Airline Affairs

The issue is set for lively debate at the June ALP Federal Conference though at presstime the PM was still sticking to his policy of selling off the two airlines and perhaps also the Commonwealth Bank. The PM recently stated that the three entities combined require at least a one billion dollar cash injection in the near future if they are to be maintained in public ownership.

ertainly, lack of financial resources was one of the primary reasons Australian Airlines ‘deferred their Airbus A320 order in September. Instead the airline signed for 4 additional 737-300s and is believed to have taken an option on a number of 737-400s for 1989 delivery. Though officially the airline is stating that it has merely deferred its A320 order, perhaps till the stretched version is available around 1993, it is generally believed that it is now unlikely that it will ever proceed with the original A320 order. Also cancelled was the $6m CAE/Singer-Link A320 simulator which Australia was to purchase. Opting for the 7378 will save AUS at least $100m over the next two years in fleet and crew commonality compared with introducing an entirely new type of aircraft.

Ansett are also to receive an additional four 737-300s next year and are now scheduled to begin receiving the first of their CFM-powered A320s around next September. As the A320s arrive Ansett will begin delivering its existing 727-200s to Federal Express in the USA. We also believe that Ansett will begin deploying its new Fokker 50 propjets (refer feature elsewhere in this issue) on the Canberra to Sydney and Melbourne sectors virtually on a shuttle basis and use the larger jets only on peak flights. This is expected to result in significant cost savings, better frequency of service and an ability to deploy the jets elsewhere on the trunk system. On the other hand if they have got it wrong it could also represent a windfall for Australia which will be sticking with its jets for these services.

Anz to Boost Tasmanian Flights:

Air New Zealand has boosted its Christchurch/Hobart services to 4 a week. The extra flights, which will see a doubling of capacity on the route, commenced on December 5 and will remain effective till March 1988. Additionally, ANZ will now offer its Pacific (business) Class on the 737s which will operate two flights each Saturday.

ANZ have also won a $A5m maintenance contract for the RAAF and RAN Dart powerplants beating a number of Australian repair shops in the process. This is generally seen as an example of the Closer Economic Relationship (CER) in action and is part of an anticipated parcel of work that will be offered to NZ companies as a sweetener to New Zealand eventually acquiring Australian-built PC-9 trainers and new generation destroyer escorts.

Qantas Arrests Fraudulent Ticket Problem:

Qantas has introduced a worldwide computer system called Arrests which automatically alerts staff when attempts are made to use stolen, fraudulent or missing tickets. Within 24 hours of the system becoming available last month, it led to the seizure of six irregular coupons presented for re-issue in Melbourne.

IATA believes the use of stolen and fraudulent tickets could be costing the airline industry more than $600 million annually. Qantas itself had seen its annual losses from invalid tickets jump from $5000 to more than $120,000 in the past four years. Until now, airline staff presented with suspicious tickets had faced the time-consuming task of checking their validity against a register holding details of more than 400,000 lost or stolen tickets.

A software version of this bulletin is now in Qantas’s mainframe computers which are linked to the airline’s thousands of terminals throughout the world. Updates are provided automatically. The system interrogates the database to verify the authenticity of the travel documents. When an irregular ticket surfaces, Arrest not only informs the employee handling the transaction but local Qantas security staff.

Qantas Boosts Flights:

Another 34 Qantas flights to and from Australia went on sale in October as part of the airline’s program to cater for demand over the coming busy holiday period.

Together with the 43 supplementary flights announced during September, and 60 additional New Zealand services committed to earlier, the airline was now mounting a total of 157 extra services in this peak period. Destinations to be served by these supplementaries are Tokyo, Hong Kong. Athens, Los Angeles, Singapore, Harare, Tahiti, Kuala Lumpur, and Manila.

Many supplementary flights to and from Australia have also been arranged by the 34 foreign airlines flying here. The industry is now providing the equivalent of 250 jumbo jets to and from Australia each week.

Meanwhile, arrivals continue to boom, with the Bureau of Tourism reporting that some 1,213,000 people had entered Australia in the 9 months till September, an increase of 27% over the same period last year. Holidaymakers account for 39% of the traffic, with 17% visiting friends and relatives and 15% on business.

Qantas has also announced that it will lease a 747 to better meet the southern summer peak. The aircraft will be leased from December 12 to February 20, 1988, with the option of an extension until the end of April if necessary. The lessor is a New York-based airline, Tower Air Incorporated. The leased aircraft will be supplied with an American aircrew and it will be used on the QF17 and QF18 services operating Melbourne, Nadi, Honolulu, Los Angeles and return. This will free other Qantas aircraft and crews for the additional supplementary services. This follows the news that Qantas has ordered two more GE-powered Boeing 767-300ER aircraft, bringing to seven the number of Boeing widebody jetliners the national carrier will introduce into its fleet within the next two years.

This means that between 1984 and 1989 Qantas will have acquired 20 new Boeing 7478 and 7678 at a cost of more than $3. 5 billion. The latest orders will see Qantas operating 29 7478 and 10 7678.

British Airways Bcal Merger Approved:

The UK Government has approved the merger of British Airways and British Caledonian. This will strengthen the entire BA route network, give it additional engineering capability and amortise a source of competition that in turn will strengthen its own domestic and international market base. BA is also flying high with an excellent half year report that saw pre-tax profits lift from £141 to £232 on a turnover base of £1,822m as against only £1,559m in the same period in the previous year. Though BA shares have taken a drubbing in the Great Crash, their value is still considered strong in the medium to long term. Meanwhile, RTK increased by 17%, RPK by 18% while cargo tonne kilometres rose by 13%. It is expected that 1987/88 will see BÁ recording its strongest operating and profit performance ever.

UK Aviation Growth Sets New Records:

Traffic growth in the UK is booming with a 7% increase in aircraft movements and a 12% increase in passenger uplift recorded for 1987. Some 60 million people filed through British airports in 1987, a statistic which makes Heathrow the world’s busiest international airport and the single-runway Gatwick the second busiest.

Qantas Buys Into Ailing Air Pacific:

Qantas has acquired a 19. 5% stake in Fiji’s Air Pacific.

The national carrier won the rights to manage the very sick airline back to fiscal health in 1985 and since then has turned the carrier into a viable profit earner. Against losses of more than SF10m in 84/85 the new QF management team in charge of Air Pacific turned the corner with a modest but noteworthy surplus of $F143,000 in 85/86 and a healthy $F1. 5m profit in the year to March 1987.

The tragic events of recent months though have generally scuttled the chances of the airline maintaining profitability in the medium term. Even though some load factors were very high out of Australia during July/September, most were sold at bargain basement prices leaving little viable yield. And as any airline operator knows-air fare without yield is simply turnover balancing expenditure, and nothing more.

Since the events of October (Coup II), the situation has deteriorated further and it is felt that most Australians (Fiji’s largest single tourist market) are now looking elsewhere for their Pacific travel till the situation really does return to normal.

In the meantime, Air Pacific still intends. pioneering new services including a mooted Tokyo/Nadi link being inaugurated in mid 1988. Mr Andrew Drysdale will also take over from John Schaap as chief executive this coming April in what promises to be a particularly challenging assignment.

Scheduled Domestic Airline Activity Continues to Grow:

Provisional statistics recently released for scheduled domestic airline activity show continued steady growth in the September quarter.

Total activity (tonne kilometres) increased by 9. 7% in the September quarter relative to the September quarter 1986 and by 6. 6% in the year ending September quarter 1987.

The passenger component increased by 10. 4% for the quarter and 7. 8% for the year, while the cargo component recorded an increase of 4. 8% and a decline of 1. 6% respectively over these periods.

In the year to the September quarter, the two major airlines’ share of the passenger tonne kilometres stood at 87. 4%. Their share of the annual cargo tonne kilometres was 83. 7%. Hours flown increased by 6. 0% for the quarter and 6. 3% for the year. Domestic airline aircraft movements at the eight capital city primary airports increased by 8. 3% for the quarter and 4. 6% for the year.

Quarterly and annual increases in domestic airline aircraft movements were recorded at all eight ports except Adelaide, which showed a decrease of 13. 6% for the year. This reflects the cessation of operations by Airlines of South Australia in June 1986.

Singapore Airlines and Qantas to Increase Capacity:

Singapore Airlines and Qantas have concluded a new capacity agreement enabling the two airlines to operate the equivalent of seven more scheduled 747 flights a week between Singapore and Australia.

Under the agreement, Singapore Airlines gains operating rights to Cairns and Townsville as well as trans-Tasman to New Zealand. Qantas gains operating rights beyond Singapore to additional points in Asia.

The new agreement provided for the introduction of five of the seven flights between Singapore and Australia from December 1. The further two flights are scheduled for April, 1989, but could be introduced as early as August, 1988, depending on traffic demand. Traffic on the route has increased by 30% since 1985. The two airlines are also discussing the possibility of a joint service between Singapore and Australia using SIA’s 747 all freighter aircraft which is due to be delivered in mid-1988.

SIA currently operates a total of 14 Boeing 747 services a week between Singapore and Australia serving Sydney, Melbourne, Brisbane, Perth and Adelaide. A further 18. supplementary flights are planned by SIA for operation between December, 1987 and February, 1988 to meet increasing traffic demand.

New Icaonata Airline Codings Now in Operation:

ICAO have introduced new international three-letter carrier designators that have effectively replaced the previous two-letter codes. Reason for the change was simply that the rapidly growing number of airlines had absorbed all the available two-letter codes.

The move was foreshadowed several years back and is the primary reason TAA became Australian Airlines during 1986. Thus in one fell swoop the old TAA went from TN to AUS overnight and from page zilch on the world’s CRS booking screens to page one right alongside its eternal foe Ansett which itself has gone from a well-positioned AN to an excellently positioned AAA.

To assist readers who require the new codings, the new designators of most of the carriers involved with Australian operations follow.

Aeropelican is now PEL, Air Caledonie was TY is now TPC, Air India was Al is now AIC, Air Nauru remains as ON, Air New Zealand was TE is now ANZ, Air Niugini was PX is now ANG, Air Pacific was FJ is now FJI, Air Vanuatu was NK is now AVN, Alitalia was AZ is now AZA, All Nippon (ANA) was NH is now ANA, Ansett Airlines of Australia was AN is now AAA, Air NSW is now NSW, Ansett New Zealand was NY is now NMA, Ansett NT is ANT, Ansett WA was MV is now AWA, Australian Airlines was TN is now AUS, British Airways was BA is now BAW, CAAC was CA is now CCA, Canadian Airlines International (CAI) was CP is now CDN, Cathay Pacific was CX is now CPX, Continental was CO is now COA, Cook Islands International was KH is now KHH, Eastern is ECO, East-West was EW is now EWA, Garuda was GA is now GIA, Hawaiian Airlines was HA is now HAL, Japan Air Lines was JL is now JAL, KLM was KL is now KLM, Kendell Airlines is KDA, Lauda Air was LW is now LDA, Lufthansa was LH is now DLH, Malaysian Airlines System was MH is now MAS, Mount Cook Airlines was NM is now NZM, Norfolk Island Airlines was UG is now NIA, Olympic was OA is now OAL. Philippine Airlines was PR is now PAL, Polynesian Airlines was PH is now PAO, Qantas was QF is now QFA, Royal Brunei was BI is now RBA, Singapore Airlines was SQ is now SIA, Thai International was TG is now THA, and United was UA and is now UAL. •

Galileo Grows:

Europe’s rapidly expanding Galileo Computer Reservations System (CRS) has taken on two new members.

During late October, both Aer Lingus (Ireland) and TAP (Portugal) voted to join the Galileo consortium which already includes British Airways and BCal, Swissair, Alitalia, Australian Airlines, KLM and United Airline’s Covia.

Schiphol-based Galileo is investing over $A200m in establishing a CRS system that is of particular relevance to Europe. At time of going to press Olympics, Turkish Airlines, Sabena and Icelandair were also actively investigating joining the Galileo team.

Ewa Update:

Despite the ongoing con-fusion of recent months life goes on at East-West Airlines.

The future is at least clearer now that the TPC has finally handed down its decision as to the carrier’s future route profile (refer separate story elsewhere). Many observers feel that Ansett has come out of the entire exercise fairly solidly and now possesses a vastly streamlined EWA that has managed to shed most of its less profitable routes. The ‘new’ East-West will also most likely become a pure jet operator as virtually all of its turboprop routes have now been hived off.

To this end the carrier is still intending to im- port two additional F28-4000 twinjets during the first half of 1988 though will defer its previously intended lease of three Fokker 100 jets for the time being. East-West is also look- ing to strengthen its existing routes and to further increase frequencies in Queensland with the commencement of a second direct jet route to what is believed to be Townsville. The airline will also begin operating direct jet services from Sydney to Geelong in the next few months and hopes to be able to expand this market greatly over the next few years.

WA Government to Stimulate Tourism via Its Own Domestic Charters:

Commencing January 1, the West Australian government will charter its own aircraft to stimulate regional tourism.

The West traditionally falls flat during the mid-summer period due to high temperatures and most Eastern States residents taking their annual holidays on that side of the continent. Perth is also suffering from a glut of medium and high-range hotel accommodations built to cater for the America’s Cup challenge. Consequently, the WA Government has decided to bite the bullet and charter its own aircraft to offer 7 day holidays ex-Melbourne ranging from between $500 and $900 depending upon the standard of accommodation chosen.

The Government will charter two 150 seat Australian Airlines 727s with the night charters operating at a time when the aircraft would normally be grounded on the east coast due to curfew restrictions. If successful, the scheme will become more viable if frequencies can be stepped up to ensure that the charters are operating at a productive payload in both directions. Breakeven is said to be set at 70% load factor while a full aircraft is said to be worth around $50,000 in potential revenue value to the WA tourism industry.

This is certainly a healthy move, where a State Government has decided to promote an entrepreneurial approach to boosting its own tourism capability and regardless of the outcome, the WA Government should be applauded for its ingenuity. In a deregulated environment it will also be interesting to see if even more Eastern States tourists could be lured westwards with the even cheaper fares that could be offered using such aircraft as Qantas’ 747s. Considering that from the East Coast it is generally cheaper to enjoy a holiday in Hawaii, New Zealand or the Pacific than to travel to Perth (and vice versa with WA residents regularly holidaying in Asia), then there is certainly much more that can be done to open up domestic tourism within Australia than has previously been done.

Qantas and Air New Zealand to Form Closer Relationship?:

Mr Richard Gates, Air New Zealand’s Manager, Planning Division, foreshadowed a closer economic relationship between Qantas and ANZ in a recent speech in Sydney outlining the New Zealand expectations of the CER (Closer Economic Relationship).

Air New Zealand wish to become more heavily involved with Qantas’ day to day operations and planning so as to be able to provide a stronger front against the perceived threat of the US mega carriers, Continental and United Airlines. ANZ would like to trade fifth freedom rights out of New Zealand to the US to Qantas in return for ANZ access to North Queensland and perhaps other ports. This way both carriers could effectively market the region better internationally through better being able to offer multi destination regional packages rather than merely being largely an end-stop service.

The New Zealand interpretation of CER is interesting in that it is big news in NZ while barely even mentioned here in Australia. In fact most Australians wouldn’t even be aware of what CER was wheras it is daily news on the other side of the Tasman. This to some extent raises questions as to whether it is indeed being taken that seriously in Australia which generally has such a large and commercially diversified trading market that New Zealand merely becomes just another State.

A strengthening and Australian acknowledgement of the perceived responsibilities of CER is what Air New Zea- land is hanging its hat on for eventual granting of Australian domestic air service rights. ANŽ hope that at some point during the next decade the Australian Government will allow them full access to the local domestic route network just as their own Government did for Ansett in 1985.

However, Senator Gareth Evans has already pointed out in his October announcement on deregulation that ANZ would not be allowed access to such routes though the view from Auckland is that patience will rule the day and that CER will be the eventual key to the vast Australian domestic market, which of course would also greatly boost ANZ’s outbound long haul market.

Lauda Air to Serve Australia:

Former World Champion Formula One racing driver, Niki Lauda, has won his long battle to operate charter services to Australia.

Lauda Air will commence its first Vienna/ Sydney/Melbourne service tentatively on April 29 and will operate the flight as a 21 hour one stop service via Bangkok. Initially the route will be served once weekly though Lauda hopes to expand upon this when his second Boeing 767-300ER is delivered during 1989. Lauda Air principally has been a profitably run European charter operator specialising in flying Austrians to the popular Mediterranean resorts using a fleet of 3 737-300s and one 737-200 with the 2 767-300ERs on order.

Boeing 747 to Have Overwing Exits:

The US Federal Aviation Administration is moving to propose that airliner emergency exits be no further apart than 60ft with no passenger more than 30ft from an exit.

This follows a year of continual court battles between the FAA and Boeing over the certification of 747 aircraft minus overwing emergency exits. In this configuration, the distance between exits is as great as 72ft. The practice of 3R and 3L exit removal on the 747 has never been fully endorsed by the FAA and was origin- ally only passed by the North Westem FAA division without the full endorsement of the federal FAA executive in Washington DC. The National Transportation Safety Board also condemned publicly the practice of plugging the 747 overwing exits as has the US flight attendant unions. If the proposed rulemaking is successfully introduced then it will be virtually compulsory to include overwing exits on all US registered 747 aircraft irrespective of their model.

While on a recent flight to Europe it was interesting to note that the area previously occupied by the overwing exits now hosted several rows of two abreast economy seating set alongside one of the busiest galleys on the aircraft. What really made the day-long flight less than enchanting for these passengers though was that not one row had a window with the result that they might as well have been sitting in a darkened tunnel for the entire flight. Our advice is that if you are flying economy with a carrier who has chosen to delete the 747 overwing exits then be sure that you get to check-in early enough to ensure you do not get stuck with these second-rate seats.

Qantas Assisting in Visa Processing:

Qantas’ office in Nagoya is assisting the Australian Embassy in Tokyo by operat- ing as a mail drop for processing the vast numbers of entry visas required by Japanese citizens travelling to Australia.

Qantas accepts the visas at time of ticketing and forwards them on daily to Tokyo for processing, thus speeding up what was traditionally a time-consuming and often frustrating procedure that did little to promote Australian tourism. The system is presently undergoing a trial period and if successful might well be introduced elsewhere throughout Qantas’ world network. Japanese inbound travel to Australia has grown from only 75,000 in 1981/82 to over 165,000 in 1986/87 and is anticipated to exceed a quarter million by 1990. VH-UNT

Another Example of How Airports Are Greening Their Surrounding Communities:

Driving away from Sydney’s Kingsford Smith airport down O’Riordan Street, what do you notice? Right, gone, or going, are the nineteenth-century industrial slums that made this area the home of some of Sydney’s worst eyesores.

What is occurring is precisely what has happened worldwide as aviation has become one of the world’s largest industries in recent decades. In place of the rundown factories and dishevelled warehouses are modem industrial parks, complete with landscaped gardens and trees. Attracting a large number of companies in the booming freight forwarding, car rental, manufacturing and decentralised offices the industrial parks are a pleasant by-product of what politically biased local councillors would have us all believe to be a blight on the landscape – their local airport.

The latest development alongside KSA is a $100m business park that will cover some 4. 5 hectares and include a three-star 220-room hotel with restaurants, a recreational centre, shops and conference facilities. Additionally, the development will include a retail area linking the hotel, an international freight centre and a vast office complex of over 28,000 metres. Out with the decaying slums and in with modern, landscaped, efficient and attractive people-employing developments – now won’t the local councils hate that!

United Has Strong Third Quarter:

United Airlines has reported a third-quarter profit of $US87 million, an increase of 159% over the same period in 1986.

Total revenue for the quarter was $US2. 3 billion, up 15% on the same period last year. Operating expenses for the quarter were $US2. 1 billion, also up 15%. The largest single contributor to the increase in operating expenses was a 38% rise in fuel costs.

For the nine months to September 30, Allegis (United’s parent company) reported total revenue of $US6. 2 billion, an increase of 18% over the same period in 1986. Total profit for the nine months stood at $US286 million compared with $US85 million in 1986. September also marked the fifth consecutive month of profitability on Pacific routes for United. The load factor for the month was 73% while cargo loads continued to be very heavy.