Airline Affairs

Qantas has been concerned since PanAm first announced its Pacific route sale back in 1985. The Flying Kangaroo after all has more than 30% of its total capacity dedicated to the relatively unprofitable Pacific routes while Uni- ted for its part dedicates less than 3% of its total uplift to this market. For a time it appeared that United and Continental would not pioneer predatory price-cutting fare wars on the Pacific but events of late have shown this to have been an optimistic assumption at best, As we closed. for press, negotiations between the Australian and US governments were continuing though with about as much sensitivity from the US side as was recently displayed over the disastrous subsidization of US grain exports. The 1987 War of The Pacific will certainly be one to watch with interest.

Australian Aviation Flies High:

International passenger traffic, in and out of Australia, is expected to increase by about 7 per cent in 1986/87. According to the information paper ‘Outlook for the Aviation Industry’. Prepared for the Aviation Industry Advisory Council (AVIAC) by the DolA.

The paper suggests that international passenger traffic is expected to continue its strong growth. Scheduled international freight traffic is also expected to maintain its annual growth rate of about 4 or 5 percent. Meanwhile, domestic airline freight is likely to increase in 1986/87 by about 1 or 2 percent.

Aviation Minister Mr Peter Morris said the industry’s strength is reflected in the record number of total aircraft movements at capital city airports in 1985/86. “Aircraft movements at all capital city primary airports except Darwin increased last financial year, taking the total number of movements to 6. 9 per cent more than the last peak,” Mr Morris said.

He said the paper also predicts that the growth in passengers and freight carried by Australia’s domestic, regional and commuter airlines will continue this financial year.

However, the overall rate of growth is expected to slow slightly and activity in the General Aviation sector should continue to remain fairly static.

East West Revises Schedules in Light of Lack of Capacity:

East West Airlines has revised its entire route network in an effort to maximise its fleet assets to best advantage. In many cases, claim company spokesmen, the airline is being disadvantaged as it now has to forsake some of its previously connecting flights for the sake of keeping the entire Australia-wide schedule viable. The changes, claim East West, are not by choice but by necessity.

Meanwhile the carrier is achieving very good (85%) load factors on its recently introduced Brisbane/Cairns F28 Service though desperately requires additional capacity to augment the high inherent costs of such an operation using only one aircraft. Application for their first Boeing 737-200 has been with the Minister since November though the second and third aircraft won’t be applied for till after the current Capacity Determination Review is completed late in 1986. Ansett have also appealed against EWA’s Queensland route victory in the Federal Court though the routes will remain active under the present wording of the agreement with the Queensland Government. EWA hope to have their first Boeing in service by next Easter and will operate the aircraft in a 120 pax configuration.

Tnt Bae 146 Freighter an Omen for the Future?:

TNT UK leased the British Aerospace QT 146 freighter for a two-week trial period during late November and early December to service their European night priority satchel operation. TNT may well use this type of aircraft to greater advantage if the initial trial proves successful.

Of local implications are the options that the Ansett group still presently hold against 6 146- 200s and which we believe must be exercised or forfeited by June 1987. Ansett have always watched the developments of the Night Freighter version of the 146 with interest as has TNT.

TNT could also have its own air arm by the time you read this if their press time takeover bid on the US Airborne Freight Corp is successful. If acquired by TNT, Airborne would be integrated on a worldwide basis to a greater level than it presently is and may even acquire those 747F freighters that Sir Peter Abeles has long been keen to fly.

Closer to home the joint TNT/News Ltd group acquired a half share in the prestigious Regent Hotels group in October. In all it has been a busy year for both companies with them achieving record net profits, and acquiring the Regent Hotels shareholding. Travel and formalising an important association with Qantas in addition to laying the groundwork for an enhanced Pacific presence via Ansett New Zealand.

Brisbane International Terminal to Be Upgraded:

The DotA has allowed a further $1. 5m to upgrade the existing Brisbane Airport international terminal. Expected to be completed as early as this July, the extensions will increase, check-in facilities by 70% and provide a greater amount of space with which to cater for the increasing number of international flights.

Also on schedule is the completion of the totally new Brisbane airport which is expected to become operational this September. The new airport will be the most modern in Australia, will be curfew free, have 26 aerobridges and two separated funways with land set aside for a third as necessary.

Australian Sells an A300:

Australian Airlines has sold one of its five Airbus Industrie A30084 wide bodied twinjets to Toa Domestic Airlines (TDA) of Japan. . . The aircraft, VH-TAB, will depart Australia this March following the delivery of Australia’s tenth Boeing 737-300. Australia presently have another A300 on lease to Air Niugini and plan to maintain the type in local service into the 1990s. Disposal of the A300 will inject more than $A40m into the airline’s coffers this year and will allow enhanced flexibility in scheduling via a greater mix of smaller aircraft.

Qantas Wins South American Engineering Deal:

Qantas Engineering has won its second major contract in recent months. The latest deal involves modifying high-pressure turbine blades on Brazil’s Varig airlines Boeing 767 Pratt & Whitney JT9D- 7R4D engines. The big Pratto have been having blade problems on 767 and A310 aircraft for some months and Qantas’ own in-house expertise associated with our depreciated dollar has led to what is hoped will be the first of a number of such contracts. . Qantas earns more than $40m annually from contract work performed by its engineering and maintenance division. Customers include aircraft operators in Asia, the Pacific region and the Middle East as well as in Australia.

Sydney International Terminal to Be Upgraded:

The DotA has confirmed that it will spend some $23m on redeveloping and improving Sydney’s present international terminal.

The plan will increase terminal passenger capacity by 80% and when completed will allow processing of over 1800 arriving or departing passengers per hour. Work is expected to commence on site this February and the various parts of the international terminal facility will be completed progressively over a three year period. The project will take that long to complete due to the need to stage the work and allow the existing terminal facilities to continue in operation.

Aviation Minister, Mr Peter Morris, also advised that the new Federal Airports Corporation (FAC) will consider the issue of a second KSA international terminal building as one of its first tasks when it assumes management of Australia’s major airports in the first half of this year.

 Record Activity for Domestic Airlines:

Australia’s domestic airlines carried a record number of passengers in the past year according to the provisional statistics for domestic aviation for the September quarter.

The figures show the domestic airline sector achieved record activity for the three months to 30 September 1986. Total domestic airline activity for the quarter was almost 310 million tonne kilometres. This is an increase of 4. 4 per cent on this quarter last year.

Total domestic airline activity for the year ending 30 September grew by more than 7 per cent to more than one billion tonne-kilometres. The passenger component, representing about 87 percent of the total domestic airline task increased by almost 6 percent for the quarter and by 8 percent during the year. The overall passenger task performed by regional airlines grew by more than 4 percent for the quarter.

The total cargo task performed by domestic airlines fell by just over 4 percent in the quarter but growth of nearly 2 percent was recorded over the year. Total hours flown increased by nearly 3 percent in the quarter and nearly 5 percent over the year. The growth in task performed and hours flown was reflected in increased aircraft movements at major airports. Domestic airline aircraft movements at the eight capital city primary airports increased by about 3 percent in the quarter and by 8 percent over the year.

 Flying Tigers Losing Their Growl:

The international air freight airline, Flying Tigers, has decided to sell its assets in order to stave off bankruptcy.

Flying Tigers is saddled with a very expensive flight division and employs some of the highest paid aircrew in the industry. The company sought for much of 1986 to gain substantial wage reductions from its staff in addition to other much needed operating efficiencies. These however were not forthcoming and so Chairman, Robert Jensen, has decided to sell off the assets and close the company if necessary. Flying Tigers operates the world’s largest fleet of 747 Freighters and has been a pioneer of international air freight since the end of the Second World War.

 South African Airways Ban Could Prove a Money Spinner for Qantas:

The recently announced decision by the Federal Government to ban all South African Airways flights from October 31st, 1987 could have far-reaching economic implications for Qantas.

SAA presently operate twice weekly services to Australia with a waiting list that is usually several weeks long. Indeed the carrier could operate almost triple the frequencies with viable payloads if the political situation in South Africa was not what it is. Qantas of course have been barred from flying into SA for many years and now serve Harare in Zimbabwe where the bulk of passengers then transfer onto SAA domestic flights for the link up with Durban, Cape Town and Johannesburg.

When SAA depart the route it is expected that Qantas will fill the void with up to four 747 frequencies a week to Harare in concert with Air Zimbabwe which shares space on the Qantas aircraft under the terms of the bilateral traffic agreement between Australia and Zimbabwe. Zimbabwe itself is proving a very interesting tourist destination in addition to being a viable hub for business trips elsewhere in Southern Africa. It is expected that this will also reduce Qantas service costs considerably due to the present need to keep crews in Harare for a full week due to the present once-weekly service.

Additional uplift on this route and the ever-increasing requirement for seats to and from Japan will no doubt lead Qantas to firming up the 6 production slots they presently have written against 747-400 aircraft. In the shorter term Qantas has continued ordering additional 747-300 EUDs and has also recently announced the order of its seventh 767-200ER which will enter the fleet this coming August. When this aircraft becomes operational Qantas will have a fleet of 31 aircraft, 13 of which will have been purchased since the end of 1984.

Ansett Drops Vanuatu:

Ansett are to cease their operations into Vanuatu effective February 1. The reason is principally that the Vanuatu government has made no attempt to upgrade the Vila runway to a minimum of 737-300 standards and as Ansett parts with its final 737-200 in February the carrier has no suitable equipment with which to serve the once bustling holiday destination.

Further afield Polynesian Airlines are record- ing profitability now under their revitalised Ansett management and hope to introduce Boeing 767 services later this year. The 767 will totally replace the smaller 737-200 and the airline may also consider operating one of Ansett’s Fokker 50 propjets on a number of new inter island routes. This though is dependent upon Ansett winning approval to manage the airline for a second term against fierce competition for the contract from Air New Zealand (refer NZ News).

Polynesian and Cook Island International have now established their Pacific schedules in such a way as to allow the holiday-maker the maximum opportunity for exploring the vast Polynesian and Melanesian group. Both carriers will also benefit from more vigorous marketing support when Ansett cranks up its New Zealand domestic operation in the coming months.

 Transcorp Resume Asian Freight Air Bridge:

The charter arm of Ansett International Air Freight, Transcorp, has resumed regular scheduled freight services to Singapore and Hong Kong.

Transcorp have been operating a leased Boeing 707 freighter for some time but during December introduced into service their own hush kitted 707 that will retain its Hong Kong registration of VR-HTC. Transcorp operate weekly services from Sydney, Brisbane and Darwin to both Singapore and Hong Kong with transhipment available from these ports where necessary. If additional uplift can be found, and the specialist primary produce market is the primary target sector, then a second 707 may be purchased in due course.

Flight Engineers Lose Third Crew Member Case:

The benchmark case between the Australian Airline Flight Engineers Association (AAFEA), the Australian Federation of Air Pilots (AFAP) and Australian Airlines has come down heavily in favour of the airline.

Heard by the Arbitration Commission during July and October, the decision scuttles Australian Airline FES hopes of having their position formally instituted aboard new techno-two-crew airliners such as the Boeing 7J7 and the Airbus A320. The Commission also denied the AFAPs case for a third crew member on the flight deck (a pilot, not necessarily an FE) and recommended that the new generation of aircraft be operated as certified as they are elsewhere in the world. However, the Commission did agree that additional work must be done to identify possible flaws in operational procedures in an effort to enhance the human factors and procedural aspects of such aircraft.

While Australian will now most definitely operate their A320 twinjets as two crew aircraft it remains to be seen what will occur with Ansett as they have consistently agreed with their FES that Ansett A320s (and all Ansett aircraft of more than 120 seats) will be crewed with an FE. According to Ansett and Airbus Industrie though, there will be no physical alteration to Ansell A320 cockpits with the third crew member being situated in a forward-facing auxiliary seat in such a position that he will physically be unable to reach many of the controls which he might be required to activate.

 Visit of the First Commercial Flight to Ballina:

Australian Aviation was on board Air NSW Fokker Friendship VH-FCB when it made the first flight by at commercial aircraft to the new Ballina Airport on 26 October. The new airport is the culmination of much work by the local Shire Council to increase tourism to the area. Built by the Ballina Shire Council at a cost of $2m, the airport has a 1600m runway suitable for F27 operations. Runway lighting and an NDB have yet to be installed but it is hoped to have these in place within the next few months to enable regular passenger flights to commence early in 1987.

Considerable interest had been sparked by the historic first flight and when VH-FCB landed with local dignitaries and senior Air NSW officers including four members of the Board, a crowd of 2,000 were on hand to witness the event. Air NSW is hopeful of being able to commence RPT services early in the new year when all the necessary formalities have been completed.

Qantas Ready for Big Increase in Japanese Tourists:

Following talks with Japan Air Lines in Tokyo during October, Qantas will add a sixth Boeing 747 service between Tokyo and Australia from this April.

At present Qantas has five 747 flights a week from Tokyo to Australia’s east coast. Three go to Melbourne via Sydney, one to Sydney via Melbourne and the other to Sydney via Bris-Bane. In addition, Qantas operates weekly services with the smaller Boeing 767 aircraft from Tokyo to Perth and from Tokyo to Cairns and Brisbane.

The new 747 service will probably operate to Sydney via Brisbane, although final details are still subject to government approval.

The number of Japanese tourists to Australia grew by 23% in 1985 and will surge by an estimated 40% during 1986 to an annual total of 140,000. This represents almost three times the number who came to Australia in 1981. When the new service begins in April, the number of Qantas seats on the route will have doubled since April, 1985. Qantas Chief Executive, John Menadue, said: “We are keeping in mind that despite these impressive growth figures, Australia is presently seeing less than 3% of Japanese who take an overseas holiday. Within Japan, the awareness of Australia is at an all time high and we are strengthening our marketing and promotional activities there to make Australia and Qantas even more popular. The fares to Australia compare more than favourably with Japan’s traditional holiday destinations. On a yen per kilometre basis, it is now cheaper to fly from Tokyo to Sydney than from Tokyo to Honolulu or Hong Kong or the European cities of Paris, Frankfurt or London. ” “Within a year we expect to add yet another service, giving Qantas daily 747 flights between Japan and Australia’s east coast. The Japanese are coming and in numbers that would have seemed unrealistic just a few years ago. Our hope is that the Australian tourist industry will be ready to offer them the kind of experience that will ensure they will want to come again,” Mr Menadue said.

Lufthansa In-Flight Meals Take a Natural Course:

Seasoned travellers know the value of eating lightly and going easy on the alcohol during long flights. And most people, even if they do not fly frequently, are now aware of the importance of eating proper- ly.

For some time, Lufthansa catering experts have been studying ways to develop new kinds of in-flight meals that will satisfy the needs of travellers who are more health-conscious than ever before. The caterers have been considering criteria like these: use of additive-free natural foods, maximum content of essential nutrients, sufficient bulk and fibre (whole grains), more raw fruit and vegetables, reduced fat content, less salt, less refined sugar, less meat and meat products.

The new ‘health food meals are now available and the caterers say that more and more travellers are asking for them on flights where there is a choice.

 Australian Runs Into Problems With Queensland Jetstream Introduction:

Australian Airlines ran into a number of logistical problems with the late 1986 introduction to service of their new BAe Jetstream 31 aircraft serving the outback Queensland routes.

Primary problem was that Australian had not trained sufficient crews for the three aircraft in time for the handover of the F27s to Air Queensland. This then resulted in a two month period where only one Jetstream was available to perform under what was the old Fokker schedule. This is naturally an impossible task considering the difference in size of the two aircraft. What occurred then was a lot of bad publicity, much of it stirred up by political adversaries and rival commercial interests, as Australian had to charter Baron aircraft to fly with the Jetstream as a baggage aircraft.

Australian hope to have their full three aircraft fleet fully operational by the end of January and will then be able to double the number of average frequencies linking the outlying Queensland ports with Brisbane.

The operation will never pay money though. Configured as 15 seaters with a flight attendant supplying a full galley service and aircrew paid to full airline standards the Jetstream could not hope to break even even if it was flying 100% load factors twenty hours a day. Australian appreciate this but maintain their expensive presence on the routes despite a number of setbacks in their dealings with the Queensland Government of late, the least of which includes the granting of coastal routes to EWA and a major cut in subsidies for the loss making outback flights.

The outback services have always been a political issue and no operator has ever been able to make them pay. Many observers feel that Australia might have been better to have stuck with their fully depreciated F27s though the terms of the Queensland Government requirement for such a service stated in 1984 that the operating carrier must use the latest available technology. Why Australian have repeatedly chosen to stay on the service is a mystery that none of the airline staff have ever been able to clarity.

Australian is still also suffering badly in Queensland through having to watch its Air Queensland un-carriage go to Ansett. General Manager, James Strong, stated in September that the airline would secure this on-carriage by late October. Australian served notice on Ansett that AQ would be effectively swapping terminals at that time with the result that Ansett immediately responded with an injunction against such a move. The matter is now back in the courts. Times are presently not that bright for AQ for a number of reasons and Australian were hoping to be able to buoy up the airline with the benefits they would achieve from AQ on-carriage out of Brisbane for southern ports. This has not been the case and must certainly make Australian grimace when they nowadays look northwards to the sunshine state.

Fuel Savings Save Us Carriers:

Most US carriers were saved during 1986 from heavy losses through the effects of vastly lower fuel prices. Overall, most American carriers are paying up to 50% a gallon of jet fuel less for jet fuel than they were a year ago, enabling them to trade off hikes in capacity, a relatively dormant market and reduced yield with operating cost savings. Overall, the leading group of majors is expected to turn a profit for 1986 though only due to the presence of lower fuel costs which is estimated to have saved the US air transport industry more than SA7bn this year.

Fuel costs in Europe, Australia and much of the rest of the world have decreased by as little as 10% and if anything look likely to increase during the coming year. In most cases, and particularly Australia’s, this is solely due to government taxes on fuel which are keeping the commodity at an artificially high price as an expedient to feed government coffers.

Meanwhile, IATA has tipped a 3. 5% growth in international airline operations for 1986. This is against a late 1985 prediction for the year of 6. 5%. The lower-than-expected figure was achieved directly as a result of a number of terrorist-related events and the effects of Chernobyl on inbound European tourism. The North Atlantic was an aviation graveyard for much of the year and only regained its profit-ability in the third quarter of the year.

Australia looks like attaining a 9% growth in Revenue Tonne Kilometres (RTK) for 1986, particularly as all carriers reported that their final quarter uplifts were much better than budgeted for.

Earlier in the year the DotA and airlines speculated that growth was declining though up to late November this had fortunately proven prematurely pessimistic. One major asset locally is the sheer number of inbound tourists who are also flying domestically. Even a five percent increase in this market reflects greatly upon the overall uplift available to the domestics and indeed fuels a sore point amongst Qantas executives who again wonder why theirs is the only international airline in the world that is specifically forbidden to fly overseas visitors within its home country’s borders.

Lufthansa Have a Boom Year in Air Freight:

Lufthansa during 1986 is set to eam more than a quarter of its total revenue share from its highly successful air freight division. Also of note is that 1986 heralded Lufthansa’s rise to become the largest freight operator (in RTKs) in the world, ousting JAL in the process.

Over the past 30 years the volume of air freight has grown 30 fold to 40 billion tonne kilometers expected for 1986 while the volume lifted by Lufthansa alone in the first six months of 1986 exceeded the total for all of 1955 worldwide. Lufthansa’s total market share now stands at 6. 1% while during 1985 the carrier uplifted some 547,000 tonnes of cargo and 67,800 tonnes of mail. Lufthansa now operate 23 full or part freighter aircraft including 4 all freight 747Fs, 12 747 Combis (which serve Australia), 2 Boeing 737F and 5 DC-8-73F operated by the subsidiary. German Cargo Sepeetacular deals strikingly demonstrate the shape of modern air freight developments – one such is the transatlantic assembly line set up for Cadillac cars by both Lufthansa and Alitalia. The two airlines are flying car bodies from Turin to Detroit, and ferrying auto parts back to Italy on the return trip. Despite the not-inconsiderable air transportation costs, this is still more cost efficient for Cadillac than producing the cars at a single plant.

The higher the value of a product, the more exacting are the demands that are made on the type of transportation chosen to move it from one place to another. Airlines are ideally placed to meet these demands, since they offer quick, reliable and punctual delivery services in their regular network of scheduled flights. It is no coincidence that air freight shipments now account for about 10% of the value of world trade but only a meager 1% in terms of volume. Lufthansa themselves give the example where barely 1% of trade between the USA and West Germany is carried by air yet its commercial value represents 55% of the country’s total import bill.

 American Airlines Consumes Air Cal:

In the ongoing takeover fest of the US air transportation scene, giant American Airlines has taken control of California’s AirCal. The takeover has been classified as ‘benign’ and gives AA an important West Coast route network which will benefit its total US domestic operation. AirCal will also benefit by now being able to offer Californian travellers the benefit of American Airlines one-airline on-carriage.