Airline Affairs

Also very soft is non-Japanese tourism into New Zealand, according to ANZ’s chief executive Mr Jim Scott. Speaking at a recent meeting of the National Aviation Press Club, Mr Scott stated that the number of Australians visiting New Zealand was only half that of the average through the late seventies. The rapidly expanding Japanese inbound market was the only thing presently saving NZ tourism as visitors from all other sources were well down on figures of just three years ago. ANZ are planning a number of initiatives to rectify this situation and will also focus their attention on captuing a greater share of the high yield premium class market.

Third World Airports:

In view of the recent controversy over Sydney Airport’s need for a third runway and other updates, some comments made in a paper by the Australian Federation of Air Pilots are are interesting. The paper rates Australia’s airports as being among the lower ranges of those in the Third World with some being on the fringes of safety. While it indicates there is no immediate substantial safety problem, the paper does highlight potential problems caused by congestion, inadequate radar, substandard runway lengths and configurations and inadequate staffing. The paper warned that Sydney’s ILS is unreliable after heavy rain and that Melbourne needs provision for runway end safety areas. It also pointed out that on the subject of runway facilities, Australia was hopelessly behind, while terminal facilities were abysmal.

Most European and Asian airports have dual, widely spaced runways more than 4,000m long, ILS facilities on most runways and up to date radar. There are no parallel runways at any commercial airports in Australia- yet – while Sydney’s and Melbourne’s longest runways are both less than 4,000 metres in length.

Runway In, Punch Out:

Two items of good news have greeted the aviation industry in recent weeks, the first being the announcement by the Federal Government that construction of Sydney Airport’s third runway has been approved.

Better late than never, the decision to upgrade Australia’s busiest (and preferred by international carriers) airport should have been made some years ago but has become one of the country’s most visible political footballs.

Some issues remain to be resolved, however, particularly that of the Environmental Impact Study, which for some obscure reason is going to take 18 months to complete. Private industry has indicated that it could be done in three months and the fact that a lot of the necessary work has already been completed tends to support this. Showing their usual incisive grasp of the situation, some unions have declared they will black ban work on the new runway, while resident groups are also up in arms and have already mounted protests which have blocked roads into the international terminal and have seriously delayed travellers. Hopefully, work will be able to start in the near future and a project which is of benefit to all Australians will be completed quickly and without undue interruption.

Perhaps a lesson can be learned from protest groups which recently gathered at London City Airport when a British Aerospace 146 conducted trials there with a view to future operations by the jet airliner. The chairman of the protest group admitted that she did not hear the 146 land, while The Times reported that the protesters made rather more noise than the aircraft! The other piece of good news surrounded the resignation of the Minister of Aviation Support, Gary Punch, in the wake of the runway decision. An ambitious young man who has become the de facto head of the antithird runway groups, Punch has built a career out of inhibiting aviation development generally and Sydney Airport in particular As one industry wag puti it: Making Gary Punch responsible for aviation is a bit like puffing Adolf Hitler in charge of Jewish affairs! His departure from the ministry is a cause for celebration in aviation circles throughout Australia. a minister

Aircruising Expands Into International Ventures:

The highly successful firm of Aircruising Australia, with their two specially converted Fokker F. 27-100s, has spread its wings internationally with a first ever aircruise of Canada’s Yukon and Northwest Territories.

So successful was the inaugural Canadian aircruise, which uses a chartered BAe 748 and is scheduled for June, that it was sold out by more than 100% within weeks of its release. The Australian aircruises are just as popular while Aircruising Australia’s entrepreneurial Managing Director, Miss Nancy Knudsen, claims that it is only now that there is sufficient spare capacity to begin to specifically target the inbound tourist market.

Also on the regional schedule is a May two week Coral Sea aircruise which takes in Norfolk Island, New Caledonia, Honiara, Port Vila, Pentecost Island and Caims. For the immediate future AA is content to stay with their two Friendships though plans are afoot to eventually expand with possibly the wet lease of a 707 for international aircruising on the horizon.

 Qantek Buys Site for New Compu- Terback-Up:

Cantek, the Qantas information technology subsidiary, has acquired more than five hectares of land at Arncliffe, Sydney, to build a new back-up computer centre. The new centre, to be operational early in 1991, will provide development and back-up facilities for the main Qantas reservations and communications system, Qantam, located in the basement of the Qantas International Centre in downtown Sydney. Qantas already has a back-up computer site but the lease expires in 1991. Major computer users, such as Cantas, require a back-up to cover operations in the event of major problems with the prime system.

Efficient use of computers has an impact on nearly every area of the Qantas operation and the new computer centre will allow Qantek to keep pace with the major expansion planned by Qantas. The airline’s computer usage is increasing by 65% a year.

Us Industry Praises Deregulation:

Ten years after the introduction of airl ine deregulation in the United States, the system has been broadly praised by industry officials but that has been tempered by concern for the numerous problems that have been created.

Both positive and negative effects have resulted from US deregulation including lower fares and enormous traffic growth against which must be balanced small airline profits (an average 0. 7% per annum as opposed to 4. 5% for other US industries) and indeed severe losses in some cases, a general deterioration of service as a result of cost cutting and airport congestion and delays, a substantial increase in safety violations (again mainly as a result of cost cutting) and a high mortality rate among the airlines themselves.

The greatest benefit of deregulation has clearly been the fact that reduced airfares have made airline travel available to a much larger number of people. The number of passengers carried by the US airlines has nearly doubled to 447 million between the last full year of regulated airline operations (1977) and 1987.

A major present and future problem though is the power of the monopoly and its exploitation on some routes. Victims of these monopolies are seen as the 10% of US passengers who don’t qualify for discounts due to them not being able to stay at a destination over a weekend or buy their tickets far enough in advance. These disadvantaged passengers are mainly those on flights in or out of hubs dominated by a single carrier. Full fare tickets have increased by 156% since 1978, double the growth rate of the US Consumer Price Index while discounted fares have increased by a rate only two-thirds that of the CPI and are available in greater numbers than before. For Australia there are many lessons to be learned from the US experience. We hope those people in a position to influence of Australian deregulation have taken note. The primary points to watch will be to ensure ongoing airworthiness and maintenance surveillance of operators is increased in line with an increase in RPT activity and that the Government provides adequate airways and airport funding to ensure that the growth in passenger uplift is matched with that of the ground based facilities. In the US, the airlines have met the challenges of deregulation but have been successively let down by government which has not improved the necessary airways and airports environment to match consumer demand.

Up and Up:

Perhaps it’s time for anyone interested in such things to start lobbying for a fourth runway at Sydney Airport following the release of a report compiled by British Airport Services Ltd (BASL) on behalf of the Federal Airports Corporation.

The report predicts that international airline passenger arrivals and departures from Australian airports will triple in the next 20 years and that Australia will record more than 19. 5m international air traffic departures and arrivals annually by the year 2007 compared with 6. 8m in 1987. Of those arrivals and departures, more than 92% will be through Sydney, Brisbane and Melboume. Figures released during early April by the Australian Tourism Commission verified an increase in international arrivals of a massive 26% for 1988 as against the previous year. However, growth is expected to stabilise now that the Bicentennial and Expo year has concluded, though earlier long-term assumptions of 7% pa growth are hurriedly being upped to 10% as a long-term minimum.

Qantas Slam Low Freight Rates:

Australian exporters’ unrealistic demands for cheap rates are limiting air freight capacity out of Australia, Deputy Chief Executive (Commercial), of Qantas Peter Stanley, said.

Without profitability, no airline would provide freight services out of Australia, Peter told the Australian Institute of Export recently in Sydney. While Qantas is providing record export volumes, foreign airlines are flying out with empty cargo holds “Australian exporters benefit from some of the world’s cheapest air freight rates. These are unrealistic and unprofitable,” Peter said. “Martinair, for instance, flies a DC-10 freighter into Austral Australia with 60 tonnes of freight but empty leaves “United States airlines find New Zealand exports better because the rates there are higher and Japan Airlines operates a DC-8 freighter to Australia regularly carrying computers but it leaves empty because JAL finds the yield too low to Aircruising Expands Into International Ventures:warrant uplift, handling and direct operating Qantas aircraft carry 38% of the air freight arriving in Australia and 41% of air freight going out. In the last six years capacity has more than doubled to 2,000 tonnes each week, however, outbound rates average only one-third of inbound rates. “Outbound rates must return adequate profit to operators. Exporters must accept realities. They demand more capacity yet want prices kept artificially low,” Peter said. “Qantas and other carriers cannot keep adding capacity unless they make profit. ” main air freight routes in volume t for Australia are New Zealand, USA, Japan and Asia, but these give problems because of seasonality and unpredictable exports.

terms Meat exports to the USA dropped during April, 1988 and did not recover, making planning difficult. The horticultural industry is unwilling to make firm space commitments and shippers are often unreliable in terms of honor ing booking.

A Qantas survey in Perth found 26% of bookings were cancelled in the first half of 1988; of more than 2 million kilos booked, 539,000kg were cancelled; the fishing industry used only 12% of its bookings. This results in capacity being wasted during peak seasons. These were reasons that caused Qantas to introduce a 20% cancellation fee within 72 hours of departure.

Peter said that without profitability, no airline would provide the freight services exporters needed out of Australia. Qantas has been increasing rates for three years, advising of these in advance since last year.

“Qantas will keep increasing rates until they are fully cost related,” he said. Qantas have developed a global strategy for air freight which will concentrate on door-to-door services, customer orientated cargo information systems and guaranteed delivery times.

“We are forging strategic links which include joint freighter operations with Lufthansa and Japan Airlines and freight handling for Singapore Airlines, MAS, Air New Zealand and CAL Peter said.

A Date to Remember:

Blake Dawson Waldron in co-operation with IATA are to host an aircraft leasing and finance symposium. Dates will be the 8-10 November at the Sydney Hilton. All enquiries to Peter Harbison at Blake Dawson Waldron, Sydney, ph (02) 258 6589 or fax (02) 258 6999.

Where Is the James Strong Interview?

Well might you ask as it is clearly advertised on this issue’s cover. It seemed we put the mocka on yet another airline CEO as the last two we have interviewed have not for various reasons retained their position long enough to see their interview make the printer’s ink. Cover artwork and production is performed well prior to our usual text deadlines owing to the relatively complex technical requirements required to laminate the covers, etc.

As history notes, James Strong announced his decision on April 3 to leave Australian Airlines in favour of a senior management position with a newly established law firm. The decision came as a sa shock to airline staff though Australian chairman, Mr Ted Harris has reiterated that the decision to publicly advertise Mr Strong’s position did not have any bearing upon the decision. Naturally in the interest of Mrs Ros topicality we decided to withdraw the interview. Another casualty of the reporting period was рето DSTO article, p. 71) who her posion as Minister for Defence Personnel and Defence Science to take up the position in Aviation Support vacated by Gary Punch. Mrs Kelly’s loss in particular to DSTO will be keenly felt as the ongoing system of ministerial musical chairs which is a hallmark of modern day politics serves no-one well. The ministers concerned must now quickly come to grips with new situations largely beyond their past experience and deal competently with a wide range of issues foreign to them. Hardly the way to have skilled and capable government at any level and by any party. snow been transform

Proposed Av Charter Firm to Further Tap European Low Fare Holiday Market:

A new company. Australia World Air, has been formed to tap a greater share of the European holiday market. The group will initially c operate one 747 7 flight a week between the UK and Melbourne though it successful this could increase to up to three services a week. A feasibility study jointly fun- by t the Victorian, Tasmanian, SA and WA governments identified a potential annual market of up to 40,000 additional visitors i fares could d be considerably lower than is presently available on the scheduled airlines.

ded It is believed that the group is planning a return fare of £700 which will be sold only in Europe, this is generally £300 to £400 less than that available on scheduled carriers. The charters would operate only in the northern winter.

 Ansettski Air Freight:

Ansett International Air Freight and Russia’s Aeroflot have signed an agreement which could lead to a truly global door to door freight network. Ansett, through its TNT part ownership, is already working in association with a Soviet Bloc country by way of a freight agreement with Hungary’s Malev, which has recently become part of TNT’s of TNT’s European overnight air cargo service with its fleet of BAe 146 freighters. Any arrangement with Aeroflot could open up numerous possiblities for a genuine world wide operation particularly in association with Ansett Air Freight (which currently operates domestic and international freight fights with a Boeing 707) and the USA’s parcels airline Air- bome Express, of which TNT owns 11%.

East-West Finally Win Canberra! Melbourne Approval:

After years of trying, EWA has finally been granted approval to serve the Canberra/Melbourne route.

The airline commenced operations on April 10 with a return $216 fare as against the standard jet economy return of $282. Two F. 27 services are flown daily in each direction with a late morning and late afternoon departure out of Canberra and early morning and early evening departures ex Melbourne.

 No Fare Increase:

Following a review by the Independent Air Fares Committee, a request by Ansett and Australian Airlines for an increase in fares has been refused and the levels set in July 1988 will remain. The Committee approves fares for the airlines on the basis of forecasts of costs and revenues for the ensuing financial year. It decided that over the year as a whole, movements in key cost and revenue elements were unlikely, on average, to be significantly different from those taken into account in July last year.

 Controllers Want Changes:

In the wake of several shutdowns of both Sydney and Melbourne Airports in recent months due to air traffic controllers banning overtime, the CAA must now surely be forced to listen to their grievances.

The basic issue is safety. Being an ATC officer is a highly stressed job requiring intense concentration and allowing no margin for error. A long-term lack of numbers among the officers on to has forced longer than desirable working hours many of them when they have been needed fill in for others reporting in sick. Their refusal work under these circumstances has resulted in undermanning and therefore shutdown of the airports on several occasions.

to The Sydney controllers have submitted several issues to the CAA for consideration including an upgrade of ATC equipment at both Sydney-Kingsford Smith and Bankstown airports, the awarding of ten extra sick days per annum for controllers, compensation for changes of shift with less than seven days notice, the introduction of a ‘recruitment and retention allowance for controllers at Sydney and Bankstown, an allowance to cover the increases in complexity and productivity required by major changes in control procedures, the introduction of a mid shift work break and that allowances be paid a fortnight after work is performed.

It appears the controllers genuinely regret causing disruptions at the airports, but it also appears they have a case. Safety (which has always been given godlike pre-eminence by the CAA in the past) should be everything in aviation and a fit, alert and mentally ‘in gear’ ATC officer who has the best possible equipment at his or her disposal is a necessity to achieve this.

 Air New Zealand Sale Approved:

The NZ Commerce Commission has approved the sale of Air New Zealand to the Qantas, Brierley, JAL and American Airlines consortium.

Initial Commerce Commission fears were based on the lack of competition that could ensue if Qantas and ANZ decided to rationalise their trans-Tasman traffic base. The two carriers uplift more than 80% of all trans-Tasman passenger traffic, though Qantas itself would still have minimal clout within ANZ owing to its relatively minor 19. 9% stake and resultant minority boardroom presence.

The sale, valued at SN2660m will now proceed and serve to boost the flagging NZ economy though many within the airline industry, including ANZ’s senior management, feel that the airline was sold for several hundred million dollars less than its real worth.

BA Launch Innovative New Air Miles Scheme:

British Airways has launched an innovative new scheme designed to absorb the 9 million empty seats that the airline fies each year.

Designated, Air Miles, the scheme concentrates on selling bulk numbers of seats via coupons to major retailing chains who then offer them to their clientele in the form of bonus coupons, etc. Shell, National Westminster Bank, Debenhams, Holiday Inn and Access Credit plus several dozen other major UK firms have already signed up for the scheme which at presstime had nearly 2 million Britons in its membership. In its promotional launch BA spent SA12m in media advertising alone in addition to a mailing of an Air Miles information pack to some 10 million households and a further 10,000 retail outlets across Britain.

Object of the scheme is for BA to sell off its otherwise empty economy class seats at a bulk price equivalent of around 25% of the standard economy fare. Retailers then issue pre valued coupons to their clientele based on the value of goods purchased. It is actually the retailer who decides the relative value of his Air Miles coupons. According to BA this typically would equate to an average British family’s grocery shopping accruing coupons of sufficient value to earn a London/Paris return ticket for two in about three months. with more companies coming on stream through the first quarter of 1989 boosting collecting opportunities, the typical family will be able to save enough miles in 12 months for two return tickets to practically anywhere inint of view the beauty of the From BA’s scheme is that it involves almost no administration. Participating companies bulk buy the tickets in advance (or at least their equivalent value) and then ‘sell’ them to their clients. BA also receives a considerable degree of free publicity from the scheme while the end consumer is able to fly to a destination free of charge by using his accumulated coupons. Booking restrictions apply in terms of advance ticket purchases so the airline also knows weeks in advance if that flight is beginning to look particularly heavy in terms of loading.

BA estimate that the scheme should gross them in the region of SA6Om additional revenue this financial year which is money that the airline has little downside on and would not have had otherwise. Indeed it will be interesting to see if other major airlines race to copy the scheme. Virgin Atlantic were quick off the mark with their own version of the scheme, appropriately entitled, Miles Better, though the . carrier has linde spare capacity and a dearth of destinations compared with mega-sized BA

North Atlantic Booming:

Like most other air routes around the world, the North Atlantic route enjoyed a growth period in 1988 with a total of 28,242,965 passengers being carried during the year.

This represents a 9. 3% increase on 1987 and a 70. 4% passenger load factor. In addition, 1. 602m tonnes of freight was carried (up 12. 5%) and 89,000 tonnes of mail. The North Atlantic route remains the most important in the world, accounting for 12% of all international passengers and 22% of the international traffic Revenue Tonne Kilometres. American carriers gained the lion’s share of the market, eight of them capturing half of the total market leaving the remainder to the European and other airlines.

 Bloated Bureaucracy Another Burden for Aviation and Air Travellers:

Charles Blunt, Shadow Minister for Transport and Aviation, has described as “outrageous”, the recent restructuring of the Civil Aviation Authority.

Mr Blunt said, “There has been a 20% increase in the number of SES positions in the CAA compared with the number of SES positions undertaking the corresponding functions in the former Department of Aviation. The figure has grown from 29 to 35.

“There is no wonder that aviation charges are escalating, when an organisation such as the CAA can restructure itself and reclassify its Senior Executive Positions (SES) in this way. ” In outlining the new structure, Mr Blunt indicated that, “Where in the past there was a single Division handling the Airways functions, this has now grown to three Divisions. Where there had been one Division handling Flight Standards and Safety Functions, this had now grown to two, and two Management Services Divisions had been spawned. There has been no increase in functions or activities to justify these changes.

“As if that is not bad enough, over and above the sheer increase in numbers, there has been a substantial enrichment in salaries.

“Compared with the former Department of Aviation, virtually all SES Level 1 Positions have been reclassified to Level 2, two new Level 4 positions have been created, and two new Level 5 positions have also been created”, Mr Blunt said.

“One really does have to wonder what each of these people will be doing. There are just over 7,000 aircraft registered in Australia, and all airport functions are handled by the FAC, and policy functions have been retained within the Department of Transport and Communications.

“This reorganisation is ludicrous. It will add substantially to the costs of the Aviation industry and to those of the travelling public. It emphasises once again the need for a comprehensive review of the operation and management of the CAA”, Mr Blunt concluded.

No More DC-9s:

After 22 years’ service, the McDonnell Douglas DC-9 will shortly no longer be seen in Australian skies following Australian Airlines’ decision to dispose of its five remaining aircraft between May and December this year and replace them with 737-300s and -400s. Australian (as TAA) took delivery of 12 DC-9-30s between 1967 and 1971 and operated them in a 95 passenger configuration. The airline originally intended retaining the DC-9s for specialist tourist operations but has instead decided to replace them with the more modern Boeings as part of its general fleet modernisation programme.

More Anz Flights to Japan:

Another major jump in airline frequency to Japan is planned by Air New Zealand within the coming year. The airline, which only recently increased its Auckland/Tokyo frequency to four a week, has reached an agreement in principle with the Japanese for another two flights a week, taking the total weekly number of flights from six to eight.

The additional services are subject to government approvals and availability of Narita airport landing slots. Nagoya, a city of 2. 1 milion, 360km south-west of Tokyo. is also evaluated as an option for serving Narita.

“The outbound market from Japan to New Zealand can only be described as exploding. ” said the airline’s chairman Hugh Fletcher. “We have already doubled our capacity to Japan in the last three years and it may be that another two flights only keep pace with projected growth. The Japanese government has set a target of of 10 million Japanese holidaying seas every year by 1990. This represents 8% of the population. Experts believe that up to 30% are potential travellers. ” Overseas Air New Zealand started Auckland/Tokyo flights with a weekly DC-8 service in August 1980. A DC-10 joined the route in 1981 and was replaced by a Boeing 747 the following year. A second fight was added in 1985, a third in 1987 and the fourth in November 1988. Over the last 10 years, Japanese visitors to New Zealand increased 520%.

Delta/Swissair Deal:

Swissair and Delta Airlines have signed a memorandum of understanding which will see the two operators co-operate on fleet management, technology and marketing.

Similar to the agreement reached by SAS and Texas Air last year, the deal will strengthen both carriers’ market positions in their partner’s area of operation through the co-ordination of schedules so that airline passengers and cargo customers of both airlines can take advantage of the the swittest connection to and from North America.

The airlines are also considering joint specification of flight deck and facilities for the McDonnell Douglas MD-11s both have in- dependently ordered.

 Australia-Japan Air Services Expanded:

The number of flights between Australia and Japan will increase significantly this year From July this year, Qantas and Japan Airlines also plan to introduce a joint Boeing 747 service to Adelaide and, Melboume. This will give Adelaide a direct air link with Japan for the first time in several years and means that Melboume will also gain an extra service, bringing to eight the number of flights a week between Melbourne and Japan. More Melboume services are being planned from October. Qantas and Japan Airlines are also planning to introduce a twice-weekly joint Boe- ing 747 service to Fukuoka for the first time.