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To many veterans of the Vietnam air campaign it must be with a sense of deja vu that they comfortably sit at home and watch on nightly TV the taking out of high priority and difficult to destroy targets such as bunkers, bridges and individual buildings with the wide assortment of precision guided munitions (PGM) available to the allies. The number of lives lost over North Vietnam a generation ago trying to destroy such targets bears testimony to the fact that surgical strike nowadays actually saves lives through reducing the effects of collateral damage in the target area while also minimising the risk to the attacking aircrew.

The physical intensity of the air campaign is also unprecedented and highlights the inc reased reliability of the later generation of combat aircraft in terms of being able to keep aircraft mission ready. From Jan 16 through till February 5 a massive 44,000 sorties had been flown at an average rate of one per minute, 24 hours a day. On one day, February 3, aided by fine weather, some 2,700 sorties were flown while the amount of bombs dropped on Kuwait and Iraq in the war til February 5 was said to be in excess of what was dropped on Germany during all of WW21 Despite the array of new generation smart weapons and their host aircraft it is also almost symbolic that two of the most respected aircraft in the Gulf are no doubt in most cases older than their crews. Even the younger B-52s are now well into their thirties whilst the F-4G Wild Weasels are old enough to vote. Also of interest is the fact that geriatric Buccaneers have been brought in to target with ancient Vietnam era Pave Spike laser designators for RAF Tornado strike aircraft. Like the Vulcan in the 1982 Falklands campaign, the Buccaneer was also due to be retired later this year.

An in-depth analysis of the air component of Desert Storm by our defence specialist, Carlo Kopp, will follow in our April issue, don’t miss it!

Qantas Begins Major Retrenchments, Reviews Security & Alternative Routes:

Qantas may well be forced to retrench up to a third of their staff over the coming year as recession, high costs and declining yield all take their toll on the national carrier.

Plagued with soaring fuel costs and a daily loss of between $600,000 and $800,000 since the commencement of Desert Storm due to a massive fall in bookings, Qantas management is looking at the possibility of having to ultimately lay off upwards of 5,500 personnel. Primarily under review are all employees who joined the airline after the end of 1988. The airline has already announced a reduction in flying hours from 202,000 in 1990/91 to 173,000 in 91/92 and may well reduce this further if Gulf hostilities become drawn out beyond March.

Meanwhile, the airline has taken extraor dinary security precautions that involve the positioning of additional security specialists: at several overseas airports in addition to beefing up onboard security. For obvioust reasons this magazine cannot detail these developments suffice to say that if a Qantas aircraft were to be targeted for terrorist action then it would certainly not be a walk-over for those concerned.

Qantas is also nervous about the fact that it is now fully reliant upon overflying the USSR in order to be able to reach its vital UK/ European markets. With the possibility of some form of internal disruption in Russia ever present, then the airline (and many others) might have to cease over fights for an indefinite period. The airline is thus evaluating opening up a new route which would take in Honolulu with a non stop haul across Northern Canada to Europe using 747-400s. The possibility of flying Australia/LA/ London is also being canvassed while an imminent cessation of apartheid in South Africa may well bring Southern Africa into viability with an East Coast/Perth/Johan Rensburg/London service. Using -400 equipment this route could mostly be flown eastbound from Sydney or Melbourne without the Perth refuelling stop while normally the westward leg would be flown non stop due to favourable winds. Conversely the use of Mauritius could be an alternative to Johan- nesburg in addition to providing an attractive stopover enroute for leisure travellers. Air distance from Sydney/London using Rus- sian airspace is roughly 9,200nm as against 10. 900nm for Sydney/London via Johannesburg and 11,300nm via LA. These figures are approximate.

Any diversion from the existing ‘express routes would also necessitate a fare increase of upwards of 15% to make up for the extra flight time involved, about the last thing Qantas needs at this stage.

Ansett Considered Likely for Sale:

Speculation is mounting that Ansett Airlines shares may soon go on the market. with joint owners News Corp enduring a financial crisis and TNT feeling financial strain. With both News and TNT more or less in need of a substantial cash injection, there is some speculation that either one or both will seck buyers for Ansett shares. Certainly News Corp’s 50% share of the airline is considered a non core asset, and could be readily sold to obtain funds and reduce group debt as has specifically been specified by the international banking consortium that provided News with a rescue package in early February. It is considered that the airline would be one of the first of News Corp’s assets to be sold off, and indeed it has been reported that overseas airlines have already been approached over a possible share. sale, top of the list apparently being British Airways in line with its interest in buying Qantas and Air New Zealand shares. Other airlines which have expressed interest in buying a stake in an Australian domestic car- rier-be it Ansett or the to be privatised Australian include All Nippon, Singapore, United and American.

It would perhaps be unfortunate if Ansett shares had to be sold off in the near future. with Australian and Qantas up for privatisation and both airlines feeling the effects of the softening domestic travel market and increased competition. With three airlines seeking investors at about the same time, it would indeed be a buyers’ market and could greatly affect the sale price of shares in all three airlines, and also cloud Eastwest’s future.

Essendon Should Be Retained:

The Draft Port Phillip Region Airport and Airspace Study has clearly found in favour of the retention of Essendon as Melbourne’s second major airport, and has found no environmental or safety reason for its closure. Besides recommending that Melbourne Airport be operated in accordance with the Melbourne Airport Strategy, the report stressed that Essendon and Moorabbin Airports should be “retained and managed in an environmentally sensitive and financially rigorous manner”; ASTA’s Avalon Aero- drome should be “developed in accordance with sound commercial practice, including consideration of the regional airport requirements of Geelong”; a site for an airport in the south east region should be identified and assessed, and then protected from urban encroachment; and the CAA and Dept of Defence should act together to improve commercial access to Avalon Aerodrome.

The recommendations for Essendon were particularly important, because calls had come from several quarters for its closure and the FAC and industry has been left in limbo waiting to be sure of its fate before investing in the airport. Fortunately, the report shows that it is both financially and operationally important for Essendon to be retained. The airport itself directly employs. 2,500 people plus others indirectly. In monetary terms, keeping Essendon open is the most sensible option, having as it does nil cost. To close Essendon and minimise Investment elsewhere would cost $54m; to close it and develop Melbourne Airport for general aviation would cost $66m; and to close Essendon and develop Laverton as a GA airport would cost $81m. Could such costs be carried by the already very financially troubled Victorian (and indeed Australian) community? Despite the strong support for the retention of Essendon Airport on operational, economic and social grounds there remains a need to demonstrate that the community at large supports the recommendations. If you share the strong conviction that Essendon should be retained, then write to: The Chairman, Steering Committee, Port Phillip Region Airport and Airspace Study, DoTC, PO Box 594, Canberra, ACT 2601.

Gulf Affects Air Travel:

In the wake of the Gulf War, there has been a marked drop in the number of people booking travel to the UK and Europe, with the prospect of increased demand for South Pacific travel.

Since the war began, the transatlantic market has suffered considerably with many travellers opting not to fly to Europe and therefore avoiding the open threat of terrorism. Such was the sudden passenger reaction to the outbreak of war, that in its first four days traffic at Britain’s major airports fell by 20%. With the war now prolonged and terrorist action openly threatened, many US companies have banned employees from travelling to Europe whilst many people are changing holiday plans. The result is that all US transatlantic carriers and most European airlines have reported a sudden drop in demand. TWA has slashed its transatlantic capacity by 50%, with some services temporarily axed and 747s being replaced by smaller aircraft on some routes. Delta and PanAm have acted similarly The war and the accompanying threat of terrorism does not just affect the US trans-atlantic market. Qantas has experienced a 50% drop in new bookings for travel to the UK and Europe since hostilities commenced, though there have been few cancellations. from travellers already holding firm bookings. The US and New Zealand routes have suffered a lesser 20% drop in demand while Asia has remained steady. Bearing in mind This apparent drop in new bookings, it is in retrospect perhaps fortunate that Qantas did launch its 70th anniversary specials when it did, giving the airline firm bookings for some months ahead which do not appear to be suffering.

Fortunately, the news is not all glum, with Air New Zealand experiencing an increase in bookings for its US and European services. It seems New Zealanders (and other nationalities for that matter) are willing to pay a little extra to fly with the national carrier of at ‘peaceable nation seen as a low profile player in the Gulf War.

And on a more promising note for the Australian tourism industry, the US travelling public is now expected to once again turn its attention to the relatively safer South Pacific region. Several US carriers are therefore seeking additional rights to Australia. United,. for instance, is introducing new services to make the most of a 32% increase in business in the region through 1990 and the expected Gulf induced increase in demand. American is also believed to be seeking additional rights, as it is entitled to do having now been operating into Australia for over a year, and Northwest is seeking official approval to take over from Hawaiian to fly into Australia. Which could all combine to make the transpacific market more competitive than ever with Qantas having to tackle head on several US major carriers.

 New Radar Suffers Breakdowns:

The modernisation program for Australia’s airport radar network has been stalled by equipment breakdowns at Cairns and Coolangatta.

Installation of the Thomson-CSF radar equipment at these two airports-planned to be the first to have the new radar operational – has apparently been delayed at least five times because of teething problems, with the latest deadline for operational use now being June this year, a year behind schedule. The radar equipment at Cairns and Coolan- gatta form part of the 18 airport, $130m major upgrade of Australia’s somewhat ancient 20 year old radar network. Unfortunately, the radar units installed at the two airports did not meet CAA standards, with the primary radar (which measures the range and direction of an aircraft) having stopped rotating due to a faulty clutch and drive mechanism. A software package linked to the secondary radar (which identifies aircraft detected by the primary radar) was picking up and displaying on screen catamarans sailing off Cairns. This is quite rightly considered unacceptable and Thomson-CSF is working hard to right any technical problems, having already been penalised for the delays.

Despite the 12 month delay in the installation of Cairns and Coolangatta equipment, it is expected that with faster production techniques and initial technical problems overcome, installation of equipment at the other 16 Australian primary airports should in fact be ahead of schedule.

 Shuttle’s 7488 Begin a Long Ferry:

At presstime, Moorabbin based Shuttle Airlines’ two BAe 748-28s were pre- paring for an extraordinarily long ferry flight owing to the Gulf War.

The two propjets were to ferry from the UK, where they have been upgraded by BA, via northern Europe, Russia, Mongolia, China and thence down through Asia to Moorabbin. While this is probably the longest ferry route one could use from the UK to Australia, it is the only practical alternative owing to the type’s limited performance and the need to keep well clear of the region of hostilities.

Shuttle now hope to commence services. in May with the two 44 seat aircraft flying three times daily between Moorabbin and Sydney Airport and three times a day Laun- ceston/Moorabbin/Canberra return. The Moorabbin/Sydney sector is around one hour fifty minutes duration whilst a one hour forty minute twice weekly fight from Moorabbin to Adelaide is also under investigation. Services into Bankstown airport will also be considered if and when a proposed runway extension is approved.

Transcontinental Again Defers Start Up:

Citing poor economic conditions and unresolved terminal access difficulties as the primary cause, TransConti- nental Airlines has deferred its previously stated March start up to some time in 1992.

The airline hopes to operate a fleet of 737-300s in a two class configuration with a heavy emphasis on attracting the business market via high standards of service at lower than currently available premium class fares. The airline has had little joy though in its terminal access discussions with Ansett and is now considering building its own terminals, particularly in Sydney and Melbourne, rather than have to rely on a rival carrier.

Australian Air

Australian Trims:

Ines announced in early February the elim- ination of up to 2,000 positions over the coming year as the airline trims for eventual privatisation.

Australian, like carriers everywhere, has been hit hard by soaring fuel costs, a big fall in high yield business traffic and widespread yield erosion due to heavy discounting brought on by deregulation. While load factors have remained relatively high through- out the Australian domestic system, yield has dropped dramatically at a time when fuel costs have risen to heights unforseen a year ago. Australian also cited the lingering effects of the 1989 pilots’ dispute which not only cost it dearly at the time but also effectively robbed it of any possibility of making an operating profit for at least two years.

 Macchi Grounding Hopefully to End Soon:

Following the fatal loss of an RAAF MB-326H Macchi off Newcastle on November 15 the entire fleet has been grounded whilst stringent wing fatigue checks are made.

At presstime it was hoped that the type would be returned to service sometime in March though to some extent that hinged on the findings of the engineering audit as to how many aircraft, if any, are suffering fatigue problems. The entire Macchi fleet went through a life extension (Lifex) program during the late seventies and it was generally thought that they would be able to soldier on without trouble till at least the end of this decade in the Fighter Introductory Course (refer article elsewhere this issue) role.

The Willamtown Macchi was the first to suffer wing problems and at the time of the accident, which saw the wing collapse in fight, the aircraft was performing well within the type’s operational envelope. Though the pilot initiated ejection, it subsequently proved unsuccessful. Meanwhile, a Pearce based Macchi was also lost prior to Christmas though this, like most such losses, was due to engine failure.

Privatisation Decision Nears:

The Federal Government’s scoping study into privatising Australian Airlines and Qantas is due to report to Finance Minister, Ralph Wills, by the end of February for tabing before Cabinet in March.

The study is being conducted by Westpac subsidiary Ord Minnett under assistance from international merchant banking advisers, Morgan Stanley. Meanwhile, the Boards of both airlines have contracted separate merchant bank advisers. Australian has retained BT Australia whilst Qantas has hired Baring Brothers Burrows. However, while the Government believes that a quick sale is necessary the findings of the airline appointed advisory groups deems the opposite to be prudent, citing the poor performance of both carriers over the past eighteen months as reason enough to wait till they regain profitability so as to ensure a maximum asset valuation.

AA believes that the managements of both carriers are now concerned that the Govern ment may rush privatisation simply to gain “fire sale” cashflow to boost its flagging bud- get aspirations (already down from an expected $8bn surplus to just $4bn) and to be able to present something solid to the party faithful at the mid year ALP National Conference in Hobart.

The Government has stated that it will sell 49% of Qantas and 100% of Australian. Equity in Australian could be taken up by two internationals with a suggested 20% each, with staff, large investors and the general public being offered the remainder. Qantas, which owns 19. 9% of Air New Zealand, is also courting an international partner though with the events of recent weeks it is unlikely that even the world’s traditionally profitable carriers will have too much spare cash with which to shop for partnerships that they presently do not need. Ministers Willis and Beazley are expected to make a formal announcement on airline privatisation during the course of this issue.

 Afap Compass Representing Pilots:

The Australian Federation of Air Pilots (AFAP) has regained a foothold within the Australian airline industry, with a ratified industrial agreement between the union and Compass Airlines.

Over 90% of Compass aircrew-mostly ex Australian and Ansett pilots were paid up AFAP members when they joined the airline. Granted full freedom of choice as to union representation, they approached the AFAP to negotiate working conditions with Com- pass on their behalf. Having mellowed some- what since the pilots’ dispute, the union negotiated an agreement along the lines of the contracts held by Australian and Ansett aircrew, containing similar pay and conditions. A Compass spokesman stressed that the AFAP officials were both amicable and negotiable, and there were certainly no “table banging clashes [to arrive at an award that both parties were in agreement with”.

On another front, a split in the ranks of the 140 Skywest pilots has occurred, with a “substantial” number of dissatisfied pilots having resigned from the AFAP to set up their own inhouse union. Skywest pilots operated under AFAP GA awards which still cover most pilots in GA. Like both Australian and Ansett’s pilots, they will use the Australian Transport Officers’ Federation for industrial representation.

Meanwhile, the arrival of Compass’ own Airbus A300-600Rs is imminent. The first should arrive in Australia (via Polaris) in late March, the second following in mid April.

Boeing Reports Strong 1990 Sales:

Boeing has reported sales of SUS27. 595bn and net earnings of $US1. 385bn during 1990.

This represents a steady climb in earnings in the past year, having recorded in 1969 sales of $US20. 276bn and earnings of SUS973m. The increase in 1990 net earnings. over 1989 figures was primarily due to increased sales volume and operating mar- gins on commercial transport programs, and a marginally lower defence and space business operating loss. During 1990 Boeing announced firm orders for 543 jet transports (including 11 707 military derivatives) and 30 Dash 8 commuter aircraft valued at $US48bn. In 1989 883 jet transports and 76 Dash 85 valued at $US47. 4bn were ordered.

During 1990, Boeing delivered four 707 military derivatives, 174 737s. 70 747s (including two Air Force One aircraft), 77 7578, 60 7678 and 64 Dash 8s for a total of 449 aircraft. Comparable 1989 figures were five 707 military derivatives, 146 737s, 451 7475, 51 7575, 37 767s and 58 Dash 8s for a total of 342 aircraft. Boeing plans 1991 deliveries of 16 707 military derivatives, 216 7378. 64 7478, 80 757s, 62 7678 and 68 Dash 8s, a total of 506 aircraft.

Total firm order backlog stood at a stunning SUS97. 2bn (greater than many nations” GDP) at 31 December 1990, compared with $US80. 6bn at the end of 1989. 94% of the backlog is for commercial customers (including foreign governments) and the remainder for the US Government.

 Eagle Sign Malaysian Production Agreement:

Eagle Aircraft Australia (EAA) has entered into a joint venture agreement with the Malaysian Government to complete certification of its long stalled Eagle XTS.

EAA had experienced difficulties attracting local investment in the XTS, while potential Japanese investment was reportedly scuttled by the pilots’ dispute, forcing EAA to turn elsewhere for funding. With cooperation from Austrade, EAA have now entered a joint venture agreement with Assets Accretion, a Malaysian Government owned company. The agreement allows for a joint venture company to be established within the next. three years to produce the Eagle XTS. Production will take place in both Australia and Malaysia, “however the location providing the major economic advantages to the com- pany will be responsible for the bulk of the world production”.

The Eagle XTS is a canard design light personal aircraft with 7 metre wingspan and 6. 5m length. Powered by a 90hp Norton GR36 engine, it features an MTOW of 450kg. a cruise speed of 120kt and four hours endurance.

Iraqi Airways Aircraft Dispersed:

Iraqi Airways and plundered Kuwait Airways airliners have been redeployed to other countries following the commencement of Desert Storm.

At least five A310s have been flown to Mashdad in Iran along with a number of Boe- Ing 737s. Other aircraft, including Airbus A300s, 7475, 727s and 707s have been sent to safe havens throughout the Middle East and Africa.

Us Eases Airline Ownership Restrictions:

The US Government has relaxed its rules on foreign ownership of US airlines, now allowing a 49% stake to be owned by foreign companies.

Under the new rules, though foreign companies will be allowed to own a 49% stake in an airline their voting power will be restricted to 25%. Previously a 25% stake in an airline was allowed with 25% voting power. The relaxing of foreign ownership rules comes at a time when the US airline industry is strug ging with its worst crisis since US deregulation, having lost a combined $US2bn last year and facing little prospect of a rosy 1991. The new investment rules will allow US airlines to attract capital from foreign sources. in difficult periods such as that presently being experienced. However questions have been raised about just how much capital will be able to be raised in future sales, given the firm limit on voting powers to foreign owners. But despite the voting restrictions, there are no doubt several stronger European and Asian carriers poised to increase their shares in US airlines to gain a steadier footing in the US market. KLM already held a 49% equity stake in Northwest, and will now be able to retain 49% ownership, though its voting power will be just 10. 5%. SAS holds a 16. 8% stake in Chapter 11 bankrupt Continental; with its board already having control of the airline, SAS may increase its owner-ship level. Swissair and Singapore may opt to increase their 5% equity stakes in Delta.