Airline Affairs

Grey has become extremely interested in the incredibly competitive computer market, but has the airline bug completely gone? It has been rumoured that Grey might be interested in beginning a Melbourne-Norfolk Island service using Canadair Challengers.

The mill had it that this would be in partnership with Ron Walker, who was an early casualty from his job as East-West’s Melbourne manager soon after the sale.

Grey was not a willing seller of East-West. He had been constrained to hold an extremely large amount of money in the bank against his Fokker F27 and F28 purchases and was fairly strapped for working capital if expansion was to continue.

He had sought equity capital from a number of sources, including Skywest and, one whispered it, Iwasaki before the buy offer came in from Rick Stowe.

The whole deal was cleaned up in three weeks, in such secrecy that Skywest executives bought East-West without even inspecting its Tamworth maintenance and administrative base.

Dennis Howe and Bill Meeke, the joint managing directors of Skywest, are to parallel their respective responsibilities with EastWest, with Howe looking after administration, finance and engineering, while Meeke will take on marketing and operations.

A Sydney-based general manager is expected to be appointed, as Meeke and Howe will continue to commute from Perth. This will follow a review of the East-West structure by the respected US marketing consultant, Avmark.

• TAA’s new chairman, Neil Smith, has wasted no time in letting the staff of the Franklin Street tower know that he is a spit and polish man.

Smith was apparently appalled at the ‘untidiness’ of desks and offices and took a senior executive to the Victorian Gas and Fuel Corporation to demonstrate what neat really meant.

Now all the TN desks are clear. Unfortunately, the appearance might be great, but inefficiency has blossomed because the airline has a chronic shortage of storage and filing space for staff.

One staffer wryly observed that down at Gas and Fuel, staff weren’t allowed in their offices because they cluttered them up.

Smart insiders are said to be attempting to corner the market in stationery cupboards and filing cabinets in anticipation of a multi-million dollar order by TAA.

More seriously, Smith has inherited the difficult job of trying to attract top-rank executives to the airline, which is decidedly thin at the top following mass retirements and some resignations.

This recruitment may become slightly harder soon, because East-West is expected to begin headhunting for the equivalent of a general manager, to be based in Sydney.

The TAA commissioners are also having to deal with the problem of replacement aircraft for the ageing but still efficient DC-9 and some parts of the 727 fleets.

Sales executives of Airbus Industrie and Boeing pace the TAA foyers as each Commission meeting is held in anticipation that the A320 or a mixed bag of. Boeings will get the nod.

But so far the airline is proceeding towards such large investments without due haste, with each meeting having the anticlimactic result of both manufacturers being asked for more information.

TAA is more concerned with consolidating its return to profitability and maintaining market share, which is running fairly consistently at about 50 per cent each for the majors.

• While TAA is still thinking about buying new aircraft, East-West has placed orders for two more Fokker F28-4000 Fellowships, in a deal worth about $30 million.

The order was, in fact, the culmination of the study by Skywest of the suitability of the F28 and the British Aerospace BAe 146-100 for the Perth-Pilbara routes which it has been awarded by the Western Australian government.

East-West said it had chosen the F28 because of the obvious standing investment in the type and earlier deliveries than could be promised by the British. The jets are expected to reach Tamworth in August and October.

However, all may not yet be lost for BAe. East-West is still interested in the BAe 146-200 for later expansion, but it also has its eye on the proposed Fokker F100, which sounds, in the Australian context, more like a Ford utility than a 100-seater.

In addition to the jets, East-West plans on keeping one, or possibly two of the 10 F27s it is trading in on six new -500s. These will be refurbished to new aircraft standards.

• A little taste of what deregulation could bring can be sampled on the grossly over-serviced Albury-Melbourne and return run.

With the issuing of supplementary air licences for both Kendell and more lately to Murray Valley Airlines, the skies above Albury are now almost black with aircraft. The Department of Aviation can’t do anything about it because it’s interstate trade and saying ‘no’ would be unconstitutional.

Such problems never arise for Ansett and TAA of course, as they snooze on under that increasingly tatty blanket of the two airlines agreement.

But back to the twin cities, the commuter operators’ flights are in addition to those of East-West on its Sydney-Albury-Melbourne and v. v. and Air New South Wales stops for tyre inspection purposes.

Murray Valley, which appears to have more than a little capacity on its hands, has also gained rights to Mt Gambier-Adelaide and v. v. and is expected to base a Shorts 330 in the Blue Lakes city.

Again it will be flying against East-West which reportedly is not making much money either on its cheap Melbourne-Adelaide services or the sectors through Mt Gambier.

• Rumours have been coming and fast out of the Deep North that Sunstate is to be acquired by Ansett.

The grapevine first had it that Ansett was going to formally take over Air Queensland, but it was soon pointed out by the pundits that Ansett really didn’t need to bother because of its long commercial agreement and F27 deals with the Cairns-based carrier.

Then the story began leaking out of Ansett that it was really Sunstate which was in the corporate gunsights. Such an acquisition of Sunstate would be interesting politically, because it would, for all intents and purposes, give Ansett a monopoly on air services and on-carriage rights in Queensland, with TAA having access only to what it could pick up on the coastal routes.

Perhaps that’s why we hear that TAA is back in the running for the west Queensland services, which it has spent so long bemoaning as loss makers, despite government subsidies.

•  Qantas has struck a few snags with its efforts to have what are, strictly speaking, the illegal Yield Improvement Program (YIP) fares become government-approved rates.

Qantas had wanted the YIP fares, which offer controlled, but still substantial discounts on ‘official’ fares, to become the norm from March 1 – complete with seals of approval from the Federal Government and the Geneva-based fares dinosaur, IATA.

But what suited Qantas doesn’t suit some of the Asian and European carriers party to YIP and it seems Qantas’ efforts won’t bear fruit until August.

The March 1 deal called for a five per cent increase in fares, largely because of overriding commissions and other such questionable practices, but dissenting carriers believed the market, which is showing some signs of bloom instead of gloom, wouldn’t wear it.

Meanwhile, amongst commendable amounts of free booze and tucker, OF has issued a discount card system which is plainly an attempt to get it more business direct from the public.

There has been the predictable wailing and careful tearing of designer-label clothes from travel agents, but it’s unlikely they’ll get much sympathy.

An increasing number of airline executives have had a gutful of overriding commissions to agents, a practice which is undermining the ability of the carriers to come out from recession. As the public rarely, if ever, gets the benefits of the perks squeezed from the airlines by many agents, they can’t expect any help from that quarter, either.

• What odds Ansett buying Rolls or GE on any new aircraft purchases following the appointment of Rupert Murdoch to the board of United Technologies, makers of those dependable Pratt & Whitney engines?

However, it has to be admitted that Rupert and Harry Gray do make an amazingly formidable duo.

• Awards . . . SAS has been voted the world’s best airline for 1983 by Air Transport World. Our own QF didn’t do too badly either, with a proud Ron Yates picking up a technical excellence award. Congratulations to Doug Scott, Cec Morgan and all at the Sydney jet base. Qantas has been spreading its wings a little in selling its technical skills and has picked up contracts worth a handy few million from MTU.

• Briefly . . . Continental has had a further step in its moves towards bankruptcy approved by a US judge, but it is not out of the woods with the ACTU, which may re-apply bans . . . Pan Am is increasing its trans-Pacific non-stop SP flights from . Australia to five a week. And Qantas is at last following suit – if it can settle with a totally outrageous claim that cabin crewing on the non-stoppers be 21. But it must be a terrible strain on the wrists having to work for 13 whole hours. The more robust Yanks can do it with 11 looking after 243 pax . . . Thai has posted its 19th consecutive profit, a record of $A32. 3 million . . . TAA says it is back in the black . . . Boeing has rolled out its Boeing 737-300, perhaps unkindly dubbed by many as the ‘Mundane Plane’, after an exercise that showed how invaluable dress rehearsals are. The practice run saw the plane rip curtains and almost demolish sound equipment. All went well on the big day . . . Rolls Royce, with some dexterity, is now also in bed with GE, swapping RB211 technology for GE’s experience on the NASA-funded EEE, which has churned out 72,000 lbs of thrust. Rolls are also associated with Pratt & Whitney through the multinational consortium planning to build the V2500 engine for the new generation of 150 seats. There is no truth in rumours that Ken Wright, Australian Regional Manager for Rolls, has begun chewing gum or ordering plaid suits. . . Boeing’s new manager for Australia, filling a post long left vacant since Chuck Reynolds was transferred back to the US, is a Porn. David Maund should be in the chair as we hit the streets. Reynolds, who was extremely popular with airline clients here, recently resigned from Boeing and has returned to Australia to live.