Airline Affairs

Droning westwards to Perth against prevailing headwinds, passengers had time for two-up games run by the hostesses in the aisle while up front the pilots passed the time with a portable chess board balanced on the throttle quadrant between them.

Sometimes the winds were too strong to make the flight in one hop and the aircraft used to land at tiny Forrest in mid-Nullabor, near the centre of the famous 478 km straight on the trans-Australia railway, to refuel from drums carried in by rail.

In May 1964, TAA’s first Fokker Friendship F27 turboprop, which had been in service for about four years, clocked up 10,000 hours flying time, and TAA was preparing to move into its new headquarters building in Franklin Street, Melbourne.

TAA’s first jet was introduced on August 1, 1964 – a Boeing 727-100, a shorter-body version of the 727-200s still operated by both airlines, but likely to be phased out over the next few years. With the coming of jets, travel times were reduced dramatically – where the main trunk Sydney-Melbourne had averaged two hours or more, the jets were routinely completing the flights in about one hour and 10 minutes.

That, of course, was before the days when political neglect led to increasing congestion at Sydney airport and aircraft had to circle for lengthy periods waiting for a landing slot, forcing up both tempers and prices, and throwing schedules into chaos over much of the country.

Not everybody liked the shorter travel times – at least one hostess turned in her apron after her first Perth jet flight with the words: ‘I am not a bloody waitress. ‘

The smaller Douglas DC-9 jets did not arrive until March 1969 and were promptly grounded for three months over a dispute with pilots over whether the aircraft designed for a cockpit crew of two should have a third man in the cockpit.

The two-crew cockpit eventually won and set a precedent for the Boeing 737-200 later introduced by Ansett, and the larger Boeing 767 to fly for Qantas from next year, although Ansett has become the only airline in the world to operate the 767 with three crew.

But in 1964, the venerable DC-3 ‘Dakotas’ {most of which were converted WWII military transports) were being wound down in mainline service but still operated a considerable part of the air network, particularly in Queensland.

The airlines operated diverse fleets in those days.

Ansett, as well as two Sandringham S25 flying boats, had three Lockheed Electras, three DC-6Bs, 11 Viscounts, four DC-4s, four F27s and nine DC-3s.

TAA had a largely identical fleet but it had nine F27s and one de Havilland Drover – cobbled up local production built around three surplus Gypsy engines originally developed in the 1930s for Tiger Moths. Both airlines were still flying Papua New Guinea services with aircraft including former wartime Catalina flying boats, Bristol Freighters, twin-engine Piaggio amphibious aircraft and a variety of Cessna light aircraft.

East West had two F27s, four DC-3s and one Beech 50, while the inimitable Eddie Connell an was flogging around remote outback communities with two Herons, and a variety of smaller Beech and Cessna aircraft.

The now common commuter airlines that serve smaller centres were almost non-existent then.

On the international scene, Qantas already operated 11 Boeing 707s, but it was far from out of the propeller era with four Electras, two DC-4s and two DC-3s.

International air travel was still very much the expensive glamour way to go in those days and international air travellers could still find willing audiences to hear about how fast the clouds went by.

The bulk of people could travel by sea for a fraction of the air fare on ships arriving and departing almost weekly from Europe, Asia, the US and New Zealand.

On the airport scene, the Department of Civil Aviation had just let a contract for the extension of the north-south runway at Sydney to be extended into Botany Bay and in Melbourne the first runways were being laid at Tullamarine, which would shortly take airline services away from Essendon.

Total number of passengers flown on domestic routes in 1963-64 was about three million.

Today, despite a contraction in the market during the recession of the last couple of years, over 11 million passenger journeys are completed.

• Qantas made a profit of $58 million before tax from the airline operations to the year ended March 31, 1984.

This compares with an airline operating loss of $47 million in the previous year but is still subject to audit and final adjustment.

After allowances for normal items such as minor asset sales tax and tax credits from last year, the overall operating profit to; 1983-84 is expected to be $58. 3 million, compared to last year’s overall loss of $34. 4 million.

Qantas chairman, Mr J. B. Leslie, said the result was achieved mainly through stringent cost-cutting and some improvement in yields and was particularly satisfactory considering the extremely competitive and depressed nature of international aviation.

Three years ago, the airline had to sell more than 70 per cent of its total seats to break even while today it was able to achieve break even at 56 per cent.

The board recommended that the company should pay a dividend for the year of five per cent, amounting to $6. 9 million.

The Federal Government, which owns all Qantas shares, has introduced new financial directives for Qantas which will give it greater freedom and flexibility in running its own affairs.

Former controls on Qantas’ ability to undertake expenditure and leass have been modified with Government approval only required for certain major items, including new aircraft.

Qantas can now raise its own borrowings for projects under $5 million, up to a limit of $20 million in any one financial year.

It also has access to an increased range of avenues for short-term investments.

All Qantas salaries will be determined by its board under new salary arrangements, except for salaries of the chief executive and deputy chief executive.

• Kendell Airlines is to become the first Southern Hemisphere operator of the new SAABc Fairchild 340 regional airliner.

Operating out of Melbourne, Kendell will introduce its first 340 in December.

The company will also double the size of its maintenance base at Wagga Wagga, where it provides heavy maintenance and repair on components for several overseas regional airline operators.

TAA, Qantas and Ansett have strongly criticised the Federal Government for forcing airfares by imposing millions of dollars in unnecessary costs on the aviation industry through unrealistic cost recovery policies.

Their submissions to the Independent Inquiry into Aviation Cost Recovery point to a number of areas where government costs could be cut and changes in procedures would allow them to improve their own efficiency. (Refer to Reece. )

They claim that millions of dollars are wasted over unnecessary ATC {air traffic control) delays, curfews, noise abatement requirements, outmoded airways facilities, misallocation of resources and public-service overstaffing.

TAA singled out the development of the new Brisbane airport facilities as an unnecessary waste of precious funds which would be better diverted to improving efficiency in other areas.

It said that rather than ‘unnecessary’ development of facilities such as Brisbane it would like to see upgrading of Alice Springs, Rockhampton, Mackay and Kalgoorlie.

It would also like to see money diverted to modernising air traffic and airways facilities, extension of radar and navigational aids, parallel taxiways and runway grooving and resurfacing to reduce wet runway performance problems.

TAA said ATC delays cost it $5. 8 million in the 12 months to March 1984 in direct operating costs, with delays between Melbourne and Sydney alone costing $1. 8 million.

Curfew restrictions in Brisbane, Sydney and Adelaide reduced airline operations to 70 per cent of total availability by precluding most economic utilisation of aircraft and off-schedule diversion or aircraft holding at other ports.

The cost of adhering to noise abatement procedures had been estimated in 1975 at $2 million per year for Sydney alone and these costs have escalated due to an increase in diversion procedures resulting from residential developments around major airports.

The airlines also complain that they are charged millions of dollars for services such as meteorological reports and security which are provided free to other industries and the community.

TAA while airlines had spent hundreds of millions of dollars on aircraft to keep up with new technology, the DofA’s facilities had not kept pace and resources were being diverted to maintenance of less efficient systems.

‘Current airways facilities in particular offer substantial impediments to efficient airline operations,’ it said.

‘The ATC system does not allow TAA to utilise its wide-bodied fleet to best advantage. It does not provide any incentive for the introduction of even more efficient aircraft in the future. ‘

Flight planning in Australia had been largely unchanged over the past 20 years and heavily labour-oriented while other developed countries had moved to database systems, computerised facilities and VDU/printer usage.

Search and rescue standards were regionalised and there was an overprovision of facilities and dilution of experienced staff while other countries were concentrating on centralised facilities and specialisation.

TAA said the level of DofA costs attributable to the airlines had grown significantly in recent years.

Between 1981 and 1983 TAA had cut its staff by 852 – over 1 O per cent of total until it was below the number of staff employed in 1977.

However DofA staff had grown from less than 8500 in 1977 to about 9600 by the end of 1983.

• Austrian Airlines is proposing to buy a new fighter aircraft which it would maintain at its own facilities and lease out to the Austrian Air Force, which has been desperately trying to find money for new aircraft for many years.

Asked about the effect of new ICAO guidelines which specifically prohibit shooting at aircraft owned by airlines an AA spokesman admitted: ‘We had not thought of that.

• TAA has leased a Boeing 727-200 aircraft from Ansett for six months to overcome shortages in peak period capacity while two of its Airbus A300 aircraft are leased overseas.

The 150-seat aircraft has been repainted in TAA livery and will be repainted in Ansett colours again before it is returned prior to Christmas.

Although both airlines said Easter holiday travel numbers were their best for three years, overall passenger numbers remain depressed and both airlines have reduced their fleets by leasing aircraft overseas.

German charter airline, Condor, is operating TAA’s two Airbus aircraft in a 299-seat all-economy configuration during the peak European tourist season.

They will return to Australia later this year and TAA hopes to sell or long-term lease one of them to Air Nuigini to replace an ageing Boeing 707 on Singapore, Hong Kong, Tokyo and Manila services.

• Pacific air routes between Australia and the US are some of the most competitive and volatile in the world where careful buyers can pick up very good deals on tickets.

Although public discounting, such as Continental’s recent limited offer of $870 return fares between Australia and the US, is still fairly rare, many airline sources believe it is only a matter of time before increasing over-capacity tempts more airlines to start price cutting.

Qantas recently began offering return flights to Honolulu for $800 and Air New Zealand had eight-day Honolulu packages for $940 to October 1 .

In the meantime, all sorts of unofficial discounts are available under-the-table for all classes of travel and people who shop carefully around airlines and travel agents should be able to win worthwhile savings on official fare levels.

Sometimes this comes in the form of a direct discount. but more often it involves ‘free’ extras such as car hire and accommodation.

Under the extraordinarily liberal bilateral air treaty between Australia and the US, neither Government can prevent any airline offering any fare or any number of flights it wishes, provided there are fair and equal opportunities for other airlines to match them in the market.

Continental’s $870 offer, at a time when other airlines were charging (officially at least) from $1570 to $1845, was tied to three new flights per week it is introducing from San Francisco.

Continental increased its Pacific services from seven to 10 per week on July 1 and Pan Am has started moves to bring direct flights by its long-range 747-SP aircraft from six per week to daily, as well as four additional flights via New Zealand and Honolulu on normal 747s.

Qantas has responded by introducing direct flights by 747-SP and Air New Zealand has added new direct flights from Sydney to Auckland, then direct to Los Angeles and London.

According to some sources, the number of extra seats introduced by airlines over the last few months could carry the total number of people travelling in some off peak periods.

The Australian Government is expected to protest to the US Government about additional flights by US airlines which have brought tourists a bonanza in cheap fares but left airlines unable to meet their operating costs.

Qantas openly admits that it is losing money on its Pacific services where it claims that major US airlines are trying to ‘squeeze it out. ‘

Although other airlines are less forthcoming, most admit privately that they are losing money or barely covering their direct costs on the route.

Most airlines claim good load factors on their aircraft but fares discounting has become so extensive that many admit their financial yield is not adequate to cover all costs.

Qantas’ introductory offer of $US499 for a return trip from the US to Cairns has been swamped with bookings but senior Qantas officials admit that they are selling it far below cost to promote the new service.

There were ugly incidents at ticket counters in Los Angeles – someone who could not get a seat attacked a man in a koala suit and another man walked out clutching his ticket saying: ‘I don’t know where Cairns is but for that price I gotta go. ‘

But even when fares reach their full rate after the introductory period, Americans will pay only $US1100 for a low-season excursion Qantas ticket from the US West Coast which allows stopovers in Honolulu, Cairns, Sydney, New Zealand and Tahiti before returning to the US.

They will be able to fly between Cairns and Sydney for nothing on these tickets and to Melbourne and Perth return for $100 each.

The ticket also permits them to make a return trip from Australia to New Zealand before returning to the US from Australia.

The Americans still have the better part of the deal but it is not unreasonable to hope that Australians will soon enjoy comparable deals for travel to the US.

• Ansett Airlines is planning a major expansion into worldwide charter operations with a variety of new aircraft.

It plans to expand its own fleet and those of subsidiary airlines by introducing new types and retaining, them instead of disposing of older aircraft.

Aircraft surplus to its own requirements will be short or long-term chartered. with or without crews. to airlines or other users, or operated in joint ventures with them.

Ansett already has three Boeing 727s leased to an Alaskan airline, one 727 leased to TAA, and one Fokker F27, with crew, leased to Air Pacific of Fiji.

Because of the continuing depression in domestic travel, it is seeking a lease for its fifth Boeing 767, due for delivery from the factory in September and claims to have refused an offer to sell the aircraft at a profit.

A prime target for leased aircraft is low-cost holiday-package ‘charter’ airlines in the northern hemisphere which have high summer demand peaks during slacker winter months in the southern hemisphere.

Ansettt recently ordered two British Aerospace 146-passenger aircraft for Airlines of WA, with options on a further six.

If they prove viable with AWA, the four-engine 146s – which restrictions placed on over-water operations by avoid most of the two-engine aircraft – may be employed extensively throughout the Ansell network. It is looking at further fleet development and appears to favour the recently launched stretched and re-engined version of the Boeing 737-300 as well as the Boeing 757, which has a common cockpit with its existing Boeing 767s.

Recent firming of the international market for used airliners appears to have persuaded Ansett that despite their high cost, new aircraft pay dividends in passenger appeal, high depreciation and potential for charter revenue.

According to some well-placed industry sources, it may acquire or retain a number of older, second-hand aircraft, which can be operated profitably on only a few months per year, and be pushed against the fence at other times.

With signs that East-West is about to go back on the warpath, continuing pressure from the Government and international airlines for a greater range of discounts on domestic fares, and the Government intent on establishing a new regulatory regime by the end of the decade, A set faces limited prospects for growth within Australia.

It has been contained in its ambitions to develop a regional international network in its own right because of the Federal Government’s policy of Qantas being the sole international flag carrier for Australia. It has however developed joint operations in the Pacific with Air Vanuatu and Polynesian Airlines of Samoa despite strong opposition from Air New Zealand and Air Nauru, and is working on further developments in the region.

This has resulted in Ansell becoming part-owner of Polynesian Airlines’ sole Boeing 737 jet which registered, crewed and maintained to New Zealand standards.

Ansett is also considering implementing a standard aircraft colour scheme across all its subsidiary airlines to facilitate transfer of aircraft between them.

This is likely to happen first with new and existing aircraft of Airlines of WA and other subsidiaries, which retain considerable autonomy through their local boards of directors, may follow.

Air fares between Australia and Europe are tumbling by up to $800 as the result of a break down of the a fare-setting cartel of international airlines.

Although published air fares rose at the beginning of August as airlines abandoned their yield improvement program (YIP) unofficial discounts were expected to increase markedly.

By late July some agents were already selling return fares to Europe on MAS (Malaysian Airlines Systems) at about $1250 for travel during periods when official tarns were up to $2029.

Apart from currency adjustments, airfares to Europe have not increased for two years.

Airlines say that there may be a lull before heavy discounting starts because the travel market has been fairly buoyant in recent weeks and most airlines are flying with high passenger load factors.

Most expect discountingto increase travel periods later in the year and some believe this could develop into a major fare discounting war.