Interview – Frank Ball

JS: Now that you have actually got the A300s coming in what is your basic reaction to them at this stage and the public’s reaction?

FB: Well, both have been up to expectations. We are very please with the Airbus. I think we are proud of the record of 19 months from signing to delivery. We achieved that and I think that is one of the shortest times any airline of any size has moved into a wide-bodied jet, because this aeroplane involves all facets of the airline, a little bit more than previous types.

It arrived on time, went into scheduled operations on time, it has carried the numbers of people we expected, we all know revenue factors are high on it, it is carrying quite a considerable load of cargo in the hold. All systems are working well.

Public reaction has been good. Even today I was talking to people and they are changing their travel times so they can experience the Airbus. I make no judgment on that. I think we need more time but up to date it’s right on target.

JS: Do you think the matter of changing travel arrangements will be a fairly short-term thing with a lot of people trying out the aircraft?

FB: Certainly. In time the aeroplane will become part of the scene. But the times are suitable times and the seats are available when people want to travel.

JS: You mentioned the load factors were being what you anticipated. TAA has said in the past that it feels it has to buy an aircraft which is possibly a little too big now which would be about right in a few years time and possibly a bit small towards the end of its life. Can you tell me what the load factors have been and what you expect?

FB: The load factors have been around the 75 per cent revenue load factor, but remember it is operating on the Melbourne-Sydney run and there have been effects of stoppages, etc, it needs to achieve that sort of figure to fit in with the capacity available on the trunk network.

JS: Its utilisation at the moment seems to be limited to the middle of the day. It does not seem to be running late or early flights?

FB: Other than on the weekends and Fridays. With an aeroplane like this, we are in a training program. The number of stages we can fly in a day at this stage are limited by the availability of trained crews, That slowly increases, starting on September 4 with the next aeroplane and we build up to the third aeroplane in October and they extend to Brisbane and Perth then.

JS: The question of curfews at Sydney airport. I know you have asked to be allowed some relaxation on the curfews and have been told there is a 12-month waiting period for people to get used to the aircraft. What in effect would you be doing there, what relaxation would you be looking for, what sort of flights, what time would you be flying, what runways would you be using and what would you expect to be the effect on people around the area?

FB: There are two aspects to this. Firstly, the industry itself is looking for a change in the classification of aircraft rather than straight jet aircraft. Some aircraft are quieter than others. Later planes of course have got newer technology and as we say Airbus is the quietest plane we are flying at the moment.

What we are saying is that curfew policy as applied should have some consideration for the improvements that have taken place. Secondly, it is not that we are saying that the curfew should be lifted, but that there should be the ability to fly at various times on selected runways. And then there are periods of the year when additional capacity is required-holiday times. We would be looking for selective dispensations, from a hard and fast flat curfew policy on jet aircraft landing between 6 am and 11 pm.

JS: You would be talking about the north-south runway, I suppose, landing and taking off over Botany Bay. That kind of thing.

What sort of hours would you be looking at in these holiday periods? What would be the earliest and latest times an Airbus would operate?

FB: I would start with the relaxation of one hour.

JS: At either end?

FB: You can get in from Perth just before curfew and you can get out again on an early flight from the east coast- get a number 8 out of there after 11.

No matter what fleet you have there are certain times the busiest time is Thursday and Friday of Easter – when there is a very big demand for travel.

JS: How much of that desire for the relaxation of curfew is based on passengers and how much on cargo?

FB: The selective periods of the year are based on passengers, but cargo does travel and has a preference in the evening. Now for our year-round opera-if that does come, about-it would be important to the cargo service.

JS: While we are on the subject of Sydney Airport, I do not think TAA has made a definitive statement yet on its policy in that area. What is your reaction to the expansion or otherwise of Sydney Airport or the development of a second airport?

FB: We had representation on the MANS Committee which most people are familiar with and generally we support that. Construction times for a new runway or airport are long. Already in Sydney, you are getting delays that have been well-reported because of congestion at times.

We just find it disappointing that neither the State nor Federal Governments can achieve a policy that sets priorities, so therefore we would see an increase in the capacity of Sydney Airport taking place first with further consideration of a second airport, or whatever, flowing from that.

JS: Is it causing you a major financial drain – the delays and carrying of more fuel into Sydney?

FB: Not a major financial drain, but there is a financial burden which is reflected in utilisation because your lost block time as we call it in flights operating to Sydney is apparent and more flight time costs more fuel and those costs are reflected in fares.

JS: Airbus turnaround times at the moment are 45 minutes in Sydney and 50 minutes in Melbourne.

FB: The other way round.

JS: Is that to be the standard time or do you hope to whittle the times down?

FB: We set our Airbus timetables some time ago and we operated those with the 727 and they are on the hour. I mentioned lost block time into Sydney, we are picking up some of that lost time in the turnaround. We have turned the Airbus around in 31 minutes in Sydney and 32 minutes in Melbourne and that is with full loads.

JS: Your next-generation aircraft then. There has been a great deal of talk about your involvement in the Airbus A320 project. How heavily are you involved in that? One suggestion I have heard recently is that you actually asked Airbus for some changes in the performance envelope of the A320 to make it fit more closely with the 727 and DC-9 for air traffic control reasons. Can you fill me in on that?

FB: Airbus Industrie did have very early talks with us as to what our specifications would be for the next sort of aircraft we wanted below the big ones. We roughly call it the 130-150-seat aeroplane and we did work on those and they changed mainly on our recommendation the shape of the aeroplane, the fuselage section and this does permit, compared with the current Boeing 727, and 737 models, a 6 in wider cabin.

This permits in the cargo hold the carriage of an LD3 container base – not in height – so whatever you carry in this aeroplane would be compatible with Airbus or anyone using an LD3 base.

I think they will finish up with a concertina top to the container, push it down and it fits or you can pull it out and put more in it, if you want, and fit it in an Airbus.

JS: What difference is there in the height of the container?

FB: I would be guessing. You would need to check on that – about 18 inches.

The other one is on the range performance capability. We probably would want a bit more range than most other people.

JS: I believe also there are two models of the A320. I believe you were interested in one with a slightly more powerful engine to fly out of Port Hedland. I think that was the specific instance I heard mentioned.

FB: Well, there are two models, but they are different sizes. One is slightly bigger than the other, with 130-150 and 150- 180 passenger capability, but that capability could be used for airfield performance and hold the passenger loading down.

JS: How great a continuing interest have you had in the development of the A320?

FB: It is still continuing, but so is our study of the DC-9/80, MBF 100, 737-300, 787 or 7-7. You keep all your options open on fleet planning.

The aeroplanes we are talking about are not built yet, so there has got to be a lot of refinement in the specification.

JS: There was some criticism from TAA of Ansett when they went into the Boeing 767, that it was a new and untried aircraft that they were buying.

Some people in TAA felt they did not strictly have to go for that aircraft since the viable alternative in the proven A300 was available. It has been put to me that with a fairly short life left on the DC-9, you are faced with a decision fairly soon on a replacement in that area, with something like the A320. This would seem to suggest that you might be a launch customer for the A320 which would be a similar untried aircraft. Can that be confirmed or denied?

FB: The suggestion has been made, but you cannot get an answer on that at this time. We have not made our decision on our next piece of equipment. At the time we quoted our reasons for buying the Airbus, there was some caution about a totally new type. You will find in, say, the Airbus industries A320 there will be in their systems from the same family, and technology that is known and proven. The size may be different, scaled down.

JS: So you would have no philosophical objection to being a launch customer of the A320 if that did come about?

FB: No.

JS: You mentioned the DC-9-80, and I see a model there nicely done up in T AA colours. What about the two or three-pilot thing, since the DC-9-80 has been specifically designed as a two-pilot aircraft?

FB: And certified by FAA.

JS: Right, but the local pilots’ union have said they will not operate it. I think their breakpoint is basically 100 passengers; below that they are prepared to operate with two pilots, and above that three.

FB: I believe that decision was made prior to the presidential task force, which recently reported in America, upheld the certification of the FAA and virtually set guidelines for aeroplanes in the future.

I believe that the Pilots’ Association here is seeking more information and it is continually studying this aspect.

JS: There has been a lot of criticism of that task force as a bit of a snow job. Do you think it is possible that they may take some guidance from the fact that they may relax their stand on this issue?

FB: Well, I have had the advantage of reading the report and I have been advised the American Pilots’ Association has accepted the report.

JS: Your next type in this range is 130-140 seats – do you think it will be a two-pilot aircraft whether it is the DC-9- 80, the A320, the MDF-100 or whatever? Most of these seem to be designed as two-pilot aircraft. TAA has been fairly ready to go along up to this point with three pilots. Now you think the time has come for two pilots?

FB: No, that is not quite right. In the large aeroplane designed with three crew seats, we have adopted it. With a DC-9 replacement aircraft, of the size we are talking about, we would hope it would be a two-crew operation with modern technology incorporated in the cockpit.

JS: Coming down the scale steadily, what about the sales prospects of DC-9?

FB: We are retaining at least six and probably more in service.

It is quite surprising that there has been a reasonable market for DC-9s because of some of the smaller specialised airlines in the US which have taken over some of the smaller routes which have not been as well serviced under deregulation as before by the big operators.

JS: Have you sold any DC-9s so far or have buyers lined up?

FB: No buyers lined up. There are people who would like to come to arrangements when we come to sell them. There is still the fundamental that Australian airline aircraft are sought after on the world market with their high maintenance standards.

JS: The F-27s. What is your basic philosophy surrounding F-27 operations and routes?

FB: There are two areas here. In the passenger area the F-27s are operating on two routes through various factors – normally overflying of ports, lack of growth in some centres they serve that would be better serviced with smaller aircraft.

Our philosophy there would be on a phased basis to withdraw from F-27s in those unprofitable areas.

JS: This would include the North and Western Queensland?

FB: Very sensitive area this, we will approach it with sensitivity.

JS: Is it possible to put a timescale on that?

FB: We have undertaken to honour our agreement given to the Queensland Government that we will maintain those services until March-April next year.

JS: What about other F-27 routes? You no longer have the F-27 route in the Northern Territory. Do you have a surplus of F-27s at the moment? What use are you making of them?

FB: There is no surplus at the moment, but with the phased withdrawal of F-27 operations, the airdraft will become available for other tasks or disposal. The other routes are the Albury-Melbourne-Devonport route, Sydney-Newcastle-Coolangatta. The other task we use the F-27 for is freighter operations and I would see that staying for a longer period than passenger aircraft. Even then there is not a suitable aeroplane about that size, but we do need to support night freighters to maintain the cargo loads in our aircraft.

JS: You see yourself gradually moving out of F-27 passenger operations?

FB: There is a phased withdrawal from those areas.

JS: Over what period?

FB: Two or three years.

JS: And the cargo F-27s – what future do you see for them?

FB: Cargo operations are no longer part of the two airline policy, no longer regulated. We are looking at our policy in that. Just what is the extent of night freighter support we need for the big jets.

JS: What if you got a relaxation on curfew with all that space under the floor of the Airbus?

FB: There are still areas where Airbus capacity would be too large.

JS: There was some suggestion that one or two of your F-27 routes would be handed over to East West.

FB: We have, and it is no secret, been talking to East West over a number of years and I believe East West themselves have made some statements. Following on the last packet of legislation they have expressed a desire and feel they have the expertise to operate on some of those routes because they are F-27 specialists.

JS: So it is not beyond the bounds of possibility that within say five years TAA would be an all-jet airline. Is your turboprop operation likely to be phased out completely at any stage in the future?

FB: If you are talking in that time scale, yes. There is development in this area. You will notice mainly the airframes are mostly UK or European, and power plants are American, but there is quite a lot of activity in the small 30-seater turboprop operation and there are certainly areas in the world where that will be a viable operation or need for that type of aircraft. I do not see it fitting back into our fleet.

JS: So an aircraft of about 130 seats will probably be the smallest you will be operating in the future?

FB: That ratio is through the jet types we have, the most efficient fleet for us.

JS: And your jet fleet would come down to the two types of A300 wide-bodied base types and variations of this such as the stretched version, and the narrow body.

FB: You are into long-term planning now. It will be a long time before you see a two-type fleet again. 727s will still last a considerable time in our fleet.

JS: Approximately how long?

FB: 10-15 years.

JS: Would not they, up to a point, be crossing over with the A320 types of aircraft?

FB: The 130-150 seater certainly is the DC-9 replacement and the bottom end of the 727.

JS: Even if you were thinking of bringing in a new single-aisle aircraft would we still see the 727 continuing in operation?

FB: For quite some time.

JS: What is the rationale there if they are basically similar in capacity?

FB: Cost of utilisation – cost of the fleet. It’s a very expensive operation. We now have 12 727s and 6-8 DC-9s so you are talking about a fleet of 20. With aeroplanes, you just would not turn that over in the space of 12 months.

JS: What about the situation in Newcastle with the takeover of AeroPelican? That has traditionally been a great feeder from TAA. A tremendous amount of revenue has come in from the carriage of Masling and AeroPelican.

FB: From Masling. AeroPelican has only recently been taken over by the proprietor of Masling and there has been counter-reaction to that.

JS: Can you tell me about that? This seems to be happening with commuter airlines, the more successful ones are being steadily taken over by the larger operators and basically, they are beginning to play it for bigger stakes in that area. What do you see as the ongoing relationship between airlines such as yourself and these smaller regional airlines?

FB: Well, you used the term regional airlines. Virtually the industry has three categories – the APT operator, regional airlines and commuters. We have arrangements with over 20 in our reservations system. We generally assist them in their reservation and handling and look to them for benefit in the on-carriage.

JS: So coming back to the F-27 thing, you are quite prepared to give away the F-27 routes in return for on-carriage agreements. Is that part of the package, a quid pro quo?

FB: You could say that is a principle.

We are happy to give them away, if you look at the pricing system the industry will be adhering to in the future where adoption of the Holcroft Report means no ability to cross-subsidise. All operations must stand on their own feet. And there are some areas where the F-27s are not the right aeroplanes to be commercial.

JS: Are you happy with that principle of each area standing on its own feet and no cross-subsidisation?

FB: I think it is the proper commercial approach.

JS: On policy, I wonder if you could give me a general summary of the state of play as you see it at the moment. The Government obviously wants a more commercialised TAA although in just what form it is difficult to say. There have been proposals of 51 per cent or 49 per cent or shares being sold. Could you give me a roundup as you see it?

FB: Well, the last session of Federal Parliament saw the carriage of the package of legislation: the domestic aviation policy, containing the two airline agreement; the intention to establish an independent airfares committee; changes to the equipment act. . . terminations of two major trunk operators, and a bill enabling a change in corporate status for the Australian National Airlines Commission and TAA.

Now we see work to implement the intentions of that legislation. At the same time the Government is to undertake, with the help of consultants yet to be appointed, a study of the practicality of the sale of TAA and the sort of structure it should be, a type of anti-monopoly provisions if required that should be included in any change to a public company with private ownership.

You also have on the domestic aviation scene an inquiry which should be completed by June or July 1986 on the question of regulation or non-regulation.

You also have commenced this year the Government’s review of its international aviation policy. So there is a busy period of review and implementation.

JS: International services. I gather you are doing quite well on the Christchurch service. I wonder what is the future of that and other international services. I think that taking over the contract for Air Pacific in 1982 has been suggested.

FB: The Hobart-Christchurch trade has been satisfactory. Bookings continue to be good. It is in a lull at the moment; it is a low-traffic period.

We did respond to a request from Air Pacific, as I think did all the industry here, for the provision of capacity to Nadi, and we would respond again if they found a need. You are chartering capacity to an offshore operator. In this case, they elected to continue with their arrangement with Qantas.

JS: Did that come as a surprise to you?

FB: It was not a surprise. It was not a blow. It was a commercial decision by Air Pacific at that time. I believe it will be reviewed again within 12 months. We could well see a request again to the industry. Australia was not the only country that offered them capacity.

JS: What about the general costs of operating an airline, cost pressures cost pushers as they seem to be called these days, and the effect on airfares? There is always the cost of fuel, now there is the cost of new aircraft, a capital cost that has to be met, and a variety of other factors. What do you see pushing costs up and the general outlook for fares?

FB: If moderation continues in the price of fuel then it will not have the dramatic effect it has had in the past two years. New aeroplanes do pay for themselves. There is some economy of scale in the Airbus that will help contain prices. It will not be with one aeroplane. You need to have a fair percentage of the fleet and we will have five by the end of next year.

The other factors are geared to the general inflation in the country – costs of labour, services, etc. So if you take it historically over the last two or three years there should be a slight easing in the rate of fare increases- but we live in an inflated economy.

JS: Any other factors?

FB: You mentioned discount fares, discount fares will now need the approval of the Independent Airfares Committee, they must meet a three-way test: the revenue from them will exceed the costs of providing the fare, the fare itself shall put no upward pressure on the standard economy fare and the conditions applicable to the particular fare shall not be discriminatory and must be reasonably available. Still, of course, in this country we will see the high load factor, it is the only way you can keep average fares down.

JS: Are you running it close to 80 per cent?

FB: High 70s.

JS: Do you think it will ever get up to 80 per cent on the network average?

FB: Not on network average.

JS: On some of the heavy trafficked east coast routes?

FB: It will or must be around that figure. You need around 73-75 per cent across the network.

JS: One thing that has interested me is you talking about air freight that wants to move at night. You have an ideal aircraft for it and you are seeking relaxation of curfews. There are occasional services in the US, the night riders, equivalent to the “red eye special” from Perth and that type of thing basically to fly the aeroplane overnight with freight you can offer a discount fare to passengers. Has any of that type of operation been seriously considered?

FB: When we have a significant number of Airbuses in the fleet it will increase our scope for promotional fares of this kind. It has not been seriously discussed at the moment.

JS: When would be the deadline for the introduction for the DC-9 replacement?

FB: Mid 80s – 1985-86.

JS: Unless you went through another A300 introduction it would have to be selected by next year sometime.

FB: Or by early 1983. Remember the DC-9. We are refurbishing those and with modification, they will be an attractive aeroplane, back in the service, with more window space seats. The DC-9 has been a very good aeroplane. It still is.

JS: Parallel scheduling. How fast or slow will that be eased, or will it be eased?

FB: On the dense routes it probably will be eased more quickly than on others, but we introduced some 12 to 18 months ago the schedules we had for this aeroplane and we have maintained that schedule, and we have all maintained our schedules.

They seem to be ideal schedules to suit the aeroplane and demands for travel. It is unlikely they will be changed.

JS: Shortly after you introduced those, Ansett introduced an almost identical set of schedules.

FB: Well, we stick to the point that we have a large number of seats available at a particular time on one flight. To match that, because that is where the demand is they have to run the first and second divisions. That is what it amounts to. There is demand on dense routes for travel at particular times, and you either meet it with a number of flights in small planes around that time or you meet it with something as efficient as the Airbus.

JS: What about the less dense routes, when often you only have one flight a day and you find both planes turning up at Almost the same time?

Next Issue: To Obtain the Ansett Perspective on the Current Domestic Environment We Interview Sir Peter Abeles