Airline Affairs

The present situation with the three crew Ansett A320 dates back to late 1984 when the issue of advanced technology two crew airliners first emerged as a local industrial issue. At that time, both Australian and Ansett suffered a strike by FEs that grounded their three crew aircraft (727, 767 and A300) just prior to the busy Christmas period. The strike lasted only a few hours at Ansett as Sir Peter Abeles immediately quelled the issue by giving a written promise to his FEs that they would be used on any Ansett aircraft of more than 120 seats and would always be guaranteed employment with Ansett. Australian on the other hand did not give in to the FEs demands and endured the dispute losing heavily through the grounding of the bulk of its jet fleet at its traditionally busiest time. Ironically, Australia has now deferred its A320 purchase in favour of an additional two crew 7378.

The situation at presstime was essentially that the Ansett pilots would not fly the aircraft it the Flight Engineer’s duties could not be operationally utilised to their satisfaction. It is obvious that Ansett would prefer a two crew A320, the same as every other operator (with the possible exception of Air Inter which is also facing industrial unrest from its displaced FEs). Additionally, Sir Peter Abeles was quoted during January as having stated to Airbus Chief Executive, Jean Pierson, that his A320s would be two crew. The Engineers now appear to have an uphill battle in getting Airbus to approve the mod to convert Ansett A320s and to then sell the effectiveness of the mod to their pilot crew members.

The major point though is that if the imminent introduction of the A320 begins to be an industrial embarrassment and potential revenue loser to Ansett, Sir Peter Abeles may well decide to shift his Airbus deliveries across to Ansett Worldwide Aviation Services where they would be no doubt leased to other carriers without delay. Ansett could then choose from a number of alternatives including additional 737-300s, and possibly -400s, Boeing 7578 or even McDonnell Douglas MD-83s, for which AWAS already holds firm orders. The 757 for instance would offer the benefit of sharing a dual pilot rating with the 767 and could fit well into the Ansett network as a 170/180 seater to complement the 210 seat 767.

The Ansett A320 crewing issue is far from dead and may well prove to be a major industrial issue in the period ahead.

Tourism Continues to Boom:

Figures from the Dept of Immigration show that 240,000 foreigners visited Australia in the three months to last September, a 40% increase on the same period in 1986 and a precursor of things to come for our bicentennial year. In the twelve months prior to September overseas visitors totalled 1,213,000 with the bulk coming from Japan, New Zealand, the USA and, most recently, Europe.

An interesting sidelight to the visitor influx is that the Government will this year reap more than $100m in various arrival/departure taxes, up almost double that of the initial estimates when the system was introduced several years ago. The newly operative Federal Airports Corporation must also be excited by the most recent half year operating profit from its UK equivalent, the British Airports Authority. For the first half of the current financial year, the BAA notched up a tidy $A297m nett profit, an increase of some 29% on the same period of the previous year! Another winner in the tourism explosion is of course Qantas who look set to report a record profit for 1987/88 and one that could possibly top $250m with load factors in the mid-seventies. The domestics are also cashing in on the boom which is seeing load factors soar to new levels.

 Air Travellers Now Taxed Both Coming and Going!

Introduction of a $5 per adult passenger arrival tax by the Department of Immigration now means that Australia is one of the very few nations where tourists and residents alike are taxed both on arrival and departure.

The new $5 tax is being left to the airlines to collect with each international carrier being responsible for accounting to the Treasury twice annually. It is expected that the arrival tax will be added to the price of the ticket at time of sale though at presstime this was still not fully decided by the Board of Airline Representatives who were given little time to consider the practical implications of the new tax prior to its introduction on January 1st.

It is expected that the new tax will raise at least $25m during 1988 while the dramatic increase in inbound tourism is also serving to greatly increase the gross takings from the Government’s existing $20 Departure Tax. This is effectively being channelled back into the DTC to be balanced against Cost Recovery and will go towards supporting the airways infrastructure rather than the newly operational FAC. It is expected that all of the revenue gained from the Departure Tax, which is expec- ted to exceed $100m annually by the end of this decade will go towards financing the Civil Aviation Authority when that body takes over much of the current DTC workload come July 1st this year.

Qantas Gains Access to New York:

Following direct negotiations during December between the Minister for Aviation, communication and transport, Senator Gareth Evans and US Secretary of Transportation Mr James Burnley, Qantas and American Airlines have now been able to conclude a deal that allows Qantas de facto access to the US East Coast via its marketing agreement with American Airlines. Virtually the same proposal was scuttled by US Transportation Dept officials last June.

The services are expected to commence this April and will use a shared QF/American flight number out of New York for a one stop service via either LA or San Francisco to Australia’s east coast. As Qantas derives some 60% of its US traffic from east of the Rockies, then this latest seat sharing agreement will greatly boost Qantas’ marketing opportunities for winning new traffic to Australia. Qantas will lease between 30 and 40 seats on each of the connecting transcontinental American Airlines DC-10 or 767 aircraft that will connect with its six non stop services a week into the two ports. Coming up in March were a new round of bilateral negotiations that will hopefully give Australia greater access to the vast US market while enabling both US and Australian carriers on the Pacific the ability to vary capacity as required without having to continually seek government approval.

Agents Move to Stem Ghost Bookings:

Multiple ghost bookings, the cause of the “full aircraft syndrome” which is wreaking havoc with our international carriers, is being attacked by the Australian Federation of Travel Agents.

AFTA has proposed to its members that an agent either accepts full payment for the ticket at time of booking or otherwise takes a $50 deposit which will be forfeited if the client cancels that reservation. The move is seen as the only logical way in which the multiple booking problem can be overcome. In many cases, travellers will make as many as three or four individual bookings on different carriers to ensure passage. This of course results in havoc as other passengers are unable to get seats aboard aircraft that are shown as fully booked but in reality depart with many empty seats.

One situation that aggravated the problem was the unexplained surge in outbound tourism that kicked off last September for no apparent reason. Up till that time outbound tourism had been fairly quiet with growth in the region of 5%. Suddenly there was a 27% increase in outbound traffic in September alone and the trend has largely continued. To cope with demand Qantas has laid on an additional 234 supplementary flights providing an additional 74,400 seats.

Apology to Air Queensland Directors:

In the November/December 1987 issue of Australian Aviation an article entitled “Australian Airlines Privatisation Battle Begins’ was published which referred to the takeover of Air Queensland by TAA (now Australian Airlines) in March 1985.

It has been brought to our attention that the article could have been read to imply that Air Queensland Directors misled TAA by concealing the existence of an on-carriage contract between Air Queensland and Ansett and by not revealing the true position as to the liquidity of Air Queensland.

We are informed by the Directors of Air Queensland that they disclosed the existence of the Contract to TAÁ and made full disclosure concerning the liquidity of Air Queensland during the negotiations and prior to the takeover of Air Queensland.

We apologise to the Directors of Air Queens- land: Sir Sydney Williams, R M Mostyn, S Christie, AJ Hope, RJ Horseman, A McInnes and H O Cornelius for any embarrassment or distress that might have been caused by the publication of the article.

Record Passenger Numbers for Qantas:

More than 700,000 travellers flew Qantas during December and January, making the Christmas period the busiest in the airline’s history. Qantas scheduled a total of 234 supplementary flights to meet the unprecedented demand for airline seats over the holiday months. Nearly 75,000 extra seats were provided by the national carrier which coupled the increased utilisation of its own fleet with the leasing of three additional aircraft including a Martinair DC-10 and an Aer Lingus 747, to cater to the needs of the Australian travelling public.

The growth in international air travel is not restricted to Australia, with the latest figures from the International Air Transport Association indicating an 18% jump in the number of airline passengers around the world for the month of October. The 31 international carriers who compete with Qantas in the Australian market also added a total of around 80 extra flights for the period.

 Fac up and Running:

The long awaited Federal Airports Corporation officially commenced control of Australia’s 17 major airports on January 1st.

The FAC has also signed 20 year leases with both Australian and Ansett for terminal space which also includes a 10 year option to develop additional passenger terminal facilities as demand requires.

Additionally, when the Two Airline Policy expires in October 1990, new carriers, or existing regional or commuter airlines offering new routes, will have access to Australian and Ansett gates at airports where common user facilities are not available. Depending upon demand, up to 4 gates will be available at each of Sydney and Melbourne, and 2 gates will be provided at all other locations except Launceston, where one gate will be available, and Hobart where terminal facilities can be provided at the little used International Terminal building.

The Federal Government has also finally decided on what exactly is the total asset value of the FAC empire. Assets vested to the Corporation will be worth $1,096m which covers the relevant land, facilities and associated infrastructure of the 17 airports. The FAC’s debt component, which is tantamount to a loan in perpetuity by the Commonwealth, has been fixed at $400m. Interest will be payable on $300m of this loan at the prevailing semi- Government bond rate, with concessional interest arrangements applying to the remaining $100m. The Government believes that this arrangement should see the FAC being able to meet its commitments on existing levels of revenue and although the Treasury does not expect dividends for several years, it does expect the FAC to be able to provide a viable return on investment by the early nineties.

East-West in a Go Mode:

Under its new and cashed up ownership, East-West Airlines has embarked on an expansion programme that will see the virtual doubling of its jet fleet by mid 1989.

The airline has sought permission from the Federal Government to import an additional six second-hand F28-4000 jets over the next eighteen months. Two of these aircraft have already been approved and will be operational by mid year. Additionally, the airline is to per- form the Dash 532 upgrade on the RR Dart turboprops of its remaining F27-500s to enhance their fuel efficiency by around 15%. EWA will continue to use a limited number of the propjet Fokkers on their Tamworth, Albury and Canberra services.

New routes to be pioneered through 1988 will be Brisbane/Townsville and Sydney! Geelong. The Geelong service is particularly interesting in that EWA will be operating into a privately developed airfield at Lovely Banks, 6km from central Geelong with a ten year exclusive operator lease on the facility. The airfield will be constructed to full 737 standards and is expected to become operational this winter. EWA will initially operate four daily jet services to the port and hope in time to increase this frequency as traffic demands.

Geelong, apart from serving a local population base of nearly a quarter million people, is also a feeder to Melbourne from the expansive Victorian south western districts. EWA’s reasoning is logical that it will now capture much of the northbound traffic from these rural regions as Geelong is so much closer to the western districts than is Tullamarine.

All is not growth though. The airline ceased its loss making Melbourne/Wynyard services in February and also moved to close down its East-West Cargo division. While Cargo had not been actually losing money, it had little long-term chance of becoming a sufficiently big enough profit earner to justify the relatively extensive equipment, investment, personnel and infrastructure required to viably support its existence.

Through 1987 the carrier enjoyed solid growth and was up till mid year greatly limited purely due to lack of available capacity. New aircraft and a revised schedule saw EWA post growth of 24% alone during the July to October period with October being the first month the airline had ever carried more than 100,000 passengers. It is expected that by the early nineties the revitalised EWA will be exceeding two million pax annually.

Government Superannuation Uncertainty Causing Pilot Exodus:

The threat of increased taxes on superannuation is causing a large number of senior commercial pilots to retire early, accelerating an already critical pilot shortage amongst Ansett, Australian and in particular Qantas.

By early February, 14 Qantas pilots had resigned because of the issue while the domestics had only lost 5, it was believed that several dozen more were seriously considering early retirement. Their concerns are that the Federal Government will amend the superannuation taxation legislation in the coming May economic statement, thereby taxing retrospectively their superannuation entitlement in addition to making a substantial portion of the previous lump sum payment as receiv- able only as a pension. This would effectively break a 1983 agreement that the AFAP made with the Treasury on this subject and would, if effected, see an exodus overseas of pilots to airlines such as Cathay, Saudia and Singapore who are currently seeking highly credentialed Australian aircrew.

WA Government Holiday Charters a Big Success:

The innovative move by the West Australian Tourist Commission to charter an Australian Airlines 727 for a weekly charter flight from Melbourne to Perth during the summer period has been a roaring success. The cost of the one week package, including air fare and accommodation is just $599 ex-Melbourne.

Virtually each flight has been full with a large contingent of passengers joining the service from other cities on specially discounted tickets. The connection from Sydney to Melbourne for instance was only $96 return, a far cry from the standard economy fare of $342 and a portent of what deregulation will bring during the nineties for those able to fly on non- peak packages.

Jetset Tours also waded in during December with a similar package, applauding the WA Government for its initiative and stating that other States might well set up similar charters during their relevant off seasons to better capture the domestic holiday dollar.

British Airways to Upgrade Its Business Class:

BA has scrapped its Super Club for a revitalised business class that will be known as Club World for its long haul services and Club Europe for its European regional operations.

The airline is investing some $60m in revising and improving the configurations of317478 and nine Tristars though points out that if it can increase patronage by a mere 1. 5% per annum the entire investment will be amortised in less than five years.

Over 2500 business class passengers were interviewed at length on what they required in a premium fare class and the results will filter across to better menus, a more personalised meal service and new contoured seats with greater legroom and increased recline.

 Caa Ready for July Launch:

The new Civil Aviation Authority is on schedule for an official launch date of July 1st, 1988.

The CAA will manage Australia’s airways system and is being located in Canberra. Original plans were to base it in Sydney but difficulty in getting many of the existing DTC employees to Sydney have scuttled the initial plan. Housing prices are such now in Sydney that residents of most other cities, and in particular Canberra, are reluctant to make the move. Though the FAC is headquartered in Sydney, some senior elements of its staff will also remain permanently based in Canberra.

Lufthansa Commences European Express Services:

Lufthansa has joined the growing list of international airlines in offering a one-stop service from eastern Australia to Europe. The new service will depart from Sydney and Melbourne each Monday with a stopover at Bangkok. Lufthansa’s regular Wednesday and Saturday departures will meanwhile retain their usual KL/Dubai routing. The carrier has also moved to upgrade its frequencies out of Hong Kong with non-stop flights now being operated on these services to Frankfurt on a daily basis.

Air Pacific Fights Back:

Qantas’ sibling. Air Pacific, of which the Aussie international now owns some 20% with a firm management contract till 1995, is beginning to turn the corner after a turbulent 1987.

The Fiji flag carrier suffered badly through last year’s political unrest. That people began to holiday elsewhere was bad enough but in order to gain some sort of viable load factor, Air Pacific was forced into deep discounting which with a $299 return fare even meant that full planeloads were virtual marginal payers.

This figure is more recently up to a more viable $399 (with an equally appealing land package available) while the number of passengers carried through the December-January period was a record. Fiji is also a better buy now that the currency has been devalued by 30% and is almost at parity with our own, while additionally a level of political stability appears to be emerging in the longer term.

One thing however that has certainly had plane spotters bluffed is that there are now two of Air Pacific’s ‘Fruit Tingles’ plying the airways. Both Qantas-owned VH-EBK and EBB now sport the distinctive multi-coloured rainbow colour scheme of the Fijian carrier. This is to ensure that all Air Pacific aircraft, operating into Nadi, indeed sport the national carrier’s livery something that Qantas could not always guarantee as the original EBK was occasionally employed on other routes which made it difficult to accommodate each of Air Pacific’s four services a week to Fiji. So when next you are at Frankfurt, Rome or Heathrow, don’t be surprised if out of the wintry gloom there appears the familiar colours of the original “Rainbow Warrior’!

United to Retire Its Tristars:

United Airlines is to retire its Lockheed L1011-500 Tristar fleet from its Pacific network effective this May.

This will now give United an all-747 Pacific fleet which will equate to an increase in capacity of some 28% on the northern Pacific and 64% on the intra-Asian services. United recently acquired five additional used 747-100s which have been refurbished and configured in a 396 pax configuration with 18 first, 62 business and 316 economy class seats. Meanwhile. United’s 11 747SPs have also been upgraded and reconfigured to accommodate 37 first, 62 business and 144 economy passengers.

Air Vanuatu Flies Again:

Air Vanuatu re-commenced services to Port Vila on December 19 following a three month cessation of operations following the withdrawal of Ansett-backed services linking Australia with the island group.

The new service utilises a chartered Australian Airlines Boeing 727-200 operating a once weekly Saturday night service linking Sydney with Vila. Australian initially won a three month contract to provide the service and is fighting hard to win renewal as Air Vanuatu cast around for a regional operator who might like to share long-term 737 capacity. Air Pacific, an established 737 operator though has little spare capacity available and Air Niugini is to upgrade later this year with a new 200 seat A310-300. Its present leased A300 (also from Australian) would also be considered too large to be an effective proposition on the relatively small scale operations envisaged by Air Vanuatu.

Australian’s 727 is configured with 20 first and 125 economy class seats and the once weekly service takes advantage of a time period when the aircraft would normally be surplus to requirements. Departure from Sydney is at 10. 30pm each Saturday with an arrival in Vila at 2. 45am. Departure from Vila is an hour later for an arrival at KSA of a sprightly 6. 05am. The cost of a seven day holiday pack- age is $699.

Regional International Win Service Awards:

Cathay Pacific has been selected 1987 Airline of the Year by Air Transport World magazine. The award is considered as one of the highlights amongst the airline community and was given to Cathay for their high standards of service, rapid growth and overall level of efficiency and profitability in what is probably the world’s most competitive and economically fragile industry. CX’s win was no idle victory either, for 1987 the airline posted a growth rate of 24% in Revenue Passenger Kilometers (RPK) against a capacity increase of only 16% in addition to an increase in freight tonnage of nearly 14%.

The other regional to win an accolade from ATW was Air New Zealand which won an award for its standards of passenger service. The magazine cited ANZ for consistency over the years in developing and delivering on both ends of the superior service equation.

Australian Becomes a Public Company:

Effective March 31st, Australian Airlines is expected to be officially converted to a Public Company with the Federal Government holding 100% of the issued shares.

Public incorporation effectively paves the way for eventual privatisation, a battle that the Hawke ministry is gearing up to enter at the Federal ALP Congress this June. The immediate benefits of public incorporation though are that Australian can at last dismiss some of the nonsensical Public Service restrictions that have only served to restrict the day to day operational efficiency of the government-owned domestic.

On the equipment front, Australian will take delivery of at least one and possibly two of its new 737-300s late this year with the remainder being delivered through 1989. The carrier is also holding on to its BAe Jetstream 31s, which are currently parked at Eagle Farm, until a full deliberation of what is happening to the propjet element of Ansett’s East-West empire is fully decided. This will most certainly be after the NSW State election though is expected to be fully decided before the end of the fiscal year.

Prior to East-West’s purchase by Stan Perron last July, the carrier was very close to signing for a fleet of Jetstreams with which it would have provided a high frequency non stop service linking a number of the smaller NSW ports with Sydney. This would have been far more cost efficient than flying the relatively low frequency levels that the 50 seat F27s demanded and had the full endorsement of local councils at a number of rural centres. Additionally, many services were multi-stop ‘milk runs which reduced their cost efficiency further while also protracting the total point to point air journey. Australian undoubtedly hopes that its already locally registered J31s will find a home with either Eastern or Sunstate, operating these ex-Fokker routes with more appropriate equipment as an Australian Airlines Sydney feeder.

BA and United Sign Worldwide Marketing Partnership:

Two of the world’s largest carriers, British Airways and United, have signed an in-depth marketing agreement that literally merges the two airlines capabilities.

BA’s chief executive, Colin Marshall, has called the agreement a “marketing merger of two of the world’s biggest and most successful airlines and one that will give each carrier greater presence in parts of the world where the other is the leader. It is a blueprint for the aviation world of the 1990’s and beyond”.

Also described appropriately as the ultimate global airbridge, the agreement will see the two airlines sharing facilities at Seattle, Chicago, Washington and New York. Fully co-ordinated schedules, joint pricing, one stop check-in and joint marketing programmes will also serve to effectively marry the operations of both carriers. Passengers flying business class on BA across the Atlantic have been able to automatically upgrade to United’s domestic first class services for some months now, while the link will also bring the two carriers closer together on the all important CRS issue. Uni- ted’s Covia is already a partner in the BA sponsored European Galileo system which also includes Alitalia, Austrian, KLM, Swissair, TAP and Aer Lingus. BA presently serves some 145 cities in nearly 70 countries while United serves 165 cities throughout North America, Asia and the Pacific.

This is the first time ever that a major non-US airline has operated a code sharing agreement with a US airline and is essentially similar to what Qantas was trying to achieve with American Airlines during the latter half of 1987 prior to the US Dept of Transport vetoing the plan as enabling Qantas unfair access to the domestic US market.

East-West Begins to Replace Staff:

The process of integration with the Ansett empire has already begun at East-West with ground handling operations at a number of ports being absorbed by Ansett.

Hobart and Devonport were the first to go with Ansett taking over the operation effective February 14 with only four of the 13 affected staff being offered jobs within Ansett. At time of going to press there seemed a liklehood of some form of limited industrial action being taken by East-West ground staff in support of job security. East-West has already moved into the Ansett terminal at Brisbane and will do like- wise at Cairns and Townsville when that route becomes operational shortly. Other ports likely to be affected will be Canberra, Albury. Melbourne and possibly Perth where the EWA operation is already being phased down.

New Asian Airlines Crs System Launched:

Following months of discussion, Singapore Airlines, Thai International and Cathay Pacific have agreed to join forces to launch their own Computer Reservations System (CRS).

Code named, Abacus, the system will provide its host carriers with fully coordinated data on a wide range of airline and hotel reservation information. The key component to the system will be a joint venture central computer complex capable of handling 300 messages a second and supporting a network of over 10,000 terminals.

At present though the system is seen generally as being of little real effect without the inclusion of Qantas, Air New Zealand and most importantly JAL and ANA. Negotiations as to a real Asian system (codenamed Fantasia) are still in process and with Australia well equipped to provide the necessary pool of computer literate specialists, it is hoped that Qantas will be able to pull off a coup as a potential leader in what would ultimately become a viable rival to newly formed Galileo, Amadeus and the US Apollo and Sabre systems.

Airlines, Rail Suffer at Hands of Deregulated Coach Services:

A six month trial of deregulated coach services between Sydney and Canberra and Sydney and the North Coast has resulted in a substantial increase in coach traffic at the expense of air and rail.

On the Sydney/Canberra sector, coaches attracted some 134,000 passengers during the six month trial, of which 31,000 would have normally travelled by rail and 6000 would have flown. To put this into perspective, this is the equivalent of 120 full F278 or more realistically around 270 at existing load factors on this highly serviced route. The Bureau of Transport Economics estimates that the airlines lost nearly a quarter million dollars worth of traffic on the Canberra/Sydney route alone due to a freeing up of the long haul coach system. The BTE estimates that an additional 11,000 people were attracted to travel the route owing to the low fares offered by the coach companies.

The North Coast situation was similar with the airlines losing 6000 potential passengers and rail some 19,000. While the airlines are responsible for the own destiny, it will be interesting to see if pressure mounts on the various State Governments to close loss-making regional passenger rail services which nationally are estimated to be losing more than $1bn per annum. This loss is largely funded from the Federal Government and is thus a major contributor to the overall federal deficit. Replacement of existing rail services with deregulated coach services could ultimately prove in the regional airlines favour if the public perceives that air travel is both more time effective and safer than travelling by road.

 Seat Back Video Ready to Fly:

The next step in inflight entertainment, seat back videos, are about to become a reality.

Readers of our Paris Air Show report in the September edition of AA (p22) will be aware of the benefits of the new systems which will effectively do away with the big screen/ projector system that is now standard on most long-haul airliners. The benefits of seat back video are many in that the passenger will now be able to watch whatever he or she personally desires rather than what is available in that particular cabin. From personal experience you normally end up with the movie you least wish to see while many seats aren’t even in a suitable position in relation to comfortably viewing the screen.

Leaders in the seat back video field, Airvi- sion, are about to introduce their Model 30 system aboard transcontinental Northwest 757s later this year. Northwest will also be fitting the system to their new 747-400s and will over the next few years retrofit their entire fleet with the system. Qantas are about to make a decision for their own 747-400s, which are first due a year from now, and are expected to be able to offer this bonus in both first and business class throughout their fleet by 1991.

The Airvision Model 31 system employs a Sharp LCD 3″ screen in a module measuring 13″ wide by 5″ deep and 1″ in depth that is embedded in the top portion of the back of the seat. A three inch screen may not sound very big but in relation to the distance from viewer to screen it is roughly the equivalent of watching your TV at home and more than adequate. Where seat pitch is a problem, as in first class, an armrest pop-up version has been designed that also overcomes the slant effect when the forward seat is fully reclined. In all cases, from what we have seen ourselves, the picture quality is excellent.

Unit price per seat is between $A1500 and $A2500. Compared with existing systems aboard the 747 and DC-10, the Model 31 is more expensive, however on smaller aircraft, such as the 757, where a number of overhead TV monitors are used, the system is actually cheaper. For the passenger the benefits are numerous and it is expected that a decade from now the present overhead projection system will be as old fashioned as steam driven gauges in the cockpit!