Airline Affairs

Bureau de Change for Ansett Domestic Terminals:

Ansett and the international exchange specialist Travellers Exchange Corporation (Travelex) recently introduced Australia’s first Bureau de Change facilities in selected domestic airport terminals.

Currency exchange services were opened in the Ansett terminals at Sydney and Melb- ourne on 2nd July, and then at Canberra and Brisbane a short time later. The facilities are aimed at domestic airline passengers with connections to or from international flights, as well as foreign tourist groups travelling within Australia. They offer all usual Bureau de Change services and should prove popular, with some 500,000 inbound and outbound passengers connecting with Ansett domestic flights each year.

 Radical Reorganisation of European Airspace Needed:

The International Air Transport Association (IATA) Executive Committee has received the report “A European Planning Strategy for Air Traffic to the Year 2010”, prepared by SRI International.

IATA has formally adopted the report which deals in detail with the growing problem of congestion in European airspace and at European airports and makes suggestions about how to best deal with what is proving a costly and problematical situation. One main conclusion of the report is that a radical reorganisation of the way in which Western European airspace is managed is an urgent priority and is essential if the region’s air transport system is not to be brought to a near standstill by the turn of the century. The report predicts also that by 1995 at least 16 European airports – Madrid, Frankfurt, London Gatwick, London Heath- row, Barcelona, Milan-Linate, Dusseldorf, Dublin, Stockholm-Arlanda, Athens, Palma de Mallorca, Geneva, Manchester, Marseilles, Copenhagan and Hamburg – will be unable to handle traffic demand by the year 2000 unless the Air Traffic Control system is overhauled. Some, like Frankfurt, are believed beyond help.

The SRI report stresses that airspace restrictions could be costing European economies as much as $US10bn a year by 1995, though a restructuring of airspace capacity and the introduction of new technologies could postpone the worsening effects of congestion until about 2010, except at a few critical locations such as Frankfurt and London Heathrow.

Sunbird Loses Routes:

based Sunbird Airlines has been forced to pull out of two of its far north Queensland air routes to make way for Australian Airlines.

Sunbird Airlines was forced by the Queensland Government to pull out of its Cairns/Weipa and Cairns/Thursday Island services so that Australian, which ceased servicing these routes during the pilots’ dispute, could resume services from 24th June. The two routes are at this stage reserved exclusively for Australian Airlines operations.

Tourist Numbers Set to Rise:

According to the Bureau of Tourism Research, the number of visitors to Australia each year can be expected to rise, perhaps to as high as five million (present figure is about 2. 2m) by the year 2000.

Following the boom years of 1986-88, Australia’s tourism industry suffered a 7. 5% drop (150,000 people) in tourist numbers during 1989. It was hit hard by the domestic pilots dispute, a slowdown in world economic growth, and the lack of major attractions such as the America’s Cup, Expo and the Bicentennial celebrations. The effect just of the pilots’ dispute can be seen by the fact that since services have returned to normal an increase in the number of foreign visitors to the tune of about 9% has occurred. The number is expected to continue rising, the main growth areas being the Asian and European markets.

 Virgin and Qantas Winners:

Virgin Airways and Qantas have come out the big winners in recent Australian and British Government air route negotiations.

In the traditionally important UK/Australia “Kangaroo Route’ discussions, the big winner is Virgin. While Qantas has been granted two extra flights per week, Britain was allowed to designate a second British carrier for the route. This, not unexpectedly, was Vir- gin which has long been seeking rights to the Australian market. Virgin has initially been awarded two flights per week to Australia, though its owner, Richard Branson, has expressed an intention to increase frequency in the future. Any more flights than this would, however, necessitate a substantial fleet expansion from the present five early model 7478 operated by the airline.

In the Hong Kong route discussions, Qantas has been given approval to fly between Hong Kong and Bangkok, and Hong Kong and Singapore, following over four years of negotiations with Britain (representing Hong Kong) and Cathay Pacific. The new arrangements give Qantas unprecedented rights to service the rapidly growing southeast Asian market. This is considered a major victory by the airline, which plans to possibly utilise its 767 fleet to a greater extent on its new Asian routes.

As part of the agreement, Qantas is also allowed six extra flights per week between Australia and Hong Kong (it currently flies six per week from the east coast and one from Perth). The airline has not received all that it hoped to get out of the Hong Kong deal, however. It still wants to fly on from Hong Kong to London but Cathay Pacific – which has received only four extra flights to Australia out of the agreement is actively opposing this.

An interesting sidelight is that one of the four additional Cathay services will be flown by a dedicated 747 freighter being operated solely for Cathay, who see considerable potential for increasing the air freight market between Australia and Hong Kong.

Meanwhile, Qantas has postponed the inauguration of their Sydney/Seoul service by some six months to March next year.

Air Traffic Delay Enquiry Line:

A special telephone enquiry line has been established by the Civil Aviation Authority to advise on delays to airline traffic.

The number, (008) 02 0626, will ring in the CAA’s Air Traffic Flow Management Unit. During working hours, the aim is to answer directly, wherever possible, by interrogating the Flow Management Information System while the caller is on the line. Outside working hours callers can record a message and they will be called back later. All calls on this customer service facility will be logged.

Wes Willoughby, General Manager of the Flow Management Project, said the delay enquiry number has been established so the travelling public could find out the cause of any flight delay, particularly those said to be due to air traffic control. The AFTM Unit runs the CAA’s Flow Management Information System which enables it to predict, and measure, the demand and delay at any of Australia’s major airports. The unit is also in direct contact with all CAA operations centres and the airlines.

Record North Atlantic Airline Traffic Expected:

In the light of relaxed restrictions on aircraft capacity, airline traffic across the North Atlantic is headed for its fourth straight record summer season.

The apparent boom in demand and airline traffic is expected to increase transatlantic passenger numbers to 27. 5m in 1990, up 1. 7m on 1989. Fares in this busiest and most competitive international market are expected to reflect increased demand with a 6-7% increase. This, however, does not make things necessarily rosy for carriers serving the North Atlantic routes. While some87% of transatlantic passengers are flown by just twenty airlines, increased competition on the routes, particularly from smaller new entries, is expected to make it more difficult for major airlines, or even eliminate some (such as PanAm and TWA which are both up for sale). At least four European and four American airlines are adding new nonstop destinations using long-range twinjets – such as Glasgow, Hamburg, Cologne, Cincinnati and Pittsburgh – to their services to gain an added niche in the market. Competition is expected to get stiffer with more services offered and more twins able to commercially fly transatlantic.

More Noise About Ksa Curfew:

The periodic local residents/local politicians versus airlines/airport and aviation authorities argument about KSA noise curfews yet again became the subject of public debate during the reporting period.

Debate initially erupted following rumours that the current KSA curfew could be abolished, much to the annoyance of local residents. This, however, proved wrong when it was revealed that the Curfew Monitoring Committee had in fact decided that the two year trial curfew, which allowed certain aircraft – relatively quiet freighters or international flights-. to utilise KSA as late as 12 midnight and after 5am (instead of the usual 11pm and 6am), should be ended. The Curfew Monitoring Committee’s decision apparently resulted from the release of its commissioned report, by Challis and Associates, which found that aircraft noise had increased significantly in certain residential areas following the trial’s relaxed hours being introduced. What was not immediately apparent, however, was that the Committee’s resolution to tighten the curfew was by no means the result of a unanimous decision. At least six members of the government appointed committee- made up, incidentally, with local council representatives as the majority – voted in favour of the extended curfew hours; some refused to sign the resolution, claiming the Challis report was “factually incorrect”

The Challis report recognised that the Frelaxed curfew did have the “potential” to significantly reduce the effects of aircraft noise for most of the Sydney population – aircraft operating during the extended hours fly over Botany Bay where engine noise is less apparent – though, it claimed, only at the expense of residents in some of the closer suburbs. The report, however, has been contradicted by a CAA report which found that airport noise levels on the whole did not increase- a condition of the extended hours remaining in place – and in at least 40% of areas actually decreased. However, aviation industry representatives claim that the committee is unfairly weighted against the aviation industry, with local council members holding the balance of power so that the Challis Report’s findings could be too readily accepted. The committee did allow international passengers to be landed during the extended hours but only because this was undeniably in the “national interest”.

The issue of airport noise is of course unresolved, although at last the Federal Government has shown some common sense in the politically sensitive situation by refusing to remove the extended curfew hours. This is in line with CAA chairman, Mr Dick Smith’s call to have the wishes of local residents balanced more in line with national interests. He has described the current curfew as “obsolete” arid in need of change. This may be so, but no doubt debate will continue for as long as there is an airport, and for as long as the very vocal minority (the 4% who in a recent survey claimed to be highly annoyed by aircraft noise and the 22% who wanted to be rid of it, and not the 37% who said they would rather be rid of barking dogs – refer June p. 47 June 90 AA) continue their campaign of scaring Governments seeking to secure marginal seats.

AA Comment: The sight of a young mother clutching her baby and complaining about airport noise recently in a national daily was too much for your long suffering editor. As jets began operating into KSA from the late fifties, this lady is like the vast majority of affected residents, who voluntarily moved into the area well after that time and so have no justifiable reason to whinge about airport noise as they knew full well who their neighbour would be. Furthermore, it would do well for these people just for once to come to grips with the reality that (a) the new generation of jets are far quieter than most of the turboprops of yesteryear and that (b) the operation of a third runway at KSA would greatly reduce suburban aircraft noise owing to the virtual closure of the present 07/25 east west runway. Why they can’t comprehend this is one of the mysteries of all time and indeed says a lot for the depth of their analytical abilities.

Germany Rejects Open Skies:

West Germany has rejected the USA’s offer for total ‘open skies’ between the two countries due to the burden of German unification and other European uncertainties and economic issues.

Heavy West German investment in Eastern Europe and the USSR is keeping financial resources occupied at the moment and adopting an open skies policy with the USA would mean Lufthansa would have to compete directly with US carriers. The German flag carrier is already losing economy class traffic to PanAm and TWA due to the American carriers’ fare cutting activities. West Germany instead wants a more gradual step by step evolution of aviation business between itself and the USA.

The Two Chinas Talking:

Airline and aviation leaders from the People’s Republic of China and Taiwan have met to discuss the inauguration of direct air services between the two traditionally ambivalent countries.

More than 450,000 Taiwanese flew to mainland China last year, travelling via Hong Kong, prompting both countries to realise there are important benefits to be gained by the introduction of direct flights. An easing of tensions between the two countries would also benefit Australia in that either Qantas would be able to serve Taipei in its own right or begin Australia/Taiwan services using Qantas’ Australia Asia Airlines, which would at last be politically viable.

 Airport Design Contract Let:

The Federal Airports Corporation (FAC) has accepted a commission from the federal government for a contract worth $2. 9m to undertake preliminary design work on Sydney’s new airport at Badgery’s Creek.

Under the contract, the FAC will arrange preliminary design work for the construction of a general aviation facility at Badgery’s Creek by 1992, with the deal also including initial design work for facilities to cater for domestic and international flights at the proposed airport in its later stages of development. Over the past year, the government has purchased additional properties at the Badgery’s Creek site and at this stage only one remaining private land holding and the internal road system is yet to be acquired.

 Increased Rights. Gives Malaysian National Coverage:

Malaysian Airlines is planning the commencement of separate direct weekly services from Malaysia to Brisbane and Adelaide in November.

The DC-10 flights will arrive in Adelaide on Fridays via Darwin, for which traffic rights have also been granted. The return flight to Malaysia, via Darwin, would operate on the same day. The service into Brisbane would arrive on Saturdays and the aircraft would then continue on to Auckland, returning the same day to offer a late afternoon departure from Brisbane for Kuala Lumpur non-stop. The airline has also been given the right to carry trans-Tasman traffic between Brisbane and Auckland and return on this service.

 Three-Nation Airline Alliance Considered:

Cathay Pacific officials recently floated the concept of a three-nation airline alliance linking Cathay Pacific, American Airlines and Lufthansa.

No firm plans for such an alliance presently exist, but if launched it would build upon the existing cooperative service agreement with Lufthansa for cargo operations and a recently signed code sharing deal with American Airlines on transpacific flights between Hong Kong and Los Angeles.

The possible alliance would not be based on the equity swop principle recently followed by Singapore Airlines, Delta and Swissair, but would simply be an operating agreement. The scheme is thought to be workable and would indeed provide a strong marketing link, especially important in providing services from the major Asian growth market to Europe and North America.

Meanwhile, Cathay is continuing its fleet upgrade program and recently sold its 18 L1011 Tristars plus spares and simulators to French based Airfleet Credit Finance in a deal believed to be worth $US380-400m. The aircraft will be withdrawn from the Cathay fleet one at a time over about three years as Airbus A330s are delivered from 1995 onwards. The Tristar fleet has just finished a major refurbishment program which has pushed up aircraft second-hand value by more than $US10m each.

Cathay is also investigating the feasibility of establishing a British pilot base to augment that of Hong Kong. Cathay currently employs 618 pilots, of whom 328 are Britons and 181 are Australians. As Cathay’s penetration of Europe increases, the airline wisely feels that it is time that an English aircrew base was established, something that would also increase aircrew productivity and no doubt be well accepted by those aircrew based in their home country.

Airways Charges Reduced for Third Year in a Row:

For the third successive year, and despite an operating loss caused by the pilots’ dispute, the Civil Aviation Authority’s airways charges have been reduced in real terms.

Airways charges for 1990/91 will average 2. 4% less in real terms than those levied this year, despite the CAA experiencing revenue losses approaching $70m in 1989/90, as a result of the pilots’ dispute. This revenue loss will lead to the CAA recording an operating loss of between $10m and $20m for 1989/90.

CAA chief executive, Mr Collin Freeland, said the new charges had been discussed with representatives of the aviation industry and have received Ministerial approval. “Our charges for 1990/91 will save the aviation industry about $14 million in real terms compared to the level of charges applied in 1989/90,” Mr Freeland said.

“If pre-CAA (ie pre 1988/89) levels of charging had been increased in line with inflation, the aviation industry and its customers would have had to pay $100 million more for airways services for the three years ending June 1991. Our new charges will still enable us to service the costs relating to new radar systems and other facilities being purchased to enhance the capacity of Australian airports and airspace and produce operating cost savings for the airlines themselves. ” The major part of the cost of safety regulation (surveillance of airline and other aviation operations) will continue to be funded by the Federal Government under contractual arrangements. The cost of pilot licences, air operators certificates, etc are charged directly to those who receive them in line with Federal Government directions.

 South East Asian Carriers Join Iata:

Cathay Pacific, Malaysian Airlines, Royal Brunei and Singapore Airlines opted to join the International Air Transport Association (IATA) on 1st July.

With the recent entry into IATA of these four airlines, the Association now boasts as members almost all the world’s international carriers – notable exceptions are Delta and Northwest – and a significant proportion of domestic airlines. The Asian carriers resisted entry into IATA until ‘restrictive’ practices, such as allowing carriers to deal only with IATA accredited travel agencies, were modified to their liking.

The decision to join the Association has been welcomed, though Cathay Pacific’s and Singapore’s membership will be confined to the trade association section of IATA; they will maintain an ‘observer’ status on tariff coordination activities. Cathay Pacific, however, believe that membership will better enable the carrier to influence tourism and air transport developments in the increasingly important Asian region.

China Qantas Deal:

Republic of China’s flag carrier, China Airlines, has purchased the MIDAS airfare yield management system from Qantek, the information technology subsidiary of Qantas.

China Airlines is the latest airline to purchase MIDAS (Marketing Inventory Data Analysis System), previous users being Swissair and Japan Airlines. The system helps the airlines maximise flight revenues through computer monitoring of booking profiles, the mix of fares charged and optimisation of the mix of short and long haul passengers. Qantek has also recently sold computer software which automatically produces destination tags for baggage to Air New Zealand and Kuwait Airways and the Qantek-developed universal availability package has also been sold to Olympic Airways.

American Airlines Expanding:

American Airlines is to spend more than $US14bn over the next five years on new aircraft.

The airline plans to invest some $US10bn in new aircraft to facilitate expansion of its route structure and services, while another $US4-5bn is needed to replace older aircraft and those deemed ‘environmentally unacceptable’, ie noisy. This no doubt is a sign of the times, with world airlines facing a growing problem with ageing fleets and environmental concerns.

 Fuel Prices Flying High:

Airlines can expect fuel prices to continue to rise, on top of the dramatic fuel cost increases that last year had a severe effect on airline financial performances.

Fuel costs have received much of the blame for the record 1989 fourth quarter $US941m financial loss of the nine US major airlines and are expected to continue to have a detrimental effect on the industry. Little long term relief in fuel costs is expected, despite a recent drop in the price of oil by as much as $US3 a barrel. OPEC members are negotiating to reduce oil production to keep prices high, and some airlines expect to be paying 10-20% more for fuel.

Deregulation Spurning New Ventures:

One of the byproducts of deregulation might well be the emergence of a large number of support services for the new entrant airlines.

Everything from engineering to catering and specialist marketing services are being offered in an attempt to contain the start up costs of the new carriers. One such innovative new company is Flightstaff which, as the name implies, specialises in the training and provision of trained flight attendants to both corporate and airline operators.

Appropriately, Flightstaff is the product of three ‘retired’ flight attendants who between them have over 20 years practical experience working the airways.

Flightstaff even run intensive one day familiarisation seminars for aspiring FA’s and are hoping to win responsibility for the prov sion and training of cabin crew for at least one new entrant. For more information call Chrissy Reardon on (03) 826 6153.