Airline Affairs

Meanwhile, the Twin Otter services that were formerly part of AQ will now be operated by Australian Regional Airlines (Queensland) Lid which is a new wholly owned subsidiary of Australian Airlines. This GA company will provide Twin Otter services from Cairns to Lizard and Dunk Island and from Townsville to Dunk Island, Proserpine, Mackay, Brampton Island and Rockhampton. The formation of ARA provides interesting food for thought as it signals an intent of Australian to return to third level style operations. In the meantime, long- term prospects for this part of Queensland are strong with both tourism booming in the region in addition to the prospects of a major RAAF facility and space base at Weipa planned for the years ahead.

Prior to the surprise Australian Airlines/Air Queensland announcement, the most favoured contender was Charter Cruise Air Ltd (CCA) which operates as Aircruising Australia. Aircruising operates two F27s on specialist tourism charter flights around Australia and was keen to develop a new scheduled airline market in Northern Queensland.

Australia to Host Additional International Carriers:

It seems that the imminent deregulation of the Australian domestic airline environment has also created renewed interest from a number of international carriers wishing to cash in on Australia’s growing tourist popularity.

Two low end deep discount carriers likely to visit our shores are LOT, the Polish national carrier and Richard Branson’s successful Virgin Atlantic. LOT have already gained approval to operate up to 10 charters between May and December linking Warsaw and Sydney. It is expected that LOT will be aiming at the Polish emigree market in Australia and will be offering fares considerably less than the norm to fly on its Soviet Ilyushin jets.

Virgin on the other hand wishes to commence a regular scheduled service, mooted at twice weekly linking Sydney and Melbourne with London Gatwick. Virgin use their 747 Atlantic services primarily to airfreight their records and other goods across the ‘pond”. It is expected that with Branson’s move into corporate Australia with his far reaching Virgin product base that he will be adopting a similar policy and carrying passengers, at deep discounts, purely as a back-up to the freight carrying capability of his 7478.

Somewhat more up-market is Swissair, which hopes to begin two services a week into Sydney and Melbourne sometime in 1989, though they may operate a number of proving flights this year as special purpose holiday charters. Swissair will offer direct connections into Zurich which currently now have to be taken via Singapore or Hong Kong. Qantas at this stage has no intention of operating reciprocal services into Zurich due to insufficient traffic though may come to a pooling arrangement with the Swiss carrier, block buying seats, in order to maintain a higher level of frequency than would normally be possible.

If Swissair is at the opposite end of the market to LOT and Virgin, then another new entry, Air Tonga, is literally in a world of its own. The Kingdom of Tonga has bravely bit the tourism bullet and leased an MD-87 twinjet from GPA with which it will try and emulate the success of its regional neighbours in offering jet links to its Pacific principality. The specially equipped MD-87 features long-range fuel tanks which provide a range of 3,260mls in a 117 seat business/economy configuration.

 Qantas Joins New Airline in Solomon Islands Operations:

Anew international airline commenced flying to Australia from March 28. Solomon Islands Airlines is now operating joint flights with Australia’s international airline, Qantas, three times each week between Brisbane and the Solomon Islands’ capital, Honiara.

The service will depart from Brisbane on Mondays, Thursdays and Saturdays using a Boeing 737-200 aircraft leased from Air Pacific. Although the lease includes Air Pacific’s technical and cabin crew, Solomon Islands Airlines will train and place two of its own cabin crew aboard each flight.

Up to 110 economy class seats will be available on the aircraft, to cater for the demand for business travel and people visiting friends and relatives. Tourism to the Solomons also is particularly adventure holidaymakers and scuba divers.

growing.

for The route was operated by Air Pacific for Solomon Islands Airlines predecessor, Solair, twice each week, but the new Solomon Islands Airlines services will replace these flights and boost available freight capacity on the route by an extra 2400kg each week.

 Fac Award Contracts for Ksa Terminal Upgrade:

The Federal Airports Corporation has let an initial contract for conceptual studies into a major redevelopment of Sydney’s KSA international terminal.

The studies are scheduled to be completed by this June and the project, which will include a minimum of four additional gates, should be completed by 1991. In the meantime, Sydney will soon begin to lose a number of international frequencies due to a physical lack of gates and processing capability at peak periods. Additionally, the fact that the surrounding airway/runway capability has already reached peak capacity is not helping the situation even though international movements at KSA constitute only 12% of the total.

The FAC is also investing at other airports around Australia, with the letting recently of a $2. 6m contract to upgrade Perth’s ‘main 3,444m runway and a further $2. 5m to upgrade Tullamarine’s international terminal baggage hall.

 Ansettization of East-West Accelerating:

East-West Airlines is rapidly acclimatising to its new Ansett Group ownership and for the first time in years is said to now be in a monthly profit situation.

Recent changes to operating policy have seen the amalgamation of the entire EWA schedule into Ansett’s Ansamatic CRS system, effective May 1 and a move from its Sydney central business district headquarters to the Traveland centre in Glebe. East-West is also looking to relocate its Mascot airport terminal from Australian to closer to Ansett. This will also make way for an expanded presence for Eastern and possibly Hazelton Airlines if that carrier should take its carriage across from Ansett to Australian (refer story elsewhere). The carrier has also gained Departmental approval to import two additional F28-4000s effective March 1989. This will then bring EWA’s fleet to 10 F28 at that time. The airline will also sell off a number of its F27 Friendships as these aircraft become surplus later this year. At present the F27s are planned to operate only to Armidale, occasionally Tamworth, Al- bury/Melbourne, Port Macquarie and Canberra out of Sydney plus the occasional Melbourne based service as the carrier moves to being primarily an all jet fleet. Port Macquarie and Armidale are due to be shed by year end under the new NSW State Government’s intrastate air transport policy (refer story elsewhere). This will leave little application for the F27s which may be sold off in favour of new generation 30/36 seat propjets or leased Fokker 50s from Ansett controlled Corsair.

Another interesting development on the equipment front is that the three Fokker 100 twinjets, originally leased by East-West from ILFC last year, will be delivered to the Group though most likely not for service within Australia. One possible application for these aircraft could be with Ansett New Zealand where the fuel efficient F100 would fit admirably into the existing route structure.

One area of growth for East-West has been its always marginal Sydney/Canberra discount services. Air New South Wales withdrew from the route on March 19 and since that date EWA’s load factors have increased by around a fifth as it is now the only discount operator serving the route. At the same time Air NSW also discontinued its Canberra/Melbourne discount services in favour of full fare Ansett Airlines Fokker 50 propjets. Passengers though have largely not been told that they will not be flying on a jet and Australian Aviation believes that this has caused a degree of consternation among passengers who have arrived at the airport expecting a jet service. Selling turboprop services head to head with jets on primary routes at standard jet fares is a new marketing phenomenon in Australia and will bear close watching.

 Malaysian Airline System in an Expansionist Mood:

Malaysian is preparing to boost its Australian frequencies with a fourth weekly service from Sydney! Melbourne in October in addition to already having introduced one stop services to Europe from Australia via Kuala Lumpur.

MAS is also preparing to increase its frequencies into London and Europe in addition to a new non stop service linking KL with Honolulu and onwards to the US West Coast. MAS begins to take delivery of an initial 3 747-400s from June 1989 in addition to 10 new Fokker 50 propjets to replace its domestic F27 fleet. The carrier is also looking to acquire new jets in the 150 seat class to replace Boeing 737-200s and is also looking at the new generation of long-range twinjets to replace its existing fleet of DC-10 and A300 aircraft. A decision on this is expected in the coming year and represents another big airframe battle between Boeing. Airbus and McDonnell Douglas.

Scheduled Domestic Airline Activity Continues to Grow:

Provisional statistics for scheduled domestic airline activity show continued steady growth in the December quarter.

Total activity (tonne kilometres) increased by 12. 2% in the December quarter relative to December quarter 1986 and by 8. 7% in the year ending December quarter 1987.

The passenger component increased by 12. 4% for the quarter and 9. 4% for the year while the cargo component recorded increases of 11. 4% and 4. 2% respectively over these periods.

In the year to December quarter, the two major airlines’ share of the passenger tonne kilometres stood at 87. 5%. Their share of the annual cargo tonne kilometres was 83. 8% Hours flown increased by 4. 0% for the quarter and 5. 8% for the year. Domestic airline aircraft movements at the eight capital city primary airports increased by 6. 6% for the quarter and 5. 8% for the year.

 North Atlantic Traffic Volume Soars in 1987:

More than 25 million passengers crossed the North Atlantic flying with 55 airlines in 1987, some 24 million of them on scheduled flights.

This represented a 21. 7% increase in passengers carried compared to 1986. Freight tonnage was up 14. 5% with by far the sharpest upswing in freight carried from North America to Europe (up 30. 4%), stimulated by the US dollar’s fall against most European currencies. Commenting on the results, IATA Director General Gunter O Eser said: “Last year’s North Atlantic traffic results confirmed our forecast a year ago that 1987 could be a good vintage. It would be unrealistic to expect that growth will be as high in 1988, but it should nevertheless be a good year. However, airlines will face problems in translating the growth in traffic into satisfactory financial results.

Smoking Now Banned on Us Airlines:

A smoking ban on all US domestic and international flights of less than two hours flight duration has been introduced effective April 22nd.

Smoking is now banned aboard domestic airliners in Australia and China with Canada and the UK currently evaluating the possibility of enacting similar legislation. Meanwhile, an enterprising Texan millionaire has moved to set up a charter airline using leased BAe 146 aircraft from Royal West Airlines in Nevada that will be for smokers only. All seats will be designated as smoking seats and flights are planned to hub out of Dallas/Fort Worth. Financial backers hoped that the new airline, which at press time was still unnamed, will be operational by year end. Any advances on CigAir or Nicotine Express!

Tourism Continues as the Big Earner:

Inbound foreign tourists now exceed outbound Aussies, according to a survey by the ANZ Bank. The survey also indicated that foreign tourism contributed $A23bn to the Australian economy or an equivalent 5% of total employment in 1987.

Inbound visitors increased from just one million in 1982/83 to more than 1. 6m in 1986/87 while the figure for calendar 1988 is expected to exceed two million. Of these visitors, some 85% are either on holiday or visiting friends and relatives (VFR). Almost all of the inbounds came from four nations – NZ, Japan, England and the USA. The report indicates that with Australia presently hosting barely 1% of the international tourism market, the potential for further massive expansion is ripe.

Olympic and Sabena Join Galileo Crs Consortium:

Olympic Airlines, the national carrier of Greece, announced on March 30 that it is to join Galileo-the eleven partner consortium leading the development of the next generation computer reservations distribution systems in Europe.

Its decision comes shortly after Sabena, the Belgian national carrier, announced that it will also be joining the venture. This makes Galileo the clear favourite among European national carriers, with more than half of the EEC’s national carriers as partners.

The Galileo partnership now comprises: Brit- ish Airways, KLM, Swissair, Covia – the distribution subsidiary of United Airlines, Sabena, Alitalia, TAP Air Portugal, Aer Lingus and Austrian Airlines.

Nsw Intrastate Services Consolidate as Third Level Operators Expand:

Regional air services within NSW are entering a new era as the State begins to be carved up between a revitalised Eastern and Hazelton Airlines in the wake of the Trade Practices Commission ruling late last year for East-West Airlines to relinquish most of its F27 presence in the State.

As a consequence of this, Australian Airlines has taken up the shareholding in Eastern formerly held by the now Ansett-owned East-West. This has provided Australian with a stronger feeder into KSA as Eastern has now acquired Australian’s 3 Jetstream commuters to augment its existing fleet of 3 Bandeirantes and 7 Cessna Titans. Eastern will use the Jetstreams from July to service former EWA ports such as Grafton, Kempsey, Taree, Inverell and Glen Innes. These townships will now have non stop as well as faster services than before as often the much larger F27s had to fly a milk run in order to service such a large route structure.

Eastern, as a result of the, has also relinquished several western NSW routes to Hazelton Airlines which itself has literally doubled its base with the number of ports served increasing from 11 to 26. Eastern will now begin reducing its Titan fleet in favour of additional turboprops including 30/36 seaters if it gains access to Port Macquarie and Armidale later in the year.

Hazeltons on the other hand is still feeding into Ansett’s KSA terminal though with the lease expiring on this early next year, the regional is also talking with Australian as to its prospective future dual designator status. Hazeltons with its new licence to serve Lightning Ridge, Cobar, Nyngan, Warren, Brewarrina, Bourke, Cowra, Parkes, Forbes, Young, Cootamundra and Coonamble will initiate a hub and spoke system based on Dubbo and will feed that port with its large fleet of Piper Chieftains with passengers being then uplifted to Sydney in faster aircraft.

Hazeltons presently operate 1 Bandeirante and have another due soon plus a fleet of 8 Chieftains with 4 more due for delivery by this September. The carrier has also acquired a new Beech 1900 which will enter service in August and may purchase additional 1900s if it is successful in gaining access to additional routes that will be designated by the NSW State Government in the coming two months. These routes are Port Macquarie, Armidale, Moree, Narrandera, Cooma, Merimbula, Griffith and Armidale.

Airline Managing Director and founder, Mr Max Hazleton, cited the primary benefits of the Beech 1900 as its long range, which obviated the need to constantly refuel at rural ports with its more expensive fuel, and its large baggage capacity. Hazelton will also buy a 30/36 seater if successful in gaining a viable route package and are looking at the Embraer Brasilia as their primary choice largely due to its high cruise speed. Either way, the carrier is geared for expansion and is also looking to serve Melbourne, Brisbane and Coolangatta from rural NSW ports with direct high speed services in new generation aircraft as an alternative for country people continually having to hub through an ever-congested Sydney airport.

Tnt Ipec Further Consolidates European Freight Market:

European express freight market leader TNT Ipec has announced an agreement for a merger with SAS subsidiary Air de Cologne. The partnership creates the biggest and most powerful force in the European express freight industry.

The merger of the two organisations, combines Air de Cologne’s recognised strength in Scandinavian markets, with Ipec’s dominance of the express freight scene in central and southern Europe. The existing TNT network in Europe along with their large investment in the new QT 146 aircraft, has made TNT the largest express freight company in Europe.

 Qantas Buys 4th Boeing 767-300ER:

Qantas has placed a firm order for a fourth Boeing 767-300ER aircraft. The airline already has firm orders for three of these aircraft which are the very latest and largest in the Boeing 767 range. They are 6. 4 metres longer than the -200 series.

The first of these aircraft will be delivered in August this year, the second in October, the third in November and the fourth in December, 1988. Originally only one of these aircraft was scheduled for delivery in 1988, but Qantas has moved quickly to meet the strong and growing demand from foreign travellers for direct flights to Australia. The new aircraft would also provide additional flights during the traditional peak summer period for Australians.

The twin-engined Boeing 767-300 Extended Range jets cost $140m each (with a large spares package) and will carry 250 passengers, 40 more than the 767s operated domestically in Australia. Qantas also has on order four Boeing 747-400 aircraft which will be delivered next year.

Air Queensland Goonies Find a New Tomorrow:

The four ex-Air Queens- land DC-3s, affectionately known locally as Gooney Birds, have found a new life with Air Rambler, a division of Clipper Tours.

The four ex-AQ aircraft, VH-BPL, BPN, EDC & PWN, will combine with VH-SBL from Aeroyandee in Western Australia to provide 6 day tours out of Brisbane into the Gulf Country and 3 day Gooney Bird tours ex Caims.

This is essentially the role the DC-3s were performing in AQ service and one that will be enhanced upon if the Clipper group are successful in tapping more of the inbound tour market.

Ansett New Zealand Set for Expansion:

A recent decision by the NZ Government to lift restrictions on foreign ownership of its domestic airlines has paved the way for further expansion by the Ansett Group.

Ansett New Zealand will now begin to operate second tier regional services in support of its primary jet trunk routes linking New Zealand’s major cities. Whether the traffic demands a second carrier on many of the traditionally low-traffic second-tier routes remains to be seen, as Ansett New Zealand’s primary operations are presently running at load factors which would not generally be considered economic.

From a political point of view the strengthen- ing of the Ansett presence in New Zealand is aimed primarily at establishing a secure market foothold and keeping Air New Zealand honest in the likelihood of trans Tasman operations later being liberalised under the terms of the Australian/New Zealand Government’s Closer Economic Relations (CER) package. While at present there exists little practical likelihood of this happening, it is generally felt within both airlines that a major freeing-up of trans Tasman, and perhaps Australian domestic operations, could evolve during the first half of the next decade.

East-West Refine Fares:

East-West Airlines has greatly simplified its air fare structure and now has only four fare types with which to deal.

On offer are the Maxi Saver, featuring a 50% discount with tickets being purchased at least 30 days prior to departure with a minimum 3 night stay. Super Saver offers a 30% discount with tickets being purchased at least 7 days prior to departure with a three night stay required while the final discount fare is Easy Saver at 20% off normal full economy (which is the fourth fare category) and which is available right up till flight departure. Easy Saver will be the first substantially discounted air fare which can be booked and purchased right up to time of departure.

The airline is also evaluating its inflight service requirements and may well move to upgrade its present no-frills image by providing a greater range of refreshments, snacks and light meals as required.

 Iata Clearing House Turnover Record:

The IATA’s Clearing House had a record turnover of $US14. 4bn in 1987, an increase of 20% over the previous year.

“This was a really good year for the Clearing House, not only in terms of turnover, but of new members,” said the Association’s Director General, Dr Gunter O Eser. “Clearing House membership at the end of 1987 included 166 airlines, both IATA members and non-members; during the year, while 25 new companies joined, compared with 12 in 1986,” he noted. “The rise in membership partly explains some of the increase in turnover turnover, but there was definitely a rebound in interlining business. ” Airlines settle claims through the IATA Clearing House for passenger tickets sold and air cargo shipped by other airlines and for other types of airline services such as maintenance, airport handling and catering. An agreement with the US-based Airlines Clearing House makes interclearance facilities available to 350 airlines worldwide.

Dr Eser said: “The increase in membership last year came from all parts of the world and involved all types of airlines. There were new European companies, Asian and African airlines beginning international operations and established carriers, which have found international debt collection too difficult to handle alone. ”

First 727 Returned to Boeing:

United Airlines has donated the first Boeing 727 built, N7001U, to Boeing’s Museum of Flight in Seattle.

The aircraft, which went into service with United on October 6, 1964, has logged more than 57,000 hours, carried about 2. 5 million passengers and made more than 43,000 takeoffs and landings. The aircraft, which was named “Spirit of Seattle’ by United’s President and CEO Mr Stephen M Wolf at the presentation ceremony, will remain in service with United until its retirement in 1989. United presently operates a fleet of 153 7278.

Tourism Future Bright:

Some interesting data released recently by Singapore Airlines highlights the enormity of the rapidly growing international tourism and travel industry, of which aviation is a major component. The figures are certainly startling. In the 146 years since the Reverend Thomas Cook organised his first outing for a group by train, the international travel industry has grown to an expected 1987 turnover of more than $US1. 5 trillion! It is difficult to comprehend such a sum but let us say that it presently is more than double the amount being spent on arms. Additionally, world tourism ranks third in size after energy products and the motor industry though these figures take account only of the tourism aspects of the industry and not the total value of their required airport, airways and airliner investments.

Tourism provides over 60 million jobs internationally and as a foreign exchange earner it ranks first in Thailand, second in Hong Kong, third in Singapore, fourth in New Zea- land and fifth in Indonesia. In Australia it is fast becoming our fiscal saviour with an expected increase in arrivals this year of more than 25%. For 1988 it is tipped that more than 2 million foreign visitors will holiday in Australia providing a level of job creation that extends from the service industries through to transport and construction. Additionally, tourism is seen as being conducive to protecting and enhancing the natural environment (largely the opposite to most industries) and also a great provider of jobs for the less skilled and younger members of the workforce.

Over 400,000 Australians are today dependent, directly or indirectly, on tourism for their livelihood. Of these, the jobs of 65,000 are totally reliant on overseas visitors. In fact, figures released recently by the Bureau of Tourism Research indicate that the spending power of a single Japanese tourist at an average of $1406 is worth as much to Australia in relative export revenue as 25 tonnes of coal or 59 tonnes of iron ore, 10 tonnes of wheat, 7 tonnes of alumina and 5 tonnes of sugar.

What They Cost:

Australian Aviation is often asked what the new generation of airliners cost, so in order to satisfy an obvious curiosity we have compiled the following figures from a number of sources. They may obviously vary depending on quantity purchased and the fiscal credibility of the carrier concerned. Additionally, the figures reflect a flyaway aircraft in standard airline configuration, without spares or training package, which would normally boost the price by between ten and twenty per cent. Lease costs run typically at around one percent of aircraft value per month meaning that lessors typically recoup their investment in the aircraft after eight or nine years. All figures are AUD.

Airbus A320 $48m, A310-200 $70m. Boeing: 737-300 $38m, 737-400 $42m, 757 $55m, 767-200 $70m. MDC: MD-81/82 $33m, MD-83 $35m, MD-87 $30m, MD-91 $35m, MD-92 $40m. ATR42 $10m. BAe: ATP $15m, 146-200 $22m, J31 $5m. Beech 1900 $5m, CN-235 $10m, Saab 340 $9m, Embraer Brasilia $8m, DHC Dash 8-100 $11m. Fokker 50 $14m. Shorts 360-300 $7m. All prices are early 1988 dollars.

Wagga Airport Runway. Upgraded:

Proposals have been approved for the upgrading of the main runway of the Wagga airport over two years which will cost $3. 1m. The upgrading will allow the lifting of restrictions on the use of the runway by non-essential heavy aircraft and for airline training flights.

The first stage of the proposed work would be carried out in 1988-89 at a cost of $1. 2m. This would improve the condition of the runway and allow operations to continue at the present level. The second stage costing $1. 9m in 1989- 90 would complete the work. Airline passengers passing through the airport had grown by 3. 8 per cent to 68,222 in 1987.

Gatwick Second Terminal Opens:

Gatwick, the world’s second busiest airport after Heathrow, opened its second terminal in late March.

The new terminal and major runway improvements to Gatwick have cost over $A600m and represents the single largest engineering project south of London to be initiated this decade. More than 100 airlines. operate from Gatwick to 134 destinations while the new terminal is designed to process over 9 million passengers annually. Gatwick’s first terminal opened in 1936 with the first major terminal being brought into operation in 1958. Gatwick was first licensed as an airfield back in August of 1930 and is one of four major airports in the London region.