TPC Hands Down East-West Decision

In NSW, EWA will retain only the existing services from Sydney to Albury, Tamworth and Norfolk Island in addition to its profitable Sydney/Coolangatta, Brisbane, Hobart, Devonport, Yulara and Melbourne services via Albury. A cynic might claim that these routes, using only F28 jets, are indeed the cream of the old EWA empire – and they would be right! Meanwhile, the EWA Tamworth maintenance base will be retained in ATIVEWA owner-ship. ATI will also divest the minority shareholding in Eastern Airlines that it inherited with the initial EWA purchase. In Queensland, ATI will withdraw its shareholding in Lloyds and it is expected that the present minority shareholder will increase to a majority shareholding. In short, ATI will end up with a far trimmer East-West Airlines that can be readily expanded as the open skies of the nineties approach.

Sounds complicated? Well it is and it isn’t over yet. Even as we write this story a lot of complex and extremely important negotiations are taking place between the numerous potential suitors for the remnants of what is left of the old East-West. Indeed, there are a number of possible suitors for all or part of the old EWA network. Australian Airlines is primarily the major player while its Australian Airlink feeders, Sunstate and Eastern also figure heavily in the equation. Lloyds were of course a dedicated Australian feeder before their acquisition by ATI during mid-1987 and it will consequently be interesting to see where their future on carriage will go, or for that matter if they will continue in southern Queensland. It is no secret that Lloyds have not found much joy in the world of third-level regional aviation and they may consequently decide to sell their aircraft and withdraw from the airline market totally if they cannot enjoy the numerous benefits of large carrier ownership. Australian’s problem of course is that it has virtually no feed into the capitals now that it has lost most of its carriage feed in recent years. If Australian picked up the entire route package though it would have to re-equip with a number of F28/BAe 146 class jets in addition to smaller propjets such as the existing EWA F27s or smaller new generation aircraft. This would be an expensive and fiscally doubtful move by Australian and smacks to some extent of their Air Queensland debacle.

Australian on the other hand could do with a smaller jet in the 60/90 seat class such as the F28 that also has excellent field performance. Unfortunately their DC-9s could not be used effectively in either Karratha or Port Hedland and thus the F28s from EWA would have to be acquired. It is not known if Australian would want Skywest and again they would be into operating small propjets such as the BAe Jetstream, an aircraft that for better or worse the Australian board would prefer not to re-member! Australian’s Jetstream operation in Queensland of course was a textbook case of “how not to operate an airline and an undeservedly poor reflection on what is generally considered a highly efficient mini airliner.

Over to the eastern seaboard and again Australian would have to acquire a large fleet of propjets. It may well encourage its two primary feeders, Sunstate and Eastern to take up the best of these routes using their own commuter airline expertise and more applicable fleets.

Eastern is known to be considering a number of the NSW routes and would be willing to invest in new generation 30/36 seat class aircraft to service an expanded network. Eastern presently operate a fleet of 4 Bandeirantes and 7 Cessna 404s on a network that presently links some 21 ports with Sydney. Eastern is expected to have carried around 130,000 passengers during 1987 and is generally considered to be one of Australia’s best managed and most successful commuters.

Further north, Sunstate has virtually tripled its route structure since the demise of Air Queensland and is also looking to additional expansion through the course of this year. This expansion may well include some access to NSW, in conjunction with Eastern and Australian and may also see its southern cousin, based at Mildura, also expanding further into South Australian and Victorian regional services in support of the Australian Airlink system.

Sunstate have put a lot of faith in their reliable Shorts aircraft and now operate a fleet of 4 360s and a lone 330. For 1987 the carrier looks set to carry over 150,000 passengers, a figure that could soar to as much as a quarter million for 1988. Sunstate presently use the Shorts on sectors as long as Emerald/Brisbane (120mins) and Mackay/Rockhampton (75mins) and have received good passenger feedback with the type. Though the Shorts isn’t as fast on the longer sectors as the more expensive pressurised aircraft in the Saab, Dash 8 and Brasilia class, Sunstate feel that its far lower direct operating and ownership costs plus roomy cabin make it an ideal profit earner for any regional carrier.

The past six months have been a traumatic period for East-West (and all who sail in her!) and certainly, the first half of our bicentennial year will be little different as the great route carve-up develops. The smart money is on Australia seizing the best routes by backing its established feeders in gaining the regional sectors that it cannot itself economically operate. Whether this occurs though is merely wishful thinking as we prepare to culminate what has been one of the most momentous years in Australian airline history. Nineteen Eighty-Eight should not be dull!