilland’s engine overhauls on a commission basis throughout Asia. We also of course are the engine spare parts supplier for Hawker de Havilland, cause we have a warehouse, computer facility and overseas buying offices.

So there are actually three elements where we have an association. But beyond that, we are fiercely independent of each other. Hawker de Havilland is very much Government-oriented. It has large defence and offset contracts. Therefore it deals with a limited number of customers. We deal with the general public.

The aviation world of small and large operators is our world. If you look at our debtor’s ledger you will see the large number of small individuals we deal with, particularly in our operations at Moorab- bin. But it is not much different to any other GA fixed base operation at Moorabbin. The same applies at Archerfield and Jandakot. They are relatively small operations. Jandakot is about four people. There is enough there to support the operators of Beechcraft in the area and that sort of thing but no more.

So I do not think you can say we are a great big conglomerate or anything. We have set out to grow at a great rate but that does not mean we feel we have any God-given right to lay down the laws. We have to fight just as hard to get somebody’s 100-hourly on a Cessna 170 as anybody else on the aerodrome.

Our Hoxton Park flying school is a relatively small operation competing with everybody else to get pupils. There is really not much difference between our sort of operation when it comes to general aviation to anybody else.

I suppose the difference is that we operate in the airline and defence field also and with a very wide range of international customers throughout Asia.

We try to provide support to people throughout Asia. The establishment of engine overhaul facilities in Indonesia, the Philippines and Korea are quite large activities, but with just a small number of Hawker Pacific people setting them up. and training and locals.

JS: What about things like your large maintenance facility at Bankstown? Does that operate at a profit?

LJ: Yes. Every activity we have has to operate at a profit or it does not continue to operate. If we establish a new activity, it has a very short time to come on-line. If it does not come in with a profit then we are not interested. We have very rigid rules on the profitability we expect from any operation. For instance, we went into cylinder repair recently and it has come online earning the sort of money we forecast. We do a very detailed study before we introduce any new aspect of our business and we reject a lot of activities.

For instance, people often wonder why we are not in the aircraft operating business. We are not for basically two reasons. We would find ourselves in competition with our customers in most areas. And we do not believe we would get the sort of return we would by putting our money into other types of operation. We would sooner leave that sort of operation to the people who are in it now and probably know more about it than we do.