Airline Affairs

For a start it curbs Ansett’s ambitions for regional expansion and secondly, it gives Qantas access to Air Pacific’s extensive series of landing rights throughout the Pacific. These rights will enable Qantas to offer all sorts of island hopping packages tied to tours of Australia and New Zealand, from which it has previously been largely excluded as a result of air rights trading between the New Zealanders and Americans.

Qantas will soon launch a major new marketing campaign based around these new opportunities and in the slightly longer term is likely to be ordering a number of new aircraft. The most interesting among these will be an extended range version of the stretch 767, probably for delivery about 1987.

The 767-300LR is claimed to have comparable range and operating economics to the 747-always the benchmark against which the seat/mile operating costs of airliners are measured. These aircraft could find all sorts of employment on Qantas routes and might even end up doing one-stop to London from eastern Australia.

Qantas is also interested in some smaller aircraft such as the Boeing 737, in various versions, and although these are intended mainly for Air Pacific, they could be used to nip at Ansett’s heels in any changes on the domestic front, where the Government has promised an inquiry to begin about now.

Qantas recently sold four of its oldest Boeing 747-200 aircraft to the US discount fare airline People Express. This brings to six the number of older 747s sold by the airline this year. The sale has been arranged by the Boeing company while the first two sales were arranged directly between Qantas and the purchasers.

The first two of the four aircraft were to be handed over to Boeing in November. However, they will remain at Mascot while interior conversions are made by Qantas and will be handed over to People’s Express in April and June, 1985 for the busy Northern summer season. The other two aircraft will be handed over later in 1985.

Boeing officials said a major reason for Qantas winning the sale was the excellent condition in which the aircraft had been maintained. Qantas recently sold a second Boeing 747 aircraft to an international trading company and leased it back for its own use. This followed the recent sale of its first 747, VH-EBA, ‘City of Canberra’, to Air Lanka, for about $23. 5 million.

Air Lanka, a leading low-fare airline operating between east Asia and Europe, is negotiating with Qantas for bilateral rights to operate services into Australia. Meanwhile, the Irish-based trading company Guiness-Peat and Associates, which handled the Air Lanka sale, acquired Qantas’ second 747, VH-EBB, ‘City of Melbourne’ for a price believed to be about $24 million. This aircraft has been leased back to Qantas for an unspecified period pending the introduction of new aircraft by Qantas through 1985.

Qantas has had six of its oldest 747s (which entered service between 1971 and 1973) up for sale for almost a year pending the introduction of three new stretched upper deck 747-300 aircraft and six smaller Boeing 767ER (extended range) aircraft. Deliveries of the new 747s began on Qantas’ sixty-fourth birthday this November 16.

Elsewhere in this edition we allude to the yield-earning potential of the Boeing 757. Providing you have the loads this aircraft has over the past two years proven itself to be capable of offering the lowest fuel burn per seat of any airliner in operation today. To back up this claim we note the recent statements made in Air Transport World magazine by Eastern Airlines president, Frank Borman in regard to his fleet of 757s. Based on the first 18 months of operation, Eastern’s 757s have already saved $US40 million in fuel costs compared with what it would have cost to fly the same number of seat-kilometres (7 billion) with the Boeing 727-100. The 757 is 84% more fuel efficient than the 727-100 and 47% better than the 727-200. Furthermore, Eastern’s 757s are operating with the RB211-535C engines, when these engines are retrofitted to -535E4 specs early in 1985 a further 10% reduction in fuel burn will occur.

PanAm‘s huge Airbus order may have grabbed the headlines recently but the airline’s tightrope act as it struggles to return to viability means its future remains uncertain to say the least.

The airline recently laid off 900 ground staff in the US and is fine-tuning its 23,000 US employees to take into account a 10 per cent reduction in its domestic fleet during the last year. US domestic traffic figures for September reveal that PanAm’s traffic declined by 24. 4 per cent and capacity by 25. 9 per cent (compared to September 1983) while load factors went up 1. 2 per cent to 56. 2 per cent. While worldwide load factors were up 2. 7 per cent to 66. 9 per cent, PanAm has suffered a six per cent fall in load factors on its Pacific routes, although capacity has been reduced by 9. 7 per cent.

At time of writing, third quarter financial results were about to be announced, though PanAm lost $120 million in the first half of this year, compared with $69 million in the same period last year. Although all five of PanAm’s major labour contracts are due for renewal at the end of this year, management is keeping up the pressure on unions, pointing out that any increases in cost, or even failure to reduce current costs, could prejudice the recovery chances for the airline.

It is interesting to contrast the sort of discussions PanAm is having with its labour groups to the enthusiastic tones of the announcement of the Airbus order.

In the short term at least it is a marriage of convenience – Airbus Industrie had a lot of unsold or uncollected ‘white tails’ at Toulouse, and Pan Am needed modern new aircraft in a hurry without having to tle up large chunks of increasingly scarce capital.

Airbus has signed a detailed letter of intent with PanAm for the acquisition of 44 Airbus A300, A310 and A320 aircraft. This includes an Interim lease of twelve A300B4s and four A310-2003, the purchase of twelve A310-300s and 16 A320s the newest addition to the Airbus aircraft family. PanAm also has an option to purchase an additional 13 A310-300s and 34 A320s, bringing the total number to 91.

The value of the initial order will be approximately one billion US dollars subject to escalation and the entire deal could involve up to three billion dollars. The success for the multi-national government-backed Airbus consortium was interpreted in the European press as one in the eye for Airbus’ arch-rival, Boeing.

But while a major sale for a “foreign’ manufacturer in the traditionally chauvinistic US market is certainly a breakthrough, the deal is more likely to appear in the medium term as one of the first in a series of breaks in the log-jam that has developed in aircraft sales to cash-poor airlines.

Until recently poor financial results from major airlines had meant a corresponding drop in aircraft sales. With 26 aircraft completed but unsold earlier this year. Airbus Industrie had already trimmed its production rate from 47 to 45 aircraft during this year and there were suggestions that it could be cut to 35 in 1985.

But ageing, fuel-thirsty aircraft and new noise regulations mean that time is running out for airlines, including TAA, which have been avoiding decisions on new fleet development. Although some medium-sized airlines, such as Qantas, with its Boeing 747/767 purchase, have moved into re-equipment, the major airlines of the world have mostly kept their options open by running on existing aircraft or leasing interim types.

One significant reason for Airbus winning the sale would be the relative weakness of the French currency against the very strong US dollar – and the franc is likely to be devalued yet again, if rumours in France are to be believed.

The ‘innovative financing’ already indulged in by some US manufacturers, notably McDonnell Douglas, to lubricate aircraft sales during depressed times, is likely to be a feature of the Airbus- PanAm deal. PanAm posted healthy profits last year after a lengthy period of losses so severe that it had to sell off most of its major assets, including its New York headquarters.

A fair number of the unsold aircraft that litter Airbus Industrie’s final assembly plant at Toulouse, France, were designed for airlines which were unable to come up with the full money.

Qantas will be employing the first two of its Boeing 767-200ER twinjets on its trans-Tasman services. The first aircraft is scheduled to arrive next July and will spearhead a new era of growth for the airline based on enhanced frequencies. Qantas, for instance, will be planning to run two Sydney/Noumea services a week with the 767 as against a weekly 747 service now; this the airline hopes will provide traffic growth through the attraction of increased frequencies. Similarly, the carrier also hopes to be offering many more flights each week to places such as Port Moresby, Nadi, Jakarta, Bali and New Zealand. Meanwhile the carrier has just taken on its first two female pilots. Miss Sharelle Quinn, 24, and Miss Anne Bennett, 26, are presently undergoing extensive training at the Sydney jet base in preparation for their appointment as 747 Second Officers next year.

• Impressions. . . The Australian Aviation team managed to cover quite a few air miles during the reporting period. Farnborough air show, Qantas 747-300 rollout in Seattle and numerous shorter hauls left us with a variety of impressions gained by flying with a number of carriers and aircraft types.

We found the new British Airways class excellent. The top deck with just sixteen extra large seats and voluminous below-window luggage containers allows you to relax in an environment not found on most wide-bodied long-haul jets these days. While the extra-large Club seats (they are larger than many First Class seats, BA claim) lack definitive body shape, they do offer more chance of sleep due to their sheer size. Additionally, if you have an unoccupied seat beside you the large armrest lifts up to allow you to stretch out something that most other Business Class and First Class seats do not allow.

While still flying with BA we visited Shorts in Belfast and Fokker in Holland, flying there in a Trident III and a Boeing 757. The Tridentis remarkably quiet inside when you consider its horrendous external noise factor, which is the reason all BA Tridents will be grounded by the end of 1985. Pressurisation aboard the Trident was amongst the best this rather sensitive writer has ever experienced, far better than the 727-100 and DC-9 models that were being built at the same time as the Trident. The Boeing 757 was, as expected, excellent, a real money earner if you have 727 type load factors. Both sectors on this aircraft were full, though the large overhead baggage bins comfortably took the carry-on baggage of what were largely business-frequented flights. By comparison, the bins aboard the 1960s-vintage Trident were more akin to your car glove box-how times have changed!

Qantas cabin service was as usual up to its high marks, though overseas some of the non-Qantas check-in people could well be improved. Many readers will by now have seen the new Qantas livery as the first 747-300 arrived ‘home’ during mid-November. Liveries of course are always a matter of personal taste though we like it and thought it time for the airline to capitalise on its revitalised economic performance with a major visual overhaul.

The new 747EUD has its Business Class on the upper deck which is actually quieter aerodynamically than the same point in the aircraft downstairs, according to Boeing engineers. The Business Class seats are excellent, of true posture design, though the trade off is that the centre armrest does not retract to allow the use of an empty seat next to you as an aid to sleep. Qantas have remedied this by providing footrests with an ample degree of recline.

While in the USA it was interesting to see the extent to which Frequent Flyer programmes have taken over. Few carriers are exempt from the need to offer a competitive plan and the smaller domestic carriers even link in with the giants in order to gain product loyalty from the high-yield business traveller.

As an example of how it operates, TWA’s plan offers points against the mileage you book on that carrier. Many executives find it easy to put away as many as 100,000 miles in a year, which would allow them to then take their family for a vacation free of charge. Conversely, the accrued bonus can also be used to upgrade, which allows the executive, or the company, the opportunity to save money and gain a higher standard of service than would normally be the case.

The TWA scheme is also available for travel on Qantas and Eastern so a true international network is at the disposal of those who wish to take advantage of it. Additionally, you can use bonus points in association with some car rental and hotel chains, for further discounts. Obviously the aim is to get companies, and key executives, to fly the one airline wherever possible and from our conversations with other travellers it is obviously working.

Has this any application in Australia? Of course it has; we imagine both airlines have done their studies but neither wishes to introduce such a scheme (which really is a form of discounting in the long term) while the present two airline policy exists and overall yield is depressed. The attractions and benefits of such a local scheme, perhaps tied in with an international carrier, are obvious and no doubt will come in time.

Departing Seattle we flew to LA on a PSA MD-80 which is always a pleasant experience particularly owing to the five-abreast seating. I don’t think I have ever been in a commercial airliner that climbs like the MD-80 family; regardless of payload it is always a source of amazement when compared with similar aircraft. An interesting ‘gimmick’ that could be taken up by our airlines was that towards the end of the PSA sector they invite you to surrender a business card for lamination as a PSA baggage label. Personally I think this is an excellent, and relatively inexpensive way, of getting Ansett, Qantas or TAA product awareness across to a very special travelling market.

The Australian and Japanese Governments have reached an agreement to increase the number of weekly flights between the two countries.

The Minister for Aviation, Mr Beazley, said that the increases had been recommended by Qantas and Japan Airlines (JAL) following talks between the two carriers in Tokyo in August.

Each airline would be able to increase its number of scheduled weekly services from three to four from April next year, providing up to 870 extra seats each week. A joint freighter service, planned to operate from October 1985, would significantly increase freight capacity.

The two airlines also plan to seek approval to operate an additional four flights each between December and March to make more seats available over the busy Christmas-New Year period.