Airline Affairs

Qantas is in a different situation in that it will actually increase its revenue base through the first half of 89/90 owing to the maximum effort it is making in flying international passengers throughout its domestic sector network that would have formerly travelled by Ansett, EWA or Australian. Prior to the dispute Qantas was carrying around 20% of the international visitor traffic via its domestic sectors, a market worth an estimated $50-60m annually since Qantas finally had its interline rights reinstated in July last year.

However, things might not look so bright come the new year when the longer term effects of cancelled bookings by overseas tour operators begins to impact the inbound market. To what extent this actually happens depends on a range of issues, not least of which is the actual length of the dispute, which at presstime was already in its seventh week. The final outcome of the dispute could well be that the Government will at last be forced with a fait accompli of either injecting a substantial amount of cash into its airlines or biting the bullet and selling them. Either way, don’t hold your breath!

Aeroflot in Iata:

It what must be considered a substantial breakthrough, Aeroflot, the national airline of the USSR, has applied for membership of the International Air Transport Association (IATA), an organisation which currently has 186 member airlines.

Aeroflot is by far the largest airline in the world, operating more than 3,000 aircraft to 3,600 domestic and 125 international destinations in 97 countries. In 1988 Aeroflot carried 126m passengers and apart from its airline activities it as the state’s official air transport operation – also flies in support of agriculture, surveys, fisheries, ice reconnaissance, Arctic and Antarctic expeditions, pollution monitoring, fire fighting, medical and numerous other operations including military airlift augmentation.

Capitol Evaluating Major Maintenance Facility at either Brisbane or Adelaide:

Capitol Airlines is about to make a final decision as to the location of its primary maintenance base. Offers of support have come in from both the Queensland and South Australian Governments and a decision is planned to be made during the course of this issue.

Capitol have fully paid deposits on 8 MD-83 twinjets and are confident of being operational come November 1 next year. In view of the events of recent months they might well be in a far better position than could have been even

Play Santa Claus This Christmas

Christmas is on the horizon and you don’t know what to get that special aviation minded person in your life?

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The 6 issue rate is only $25. 00 (you save $4. 40) while the 12 issue rate is $44. 00 (you save $14. 80). Use the coupon from the full page adverts elsewhere in this issue or send your remittance to Australian Aviation, PO Box 105, Weston Creek, ACT 2611. You can also fax in your order using either Bankcard, Mastercard, Amex or Visa on (062) 88 2021.

remotely envisaged six months ago. In the year ahead Ansett, East-West and Australian will have to work hard to regain their market shares allowing possible unforeseen opportunities for the new entrants. Indeed, passenger uplift overall is expected to decline as people simply switch off from flying due to the hassles of the past year which firstly involved Ansett flight attendants, then Sydney and Melbourne ATC and finally a complete devestation of the system by courtesy the AFAP.

Meanwhile how the inbound market will be affected is still not clear except that it will most certainly be damaged to some extent. Capitol, like Compass and the third jet operator, all had grand plans for catering for the inbound market, as had East-West. Meanwhile, a Capitol spokesman stated that an aircrew strike at that airline would not occur as all employees would also be shareholders. Where this has been applied overseas, productivity and pride in the company and job satisfaction has soared with resultant little industrial disharmony. Capitol’s brokers, Ord Minnett also went to the marketplace in October in the expectation of raising the required $150m in equity and a further $300m in convertible notes, largely from institutional investors. Despite the drubbing that air transport has taken in recent months Ord Minnett are confident of raising the necessary funds and point to the fact that Capitol will be significantly more productive than the existing carriers which they claim have become fat over four decades of relative non competition through the existence of the Two Airline Policy.

Capitol, for instance claims that it will take just 110 people to get one of their aircraft into the air compared with 270 for Ansett or Australian. Higher levels of productivity will be available all round as Capitol (like the other two new entrants) will fly only one aircraft type, will run to set schedules which it won’t continually cancel or redeploy and will be able to make the best use of crews through not having great numbers on reserve or on standby through last minute aircraft type substitutions. They estimate that they will thus be able to achieve up to 700 hours a year from each pilot compared with half this figure from the current

domestics.

Qantas Freight Reports Strong Growth and Adds Extra Capacity From United States:

Qantas Cargo has added three dedicated freighter services to Australia from the United States.

The first is a DC-10 frequency from Chicago – which will be used to supplement the two DC-10 freighters currently in service from New York. The New York route has proved highly successful operating with full load factors of 60 tonnes per aircraft. Also new are two extra services from Chicago using DC-8 aircraft which offer 40 tonnes of capacity each. The DC-10 aircraft are wet leased from World Airways and the DC-8 aircraft from Evergreen International Airlines.

The national carrier now flies five dedicated freighters from the United States each week. During the last year, Qantas has seen Australia’s air freight imports increase by around 18% while exports have jumped by 12%. To service the growing market Qantas is investing $70m in upgraded cargo terminals at both Melbourne and Brisbane.

Are Aircraft Imports Becoming a Whipping Horse for Politicians?

Australia’s record trade deficit for the month of August once again highlighted some basic deviations in the maths used to apportion such figures.

The continual inclusion of new aircraft deliveries, mostly for Qantas, is used regularly to publicly apportion blame as to why the surge in imports in any one month is so much higher than what is being exported. Such was the situation with the record August figures which provided enough TV footage of Qantas 747s to persuade many Australians that our national carrier was actually creating the burgeoning trade deficit and the resultant high interest rates that follow largely as a consequence. To set the record straight the inbound aircraft is actually classified as a once only import for accountancy purposes only. Hence the inclusion of say, two 747-400s in a month could add upwards of $350m to the import column. In reality though the aircraft is financed completely by the foreign exchange that Qantas earns from its hundreds of overseas sales centres. In fact, in 1988/89 around two thirds of the airline’s revenue was achieved in foreign currencies. Hence the aircraft purchases do not see Australian dollars actually being ‘exported’ as such. In fact each new 747-400, claim Qantas, will earn around $70m a year in foreign exchange for Australia or around $1. 4bn over the 20 year life of the aircraft.

Japan Air Lines and Qantas Announce New Route to Japan:

Japan Air Lines is planning to start a new joint service operation with Qantas linking both Sydney and Brisbane with Fukuoka in northern Kyushu.

It is anticipated that this service will be of immense interest to the large number of companies conducting business between Australia and Japan as the Fukuoka service will provide another convenient port of entry into Japan with reliable domestic connections on the popular ‘business’ route to Osaka.

The new service will be jointly operated with Qantas on a bi-weekly (Monday and Friday) basis from October 30, 1989. Flights will be routed Sydney/Fukuoka/Brisbane/Sydney 747-200 aircraft with 433 seats, comprising 16 first class, 16 business class and 401 economy class seats.

Goodbye Fokkers:

In the wake of the pilots dispute Ansett has decided to abandon its Fokker 50 turboprop operations linking northern Tasmania with Melbourne.

Prior to the dispute Ansett F50s were serving the northern Tasmanian communities with a common three times daily service linking Wynyard and Burnie. In view of the ‘irreparable damage done by the dispute Ansett has withdrawn from the route and closed its Tullamarine F50 base resulting in the loss of around 45 pilot positions. The route will be taken over by Kendells who were providing emergency uplift for the Ansett Bass Strait routes during the dispute. It is not known if East-West will also cease its marginal Melbourne/Devonport route. EWA is looking to be out of F27 operations within two years and as Devonport, Burnie and Wynyard are all within a relatively short distance of each other then Kendell might also take over the EWA route in due course.

Australian Airlines might well follow Ansett’s lead and also disband their own orphan F27 operation which served the Cairns/Weipa route. This is presently being flown by Nancy Knudsen’s Aircruising Australia using the two dry leased Australian F27 aircraft and it is known that Aircruising would not only like to retain the service in its own right but to also perhaps expand next year into other potentially viable routes. Aircruising owns two of its own F27s and leased two from EWA during the pilots dispute in addition to the two from Australian.

Qantas and Lufthansa Increase Freight Capacity Between Australia and Europe:

Qantas and Lufthansa have commenced a new joint cargo service between West Germany and Australia.

The new frequency, which arrives in Sydney from Frankfurt every Monday, doubles the amount of dedicated Boeing 747 cargo space available between Australia and Europe offered by these airlines. The flight, which uses a Lufthansa Boeing 747 Freighter, will also return to West Germany as a joint operation on Mondays. Qantas and Lufthansa already. operate a dedicated cargo service to Melbourne from Frankfurt arriving every Thursday. These services operate through ports including Dubai, Jakarta, Kuala Lumpur, Bangkok and Hong Kong.

 Icao Forecasts Doubling of Scheduled Airline Traffic by the Year 2000:

ICAO has just issued long-term forecasts of scheduled passenger and freight traffic which indicate a doubling of traffic worldwide by the year 2000.

Total world passenger/kilometers flown on scheduled services are expected to grow at a ‘most likely’ rate of 6% per annum over the 1988 to 2000 period, from 1,700 to 3,450 million, similar to the growth rate achieved over the previous ten years. International traffic is forecast to grow at a greater rate than domestic, 7% per annum compared with 5%. In terms of passengers carried, scheduled traffic worldwide is expected to grow from just over 1,000 million in 1988 to just under 2,000 milion in the year 2000.

Freight traffic is expected to continue to grow at a greater rate than passenger traffic. Total world freight tonne/kilometers flown on scheduled services have a ‘most likely’ growth rate of 7% per annum between 1988 and 2000, from 54,000m to 124,000 million, a little below the 7. 5% achieved over the previous ten years. The growth of international freight traffic, at 8. 5% per annum, is expected to be considerably higher than that of domestic traffic, at 3% per annum.

The most significant changes in the regional shares of traffic are expected for the airlines of the Europe and Asia/Pacific regions. The European share of passenger traffic is anticipated to fall by over 5 percentage points to 25% of total world traffic by the year 2000, while the Asia/Pacific region is expected to increase its share by about 8 percentage points to reach 26% by the year 2000 (with the share of international traffic reaching 39%). In the case of freight traffic, the European share is expected to fall from 34% to 29% and the Asia/ Pacific share to rise from 27% to 40% to surpass both Europe and North America.

Say Again Please:

Couldn’t resist this one from Flight International’s “Straight and Level’ column, particularly due to its Australian relevance. From our own beloved Federal Airports Corporation: “The corporation is proceeding as far as possible with contingency plans to cover the possible need for additional apron and terminal capacity, but it is not committed to investment in these facilities. It is constrained in its planning by the lack of firm information from some potential operators regarding their proposed operations following deregulation. ” They mean full. ”