Airline Affairs

The initial MD-80s will probably be of the -81 or -82 variant though the second batch will most definitely be of the long-range MD-83 version. Capitol will offer a business class and a full service economy in a 135 seat configuration. Business class will offer four abreast seating which in the MD-80 fuselage offers comparable comfort as does the 737s of Ansett and Australian. Economy will be standard five abreast at a 32in pitch.

Capitol is owned 30% by the Avio Logistics group which is headed by Mr Bob Singh. At presstime, it was planned that at least 20% of the airline would be offered to staff with the balance being offered to institutional or private sources. Capitol is looking at a capital base of $450m, at least $150m of which will come from the stock exchange float. Initial crew training will take place in Long Beach under the guidance of McDonnell Douglas while maintenance is being tendered competitively and likely to be undertaken locally by ASTA’s rapidly expanding airline maintenance arm at Avalon.

Capitol’s plans differ considerably from that of Compass Airlines, the other runner in a deregulated Australian environment. Compass is stil looking to acquire five large twinjets. either Boeing 767-300s, A310s or A300-600s with which it will ply the primary trunk routes offering discounted economny class services. Compass is also launching its share float via the ANZ Bank Group during the course of this issue.

Australian Expands:

Australian Airlines has increased its stake in the regional airline business with the purchase of one third of Brisbane based Sunstate Queensland. Sunstate serves 16 points in Queensland including most of the important tourist areas and operates a fleet of eight aircraft including the popular Shorts 360. The move is part of Australian’s strategy to consolidate itself in the regional airline area, essential with the coming of deregulation next year. Australian also has interests in NSW’s Eastern Australia Airlines, Queensland’s Australian Regional Airlines and has commercial agreements with Sunstate (Mildura) and Hazelton Air services in NSW.

Ansett Down to Business:

Finally realising the marketing error it has made in recent times by not having business class accommodation on its aircraft, Ansett Airlines is set to introduce the class.

Australian Airlines has had business class since 1984 and it is believed to have played a major part in the airline’s recent steady passenger growth. Ansett’s share of the routes on which both it and Australian compete has fallen to 48. 4% this financial year. Ansett research indicated that 19% of frequent business flyers flew Australian due to its having business class, a market that even Ansett was unable to ignore any longer. Until now, Ansett refused to introduce business class, claiming its economy class was as good as Australian’s business class and would attract much of the lucrative business travel market. It wasn’t perceived that way by the business traveller, and it didn’t.

Ánsett’s new business class, which it has designated Executive Class, commences operation on July 17 and will be available for a 15% surcharge above the standard economy fare. Ansett is also upgrading its first class, renaming it Premier Class, and upping the level of inflight service to match. From June 23 the airline also introduced new schedules with the result that an additional 54 extra weekly flights were initiated making a total weekly schedule of some 1,508 flights.

Ansett will have one of the most modern fleets in the world with an average age of just 3 years as against 8 for Australian, additionally of AN’s 33 jets, 29 are Phase 3 aircraft. At the beginning of July the Ansett fleet consisted of 5 767-2008, 4 727-200LRs, 16 737-300s, 8 A320s and 5 Fokker 50 propjets. Meanwhile, French domestic operator, Air Inter, has taken up two of Ansett’s A320 options for delivery in 1991.

More Nsw Air Services:

Improved air services within NSW will result from the issue of new non-exclusive air transport licences for services between the Hunter Valley and Sydney and for Air NSW to upgrade its Griffith and Narrandera services. Yanda Airlines, based in the Hunter Valley. will serve Scone, Singleton, Cessnock and Maitland and will connect Scone and Cessnock with Sydney 12 times a week. Cessnock will also have a number of flights to Sydney originating in Singleton. In addition, the operator Air Tours will fly regular package tours from Sydney to Cessnock with tourists then having the option to continue to Port Macquarie. The Williamtown-Sydney route will be now served by both Eastem Australian and Air NSW.

At the other end of the state, Air NSW has been awarded a licence for the Griffith and Narrandera air service to Sydney which will allow the airline to expand its flight frequency to and from those centres. Air NSW’s new time-table offers 14 services a week through Griffith (including five via Wagga) and nine services a week through Narrandera, all of them direct to Sydney and returning via Griffith.

 International Air Traffic Into Australia to Triple:

International airline passenger arrivals and departures using Australian airports will nearly triple over the next 20 years, a study by British Airports Services Ltd (BASL) has found.

The study was part of a review conducted on behalf of the FAC to enable it to plan Australia’s long-term airport needs. The study highlights the fact that Australia will remain an increasingly desirable place for leisure and business air travel between now and the year 2007.

According to the BASL study, Australia will record more than 19. 5 million international air traffic arrivals and departures annually by the year 2007 compared to 6. 8 million recorded in 1987. By the year 1992, international passenger movements will be 9. 2 million with doubling to take place between then and the year 2007. Of arrivals and departures in the year 2007. more than 92% will be through the three major east coast centres of Brisbane, Sydney and Melbourne. Presently, these ports are responsible for nearly 84% of movements.

Interestingly, if the Federal Government hadn’t axed the aviation component of the $20 Departure Tax in May 1988 then this tax would have been returning directly to offset CAA, DTC and FAC expenses of some $330m by 1992 alone (assuming no increase in the tax itself to account for inflation) while by 1997 the figure would have been just over $400m and by 2002 $600m. Today the $10 Departure Tax goes straight to consolidated revenue with the aviation industry having to make up the loss through other charges and taxes. (Refer full story elsewhere this issue. ) According to the BASL study, the FAC will need to plan for an overall average growth rate in international passenger movements of around 5-6% a year. In addition, the study finds that Australia will report a considerable change in the mix of leisure and business traffic coming to this country in the years ahead. Japan’s share of Australia’s international air traffic will effectively double during the next 20 years while that of New Zealand is expected to contract by 5. 3%.

Fantasia Returns:

The new Qantas headed CRS system, previously named ASPAC (Asia Pacific Computer Reservations System), has reverted to its original codename of Fantasia.

Fantasia is actually a subsidiary of Qantas, being operated by Asia Pacific Distribution Ltd (APD) with involvement from JAL and Air New Zealand. A loss to the system in April was the withdrawal of All Nippon Airways which has decided to go with the established Abacus system headed by Cathay Pacific and SIA.

Fantasia is technically a derivative of the American Airlines Sabre system and APD will now go about setting up personalised variants for each individual participant airline’s specific requirements in order to ensure that the system is able to provide the highest level of service and capability expected by each of its potential users.

 Significant International Passenger Growth Projected for Brisbane:

Brisbane is set to record rapid international passenger growth over the next 20 years according to the FAC.

Á study conducted by the leading international authority on airport forecasting, British Airports Services Limited (BASL) predicts growth will more than quadruple to 3. 6 million international passenger arrivals and departures in Brisbane a year by the year 2007. This compares with just 800,000 such movements in 1987.

By the year 2007, this dramatic growth will boost the Queensland capital’s market share of total Australian airport international passenger movements from 10. 6% in 1987 to just over 18%, pipping Melbourne for the title of Australia’s second largest international airport. Sydney is predicted to continue to remain the premier Australian gateway with 46% share of all movements.

The British Airports Services study estimates Brisbane International Terminal will be handling 1. 4 million arrivals and departures annually by 1992. The $4. 8 million upgrading of the existing international facility has been designed to ensure its capacity to handle this increased passenger traffic while the new international terminal is under construction.

The BASL study also found that there will be a radical change in the mix and area of origin of air travellers into the Brisbane international airport over the next 20 years. Japanese visitors are expected to account for 20% of movements in 2007 as compared to 9% in 1987. Conversely, the number of New Zealand tourists is likely to fall from 40% in 1987 to 22% in 2007. Foreign tourists are expected to account for 52% of movements at Brisbane international airport in 2007, up from 46% in 1967 with two thirds of them coming from New Zealand, Asia and Japan.

Qantas Asks Why:

In a bid to stem the increasing flow of skilled workers who are resigning their jobs, Qantas has sent letters to 294 tradespeople who have left the airline in the past 18 months. Although it’s far to early to assess the results, the problem appears to be money – or the lack of it – when compared to privately owned airlines and other organisations who can use the skills of trained aircraft trades men and women. Some efforts to improve the lot of its workers have been rejected. Recently, the airline offered a package which included a $1,500 lump sum profit share arrangement as well as higher wages and bet- ter career options within the company. Both the Licenced Aircraft Engineers’ Association and the Electrical Trades Union rejected the package.

Qantas’ chronic lack of skilled workers has caused problems maintaining schedules and standards and has forced the airline to place a substantial amount of its maintenance needs ‘offshore’, a far cry from days not too long ago when it looked after other operators’ aircraft and had probably the best reputation of any airline for its standard of work. Perhaps ‘privatisation’ is the only answer.

More South Coast Services:

addition to the new air services approved in New South Wales in the Hunter and Riverina areas (refer Newsdesk this issue) the state’s south coast area will also be better catered for following the granting of non-exclusive licences to Hazelton Airlines and Eastern Australian Airlines.

From September, Hazelton will operate 14 services per week direct from Sydney to Moruya and Merimbula as well as linking the centres with Melbourne once per day. These new Hazelton services will directly feed Australian Airlines’ network and services. The start of these new routes will coincide with the arrival of Hazelton’s first Beechcraft 1900 commuter airliner and will also enable greater utilisation of its larger Shorts 360 aircraft.

In the same general part of the world, the ski resort town of Cooma will be better served following Eastern Australia Airlines’ acquisition of a licence to operate 14 direct flights per week between that centre and Sydney. This will prove a boon to Cooma residents who now have to drive to Canberra in order to fly direct to Sydney. Eastern Australia is partially owned by Australian Airlines and, like the Hazelton operation, will tie in with the major carrier’s services. Easter’s Cooma services will also commence in September using the airline’s 18 passenger Jetstream 31s with 36 seat DHC Dash 8s available for use during peak periods. In New South Wales, at least, it appears the supplemental airline industry is coming of age in preparation for deregulation next year.

New Australian Terminal:

Australian Airlines is building a new $134m terminal at Sydney-Kingsford Smith Airport, with work commencing on the first stage last month.

The structure will combine the latest in airport terminal design with passenger services and technology to cater for the estimated 1. 48 million passengers Australian will carry through Sydney annually by the end of the century. Features include a four lane elevated roadway for easier access, special taxi ramps, larger baggage claim areas, more space for commuter airline operations plus improved retail and restaurant outlets and bathroom facilities.

The new terminal will also provide 10 new gates for Australian (it currently has eight) to cope with increased flight schedules and the additional gates required by the Federal Airports Corporation in the lead up to deregulation in October 1990. The airline also has plans to upgrade its terminal facilities at Melbourne, Hobart, Launceston, Perth and Adelaide Airports.

 Mackay 737 Incident Highlights Inadequate Navaids at Many Secondary Airports:

The May 12 incident where an Australian Airlines Boeing 737 almost landed on a nearby highway has highlighted the need to upgrade a number of increasingly busy secondary airports.

The otherwise routine approach, in bad weather and at night, was aborted at just under 200ft altitude when the pilots realised their mistake. Due to the rapid emergence of largescale tourist resorts and a resultant increase of jet movements into many regional centres, traffic and aircraft size have increased dramatically at many airports while navaids have not been upgraded for many decades. “Eventual installation of microwave landing systems (MLS) at these and most primary airports through the next decade was a safety priority if air transport in Australia was to keep pace with the rest of the world”, stated a spokesperson for the AFAP.

Major Increase in Singapore/ Australia Airline Seats:

The Federal Government has negotiated a substantial increase in the number of weekly airline seats between Singapore and Australia.

Qantas and Singapore Airlines would now between them be able to offer about 3,800 extra seats each week, to be phased in over the next 12 months. In addition, Qantas will be able to convert some of this extra capacity to pure freight services if the market demands. The key element of the deal negotiated with the Singapore government was that Qantas would be able to add the equivalent of five Boeing 747 services and one Boeing 767 service per week.

This represents about 2,200 additional seats a week and new services may terminate in Singapore or operate beyond Singapore to a wide range of other countries. Singapore Airlines will now be able to add a total of the equivalent of four Boeing 747 services each week into the Australia/Singapore market, a total of around 1,600 extra seats. This agreement means that the two airlines, between them, will be able to operate a total of more than 50 Boeing 747 services per week in each direction between Australia and Singapore.

Qantas News:

Australia’s national flag carrier has been the subject of much media attention of late, most of the coverage concerning the exodus of licenced engineers to better paid jobs at private airlines and elsewhere and the flight cancellations and delays which have flowed on from that.

The issue was brought to a head with the screening of a ‘Four Corners’ programme on the subject in May. Certainly, there have been problems. In the period May 3 to 15 this year only 30 of the airline’s 237 flights from Sydney left on time and 37% of these were caused by maintenance problems or the lack of engineering staff. Other unrelated problems – such as the basic inadequacies of Sydney Airport in many areas – contributed to the delays. The airline’s laudable policy of only departing with fully serviceable aircraft-even at the expense of schedules – also didn’t help, and it was here that the lack of staff told. Nevertheless, some Qantas pilots expressed concern at being asked to fly aircraft with more ‘allowable deficiencies’ (known but not dangerous faults) than before.

The result has been the ‘farming out’ of a substantial amount of maintenance to overseas airlines and a reduction in the air- line’s planned expansion. Some new services have also been deferred so as to cut the fleet’s annual flying hours back from the 120 000 planned by the end of 1989 to 110,000.

Nevertheless, the airline is moving on, with some refinancing to the tune of $360m recently being achieved by the selling and leasing back of seven of its earlier model Boeing 747-2008 and the arrival this month of the first of 10 very long range 747-400s which are on firm order. The remainder will be delivered between September and April 1990. Like other airlines with the 747-400 on order, Qantas has experienced significant delivery delays. The new aircraft will enable Qantas to inaugurate one stop Melbourne to London flights (via Singapore) from the end of October. By the end of this year the Qantas fleet will consist of 17 Boeing 747-200s, two 747SPs, six 747-300s, five 747-400s, seven 767-200ERS and five 767-300ERs while the carrier expects to double the size of this fleet by 1996.

 Marketing Melbourne:

In a move which is believed to be so far unique in this country, Melbourne Airport is entering the marketing arena and will employ a full time Marketing Manager thanks to a grant of $150,000 from the Victorian Government to the Federal Airports Corporation.

According to the airport’s general manager, Mr John Taylor, “This initiative comes at a time when the airport is poised to expand substantially and provide even greater economic benefit to Victoria. The proposition will involve the spearheading of both the development and implementation of a marketing strategy for the airport, something that has never been done in the past”. It will be interesting to see how the idea develops.

Deregulation Prophesies, the Heavies Speak Up:

Speaking at a special mid-May symposium sponsored jointly by Ansett, Kendell Airlines and Saab Aircraft, Ansett GM, Graeme McMahon highlighted the overall tough attitude his airline would be taking towards any new entrant come the beginning of domestic airline deregulation on November 1 next year.

“There will be no latitude given in a deregulated environment in Australia. We will kick their heads as soon as they appear in direct competition with us”, stated Mr McMahon. Similar sentiments were revealed to Australian Aviation by the retiring chief executive of Australian Airlines, James Strong, in an interview conducted with him during March.

Both carriers see little fiscal joy in starting a major domestic jet service in direct competition with the existing airlines: Mr McMahon pointed out that both Ansett (which includes a soon to grow EWA) and Australian will always be able to acquire their aircraft, fuel, marketing, insurance and spares cheaper than any new entrant which will have to ensure a large capital base to provide adequate fiscal stability through its first year of operation in an uncertain marketplace. When Ansett took over East-West and amortised many of its previously independent services into Ansett’s own system, the overall savings to EWA were conservatively estimated to have been in the region of 20%. Any new operator, according to Ansett, will be paying at least 20-30% more per seat kilometre in sunk costs than the established carriers due to its inability to acquire the best deal’ from suppliers that is available to the large and established operator.

Speaking also at the conference was Don Kendell, owner and Managing Director of Australia’s largest regional airline who stated that the Prices Surveillance Authority and the Trade Practices Commission would never in real terms be able to publicly justify inhibiting an ultra cheap fare just because it might be seen as being predatory against a new competitor. “Cheap fares are what the public want, cheap fares are what deregulation is publicly supposed to bring and so how will any government body deny the travelling public such a low fare and thus endure the political backlash that would ensue, stated Mr Kendell, Kendell also lambasted the CAA for its lack of foresight in regards to the present lack of viable radar capability at a number of Australian airports and in particular Melbourne where the ill-fated ATCARDS system has not worked properly since the day it was installed.

ATC delays at Melbourne, largely now through industrial reasons rather than safety or operational factors, was also causing the majority of Kendell flights to be delayed to some extent. While both Australian and Ansett are relying more and more upon their large wide bodied twinjets to link Sydney and Melbourne, they verified that delays at both ports was costing the overall Australian air transportation system more than $30m a year due to flight delays, wasted fuel burn and loss of productivity. A decline of traffic was also a distinct possibility as non essential travellers abandoned holiday flight plans and sought alternative, more reliable, forms of transportation.

 Sydney to Remain Number One:

Sydney will remain the number one air traffic arrival and departure centre for Australia for the next 20 years according to a planning study commissioned to assist in determining the international airport needs of Sydney. Melbourne and Brisbane.

The study, commissioned by the FAC from British Airport Services Ltd (BASL), estimates Sydney will report more than 9 million international arrivals and departures a year by the year 2007. This will effectively treble the 3. 5 million arrivals and departures of 1987.

In anticipation of growth demand on Sydney airport, the FAC has spent up to $48m on refurbishing the existing International Terminal and has announced plans to spend a further $214m over the next three years to expand the facility. By the year 1992, the BASL study estimates Sydney will be handling more than 4. 7 million arrivals and departures annually through its international facilities.

However, despite retaining its premier position, Sydney’s growth will be outpaced by that of Brisbane. Brisbane will record dramatic passenger growth in the years ahead.

In 1987 Sydney was responsible for 53% of international passenger arrivals and departures while Brisbane held 11% and Melbourne 21%. By the year 2007, it is forecast Sydney will be responsible for 46%, with both Brisbane and Melbourne on approximately 18%.

The BASL study also found that there will be a dramatic change in the mix and area of origin of air travellers into Australian airports over the next 20 years. Leisure traffic from overseas is expected to account for 10 million passengers a year by the year 2007 compared with 3. 1 million in 1987.

For Sydney, foreign leisure traffic will reach 4. 6 million compared to 1. 7 million now while foreign business traffic will rise from 300,000 to 700,000 a year in 2007. Where most travellers into and out of Sydney at present are coming from or going to North America, by the year 2007, Asia will be the principal port of origin or destination.

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Civil Aviation Administration Attacked:

The administration of Civil Aviation in Australia was in chaos and there had to be drastic reforms to bring standards back to an acceptable level, let alone to the highest world standards, which Australia previously enjoyed.

in moving a Matter of Public Importance regarding the falling standards and the costs to Australia, the new Shadow Minister for Tourism, Aviation and Sport, Mr David Jull, cited Sydney Airport, radar problems, faulty navigation aid, terminal inadequacies around Australia, General Aviation changes and the overly bureaucratic nature of the CAA and FAC as areas that all had to be addressed.

Mr Jull said that there was now a situation in Australia where 9,000 bureaucrats administered the 7,000 aircraft on the Australian register. He said that latest figures indicated that the CAA employed 7,600 people, the FAC 1,020 people while there were still 600 people employed in the Department.

“While we have a 9,000 people to 7,000 aircraft situation in Australia, the ratio in the Uni- ted States is one for every three aircraft,” Mr Jull said.

He said it was obvious that the CAA and FAC saw themselves as revenue raising bodies, with many charges rising as much as 800%. General Aviation was particularly hard hit and the new GAIT charges were decimating the industry. “As well as that, there is doubt as to their legality and there must be a number of legal challenges to them in the near future. ” Mr Jull also expressed concern that deregul- ation of domestic services in November 1990 could in fact happen because of the terminal situation, especially at Sydney and Melbourne Airports. He called for a release of the Trade Practices Commission’s report on the terminal leases for Ansett and Australian Airlines as soon as possible. There is an expectation in the public that deregulation will be with us next year. It may not physically be able to happen, if the terminal situation is not sorted out immediately.

 Flinders Island Airlines in Long Awaited Tullamarine Move:

Flinders Island Airlines Pty Ltd has finally won official approval to transfer its Victorian country services to Melbourne Airport. From June 8, 1989, the airline’s regional services operated from the Australian Airlines’ concourse at Tullamarine instead of Essendon Airport.

The move will provide direct, minimum-time connections with national and international airlines and eliminate taxi transfers to and from Essendon Airport. It will also give Flinders Island Airlines access to Australian Airlines’ computerised flight booking service. FIA’s regular services to Flinders and King Islands in Bass Strait will continue to operate from Moorabbin Airport.

 More Lauda Air:

Following discussions between the Australian and Austrian governments in Vienna, Lauda Air, the airline owned by triple-Formula One World Champion Niki Lauda, will double its frequency of flights between the countries to two per week.

Currently the airline’s single weekly service is operated mid week; from November this year an extra flight will arrive on Friday and depart the next day. Lauda Air operates its sole Boe- ing 767-300ER on the Vienna/Sydney route, with a second aircraft due for delivery this October and a third in 1992.