Airline Affairs

Total revenue increased by 20. 4% to $3,084. 7m, including $1,995m in foreign currency, an increase of 19. 7% over the previous year. This is the first time revenue exceeded $3bn. Annual revenue has risen by over $1bn in two years. Utilisation of seats available throughout the fleet increased to 71% in 1987/88 from 68% the previous year. A total of 3,453,749 passengers was carried, a rise of 14. 3% on 1986/87.

The Company is planning for further profit increases in 1989 and will take full advantage of new inbound marketing opportunities, including support for the flow of visitors to the Bicentennial celebrations and Expo 88. A rigorous programme of cost control will continue.

Although Qantas is able to borrow and repay the huge sums of money which are required to remain competitive and take advantage of important foreign currency earning opportunities, the Board believes it is essential that the growing problem of Qantas’ debt/ equity ratio should be addressed.

Qantas Chairman, Mr Jim Leslie said “The Board continues to urge the Government to contribute additional equity of at least $600m so that a sound debt/equity ratio may be achieved.

“The proportion of debt is reaching an unacceptably high level, which would place the Company at risk if a downturn occurred in the market. ” Qantas has shown that it can respond to Australia’s tourism opportunities and plans capital expenditure of $6bn over the next five years. If Qantas were denied equity capital, it could not properly meet its national obligations. The Board has also decided to change the Company’s financial year to end on 30 June rather than 31 March. This is in line with most other Australian companies. Although the final audited results for 1987/88 will cover the 15 months ending 30 June 1988, the unaudited figures quoted are for the 12 months ended 31 March 1988 so that direct comparisons can be made with previous years.

 Tourism Continues Its Boom:

Data released by the Australian Bureau of Statistics indicates an increase of 28% in inbound tourism for March 1988 as against the same month last year.

Greatest percentage increase was from Japan with 30,800 arrivals, up an astounding 58% on last year. The greatest numbers though were shared fairly equally between visitors from the UK and New Zealand with 35,000 each. Not surprisingly. Australians chose New Zealand as their favourite overseas destination with 17% of outbound traffic (by Australian residents), with both the US and UK equal with 11% of the market.

Shorter Air Routes in Asia/Pacific to Benefit Airlines & Passengers:

Dr Gunter Eser, Director General of IATA, speaking in Tokyo in April, highlighted the Association’s continuing efforts to obtain more direct air routings in South East Asia and the Pacific. This would bring shorter journey times for passengers and reduce fuel consumption and other costs for the airlines.

Dr Eser said: “Route improvements have already been achieved over the southern part of the Bay of Bengal, saving millions of dollars. Discussions are now underway for the northern part of the Bay of Bengal to reduce congestion out of Bangkok and Singapore. Shorter routes between Japan and Peking over Korea could save millions of dollars too, if this can be agreed. ” Dr Eser added that another significant roule development is to be discussed soon. “This is the opening up of air routes to and from Europe over China and the USSR. Once achieved, this would change the whole pattern of air traffic in the region. Even flights from Australia and New Zealand would find it faster to go this way. ” At present, aircraft cannot cross from one communist country to the other, meaning that non stop flights from northern Asia cannot travel direct from, say, Hong Kong or Tokyo, across China and into Russia to Europe.

Queensland Gets More Qantas Flights:

Queensland will get more Qantas flights to destinations including Singapore, the United States and Japan under new schedules announced during May. From the end of October, the airline will increase the number of non-stop flights each week from Brisbane to Singapore from five to six and add a third Brisbane/Tokyo flight.

The aircraft operating the Brisbane/Tokyo flight will be Boeing 7475 instead of the current Boeing 767s, effectively doubling capacity. Qantas will also add a second service from Brisbane to Nagoya in November. Queensland also gained a third service to the USA in March this year, operating from Brisbane and Caims to Honolulu and the US West Coast.

North Queensland will benefit, too, from new Qantas rights to fly from Singapore to Bangkok. The three Qantas flights each week that link North Queensland with Singapore and Europe will also connect with Qantas flights to Bangkok under the new operating pattern.

Qantas and Japanese Airlines to Study Fantasia Feasibility:

Qantas has officially joined with Japan Air Lines and All Nippon to examine the feasibility of jointly developing and operating a unified CRS system.

Code named Fantasia, the system would to some extent rival the existing Singapore-based Abacus system that includes SIA, Cathay Pacific and Thai International, However, the majority of reservations aboard these carriers are actually made offshore so only a small portion of their member’s total uplift passes through the Abacus system. On the other hand, the vast majority of Japanese and Australian bookings are made in their home nations meaning that the benefits of Fantasia may well outweigh those of Abacus.

The feasibility study though is not restricted to its founders and the participation of other Asian carriers is being welcomed in an attempt to develop a truly regional CRS system that could ultimately rival the European Galileo and American Sabre and Apollo CRS giants.

Establishment of Australian Airlines Limited Ushers in a New Era for the Government-Owned Domestic:

Australian Airlines commenced operations as an incorporated public company on 30 April. The detailed provisions of the Australian National Airlines Act, which have controlled the activities of the Airline since 1945, will now no longer apply.

Incorporation of Australian Airlines will form- ally place responsibility for management of the Airline squarely on the Airline’s Board where it properly belongs. It will also help to streamline management decision making by removing a range of government controls which have restricted the Airline’s commercial flexibility in the past.

The new Board of the Company will comprise Mr Ted Harris as Chairman and seven other existing Commissioners of the Australian National Airlines Commission, appointed for terms that roughly correspond with their remaining tenure on the Commission. In addition two new Directors. Mr John David and Dr Kerry Schott, have been appointed to give the Board further commercial experience and expertise with which to meet the challenges of the future.

Mr David, Chairman and Managing Director of David Holdings Pty Ltd, has high level retailing and management experience and involve- ment in a number of industry and government organisations, including the Transport Industry Advisory Council. Dr Schott, Chief Economist with Whitlam, Turnbull and Co Ltd, has a strong economic and financial background both in the private and public sector.

As part of the amendment of the Australian National Airlines Act and the incorporation process, controls will be removed over matters such as detailed terms and conditions of borrowing and leasing arrangements; all but exceptionally significant expenditure decisions, investment of surplus money, provision for insurance against risk; and dividend recommendations.

Sydney Gets Daily Qantas One- Stop Flights to London:

Qantas will operate daily one-stop flights from Sydney to London from October 30 this year, as part of a major revision of its schedules.

Qantas Manager New South Wales, Mr Brian Kirkham, said Singapore would be dropped in favour of Bangkok in the biggest change to. Qantas’ Kangaroo Route since it was established in the late 1930s. “The rerouting will cut two hours off the travelling time on our premier QF1 service from Sydney to London, recognising the passenger preference for fast long-haul flights and Bangkok’s fast growing appeal as a stopover point in Asia,” he said. Qantas 747-300 Extended Upper Deck aircraft will fly the new route.

Qantas flights to Frankfurt will increase from three to four each week and will operate via only two stops-Singapore and Bahrain instead of the present three. Another improvement will be daily non-stop 747 flights from Sydney to Tokyo, supported by three flights each week to Nagoya. With other flights stopping at intermediate points, Sydney then will have 15 Qantas flights each week to Japan. The new schedules on the Japan route reflect the huge increase in the number of tourists coming to Australia from that country.

Sydney will continue to have twice daily Qantas flights to Auckland, in addition to other services to Christchurch and Wellington. There are additionally 17 Qantas flights each week from Sydney to North America, including three non-stop 747SP services to San Francisco and three to Los Angeles which all connect with the joint Qantas-American Airlines flights to New York.

Scheduled Domestic Airline Activity Continues to Grow:

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

Total activity (tonne kilometres) increased by 6. 6% in the March quarter relative to March quarter 1987 and by 8. 5% in the year ending March quarter 1988.

The passenger tonne kilometre component increased by 6. 2% for the quarter and 8. 6% for the year while the cargo component recorded increases of 10. 5% and 7. 3% respectively over these periods.

In the year to March quarter, the two major airlines’ share of the passenger tonne kilometres stood at 87. 4%. Their share of the annual cargo tonne kilometres was 84. 4%.

Hours flown increased by 3. 9% for the quarter and 5% for the year. Domestic airline aircraft movements at the eight capital city primary airports increased by 4% for the quarter and 4. 5% for the year.

Qantas to Expand Mascot Base:

Qantas has signed a ten year lease on an area of 20,000sq metres in the new Sydney Airport Centre adjoining Kingsford Smith Airport.

Qantas’ lease runs virtually alongside the present Qantas Catering Centre and will be used to build a large warehouse, office space and staff amenities section. Qantas will now occupy around one third of the 4. 5 hectare centre which is already more than two thirds subscribed. Other tenants include a 230 room four star hotel and shopping complex, health centre and a large commercial office complex. Meanwhile, the British based firm of Steels Aviation Services has made inroads into Qantas’ previous inflight catering monopoly out of KSA. Steeles have secured both Lauda Air and Continental as customers and have targe ted 8 additional carriers over a five year period. Their new $15m kitchen at Mascot will ultimately employ up to 450 people and be capable of producing over 8,000 meals a day.

Steels have also won the FAC contract to supply catering for KSA’s international terminal. The seven year contract is worth some $61m which includes Steeles investing an additional $7m to significantly upgrade the existing facilities at the terminal before the end of this year. Steeles are also actively bidding for similar catering rights at Coolangatta, Melbourne and Cairns.

Ansett Boosting Services to Cope With Record Demand:

Ansett Airlines have added over 100 additional services a week in order to cope with a growth rate of around 9. 5% for the past year.

The new schedules provide for some 112 flights a week between Sydney and Melbourne, 56 between Canberra and Sydney and 81 from Sydney to Brisbane in a move designed to increase frequency and transfer some of the burgeoning tourist traffic away from the high yield prime time peak hours slots.

Meanwhile, the situation as to the flight crew configuration of Ansett’s A320 aircraft remains at a stalemate as we closed for press. The Flight Engineers are adamant that there is a viable career position for them aboard the new generation two crew twinjet as per the letter of guarantee that Sir Peter Abeles gave them in 1985. On the other hand, the pilots do not want them on the flight deck if they cannot be viably integrated into the flight deck operational management system of the A320. Airbus Industrie essentially are refusing to produce a special three crew version of the airliner and Ansett itself naturally wishes that it had never made such an agreement with its FEs in the first place.

If the Ansett FEs don’t win their case, it is felt that many will choose employment with international carriers such as Cathay Pacific, Qantas and SIA who are still training FEs for their vast 747 three crew fleets. Additionally. some FEs will retrain as second officers though this, to some extent, is dependent upon the individual’s age and flying capabilities.

The first Ansett A320 is due in country this October and several are scheduled to be operational prior to Christmas, whether this comes to pass though will surely rest on the passage of events over the course of this issue, as the first Ansett A320s are already off the production line and due for flight test during July.

On a brighter note, Ansett’s AWAS leasing offshoot, Corsair, has successfully placed 7 Fokker 50 propjets with Philippine Airlines. PAL has also taken options on a further 3 aircraft and will use them to serve its domestic route structure.

Big Business – Supersonic Style:

British Airways has come up with the ultimate solution for high-flying executives with a full diary and important business on both sides of the Atlantic.

In London they can buy a new supersonic day trip package to New York on Concorde, with the use of British Airways’ conference facilities in its own terminal at Kennedy Airport included in the special price.

Travelling out on the Concorde 001 from London Heathrow at 10. 30am, arriving at Kennedy at 9. 20am the same morning, the business person would have more than four hours to meet American colleagues before boarding the afternoon Concorde 004 for London at 1. 45pm to land at Heathrow at 10. 25pm.

The “New York and Back in a Day package costs £3,334-the standard return fare to New York on Concorde is £3,788. The three conference rooms available can accommodate a range of requirements from a boardroom-type setting for eight people to an informal presentation for up to 40.

Western Australia Gets More Qantas Services:

Qantas is making major changes to its schedules to give West Australians extra flights to Europe, Asia, America and New Zealand. The new operating pattern, effective from the end of October, would also see the introduction of a second Perth/Tokyo service.

The new schedules will give Perth five services to Bangkok each week, as well as eight to Singapore, which between them will offer daily connections to London and twice-weekly connections to Bombay. The schedules will include five daylight flights from Singapore to Perth. The four flights to Bangkok, via Singapore, will use the new on-carriage rights negotiated last year with Thailand.

Qantas flights between Perth and Sydney will also increase to four each week to allow connections in Sydney with Qantas flights to Auckland, San Francisco, Los Angeles, Fiji, Tahiti, Vancouver and Honolulu.

Cathay on Afterburner!

Cathay Pacific is coping with an unusual problem-unprecedented growth.

The British owned Hong Kong based airline, always a high flyer, has seen growth extend to the point where it is now in a situation of virtually having run out of capacity. Therefore route expansion in the coming two years is largely limited to topping up existing services in an effort to be able to cater for the demand for seats.

Some highlights of 1987 include a 71% increase in profit, an increase in revenue load factor from an already very healthy 70. 2% to 73. 6%, uplift of 5. 1m pax for an increase in revenue passenger kilometres of 23%. A passenger revenue increase of just over 33%. While passenger yield grew by 8. 2% and cargo yield grew by 3. 3% for an increase in cargo revenue of some 18. 9%.

Cathay also commenced an ad hoc, as required, additional 747 service to Australia in May to augment its six weekly services. Cathay operates a fleet of 10 747-200s including 2 Freighters, 6 747-300s and 12 L1011 Tristars with 3 747-400s scheduled for delivery through the latter half of 1989.

One interesting item of hardware unique to the CX 747s is a specially developed trash compactor. With flight sectors becoming longer and longer the airline had to devise a better means of storing the vast quantity of waste material that is created on a typical 13 hour sector with over 400 passengers and crew. Normally, this would be discarded at the intermediate ports but nowadays with these being overflown, the carrier was faced with an acute space and sanitary problem.

The solution was to develop a special trash compactor that acts much the same as your local garbage truck. Fed into a unit of similar size to a conventional food trolley, the trash is compacted into cubes that then go into purpose designed cardboard boxes that are not only easier to store but hold more trash than conventional plastic garbage bags. The unit is now being marketed internationally and is expected to become standard fit aboard most future long-range aircraft.

United 747 Lands on One Engine:

A United Air Lines Boeing 747 on a flight from Los Angeles to Tokyo made an emergency landing at Narita airport on May 4 following the loss of power on three of its four engines.

The 747 was 75 minutes from Narita when the No4 JT9 stopped. This was followed a half hour later by No1 while No3 failed as the aircraft was on final approach.

Preliminary analysis suggests that the cause of the problem was fuel starvation which was aggravated by the crew not switching to the auxiliary system. Following extensive checks, the aircraft was ferried back to United’s Denver maintenance base without incident.

Female Business Traveller Market Increasing:

Staying abreast of the trendlines is one way for any business to be one step ahead of its competitors. Certainly air transport is no different and that is why so many airlines and hotel chains are now beginning to pay special attention to the rapidly growing ranks of female business travellers.

British Airways presently estimates that one in five of its business passengers are female while hotel industry sources also indicate that around 20% of rooms are now booked by the fairer sex. Furthermore, this figure is expected to increase to 50% by the year 2000 as more and more women filter into executive and corporate positions.

A number of airlines, and accommodation chains, have already begun tapping into this special market with services specifically aimed at the travelling businesswoman. In the US alone, spending on hotel accommodation and services by female executives in 1987 was a startling SUS33m, a figure that is expected to double within the next ten years.

Iata Report Expanding Traffic Growth:

To say that the past eighteen months has seen a boom in air travel is beginning to be somewhat of an understatement. Figures recently released by IATA indicate an increase in member airlines RPKs for the first quarter of this year as being up by 13%. Growth of this nature, if recorded consistently would see a doubling of traffic within five to six years. Capacity gains at last dropped below that of uplift, resulting in a positive increase in revenue load factor of 1% (to 64%). However, IATA warned that yield will have to increase in the face of rising fuel prices and other operating costs if long-term profitability is to be maintained.

East-West Update:

East-West Airlines is moving ahead with its consolidation as a primary leisure market jet operator with the handing over of several of its long held F27 routes to Eastern Airlines.

Effective June 19, Eastern began services with its new (ex-Australian) Jetstreams on the Grafton and Kempsey routes, while from July 3 the commuter also takes over responsibility for serving Inverell, Glen Innes and Taree. Meanwhile, it is expected that EWA will have disposed of at least 3 of its existing F27s by year end.

The airline is also upgrading its already extensive maintenance and support facility at Tamworth (as is Eastern Airlines) and is bidding for all the remaining Fokker heavy maintenance from the Ansett Group. Additionally, EWA is hoping to win several DoD support contracts and is actively bidding on the Navy’s LADS airborne laser depth measuring system which would mean the full-time charter of one F27 aircraft. EWA presently support COSSA’s F27, VH-CAT, and various aircraft of the NSW Air Ambulance fleet.

Meanwhile, integration into the ATI system continues with the airline having moved into its new and spacious lounge facilities within Ansett’s KSA terminal. EWA also joined the Ansamatic CRS system in May and is presently being positioned as the leisure arm within ATI offering budget air transport within the growing Ansett Group.

Air Links Expanded Between Australia and Canada:

An agreement to expand air services between Australia and Canada will mean additional fights and greater choice of destinations for passengers. The agreement on an air services package for the two countries was signed in Canberra during May.

Both Airlines airlines (Canadian International and Qantas) will now be able to introduce a third weekly service immediately and from April 1989 will have rights to serve an additional entry point of their choosing, subject to six months notice.

Due to congestion at Sydney’s Mascot airport, the Australian Government is keen to 10 serve encourage foreign airlines to international gateways other than Sydney and the Canadian carrier will now have the opportunity to expand its operations to include a city such as Melbourne, Adelaide, Brisbane or Perth. Qantas, which is currently confined to Vancouver, will now have access to another major city of its choice such as Toronto, giving it access to the very important Canadian east coast market.

Ansett and Qantas Develop Ticket Counters in Each Other’s Terminals:

In another example of how two airlines can merge their common interests via a comprehensive marketing agreement rather than a direct ownership merger, both Ansett and Qantas have joined forces to offer their customers a new and useful service.

Qantas now has a special check-in facility within Ansett’s KSA terminal which will greatly assist outgoing QF passengers flying Ansett into Sydney. At the other end of the line, Ansett now has a similar facility at Qantas’ arrivals area at the international terminal. Both counters can accept luggage, including excess baggage, handle the relevant departure taxes, seat allocation and issue boarding passes and arrange tickets on the inter-terminal shuttle bus.

Ansett identifies more the 200,000 passengers a year who will benefit from the new facility which will save travellers time and hassle where connections are tight.

 Superplastics for MDC Aircraft:

McDonnell Douglas has become the first US company authorised to use Supral, an aluminium alloy used in a special superplastic forming process, to make aircraft parts.

Eastern Airlines are now operating the three ex-Australian Airlines BAe Jetstream 31s in an 18 seat configuration to support their new ex- EWA services linking Grafton, Kempsey. Taree, Glen Innes and Inverell with Sydney. Australian Airlines also now holds a 37% shareholding in the expansive NSW based commuter. (Rob Finlayson) The superplastic forming process involves heating a single sheet of aluminum to approximately 480 degrees centigrade. At that temperature the metal becomes pliable (superplastic) and, under air pressure, is formed in a die, taking the shape of the mould around it.

Because the part is made from a single sheet of aluminium rather than from machined parts joined together with rivets and fasteners, it is lighter and less expensive to produce. The superplastic forming of aluminium will offer the same performance and cost benefits as the superplastic forming of titanium.