Airline Affairs

The other ‘fly in the ointment’ for Capitol (and all of the new entrants) was the perennial delays in obtaining the necessary funds with which to officially launch the airline. Capitol was seeking around $100m and really needed this equity established by early 1990 at least in order to be able to proceed professionally towards a year end launch.

While the airline launch has now been officially put on hold for at least six months, many observers within the industry now doubt that Capitol will proceed at all due to the combined factors of a slow economy, continuing high interest rates, lack of launch capital and the problem with terminal access.

Ansett Announces Second Passenger Concourse for Melbourne Airport:

Multi million dollar redevelopment works at Ansett’s Melbourne terminal began in April to improve and extend pasenger facilities and cater for increased demand in the 1990s. This project will increase Ansett’s aircraft parking capabilities for large jet aircraft from 10 to 18 by November 1990. A new first floor passenger concourse will be built out from the southern end of the existing terminal and will provide additional parking space for nine jet aircraft. A similar project at Sydney is also scheduled for year end completion.

In the short term the new concourse will incorporate three gate lounges with aerobridge capabilities which will service three of the parking spaces. Other gate lounges will be added progressively as required. Access to the other six parking bays will initially be via a covered walkway.

Transcontinental Latest Run- Ner in New Entrant Race:

A previously unknown group operating as Trans-Continental Airlines is the latest new entrant to take on Ansett and Australian come November 1.

TransContinental is headed by Capt Alex King and is made up primarily of ex Ansett and Ipec pilots. Whilst Capt King is ex Ansett the airline has no links with the AFAP or plans by that organisation to begin its own domes- tic airline to challenge the present domestics. An initial statement by the company in late April broadly claims that the airline has already secured its capital base via employee ownership. TransContinental plans to hire up to 900 people and be ready for operation on the 1st November. Though its initial launch fleet is unknown, the airline does plan to have up to 12 737-300s in operation by late 1991. The aircraft will be flown in a two class a mystery location with accommodation provided. The airline also gave away two prizes of a month’s free travel.

configuration with a high standard of service provided at discount rates. The airline will serve the primary high traffic ports and is the first of the projected new entrants to publicly list Tasmania as a destination. The company plans a traffic mix of 50:50 business and leisure.

Capt King said during the initial media statement (which preceded a news blackout until a major media launch planned for July) that TransContinental was Australia’s first airline “wholly owned and operated by the people who run the airline on a day to day basis. Our key corporate objective is to provide the highest standard of passenger service at highly competitive rates. We believe we can achieve this by establishing a corporate framework in which only direct employees of the company have a say in the operation, This framework will allow personnel at all levels of the company to have input and to achieve appropriate rewards for their efforts. We believe we have created a structure that will allow us to tackle the two existing carriers and, by a cooperative effort, make significant inroads into their current market share,” he said.

 Air New Zealand Doubles 767 Fleet:

Air New Zealand will add an eighth Boeing 767-200 to its fleet in July, effectively doubling its 767 capacity in the last year. The aircraft will arrive in May to be modified and repainted in Air New Zealand livery at the Auckland Engineering Base. As announced last issue, another Boeing 767-200 will enter service in November, in time for the airline’s new summer schedule. Both of these aircraft will have extended range capability and will operate on a mix of domestic and international routes. Both aircraft have been operating in Europe with Britannia Airways and will be on long term leases to Air New Zealand.

State Deregulation Coming?:

In view of the forthcoming deregulation of interstate air services in Australia later this year, the New South Wales government is examining the ins and outs of doing the same thing with its intrastate services. Areview of airline licensing within NSW will examine the issue, and although numerous changes to NSW’s route licences have been made in recent months resulting in a form of competition, they stop well short of deregulation. The review is expected to be completed this September.

Dispute Statistics:

The recent domestic pilots’ dispute has resulted in all sorts of interesting statistics. Among them are figures released by Ansett which show that following the airline’s first wet-leased charter flight on September 18 last year (an America West 737-300) a total of 5,702 flights by eight chartered aircraft carried 605,000 passengers. Ansett flew its final scheduled charter flight from Perth to Sydney on March 31 using an Air 2000 Boeing 757. To celebrate the end of the use of charteraircraft (and to encourage back to the fold travellers who are still using alternate means of transport) Ansett has been offering the chance of a year’s free travel to ticket purchasers (one prizewinner was drawn) plus 50 Mystery Weekends per week — two tickets to

Europe Near Saturation:

A study commissioned by the International Air Transport Association (IATA) has revealed that Europe’s air traffic system and its ten major airports will reach maximum capacity by the middle of this decade unless urgent and radical improvements are made to the infrastructure. Delayed flights have almost doubled in the past four years but the report’s main crux is that if things were better organised there is airspace and airport capacity to cope with demand until the year 2010, even using current technology. After that, expansion would require new technology.

The report calls for the immediate organisation of a major international conference of all interested parties (governments, airlines, aviation organisations etc) and recommends the construction of a fifth terminal at London Heathrow, an additional runway at London and expansion of Frankfurt airport. Some 70% of European traffic operates between London, Paris and Frankfurt yet all but Paris are close to capacity already.

Using the current methods, Frankfurt will be more than 50% undercapacity by the year 2000, London Heathrow will be 33% under and London Gatwick will be 40% under. By the same year the two main Paris airports, Charles de Gaulle and Orly will still have some spare capacity as will the very much smaller London Stanstead. Other major European airports which will be under capacity by the turn of the century include Hamburg, Copenhagen, Manchester, Geneva, Athens, Stockholm, Dublin, Dusseldorf, Milan, Barcelona and Madrid, the latter estimated at a whopping 90% short.

Law Firm Expands Aviation Services:

Blake Dawson Waldron, one of Aus- tralia’s largest law firms, with an extensive network of offices in the Asia Pacific region, has recently completed an important first in the area of providing aviation and tourism services by establishing an independent consulting business, BDW Aviation Services.

BDW Aviation Services will provide a wide range of specialised services to the aviation and tourism industry. This step is part of the trend towards identifying new areas of needs which are not necessarily legal, and through a mystery location with accommodation provided. The airline also gave away two prizes of a month’s free travel.

Europe Near Saturation:

A study commissioned by the International Air Transport Association (IATA) has revealed that Europe’s air traffic system and its ten major airports will reach maximum capacity by the middle of this decade unless urgent and radical improvements are made to the infrastructure. Delayed flights have almost doubled in the past four years but the report’s main crux is that if things were better organised there is airspace and airport capacity to cope with demand until the year 2010, even using current technology. After that, expansion would require new technology.

The report calls for the immediate organisation of a major international conference of all interested parties (governments, airlines, aviation organisations etc) and recommends the construction of a fifth terminal at London Heathrow, an additional runway at London and expansion of Frankfurt airport. Some 70% of European traffic operates between London, Paris and Frankfurt yet all but Paris are close to capacity already.

Using the current methods, Frankfurt will be more than 50% undercapacity by the year 2000, London Heathrow will be 33% under and London Gatwick will be 40% under. By the same year the two main Paris airports, Charles de Gaulle and Orly will still have some spare capacity as will the very much smaller London Stanstead. Other major European airports which will be under capacity by the turn of the century include Hamburg, Copenhagen, Manchester, Geneva, Athens, Stockholm, Dublin, Dusseldorf, Milan, Barcelona and Madrid, the latter estimated at a whopping 90% short.

Law Firm Expands Aviation Services:

Blake Dawson Waldron, one of Aus- tralia’s largest law firms, with an extensive network of offices in the Asia Pacific region, has recently completed an important first in the area of providing aviation and tourism services by establishing an independent consulting business, BDW Aviation Services.

BDW Aviation Services will provide a wide range of specialised services to the aviation and tourism industry. This step is part of the trend towards identifying new areas of needs which are not necessarily legal, and through which clients can be offered a comprehensive and market-oriented package of services. Aviation and the closely associated tourism market are now witnessing an unprecedented rate of change, generating new needs both domestically in Australia and internationally. Through its association with Blake Dawson Waldron, BDW Aviation Services will be well positioned to meet this growing demand.

Peter Harbison, who will be heading up BDW Aviation Services, is formerly of IATA and has a long and close association with the aviation industry. Mr Harbison said “Our business will complement the activities of Blake Dawson Waldron, in particular those of the Transport & Tourism Group, where partners such as Rodon King, John Field, Richard Bunting and Adrian Morris have had a long involvement in operational, financing and industrial aspects of the aviation industry”.

 East-West Begins to Spread Its Wings:

With deregulation less than half a year away, East-West Airlines is already gearing up for additional services that will double its share of the leisure market by 1993.

Commencing May 1, the airline began services directly into Hamilton Island from Sydney and Brisbane. EWA already serves nearby Proserpine, the major mainland gateway to the Whitsunday Passage and the Great Barrier Reef, with four weekly jet services. In addition to these flights, EWA now operates four weekly round trips to Hamilton Island three from Brisbane and one from Sydney.

From the middle of next year the airline will also return to Yulara with BAe 146-300s with specially fitted long-range tanks enabling non stop services from as far as Sydney. Melbourne and Brisbane. The first two of 8 146s are scheduled to commence operation in early September, while five will be operational by year end with the final of eight being delivered in June 1991. If the options on a further 4 are firmed then these will then be delivered over the following year. At this stage it is anticipated that the 1468 will replace existing F28-4000s and that these. aircraft will either be sold or will go to Ansett NSW to replace smaller 1000 series aircraft. For the future, EWA will be concentrating on developing their east coast leisure network encompassing Tasmania, the Gold/ Sunshine Coasts, Whitsundays, Cairns and the Centre. Traffic, according to General Manager, Neil Berkett, is rebounding with bookings through March and April up a very encouraging 10% over the same period last year. Load factors are also particularly strong at around the high seventies, whilst pilot productivity has risen from a pre dispute average of 480/500hrs per annum to something closer to 750 for calendar 1990. Pilots working within the new IRC endorsed industry award are thus in most cases now grossing well in excess of what the AFAP originally fought for through mid 1989.

 Aussies to Austria:

A record number of Australians travelled to Austria in 1989 according to figures released by the Australian National Tourist Office. During the course of the year, 101,996 Australians visited the beautiful European centre, an increase of 28. 4% over 1988. The trend is continuing this year, with figures for January showing an increase of better than 28% over the same month in 1989. Austria’s tourist office in Australia has attributed much of the increase to Lauda Air, and the airline celebrated its second anniversary of direct flights between Vienna and Sydney in May. The airline now operates two services per week out of Sydney and expects demand to increase during this year, the 200th anniversary of Wolfgang Amadeus Mozart’s death. Numerous events in both Vienna and Salzburg will mark the occasion.

Compass to Use Australian Terminals:

Compass Airlines has decided to use Australian Airlines gateways where it is unable to provide its own facilities.

Senior executives of the airline state that they have been impressed by the level of cooperation given by Australian Airlines, considering the competitive nature of their opeation. Whether or not Ansett was ever a realistic landlord option though is doubtful given Compass CEO, Bryan Grey’s long time adversarial relationship with ATI. Grey was formerly a senior executive with Ansett and later went on to acquire control of the then-independent East-West, which he then. turned into a major irritant for both Ansett and Australian through EWA’S maverick forays into gaining a wider share of the domestic market. EWA at that time was also a feeder for the then TAA, a relationship that proceeded smoothly until East-West began to attempt to compete on routes against its “big brother. A major update on Compass can be found on p30 of this issue.

Additional Britannia Flights:

Subsequent to the compilation of our special feature on Britannia Airways (p74) in this issue, government approval has been given for their enlarged 1990/91 northern winter program. Britannia will operate over a 24 week peak season commencing this November and will include the new destinations of Alice Springs, Hamilton Is and Melbourne.

Innocents Abroad:

One by-product of the recent domestic pilots’ dispute has been the exodus of many Australian pilots to overseas carriers, the number involved now approaching the 500 mark. Formed as a result of pilots looking for jobs overseas and recognising there were shortages in some parts of the world, Australian Air Pilots Services (AAPS) was formed to help find positions and began operations in late 1989 by advertising the fact that Australian pilots were available for the world market. The AAPS now provides various services ranging from a basic introduction facility to the supply of contract crews to airlines as a package. Among the airlines to whom crews have been supplied are Germany’s LTU Sud, Swissair, Martinair of Holland, Singapore Airlines, Cathay Pacific and MAS, which recently took on 50 Boeing 737 pilots.

A side effect of the pilots’ dispute is an exodus of LAMES (Licenced Aircraft Maintenance Engineers) from the airlines. Ansett in Sydney has lost about 70 to other operators and jobs, seven out of the airline’s 21 LAMES in Cairns have also gone overseas along with two from Canberra now with Royal Brunei Airlines. Most of the Sydney and Cairns people have gone to Cathay Pacific’s maintenance arm HAECO, the United Kingdom, MAS or Singapore Airlines while some have gone to Airbus for technical representative training.

BA/Aeroflot Co-operation?:

British Airways and Aeroflot are discussing the formation of a joint venture international airline intended to operate on transatlantic and London/Moscow/Far East routes.

The discussions, which have been proceeding for nearly a year, also involve the establishment of cooperation in the customer service training, systems development and other areas. If the new airline is estab- lished it will be operated alongside the existing international services offered by BA and Aeroflot.

In a separate deal, Lufthansa is to service the so far five Airbus A310s ordered by the Soviet airline, meaning that all the A310s sold in Europe to date will be maintained by the West German flag carrier. East Germany’s Interflug and Czechoslovakia’s CSA already have similar arrangements with Lufthansa. In addition, Lufthansa looks after Malev’s Boe- ing 7378 and TAROM’s 7078.

Explosion Causes Eis Extension:

The explosion and fire in April at Boral’s LPG plant in the Sydney suburb of St Peters has caused the Environmental Impact Study into Sydney Airport’s third runway to be extended, meaning that it will not now be released until this month. St Peters is a neighbouring suburb to Mascot, the location of the airport and the gas plant is near the flight path of the proposed third runway. The airport was closed while the explosions and fires raged.

Workers Buy Airline:

After a lengthy period of negotiation and one thwar ted attempt last year, United Airlines’ parent company UAL Corp has agreed to sell the operation to its employees for $US5. 74bn or $US262 per share.

The $262 for each share will consist of $US203 in cash, $US45 in UAL notes and $US14 worth of securities in Covia Corp. United’s computerised reservations system. A few weeks earlier United’s directors had rejected a $US242 per share offer from the employees’ United Employee Acquisition Corp, but the latest bid was supported by the airline’s largest single shareholder, Coniston Partners.

In October last year the employees failed to gain control of the airline when the SUS8. 8bn offer could not be financed, causing a near collapse of the stock market in the process.

 Paris Growing Faster:

Passenger traffic growth at Paris’ three main airports- Charles de Gaulle, Orly and Le Bourget – was almost double that of its two main Euro- pean rivals in 1989.

While London’s Heathrow, Gatwick and Stanstead airports recorded growth of 4. 7% and Frankfurt saw a 5. 8% increase, the Paris airports between them handled 45 million passengers during the year, an increase of 10. 5%. Despite this, the London airports are still well ahead on the number of passengers which passed through their gates with 62. 1 million compared to Frankfurt’s 26 million.

US Majors in Bother:

The 1989 fourth quarter financial results of the USA’s ‘major’ airlines (carriers with a turnover in excess of $US1bn) have revealed huge losses and serious troubles ahead.

The airlines lost a relatively modest $US73. 1m between them in the same period in 1988 but managed to lose a whopping $US941. 5m last year. 1989’s final quarter was the worst in the history of the industry with only Delta and American showing a profit and Pan Am, TWA and USAir all losing more than $US100m.

Runaway cost increases in most areas (especially labour) are blamed, and the expectation is that first quarter 1990 will be at least as bad.

Virgin for Australia:

British music industry and airline tycoon Richard Bran- son’s Virgin Atlantic Airways has been granted licences to operate from London to Adelaide, Perth, Melbourne and Sydney by the British Civil Aviation Authority.

As a designated London/Singapore carrier, Virgin Atlantic was eligible to participate in last month’s Australia-UK bilateral talks. Virgin has been trying to get into the Australian market for some time.

Joint Cargo Venture:

Air France, Cathay Pacific, Japan Airlines and Lufthansa are planning to establish a joint automated cargo system based in Frankfurt and providing faster and more efficient cargo distribution throughout the world.

It will start by offering freight forwarders, trade and industry direct access to the airline in-house computer cargo systems, schedule information, cargo reservations, tracking and other services. Later, it will expand to include a full range of door to door cargo deliveries involving not only aircraft but also surface transport. Initially, Lufthansa and Air France will establish a regional distribution system covering Europe and Africa while JAL and Cathay Pacific will look after Asia and Australasia. These systems are scheduled to be operating by the middle of next year. North America and other parts of the world will follow soon after.

Inflight Customs Clearance for Qantas Cargo:

Many Qantas cargo items are now being screened by Customs while they are still in the air.

From March, special computer software developed for the Qantas Cargo Computer system, Qantac, transmits waybill details to Australian Customs soon after the aircraft takes off.

While the aircraft is flying, Customs officers can clear many items instead of waiting for documentation to arrive with the aircraft. When an article is cleared, the Qan- tac computer is automatically notified by the Customs computer that the item can be released. Cleared articles can then be collected immediately after the freight is unloaded and transferred to the Qantas Air Cargo Centre at the Sydney International Airport.

The new system can speed up individual shipments of little or no commercial value, selected for preclearance by Customs.

 Airline Togetherness:

In many ways supporting some observers’ theories that European airlines of the future will tend to be less identifiable with a particular nation than they have been, comes the announcement that Scandinavian Airlines System (SAS) and Swissair have agreed to form comprehensive links to create a worldwide travel service system.

The agreement is scheduled to be put in place this year and will involve each airline taking a small shareholding in the other and will cover traffic systems, maintenance, staff training, data and telecommunications systems, travel products, catering and accommodation.

The two airlines’ combined routes and schedules nicely complement each other and each expects to see an immediate improvement in its results. A similar agreement was recently signed between Air France and Lufthansa.

 Lost in Space:

It’s getting to be a traffic jam up there! In May this year the number of trackable objects which have been placed earth orbit broke the 20,000 mark with the launching of Russia’s Cosmos 2021. Of that 20,000, just under 7,000 remain in space and although nearly 2,000 are spacecraft, only 100 remain operational.