Airline Affairs

expected that the Ansett Group will rapidly grow EWA to stave off any budget travel push by the new entrants. It is felt that two or three years from now, the leisure based airline will indeed be many times its present size.

Ansett itself at early February employed just on 400 pilots with stated requirements for only 6 more. Ansett stated that 207 of

these were former AFAP members. Prior to

the dispute Ansett employed 870 pilots. About 50 of the new pilots were from overseas nationalities, mainly US aircrew from defunct Braniff, some from Presidential and a merged Wardair. All were highly experi- enced with many of the Braniff pilots rated on the A320. Another 100 were Australian nationals who had been flying overseas and seized upon the opportunity to return home. Previously, strict AFAP seniority requirements made their return to a position reflect- ing their experience impossible. At the beginning of February, Ansett had the same ratio of check and training captains as it did prior to the dispute in August. Ansett also planned to phase out its final five leased aircraft in February and March while at presstime it was meeting an average of 90% of its normal (this time last year) capacity requirements.

Australian Airlines meanwhile recruited 215 pilots as at early February including 101 former members of the AFAP. The airline expected to have recruited the 280 pilots it requires by the beginning of March. Prior to the dispute Australian employed 547 pilots. Australian will be hiring an additional 50 pilots later in the year and, of the 215 it had at presstime, only 60 of these were from overseas with all of them being either expatriate Australians, Britons or from North America. The remaining recruits were either qualified jet pilots living in Australia or trainee First Officers from the GA sector.

By early February, Australian was satisfying between 90 and 95% of its same time last year capacity via a fleet of 18 to 20 of its own plus 11 charter aircraft. Australian from the beginning of the year has had to rely upon a larger number of chartered aircraft giving Ansett a marketing advantage via its better configured local jets. However, most of Australian’s charters will return north in March with the last departing in April.

Pilots for all three carriers were now looking to fly an average for this year of between 700 and 750 hours as against 480 to 550 prior to the dispute. Under the terms of their new contracts this would also mean that the pilots were, in most cases, actually earning more than the extra 29. 47% that caused the dispute in the first place. AFAP figures indicate that at presstime an estimated 300 of its members had elected to go overseas while from the above data another 300 or so have rejoined the domestics. This then leaves at least 1,000 pilots who do not have employment with an airline.

Innovative Fares at Tract ExtraPAX:

Some innovative fares introduced during the traditionally quiet January/February period by Australian and Ansett have met with wide support.

Ansett was overwhelmed with the success of its $50 Mystery Fare which essentially offers the passenger a trip to a mystery destination for just $50. Ports of origin were Sydney, Melbourne and Brisbane with travel being taken on off peak flights. This fare appeals to a wide range of people who have never flown before or would like to do something different for what is basically the cost of a dinner for two at a minimal restaurant.

Other fares available were a Friends Fare, where you pay a normal full economy and can take a friend for half fare and the resumption of the Fare Go scheme which discounts Sydney/Melbourne by 50%. The restrictions on this fare though are fairly extensive and thus it is only of use to leisure travellers wishing to spend a weekend away and travel off peak.

This would satisfy the demand of a lot of people though and would get many travellers off the coaches and rail if only they knew about it. As always, innovative discounted air fares have been one of Australia’s best kept secrets while the other trick is actually getting a seat due to the very small number that both carriers have traditionally allotted for non full fare passengers. Deregulation will hopefully change all this.

 Nsw Air Services:

A major reorganisation of NSW intrastate air routes licensing has been announced by the NSW government, as part of an ongoing programme to improve air services within the state. Previous route changes have been reported in earlier editions of Newsdesk, but the latest, covering 10 major routes, represents the big- gest shake up so far with Air NSW losing several of the routes it has operated for some years. The licences have been awarded generally for three years and are non-exclusive, meaning competition may be introduced at any stage. The new allocations are summarised below.

Coffs Harbour/Sydney: Air NSW, 26 services per week with Fokker F288 and F50s, a smaller supplementary and competitive service will be considered later this year; Ballina and Casino to Sydney: Air NSW, 19 services per week with F288 and F50s; Wagga/Syd- ney: Air NSW, 21 direct services per week with Fokker F50s; Griffith and Narrandera to Sydney:Hazelton Airlines, 13 and 11 services. per week with a new 34 seat turboprop (Brasilia or Saab 340) and occasionally Beech 1900s; Albury/Sydney: currently with Air NSW and East-West with Hazelton now licenced to operate early morning and afternoon flights; Broken Hill/Sydney: Hazelton Airlines, one daily service with the new turboprop or Beech 1900; Bathurst/Sydney: Eastern Australia Airlines, 17 services per week with Bandeirantes; Moree and Narrabri to Sydney: Norfolk Airlines (replacing Air NSW), initially 10 services per week with DHC Dash 8 aircraft; Cooma/Sydney: winter service only, Air NSW 12 scheduled flights over weekends in ski season with F28s and F50s, Eastern Australian also serving route with Dash 88, Cooma Air Travel operating inclusive tour charters from Bankstown; Lord Howe Island: Norfolk Airlines and Oxley Air- lines each flying three days from Coffs Harbour using King Air 200s while Norfolk Airways continues Dash 8 and King Air services from Newcastle and Sydney on interim licence pending further review.

East-West Breaks Away:

Pilots at East-West Airlines have broken ranks with the Australian Federation of Air Pilots and established their own association.

Called the East-West Airlines Pilots Association (EWAPA), the new body in effect spells the beginning of the end for the AFAP, which now represents only unemployed pilots in mainline airline terms. The association has the full support of its airline, but has naturally attracted the scorn of the AFAP.

East-West recently announced a return to full crewing levels and services are now back to normal. Increased productivity from the pilots and the efficiency now offered by an all jet fleet have allowed operations to continue with many fewer pilots than before. The airline has 57 pilots on strength compared with 97 jet and 45 Fokker F27 pilots before the dispute. The F27s have now been sold leaving a fleet of seven Fokker F28s. The Fokkers are due to be augmented by eight British Aerospace 146-300s during the final quarter of this year.

Qantas Looking to Dispose of Sps:

Qantas is looking to sell off its two SP jets and possibly two or three of its Pratt & Whitney powered 747-2008 later this year.

Primary reason for the sale is that the ultra long range 747SPs transpacific mission has now been taken over by the new 747-400s effectively making the expensive to operate SPs surplus to requirements. In terms of fuel burn alone, the SP consumes around a third more fuel per seat kilometre than do the latest 747-400s. With fuel prices continuing to rise (internationally they have increased by between 20 and 30% over the past year). Qantas can no longer viably support the SP in its route system. At one time Qantas had looked at using the SPs on a New York/Tahiti/ Australia service, though this has been scuttled for the time being and, if ever taken up, will be operated with the -400s. Qantas has the two SPs leveraged leased till 1993 so, if a sale is consummated in the months ahead, it is likely that the new operator would lease them from Qantas until 1993 when the QF lease matures.

Also expected is a move towards selling off some of the carrier’s older Pratt & Whitney powered 747-200s. These aircraft have served for more than 15 years in the QF fleet and, according to the latest market assessment by Avmark, would be worth in the region of $50m each on a market crying out for such well maintained half life widebodies. The value of the smaller SPs though is estimated at around $20m at best. Qantas could use the sale of some of its older -2008 to boost its cash reserves at a time when, due to the combined effects of the pilots’ dispute and late delivery of 747-400s, it will be reporting a fairly tight year.

While inbound tourism has been affected by the pilots’ dispute, Qantas has also picked up much additional revenue owing to its ability to interline international passengers in greater numbers than would normally be the case. It is believed that in 1988/89 this market was worth around $50m to Qantas and this year it could well exceed that, though revenue from interlining is expected to be down in the second half of this financial year.

BA’S Task Force:

British Airways’ Joint Deputy Chairman and Chief Executive, Sir Colin Marshall, has called for a top level ‘global task force’ to eliminate physical and political constraints threatening the airline industry’s growth prospects. Sir Colin has also proposed an industry wide training facility offering scholarships in air transport to meet the ever increasing need for professional airline managers.

Sir Colin has singled out four major areas which, if not tackled properly, could inhibit the industry’s growth prospects in the 1990s and beyond. These are crowded and old fashioned airports, air traffic corridors and control methods which have not moved with the recent rapid growth of air travel, the poor servicing of airports by road and rail networks, and government regulators to whom passenger convenience is often low on the scale of priorities.

Sir Colin’s proposed task force would involve all the major international carriers and would operate under the aegis of the IATA. As a unified and powerful group it could impose more pressure on the appropriate people than any single airline or even group of airlines from a single country.

The airlines carried over one billion passengers for the third year in a row and flew 1,800 billion passenger kilometers. The overall load factor demonstrated by ICAO’s 162 member states was 68%. Air freight increased by an estimated 8% to 58 billion tonne kilometers.

1989 Traffic Up:

According to estimates prepared by the International Civil Aviation Organisation (ICAO) total scheduled traffic of the world’s airlines was up by 6% in 1989 compared to the previous year.

 $8 Million Qantas Simulator Upgrade:

Qantas will spend $8 million to upgrade its fixed base Boeing 747-400 sim- ulator to full flight capability.

The program will also allow the Singer-Link simulator to perform the full range of flight movements and provide a computerised visual system similar to that already operating on the other Qantas 747-400 simulator. The work is due to be completed in the Qantas Flight Training Centre at the airline’s Mascot Jet Base in Sydney by the end of 1990. The fixed base simulator currently provides Qantas pilots with non flying training on the 747-400 systems and visuals and is also used to train ground engineers.

The visual system will show pilots the day or night view from the cockpit of Qantas destinations throughout the world. The existing Qantas system was the first 200° daylight visual system to be used in commercial operations in the world. Qantas is also to take delivery of a 767-300 Extended Range simulator this year and a third 747-400 simulator is on order from Canadian Aviation Electronics (CAE). It will enter service in 1991. A major feature on QF simulation capacity will appear in our May issue.

 Aeroflot Groundings

The Soviet Union’s perestroika restructuring programme is hurting the national airline Aeroflot. Already short of capacity. Aeroflot has been forced to ground some Ilyushin Il-62 transports while they await scheduled powerplant maintenance. It seems many of the airline’s engine maintenance personnel have left to join co-operatives where they can earn better money, leaving Aeroflot unable to maintain its engines quickly enough to keep the Ilyushins in the air.

 Good Point:

Pilot, adventurer and Civil Aviation Authority communications adviser Dick Smith has rejected claims made by the Australian Federation of Air Pilots that air travel in Australia is less safe now since over- seas pilots (“misfits and mercenaries” according to the AFAP) stepped in to fill the void left by the mass resignation of domestic pilots.

Mr Smith says that safety in Australia was probably better now than it’s ever been and quite rightly points out that the overseas pilots now flying here are professionals who had previously flown in conditions (particularly in the areas of traffic density and weather) far more difficult than anything likely to be encountered in Australia.

AA Comment: Constant derisions against the quality, personal integrity and flight experience of international pilots by certain members of the Federation have done little to bolster their credibility amongst fellow members of the air transport industry.

Overseas pilots, most of which are from the northern hemisphere, routinely fly in conditions that would leave the average Ansett or Australian pilot in awe. As an example, this writer recently flew into Denver in a blinding snowstorm at night in an MD-80. Approaching our destination, the captain advised that due to the conditions at Denver’s Stapleton airport, we would have to hold for around 40 minutes and that there were 34 aircraft ahead of us awaiting landing clearance and holding at a number of beacons above the Rockies. After what seemed an eternity of circling through the black morass, we received our clearance and proceeded towards what was a perfect landing. Denver operates parallel runways and both were running to capacity on this incredible night. On turning off the runway, it was possible to see the landing lights and wingtip strobes of at least four aircraft on approach for each of the runways.

Amidst the driving snow, which appeared to be five to six inches deep on the taxiways and runway, we taxied to the gate for what by North American and European standards was just another routine flight. We then flew a commuter Dash 7 across the Rockies for a late night landing at Steamboat Springs, an aircraft carrier strip which relies upon America’s very first MLS – again in blinding snow and high winds and again with perfect precision. It was, the youthful crew told me, their fifth flight into Steamboat that day and to them, and their thousands of compatriots, just another routine ‘ops normal’ day. So much for inexperienced pilots ‘unused’ to Australian conditions where about the worst weather we ever suffer is a thunderstorm!

Investment Report a Worry:

A report by stockbrokers Ord Minnett has caused some consternation among those proposing to operate new airlines in Australia following deregulation later this year.

The report warns potential investors of the risks involved, stating new airlines would have difficultly taking market share from Ansett, East-West and Australian. It also suggested that two of the three new carriers were having trouble raising equity, particularly in view of the problems caused by the pilots’ dispute.

The report does nothing to help the air- lines’ cause in that area and has been dis- missed by one of them, Brian Grey’s Compass Airlines, as being subjective, illogical and displaying a shallow depth of knowledge of the industry. The airline also pointed out that Ord Minnett has strong links with Ansett via its association with TNT, its executive chairman being a TNT board member. Ord Minnett had originally been employed by Capitol Airlines to provide an advisory assignment capacity though not to specifically approach the market for funding on behalf of the new carrier. At the time of the report, Ord Minnett had completed this assignment and had no advisory or capital raising relationship to Capitol.

The report came just at the time Compass was finalising its equity raising, with most of the investment coming from within Australia and additional funding from the USA and Japan. Compass will be leasing five Airbus A300-600R wide bodies for its operations which are planned to commence in November. It has already announced one very cheap fare, the first of many which could start a long overdue fares war in Australian skies. Compass will charge $251 for a one way economy class ticket from Sydney to Perth, just $26 more than for a coach ticket (a coach journey to Perth takes three days with the passenger in that time also spending a not insubstantial amount on food, etc) and exactly half the current economy fare charged by Ansett and Australian.

 Air France to Dominate:

France’s national (and nationalised) carrier, Air France, is set to monopolise that country’s air transport following plans to take control of both UTA(which operates long haul routes to Africa, the Pacific and the USA) and the major French domestic airline, Air Inter.

Air France will initially spend $US660m acquiring 54. 58% of privately owned UTA’s shareholding from its parent company. By controlling UTA, Air France will also have control of Air Inter, which is owned 35. 8% by UTA and 36. 54% by Air France. The move is the latest of several mergers and cooperative deals between European airlines in preparation for deregulation of air services in Europe at the end of 1992. However, the move has not met with universal approval, the large French holiday group Nouvelles Frontieres saying it is a step backward towards a big monopoly and bad for competition.

Qantas Boosts Facilities:

Qantas is spending $17m at Sydney Airport to improve customer service and comfort. The first stage of the programme has already been completed with the first of three new checkin islands already up and running.

Other improvements include increasing the number of check in positions from 42 to 70, special check in counters for elderly and disabled passengers and passengers with special luggage or infants and the building of a sales and service centre in the departure area which will include a special lounge for disabled or baby carrying passengers.

Of the cost, $9. 3m is being spent on the building of a three level annex to the terminal on the “airside’ of the customs barrier. This will feature a 173 seat ‘Captain’s Club’ lounge for first and business class passengers (complete with showers for transit passengers and a television room) which should be operating as these words are read and a 273 seat economy class lounge with self service refreshments, telephones, televisions and toilets. This lounge is due to open in the middle of the year.

 Dispute Forces Fares Up:

The ongoing pilots’ dispute has been blamed for an average 5% increase in domestic jet air fares introduced late in January.

Approval for the increase was granted after the Independent Air Fares Committee reviewed revised estimates of traffic, costs and revenue submitted by the airlines for the 1989/90 financial year. The revised estimates reflected the disruption to Ansett’s and Australian’s operations through having to charter aircraft as their own could not be operated and the training of new crews for the existing fleet. Substantial losses of revenue have been recorded and although the airlines did receive financial assistance from the federal government (refer separate story), this was not to cover operational losses but to ensure continuing employment for staff who would have otherwise been laid off. The previous increase in air fares was in July last year when 7. 5% was granted and a further increase is expected to be ratified by the IAFC around July this year.

Air New Zealand Moves One Step Closer to Achieving Australian Domestic Rights:

Discussions during early February between the Prime Ministers of Australia and New Zealand, Bob Hawke and Geoffrey Palmer, regarding speeding up the free trade aspects of CER (Closer Economic Relationship) have made it more likely that Air New Zealand will one day win Australian domestic rights.

The all important free trade aspects of CER in 1988 were brought forward from occurring in 1995 to July 1 this year. What is generally felt within the diplomatic com- munity in Canberra is that if the new entrant airlines, due to enter operation after the commencement of deregulation this November, aren’t financially viable, then an established airline such as Air New Zealand (which is also part owned by Qantas) might be invited to boost competition between Ansett and Australian. It is generally felt that, in the absence of a strong new entrant, little will, in real terms, change between what we have now under the restrictive and anti competitive rules of the Two Airline Policy and a deregulated scene with simply the same players.

The move would also see Ansett achieving its long-term goal of gaining trans-Tasman rights to better feed its calling NZ operation which has from any angle been a financial disaster. Where this also leaves Australian Airlines has yet to be addressed as this carrier has no internal New Zealand infrastructure and is also a primary feeder domestically for Air New Zealand. Interesting times indeed!

Qantas Into Ships:

Qantas has teamed with Captain Cook Cruises Pty Ltd to operate a luxury 156 passenger cruise ship.

The Australian built vessel will offer four day cruises from Cairns through the Great Barrier Reef and will become operational late in 1991. Luxury amenities will include a gym, spa, swimming pool, special BBQ areas and various lounges and bars, etc. All cabins will be fully air conditioned with ensuites, while the ship will also carry two specially designed glass bottomed coral viewing boats.

Qantas will aggressively market the cruises via OH Tours internationally using the tried and tested fly/cruise concept.

Terror Tactics:

Police have been investigating allegations that an Australian Airlines security officer was hit by a car while escorting pilots to a car park from the flight simulator building.

The Australian Federation of Air Pilots (AFAP) has claimed the allegations were untrue and is simply part of a plot against it, but the question as to why the pilots using the simulator needed a guard in the first place must be asked.

Further, a senior pilot has claimed he was punched in the face and upper body near the simulator building and various other reports of problems have been emerging over the past few months. One of them is that pilots who went to either airlines’ simulator centres for training were allegedly having their car number plates noted and when a name was put to them, their families and themselves were being harassed.

We sincerely hope these allegations are untrue.

Thai Expands Australian Services:

Thai International will serve Adelaide and Darwin later this year.

The airline has been keen to serve these two ports for several years now but has been restrained due to the need to divert most of its new aircraft into its rapidly growing regional network. New A300-600Rs will be used on the route with both ports initially having a once weekly service.

Qantas Inflight Telephones on the Way:

Qantas has signed an agreement to provide inflight telephones for passengers, possibly by mid 1991.

The Qantas Manager of Electronics Engineering, Bob Schartz, said that the agreement, with an international consortium, would provide data and voice communications between Qantas aircraft in flight and cities throughout the world.

When telephones are fitted to Qantas aircraft, passengers will be able to make direct dial international calls from the aircraft during flight paying for their calls with a credit card. Qantas pilots will also use the system for voice communication and to get the latest operational, meteorological and air traffic control information. The system will also be used by the Qantas Maintenance Division to get early notification of maintenance work that needs to be done.

Major Tourism Projects Abandoned:

The combined effects of the pilots’ dispute coupled with high interest rates have forced the abandonment of tourism projects worth more than $4. 2bn throughout Australia, claims research group InterData Pty Ltd in their latest quarterly tourism analysis.

Hardest hit has been Queensland where 50 projects worth an estimated $2. 6bn have either been abandoned or put on hold. NSW has also been badly hit with 45 major projects worth an estimated $2bn being abandoned or deferred, while Victoria has seen 18 specific projects worth $150m scuttled. The Northern Territory has also had 10 projects worth $50m put on hold or abandoned altogether while South Australia, Western Australia and Tasmania have lost projects worth over $360m.

Australia was already heading towards a decline in inbound tourism of an estimated 15-20% for 1989 prior to the beginning of the pilots’ dispute last August (refer Recce Sept 89 AA). The dispute though scuttled any chance of a recovery and this year could see international arrivals down by as much as 40% as against the peak year of 1988.

Furthermore, and most importantly. Australians have opted for overseas regional holidays in place of their normal fly/drive Australian holiday with occupancies in most non capital city resorts being down by more than 50% during the August/November period last year. As the airlines get back to normal, these destinations are now only just struggling back to breakeven figures but the spectre of many months of empty rooms and sustained high interest rates has left much of the industry shattered.

European Cooperation:

In yet another example of inter-airline cooperation (refer several stories in January’s AA), British Airways, KLM and Sabena have established a new version of the latter, Belgian carrier. Called Sabena World Airways and based as before in Brussels, the airline is jointly owned by the three operators with KLM and BA each having a 20% shareholding.

The move comes at a time when the ‘old’ Sabena was beginning to lose out to other operators, and some commentators have said it has actually saved the airline from severe problems come deregulation of Euro- pean skies. It will continue operating its present route network but will expand to develop an extensive intra-European “hub and spoke network based on Brussels’ Zaventem Airport. The three airlines will remain autonomous and continue to compete commercially.

Airline Agreement Ends:

The arrangement whereby the Commonwealth Government paid compensation to the domestic airlines during the pilots’ dispute formally ended on 12 January.

The compensation was intended to allow the airlines to retain staff who would otherwise have been subject to stand downs during the dispute-it was not to make up for revenues or profits lost. Claims totalling $47. 8m had been received from Ansett and Australian Airlines by the beginning of January with more expected to cover the period up to January 12. In addition, FAC and CAA charges to these airlines worth $27. 4m have been waived.