Commercial Aviation Update

The commercial end of general aviation, dealing with everything except private pilots and trunk airlines, is watching the giants of Australian commerce and industry take an increasing interest in commuter, charter and maintenance operations. Some newcomers (and some not so new) come from other transport fields – for example, Budget and Mayne Nickless – while others found that flying is the only way to do business and “liked the company so much they bought it”, Ansett, both before and after Sir Peter Abeles, has long had a hand in general aviation aircraft sales and maintenance.

The ‘flying doctor’ period, when entrepreneurs put medicos’ spare cash into get-rich-quick schemes, seems to be over since Treasurer Keating go rid of investment allowances and changed our approach to business and finance.

With all that, these is no shortage of experienced hands in general aviation. They are still the foundation of the industry, looking after diverse needs from flying training in the capitals to critical outback commuter links and contract flying for oil and mining explorers. ‘

In some places there may be too many people in business. Love of the aviation business is a powerful incentive to keep going regardless of the return on investment or even the salary you pay yourself. The smell of kerosene is equally alluring to both general aviation operators and big airline owners.

Professionalism

Pressures on small organisations, and also the opportunities open to them, are inevitably building up as professionalism and economies of scale appear when big business gets involved.

Nevertheless, at no time in our history have there been more opportunities for general aviation to develop. Equally, the ground rules have never been tougher.

In New South Wales, the most populous State, and in Queensland with its huge area and tourism-bent, the skies are being freed for new or expanding charter and commuter companies. Interstate routes will open up in 1990 when trunk airline routes are deregulated while South Australia and Victoria have been free of regulation for many years. The top end of the general aviation industry (commuter air services) is already seeing turbine-engined aircraft replace piston and bigger turboprops replace smaller ones. The business aircraft sector has over 70 jets now flying in Australia, compared with one or two a decade ago. And as the larger GA companies move up so openings will appear for those under them.

Aircraft manufacturers, patiently waiting, will be delighted at this trend. More Shorts 360s, two Dash 8s and a Beech 1900 are already on the way while Embraer with their Brasilia has hopes.

But the fine line between profit and loss will depend more than ever on unit operating costs. Rising prices for imported aircraft and spares (some up five-fold in three years), tough maintenance regulations (Australia is still regarded as too finicky), higher landing fees and, currently, mindless bureaucratic changes to customs rules are making the decision to expand a risky, if essential one.

It will also depend on two other factors: keeri and inventive marketing and good financing.

Companies with perhaps a few hundred thousand dollars worth of equipment in the past are suddenly faced with the need for aircraft costing $5 to $12 million each and little way of proving to the bank (or the stock exchange) that they can service those sorts of assets. To stick with what you have is fine in some of Australia’s tiny markets (indeed, it is the only way) but it will not work in growth fields with demanding tourists and business tycoons to say nothing of competitors.

Environment

Paradoxically, the travelling public is asking the industry to supply it with more and more attractive products, while at the same time telling us we cannot land our planes near where they live. All three levels of Government, Federal, State and Local, are pandering to noisy minorities who insist on airports going ‘somewhere else’ while the vast majority of people are crying out for more and cheaper flights.

While environmental issues must get top attention, it must be remembered that aviation is a service industry. It cannot dictate to the public, rather the other way around. The community itself has a responsibility to resolve such problems in the interests of the majority.

There can be no ‘winners’ in narrow arguments such as those.

Politicians do no good throwing the ball back into the operator’s yard, ignoring the fact that the industry has already spent billions of dollars making aircraft better neighbours, and is still doing so. The answer, of course, is simply better planning. A political horizon of a year or so is not enough to plan facilities which take five to ten years to organise.

$A1 Billion Industry

With general aviation flying now approaching two million hours annually we are dealing with a sector of the industry turning over $1 billion or more each year, comparable with Ansett or Australian in that sense. It is big business and it demands big business professionalism. But it also demands owners and managers who know their job, who are close to their sort of aircraft and their sort of customer.

It will demand niche marketing and careful attention to precise community needs. The more general aviation knows about the community and its changing needs, the easier it will be to obtain the funds which will be required to cater for the 1990s, a decade of enormous opportunity.

Because this part of the industry is made up of many small parts, it will also demand a more mature approach to positioning itself before the government and the public. This will be a testing time for industry associations. If they get support from their members, and from potential members who benefit but do not take part, then small companies will have an even better chance of profiting throughout the early years of deregulation.

The last small operator who made it to the big time on his own was RM Ansett. That is a tough act to follow!