Airline Affairs

To enhance viability for the present year, Australian has taken several steps. Unprofitable routes in the north west of WA have been axed, Air Queensland has been closed (refer to separate story elsewhere), western Queensland routes have been dropped and a number of internal work practices have been altered.

For the 86/87 year TN increased its uplift by 4. 8%, or about half a percent above the average growth for the past decade. A record 5. 108 million passengers were carried while passenger kilometres also topped the five billion mark for the first time at 5. 125 billion.

One bright spot in the TN year was the strong performance of its Business Class, which grew by some 12%. Though of low yield, uplift in foreign tourists was also rapidly increasing due to the carrier’s recent carriage agreements with Air New Zealand, United and British Airways.

East-West Update:

After the frantic takeover period of August, it appears little has happened at East-West Airlines since its purchase by the Ansett group.

At time of closing for press there were no management changes and the airline continued to operate as normal, albeit with the benefit of its new full-fleet schedule which commenced August 17. The new schedule sees considerable growth and route rationalisation with the Brisbane/Caims service going from once to twice daily and Tamworth being introduced into the interstate jet service.

Additionally, jet frequencies from Sydney to Coolangatta and Albury are also up from four to five daily. East-West is also now connecting Yulara with non-stops to Caims which effectively pioneers an entirely new tourist route linking the Barrier Reef with Ayers Rock, then onto either Sydney or Perth and thence the rugged northwest in what could prove to be a popular tourist package.

Much is hanging though on what the Trade Practices Commission endorses as fair competition. We believe that the TPC rightly won’t issue a definitive judgement till Senator Gareth Evans addresses Parliament regarding the successor to the Two Airline Policy. Ansett ultimately may have to give up some routes, either in the West or throughout the nation where they conflict with East-West or the opposite may occur. Either way, it is envisaged that some route pruning will occur, a situation that could be a windfall for Australian Airlines if handled correctly.

On the equipment front, it is still early days and again much depends upon both what follows the TAP and the ruling of the TPC. EWA hope to be able to still take the Fokker 100 twin jet into their fleet early next year though this may well prove a casualty of the Ansett take-over as that carrier appears to be firmly in the BAe 146 camp. Future growth will undoubtedly see EWA operating leased 737-300s and may also see its F27 Friendships replaced with the vastly more fuel-efficient Fokker 50s that Ansett’s Corsair leasing division is keen to sub-lease. The cash flow from the sale of EWA’s relatively young F27s would greatly assist the balance sheet of the small airline in addition to providing funds directly back into the ATI coffers.

New Spray Procedure to Reduce Airport Delays:

Qantas has now been authorised to carry out its own ‘disinfection procedure aboard arriving flights, a move that should save an average of seven minutes in the disembarking process.

Previously, quarantine officers entered the aircraft and sprayed to reduce the risk of any potentially damaging insects penetrating the Australian environment. At best it was often felt that this allowed precious little time for any insects or bugs to die due to the need to disembark up to 400 passengers and crew in a minimum of time.

The new procedure allows Qantas flight crew to spray the cabin at top of descent, as soon as the seat belt signs have been illuminated and all passengers are seated.

Mascot Officially Reaches Maximum Capacity:

Recent growth at Sydney’s Mascot airport, the gateway to the nation, has officially destroyed its future, according to the General Aviation Association.

GAA Executive Director, Bruce Teague, recently verified that there were 203,591 movements at KSA in the year ended June 30, 1987. Yet the Dept of Transport & Communications says its maximum ‘official’ capacity is 203,000! “Already we are forcing flights from Canberra and Newcastle to contact Sydney in advance just to obtain permission to take off and join the queue. Those restrictions could soon be placed on other origin points, making a farce of Sydney’s claim to be the country’s premier air- pórt. ” Stated Mr Teague.

The GAA believes that there will have to be far better use of existing runways at KSA while work should begin immediately on a reliever runway for smaller aircraft. The GAA also believes that new helicopter operating procedures should also be introduced (just as they are everywhere else in the world) where helicopters don’t have to imitate fixed wing aircraft and use taxiways and runway approaches in the same manner as a 747. Curlews should also be eased for designated ‘quiet’ aircraft landing over Botany Bay. The majority of new generation jet aircraft, such as the now widely used 737-300, BAe 146 and even the A300 and 767 are all quieter than many of the turboprops allowed unfettered access to major airports at night simply because they are propellor driven aircraft. The GAA also believes that capacity should be increased at Bankstown, Schofields and Camden airports. While Bankstown is already very busy, the Navy owned facility at Schofields is inoperative five days a week for no real reason.

The GAA dismisses, as does much of the aviation industry, the ability of Badgery’s Creek to provide a solution to the current overcrowd- ing at KSA. “Badgery’s Creek is pie in the sky stuff, it is a quarter-century away at best, and everybody knows it,” states Mr Teague.

Smoking Ban Favoured:

Air Canada has won overwhelming support from passengers since it initiated a smoking ban on its services linking New York with Toronto and Montreal.

The ban came into effect in April and according to the carrier, 96% of respondents to surveys taken on the 18 daily connections stated that they would choose to fly the Air Canada no-smoking service again. As a result, Air Canada is evaluating the feasibility of extending the smoking ban to all flights in its network of greater than two hours duration.

BA Announces Record Growth and Another Crs Partner:

Following a restrained 1986, decimated largely by the combined anti-travel effects of Chornobyl and Libya, BA has bounced back with an increase in turnover for the April to June period this year of £900m as against £762 for the same period in 1986. Operating surplus rose accordingly from £38m to £91m while passenger boardings increased by 17% for a revenue load factor growth of 11%.

Meanwhile, BA has also welcomed the addition of Alitalia, Austrian Airlines and British Caledonian to its new CRS combine (refer p36 Sept AA) which also includes KLM, Swissair and Covia, a subsidiary of United Airlines. The new European Airlines Distribution System has been officially named Galileo and was established in July to head off attempts by Uni- ted’s Apollo and American Airlines Sabre systems from totally monopolising the European travel market. To date, the new operation has already worked up a staff of 140 computer specialists at its Amsterdam headquarters and will require an investment of over $120m to become fully operational during 1988.

Australian Airlines Privatisa- Tion Battle Begins:

The battle to privatise a number of government owned assets has begun with Australian Airlines leading the pack.

Mooted prior to the Budget in September was the specific wish of the Prime Minister and Treasurer plus much of the ALP Right Wing to privatise the airline as soon as possible. As has been well documented in the daily media, the Labor Left has protested as expected and the matter will now be fought out at next year’s June ALP Federal Conference.

In order to offer itself as a more profitable and efficient entity, Australian has been taking some hard business decisions lately. The most far reaching of these was the decision to close down Air Queensland. The carrier had become a veritable boat anchor for Australia since that carrier had paid $8. 7m for the ailing regional carrier back in 1985. At the time of the purchase, Australia seemed to be ignorant of the fact that not only was AQ losing money heavily but that it also had a watertight agreement with Ansett for all AQ on carriage to go to that carrier.

Australia finally won the rights to this on carriage via a lengthy and costly series of court battles. By that stage though, it was of academic interest as the airline slipped deeper into debt following far higher than initially budgeted acquisition costs on its new ATR42 aircraft due to currency fluctuations. During May Australian began to pull the fiscal plug on AQ, closing down its south east Queensland operations in favour of Sunstate. Thus it was of little surprise when TN finally announced in August the total closure of what was once the State’s most vibrant region.

Services from Cairns to Normanton, Karumba, Mt. Isa and Arukun ceased early October while Weipa, Thursday Island, Groote Eylandt, Lockhart River and Bamaga close next April.

Though it is still too early to tell, it appears that Australia will sell off all Air Queensland’s ground assets which include the Lizard Island and Wilderness Lodge resorts. The sale of air- craft and related assets should go some way to dissolving the accumulated AQ debt which is said by some observers to exceed $22m.

For the enthusiast, one sad casualty of the closure is the cessation of the famous DC-3 Gooney Bird flights, which were probably the last of their type in the world run on a regular schedule by a reputable airline. These had proven highly popular with tourists though unfortunately the DC-3s, with their relatively high operating costs, might well prove uneconomic to operate as stand alone aircraft without the engineering expertise of a major operator.

The Queensland scene has indeed changed dramatically these past six months. Ansett now has as dual designators Flight West, operating central and western Queensland routes, with Sungold Airlines and Lloyds operating in south eastern Queensland. Australian meanwhile have an expansive and well-managed Sunstate operating in the lucrative southeast quadrant, with Sunbird operating out of Cairns almost as a defacto Bush Pilots. Obviously both these carriers will find room for expansion under the Australian corporate umbrella during the coming year.

SAA Down but Not Out:

South African Airways, which has to close its Australia/South Africa operations on October 27 has found an effective loophole which will allow it to continue to serve Australia, albeit under a different carrier.

SAA has negotiated a number of route pack-age carriage agreements with Cathay Pacific, Air Mauritius and Singapore Airlines which will now see South African residents arriving in Australia via Asia. The new routes cost only 10% more than the old direct fares and will offer new and attractive stopovers to those passengers who are not in a rush. Qantas though will not at this stage be increasing its services into Harare though may well do so as the bulk of business traffic will naturally want to take the quickest flight, which in this case would be the Qantas service with connections ironically via SAA out of Harare.

Minerve to Challenge UTA on Noumea Route:

French charter company Minerve, is to challenge UTA on the Paris/ Noumea route.

The growing charter operator is looking to commence twice monthly charters to Noumea using DC-8-73 and later DC-10 aircraft. Minerve anticipates that they can promote an increase in tourism to the South Pacific from France with better scheduling and budget priced fares. The airline also hopes to link in Tahiti at a later date. In addition to tourists, Minerve hopes to break into the regular home travel market that sees most Noumea-based French nationals returning to Paris at least once every two years.

UTA is not lying idle though and will be able to greatly reduce the travelling time, and costs, of getting to Noumea from 1989 when it begins to introduce its new 747-400s to the route. The independent French carrier also has 12 Airbus A340s on order which would be ideal for this route, these are expected to be available around 1993.

Sunstate Seek to Tap Inbound Tourist Market:

In a nifty piece of innovative airline marketing, Sunstate airlines is the linking with Jalpak, the tourism arm of JAL, to promote scenic air tours that will take in Sydney, the Hunter Valley, the Gold Coast and onto Hervey Bay and Fraser Island.

Sunstate will use its Shorts 330 and 360 aircraft to directly airlift JAL passengers from Sydney and Brisbane on what will become virtually a scheduled service, though one that will be primarily sold to overseas tourists. Similar air cruises have been successful in the past, prime amongst them being Bill Peach’s Aircruising Australia which uses a dedicated F27. The Sunstate operation though will be different in that it will operate a high traffic regular schedule which will gain better utilisation for the aircraft. The service is planned to be in operation by late October on a once weekly basis with this increasing to twice weekly by early next year.

 ANA Commences Australian Operations:

All Nippon Airways, Japan’s second-string international carrier, commences operations into Australia on October 27.

The carrier will initially operate one 747 a week on its new Tokyo/Sydney non-stop route with this growing to two flights a week come next April. By comparison with most Japanese airlines ANA’s 747s are specially configured for extra spaciousness with the total pax loading of 315 spread between 24 First, 80 Business and 211 Economy class passengers.

ANA, which since its establishment 35 years ago has concentrated almost exclusively on domestic travel, links 31 major cities throughout Japan with 71 routes, 500 flights and 120,000 seats a day. During 1986 ANA carried more than 24 million passengers, or more than double the total Australian domestic uplift for the same period.

In the past eighteen months the airline has been spreading its wings internationally with non-stop flights into the USA, Guam, China, Hong Kong and now Australia.

FAC Back From the Dead:

Just when you thought it was dead and partially buried, the Federal Airports Corporation is reported to be alive and well and ready for its phoenix-like rebirth come January 1, 1988.

The FAC was originally supposed to have become operative earlier this year but never made it owing to continuing behind the scenes delays brought about by conflicting political and bureaucratic requirements that all but scuttled the original FAC concept. Following the September Budget, the government has now again committed itself to the concept of all airport terminals remaining in public ownership via the FAC. This move basically restores the FAC’s financial and operational credibility and will now allow it to at least have a primary revenue base of some magnitude.

The January 1 start-up date though is seen by many within the industry as just another potential blunder that is symptomatic of the lack of forethought that has bedevilled the whole sorry history of the FAC. As most lay people appreciate, January 1 is not a date to 1 really begin anything, particularly the highly complex handover of Australia’s primary and secondary airport facilities from one bureaucracy to another. With most of Australia at the beach it will be interesting to see what happens – if anything at all!

Asian Airlines Join Forces on Common CRS:

Readers of our CRS (Computer Reservations System) story, on page 36 of our last issue, would not be surprised to learn that Asia’s largest carriers are discussing a joint venture to operate their own joint CRS system.

Singapore Airlines, Cathay Pacific, Thai International, Japan Air Lines and Qantas were discussing a joint system as we closed for press. Each airline of course already has its own CRS network though each in turn is rightly afraid of the impact that giant US systems such as Sabre and Apollo, plus the new European networks, may have on future traffic trends within the region. A combined system would offer common hardware, a far better database and would pool information on the sponsoring carriers in a more productive manner than is often presently the case.

As in Europe, the Asian carriers, which are rapidly becoming air transport superstars due to the immense growth in recent years in the Asia/Pacific rim, are afraid of the projection of power that is a part and parcel of the giant US CRS systems. As an example of the immensity of United Airline’s Apollo system, it is worth not- ing that in a mere fifteen minutes it hosts more transactions than does Citibank in a full trading day. Apollo can perform 1400 transactions per second and at $US1. 85 a transaction that roughly equates to around $US156,000 per minute, 24 hours a day around the world! Uni- ted has already invested more than $US400m in Apollo and is planning a thorough overhaul of the system that will cost it another billion dollars. Apollo presently has 60,000 terminals at over 8500 locations in 40 countries and plans to double this within the next five years. The reasons for airlines other than United and American wanting to operate their own combined systems are thus obvious as CRS rapidly begins to transform the booking patterns of the international air transport system.

Australian Most Likely to Postpone A320 Delivery:

It now appears inevitable that Australian Airlines will postpone its order for 9 A320 twinjets. The aircraft were originally scheduled for delivery from April 1989.

Australian’s problem is that it doesn’t want to invest the required $100m to establish the necessary A320 training, support and spares infrastructure that the new IAE V2500 powered aircraft demands. Boeing have meanwhile offered their 737-400 to the airline which in TN configuration would have almost the same number of seats as the proposed A320. Boeing and Australian look to this as a considerable saving as the 737-400 has a very high degree of commonality to the 737-300s already operated by Australian. The largest version of the 737 also shares the same engine type as the -300, common crew endorsements and also neatly eliminates any possible industrial problem with the flight engineers who might get restive once the first A320s arrive in Australian livery and begin replacing three crew 7278.

The carrier would then keep its 727s longer than expected till a stretched version of the A320 is available around 1993.

All has not been well though within the ranks of senior management of Australian of late. Ansett’s sudden acquisition of East-West, its takeover of Lloyds commuter division and the closure of Air Queensland plus the constant frustration of having to refer continually to the slow moving Australian National Airlines Commission for approval of vital decisions have all taken their toll at TN. So much so that Neil Smith, the highly respected Chairman of Australian, resigned his post during early September to make way for Mr Ted Harris, the retiring chief of Ampol.

Havana for Qantas World Flight:

Havana, Rio de Janeiro, Tenerife and Cairo will be among the ports of call for the second world air cruise to be operated by Qantas for HHK Travel. The 16-day cruise departed Sydney on 19 October and returns on 2 November.

The aircraft to be used for the cruise will be a Qantas Boeing 747B. Although capable of carrying more than 400 passengers, it is being reconfigured with fewer than 300 seats to provide greater comfort and better opportunities for aerial sightseeing. As with the first cruise in 1983, the same crew will stay with the flight throughout the world tour (apart from the first sector to Tahiti).

Passengers will be accommodated at five star hotels at all the ports to be visited. The cruise includes sightseeing tours and will offer ample opportunities for shopping (with special provisions for carrying purchases home). After leaving Australia, the aircraft will call briefly into Tahiti for refuelling and to change crew. It then flies directly to Cuba, where a tour of Havana, the surrounding countryside and the famous Tropicana nightclub are on the itinerary. Brazil is the next country to be visited and here a full four days will be spent sightseeing and shopping in Rio de Janeiro, visiting tropical islands to the south of the city and at leisure.

Then it is on to Tenerife in the Canary Islands, long associated with the fabled lost city of Atlantis. Viewing the antiquities of Egypt, including the treasures of Tutankhamun, the Pyramids and the Sphinx, will be among the highlights of three days based in Cairo. Singapore – the last overseas port – follows and the final leg to Sydney is timed to offer passengers views of Ayers Rock and the Olgas at dusk.

The cruise costs $7,950 in an extra spacious economy class, $10,850 in business class and $14,850 in first class. The single accommodation supplement is $800. Qantas and HHK Travel hope that the world circling air cruise will become a regular event.

 US Sales Breakthrough for Atp Marks Turning Point in Programme:

On the eve of its UK certification, the BAe ATP has won a major landmark order in the USA Wings West Airlines, an American Eagle commuterliner, has ordered 10 ATPs for 1988/89 delivery. The win was a major sales victory for BAe and followed ten days of intensive negotiation that finally saw the ATP win overits Fokker 50 and ATR competition. Wings West CEO, Carl Albert, later stated that the decision was clinched by the fact that the ATP could use an aerobridge and that its breakeven load factor was about the same as for the smal ler aircraft with the added bonus of an extra 18 seats.

Wings West operate a fleet of 28 Metroliners and several leased Convair 580s, which in turn will be replaced by the ATP. Of note is the fact that the ATP will be used into airports that are extremely noise sensitive and will also compete directly against jets in the Monterey/LA route. Under its American Airlines banner, Wings West is set to grow appreciably over the next few years and is already heading for its first $US100m year, placing it in a class just above our own East-West.