Airline Affairs

The report claims the very capacity of this aircraft reduces the ability of an airline to provide enhanced frequencies. The report was also critical of the use of single pilot 9-seat commuters being allowed continued entry to KSA, their place being better taken by much larger 30/36 seater aircraft operating from the regional hubs. The report also endorsed the immediate construction of a second parallel runway at KSA in an effort to alleviate a capacity shortage which is envisaged as early as 1988 under present circumstances.

Suggestions for regional hubs would be Dubbo, Orange, Wagga, Tamworth or even Coffs Harbour. Smaller 9 seat (Chieftain, 402/ 404) and 18 seat (Beech 1900, Bandeirante, Domier 228, Metro, Aviocar and Jetstream) would hub into these regional ports from outlying towns thereby enhancing frequency of service and competition in areas where such a situation does not presently exist. From the hubs would operate a high-frequency service directly into KSA using such aircraft as the SF340, Shorts 330/360, Brasilia, ATR42, Dash 8, ATP and F27/F50. On certain primary routes jets in the F2B, DC-9 and 737 class could be utilised.

The report also backs the licensing of TAA to operate NSW intrastate routes, a move that must be worrying for East-West in the longer term. TAA is presently acquiring both Jetstream and ATR42 propjets and may even be able to deploy their surplus DC-9s (refer to Interview, this issue) as KSA feeders on the larger hubs. The possibilities for change are large and if Australia’s most populous State will allow not full deregulation it will sanction what the report terms “A system of regulated competition”, something that most industry observers agree the entire Australian route network could benefit by.

The report is now in the hands of NSW transport minister, Mr Ron Mulock and is expected to be officially announced in its definitive form during the course of this issue.

Ansett Acquire Operating Rights to South Molle Resort:

Ansett have acquired the operating lease of the South Molle resort in the Whitsundays to further boost their presence in the region. Ansett also owns the very up-market Hayman Island and has a large investment in Hamilton Island, both of which are to the south of their latest acquisition and may be linked in with existing Hamilton Island jet services.

Ansett will now spend several million dollars refurbishing the resort and finalising its connection to mainland power and water.

Ansett, Taa Move to Stifle East West’s Queensland Expansion:

Ansett and TAA have begun additional actions in the Federal court aimed at preventing EWA from commencing services over the six new Queensland routes for which it has been awarded federal and state licences.

The two airlines, in similarly worded actions in the federal court in Melbourne, are seeking an injunction against the Commonwealth preventing it from allowing EWA jets to use Commonwealth-owned airports at Brisbane and Mackay or from flying in controlled air space within Queensland.

They are also seeking an injunction to prevent EWA from commencing direct services between Brisbane and Cairns and Brisbane and Mackay, which the airline had hoped to begin flying in July.

The Queensland Government has also intervened in the matter because of concerns about the state sovereignty in relation to control of airspace and airports within its borders. Meanwhile, the new Ansett and TAA actions are seeking to prevent EWA from using aircraft already in its fleet to begin the services to Cairns and Mackay.

Earlier this year, EWA was granted Queens- land and Federal licences to fly between Bris- bane and Mt Isa, Cairns, Townsville, Proser- pine, Mackay and Rockhampton.

To enable it to do so, it applied to the Federal Government for permission to import three Boeing 737 aircraft, but consideration of this by the Federal Minister for Aviation, Mr Morris, has been blocked by Federal court injunctions gained against the Minister by Ansett and TAA.

The future of these injunctions, in which Ansett and TAA similarly claim, amongst other things, that the entry of EWA into Queensland will threaten the viability of the Australian airline industry, will be decided at a trial to commence in Melbourne on July 28.

A spokesman for EWA said that the airline was still confident that it would soon begin services within the state, but dates of commencement would be dictated by decisions of the court and any further actions by Ansett and TAA designed to block it from expansion in Queensland.

The airline is also continuing with its high court challenge against the Two Airline Policy. However, to speed up events, EWA has moved to have the Federal court examine the matters of fact while the high court delves into the matters of law.

 Smoking Ban on Aircraft Back in Minister’s Hands:

The previously announced suggestion by the Minister for Aviation, Mr Peter Morris, that smoking be banned on RPT flights of less than 90 minutes duration has been analysed by the major airlines and is now back in the hands of the Minister.

Australian Aviation believes that the airlines themselves initiated the suggestion as the vast majority of passengers already prefer non-smoking seats and the cost to the airlines in replacing dirty air filters and extra cabin cleansing could be vastly reduced if smoking was banned on such flights. Many non-smokers, who represent the vast majority of passengers, also complain of the effects of smoke even when seated in designated non-smoking zones due to the effects of smoke drifting from one area to another.

Meanwhile, the matter has not been helped by a spate of letters to the newspapers by the Tobacco Institute of Australia actively suggesting that the ban was turned down by the airlines and was not wanted by the travelling public at large. Their letters are based on a research questionnaire, sponsored by the Tobacco Institute, that asked deplaning air travellers at Tullamarine if they approved of the present system of segregating smokers from non-smokers on aircraft. While more than three quarters of respondents approved, we believe that most people were not aware that their approval would be used to suggest that they actively supported smoking aboard flights of 90 minutes or less. Many felt that the question would have been more appropriately asked as “do you approve or disapprove of a smoking ban on flights of 90 minutes or less”.

The matter now lies with the Minister, though it is expected to be some months before a definitive statement is issued either approving or disapproving the ban.

 United Fight for Market Share With Astounding Domestic Offers:

United Airlines has decided to establish its sales battlefield firmly in its ability to offer excel lent perks via its massive US domestic market. Most recent perk is the offer of 10 nights of free accommodation in leading US hotels when flying United to the USA. United also offers excellent add-on fares on its vast US domestic network in addition to fly/drive packages via Hertz, which is also owned by UAL By using this proven strategy, used so effectively by Continental in recent years, UAL can be seen to not be encouraging outright fare discounting on the Pacific routes it flies against regional flag carriers. With negotiations proceeding towards a renegotiation of the US/ Australian bilateral agreement, the giant US carriers do not wish to create regional publicity that might run against their previous claims of not wishing to destabilise the market through their sheer size.

Similar excellent value add-ons have also being offered on the Kangaroo Route and our advice is that whether on business or pleasure it is nowadays certainly worth investigating what is on offer before booking a ticket. We would also advise that you don’t dally on making a selection as all these special offers are limited and certainly require long lead times it your travel plans are not to be disrupted due to the non-availability of seats.

Additional Airlines Vie for Australian Services:

Several new international airlines were hoping to gain Australian traffic rights as we went to press.

Korean Air Lines, Air Mauritius and Air Lanka were all hoping to be able to commence regional services before the end of this year. Korean Air would like to extend its route network south in an effort to capture additional traffic that will eventually be associated with the Olympic Games. Qantas does carry a level of Seoul-bound traffic on its Hong Kong and Tokyo services and may slot in a 767ER to handle the direct Australia/Seoul service if and when one should eventuate. This would also free up some of the capacity on Qantas’ heavily patronised Tokyo flights.

Air Lanka has been trying to gain Australian traffic rights since 1984 and apart from offering a non-stop service to Sri Lanka would similarly be able to offer a one stop service to Australia/ London, something that Qantas has only recently introduced.

The third airline is Air Mauritius. This carrier would operate from Perth to the Indian Ocean island of Mauritius and would replace the capacity lost when Qantas were forced to withdraw from the service by the Federal Government in 1977. At that time the QF service linked with Johannesburg, something that may well hinder Air Mauritius’ latest attempt to gain rights as it too would be able to hub into South Africa from the island state. This in turn would enable more de facto capacity on the Australia/ South Africa route and take the strain off the present weekly SAA flight that is usually booked weeks in advance.

Qantas Posts Record 1985 Profit:

According to reports in Australian Business, though not yet officially verified by the airline, Qantas recorded a pre-tax profit of some $211m in 1985. This was more than three and a half times the figure for the previous year though it does include nearly $150m raised by the sale of 6 Boeing 747-200 aircraft. For the year Qantas earned $1. 6bn, a new record that was only disadvantaged by the rapid decline in the relative value of our dollar, something that not only forced up the QF fuel bill by more than $6-4m but also saw fewer Australians wishing to holiday overseas in the period. On the positive side, this was balanced by a vast improvement in uplift from Japan, the USA and to a lesser extent Europe.

For the year ahead Qantas will benefit by the fall in international oil prices and hopefully some strengthening of our dollar against the Greenback despite its relative poor showing in recent months against other primary currencies. Inbound tourism is gaining momentum in avalanche proportions and with America’s Cup, the Brisbane Expo and the Bicentennial all coming up in the next few years then Qantas feels that with its new, more flexible, fleet of 7678 and 747s it will be well situated to capitalise on the potential inbound tourism boom.

Qantas is also fighting to regain its rights to carry international passengers within Australia on existing QF services. This right, which every other international flag carrier has within its home country, was taken from Qantas in 1979 by the transport minister of the day virtually without explanation. Qantas is fighting now to get this right back and some interesting joint developments may result in the years ahead as Qantas moves closer to one of our domestics (Ansett, which Qantas sees as being more marketing orientated than its rival) as internal capacity is ultimately played off against regional offshore expansion. RIDING HIGH ON

Lufthansa International Air Freight Boom:

Lufthansa reported a growth of 4. 2% in its international air freight uplift for 1985. While this is considered good the real growth occurred in the Far East market where uplift increased by just over 17%. So strong is the influence of air cargo in the Lufthansa Far East market that for 1985 it represented 52% of net earnings, exceeding passenger revenue for the first time.

Australia was not left out of this success story as Lufthansa air cargo growth on the Australian route was so strong that the carrier is planning to introduce a third 747 Combi service to our shores early next year. Overall, air cargo represented a sizeable 20% of LH Australian sourced revenue for 1985. Lufthansa presently operates two 747 Combi’s a week to Australia configured for 247 passengers and up to 35 tonnes of cargo. The carrier also operates a 747 Freighter in conjunction with Qantas on a Frankfurt/ Melbourne operation and is looking at increasing this frequency if demand continues as strongly as it has in the past year.

Lufthansa is one of the largest non-specialist air cargo operators in the world and presently owns a fleet of 5 747F, 5 DC-8-73, 2 737F and 14 747 Combi aircraft. By the year 2000 the German carrier envisages operating up to 14 747 Freighters in a total fleet of more than 250 aircraft.

For 1985 IATA airlines carried some $13bn of air cargo, a figure that is conservatively expected to more than double before the turn of the century as freighter and combi aircraft become more popular among regular airlines. Closer to home Qantas has also been experiencing a boom of sorts in its air cargo operation.

As mentioned previously the national carrier leases half the space aboard Lufthansa’s weekly freighter in addition to a similar arrangement with JAL on the Tokyo/Australia service. Qantas also shares half capacity with Air New Zealand on their thrice weekly DC-8 trans-Tasman freighter. Qantas also operates its three 747 Combis to good effect on the trans-Pacific route five times weekly and to Tokyo and Hong Kong once weekly. Qantas is meanwhile presently upgrading its large Sydney air cargo facility at KSA and has earmarked more than $16m for major air cargo terminal development at Perth, Melbourne and Brisbane airports over the coming eighteen months.

Us Carriers Experienced Strong Growth in 1985:

Overall the US domestic air transportation system experienced strong growth during 1985. On the sour side, yield was lower than most preferred and the higher-than-expected loadings with many carriers was to some extent a result of the May/June United strike which proved a bonanza then and after for UAL’s rivals.

Among the majors, Continental enjoyed unrivalled growth posting an increase in Revenue Passenger Kilometres (RPK) of some 49%. Republic fared well with a 25% gain as did American with nearly 19%, Northwest with 17% and US Air with 18%. PanAm was down 14% while United dropped nearly 11% owing to the strike.

Internationally PanAm still saw a decline of 1% while again Continental posted excellent results with a startling 53% gain. Northwest, which now controls Republic, itself a regular cash box, gained nearly 15% while TWA increased international RPKs by a healthy 14%. US Domestic traffic increased by 10. 1% overall while internationally the increase was 9. 8%. Overall domestic load factor was 60. 7% and internationally it was 64. 5%.

The nationals, many of which are bigger than TAA and Ansett combined, posted overall growth of just under 20% with People Express as usual performing strongly with 42% growth. Top scorer though was New York Air with 50% and what must be one of the world’s classiest liveries. New York Air is another of the Frank Lorenzo/Continental stars and operates an east coast-based fleet largely comprising 737- 300s. The overall load factor for the Nationals was 63% Below the Nationals are the Large Regionals where growth is synonymous with survival. America West, which is acquiring Ansett’s present 737-200 fleet, looked promising with a growth of 83% while big BAe 146 operator, Air Wisconsin scored 70%. Midway, which purchased many of Ansett’s old DC-9-30s during the early eighties tabled 44% while F28 operator Empire scored a 21% growth.

Additional United Frequencies:

United Airlines has boosted its US-bound frequencies from seven to eight a week. United will now operate a Wednesday non-stop to Honolulu, three SP directs to LA and four via Auckland and Honolulu. Of importance to United is that five of the eight flights will be actually terminating at its giant Denver hub, allowing speedier connections to the more than 100 US domestic destinations that the carrier services.

Air New Zealand/Qantas Team on Tasman Freighter Link:

Air New Zea- land and Qantas have launched a joint trans- Tasman air freighter service.

Using Air New Zealand’s DC-8 Freighter, the two airlines now have designated freighter operations between Sydney. Wellington and Auckland on Wednesdays and Fridays, plus a Melbourne/Auckland service on Thursdays. The joint services have increased trans- Tasman cargo capacity by 30 per cent.

This latest joint service follows on from the successful overnight Air New Zealand/Qantas courier service, the Southern Crossing, which is operated with a Westwind jet and was launched last year. That service operates four nights a week between Sydney and Auckland catering mainly for shipments of small packages and documents.

Air New Zealand’s DC-8F can carry an average main-deck load of 30 tonnes. A further 30 cubic metres of freight can be loaded in the belly hold.

 Middle East Traffic Continues to Decline:

Falling oil prices have reduced Gulf traffic by up to a third since the beginning of this year reporting a number of major carriers serving the region. A rapid cutback in construction and development projects has curtailed the usually busy air bridge that once ensured heavy traffic uplift for Asian carriers serving the Gulf. The worst hit have been Korean, SIA and Thai International who have abandoned stopovers at a number of Gulf ports in favour of direct routings from Asia to Europe.

Ironically one airline that has been fortunate has been British Airways. BA of course was forced by UK Government decree in 1984 to hand over its then lucrative Middle East routes to rival British Caledonian. What has occurred though is that BA has been able to make reasonably good productivity from its new South American (ex-BCal) routes using its long-ranging 250 passenger L1011-500 Tristars while BCal has had to watch a massive and continuing traffic decline as the Middle East dissolves into a cauldron of terrorism and fiscal insolvency.

Asian Carriers Enjoying Share Boom:

Perhaps one day both Qantas and TAA, sorry, Australian Airlines, will be privatised, who knows? However, if the surge for shares in Asian carriers is any guideline then perhaps our airlines have higher corporate values than we presently appreciate. The most recent share offering, for Cathay Pacific, saw the extremely strong Hong Kong economy shaken as virtually every trading house in the Colony extended their overdrafts in the hope of acquiring CX stock. We say hope as few realised more than a small fraction of their investment owing to the CX share sale being oversubscribed by more than 5,600%! In all, some 230,000 applications for shares were received totalling more than $A10 billion dollars forcing recipients to make do with as little as 2% of their planned for purchase.

The record Cathay share issue follows strong share sale performances by both Singapore Airlines and MAS in recent months, though neither came even close to being oversubscribed by such a large factor. Other airlines looking to divest some of their State ownership are Lufthansa, KLM, JAL and Brit- ish Airways, which looks set to outperform the popular UK Telecom flotation.

Jal Inaugurate Ultra Long-Range Routes:

JAL have recently introduced two new long-range routes which tend to reflect the growing popularity of long-ranging non-stop services.

The two new routes are from Tokyo/London, 5,563nm across the USSR and non-stop from Tokyo/Chicago. Both flights take up to 14 hours depending upon wind strength and in the case of the Tokyo/London route save upwards of six hours journey time.

Non-stop ultra-long-range sectors are becoming more popular nowadays for a variety of reasons. Most are conceived principally to serve already existing strong business markets and as any businessman appreciates a reduced journey time, then the nonstop service is usually well patronised with high yield business class type traffic from the outset. Qantas is now proving this ably on its own one-stop-to-London service and non stop across the Pacific with the SPs. Airport congestion is also influencing some carriers to bypass the more heavily trafficked hubs while the extremely bad situation as regards terrorism is telling many travellers to limit their airport visits as much as possible in order to avoid potential problems.

Bcal Retrenches Staff in Wake of European Traffic Decline:

The virtual abandonment of Europe as an American holiday destination is sending shock waves through the European tourism and transport industry.

British Caledonian Airlines was recently forced to retrench some 7% of its workforce (over 1,000 people), close four regional offices and cut routes in the wake of the threat of terrorism against American holidaymakers. Traffic on the North Atlantic, always a fiscal graveyard for carriers, is down by more than 20% overall at a time when the route should be running to capacity. Similarly, routes within Europe and to the Mediterranean countries are suffering badly. The worst hit are Italy, Greece, Malta and Egypt.

 Pan Am Buys Ransome:

PanAm has purchased its first airline subsidiary with the recently announced acquisition of regional carrier, Ransome.

Ransome, which has been renamed PanAm Ransome Express will feed directly into PanAm’s Kennedy hub. Ransome presently operates a fleet of DHC Dash 7 and Nord 262 aircraft and is awaiting delivery of new ATR42 and Saab SF340 aircraft. This is the first time PanAm has aligned itself directly with a smaller region and may well signal an extension of Ransome’s network which primarily is situated within the important northeast sector of the US.

 International Hotel/Convention Centre for Adelaide Airport:

The Minister for Aviation, Mr Peter Morris, has announced that tenders would be called for the construction of an international standard hotel, convention centre and office administration complex at Adelaide Airport.

Mr Morris said the proposal was in line with the Federal Government’s policy of making the Aviation Department increase its revenue from business concessions and property assets.

The development will be on a 4. 5-hectare site at the northeast corner of the airport bounded by Burbridge Road, Clifford Street, the airport’s access road and the International Terminal. The project will be the largest single commercial development at a Commonwealth airport since the construction of the Travelodge hotel-motel at Melbourne’s Tullamarine Airport in 1970.

The land will be leased for a 40-year term while a two to three-storey complex is envisaged offering jobs for 300 people.

In addition to revenue from the lease of the land there would be indirect savings in wages, fuel and mechanical servicing costs by not being required to maintain this part of the airport. On-airport office accommodation for the Department, the Federal Airports Corporation and industry would become available at much cheaper rentals than in the central business area of Adelaide.

Rolls Royce Long-Life Blade Wins Design Council Award:

Rolls Royce has won a major UK Design Council award- its third in two years – for a type of turbine blade that is revolutionising the reliability of engines in airline service. This year’s award is for the directionally solidified high-pressure turbine blades designed and developed by Rolls-Royce for its RB211 family of engines.

Rolls Royce engineers say that introduction of these blades has brought new levels of reliability for the airlines. In service they have reached more than 13,500 hours and made 8,000 landings and takeoffs without replacement- about a six-fold increase in reliability. At takeoff, these high-pressure blades rotate at some 10,000rpm and each blade creates an outward pull equal to the weight of a London bus. The temperature of the hot gas in which they rotate is about 1,300°C-requiring blades of the highest quality and integrity.

The secret of the blades’ long lives is in the casting process during which cooling is strictly controlled to allow the metal’s crystals to align directionally to give the greatest strength. These DS blades have helped to make the RB211-535 (which powers the Boeing 757) the most reliable engine ever to enter service.

 British Airways Take the Budgie to Germany:

British Airways are to commence operations on short-haul West German domestic sectors with the BAe 748, an aircraft the carrier calls the Budgie in BA livery. The 748s will replace BAC 111 and 737 aircraft presently used by BA and will enable additional frequencies to be maintained between BA’s routes linking Bremen, and Munster Osnabruck.

and BA have had good service from their fleet of 748s which are presently used to good effect on the previously loss-making Scottish highlands routes. The giant carrier now hopes that a similar turnaround will take place by substituting the large jets with small fuel-efficient turboprops providing enhanced frequencies between smaller centres.

Computer Model for Remote Air Services:

Macquarie University has developed a computer model for the economic evaluation of air services to remote Australian communities.

Associate Professor David Hensher and private consultants, Airport Consulting and Construction Australia Pty Ltd, recently completed a study of air services and airport requirements for the Pilbara region in northwest Australia. The resultant computer model has wide-ranging applications and could also be extended to more complex issues such as investment on inter-urban transport.

The study which was commissioned by the DotA is particularly relevant in view of proposals to deregulate airline services in Australia. It has implications for airfares, frequency and quality of service and is being used to test the viability of alternative strategies.