Airline Affairs

Qantas certainly is interested in returning to the South African market, which it lost due to politics during the early 80s, with a strenuous link to the country and Africa being maintained with landing rights to Harare, Zimbabwe. Presumably rights to South Africa would also involve the return of South African Airlines, which is also seeking to extend its international route network as soon as possible.

Sydney to Get Pokies:

Sydney Airport’s International Terminal is to have poker machines introduced this year.

The machines will initially be introduced on a trial basis in the departures concourse, accessible only to departing and transiting passengers. As a commercially self-supporting enterprise, it is within the Federal Airports Corporation’s charter to operate gaming machines at its airports. The machines will be either coin operated or modified to accommodate foreign currencies, while a food and beverage snack area will also be included in the new gaming area to enhance its popularity.

 BA Predicts Final Quarter Loss:

British Airways third quarter financial results reveal a sharp fall in profit as a result of the Gulf War, and an operating loss has been predicted for the final quarter.

The airline announced pre tax profits of £340m ($A850m) for the nine months to 31 December 1990, up 3% on the same period the previous year. Pre tax profit for the third quarter, however, was down £51m (SA127. 5m) to just £20m ($A50m), and BA has warned off a substantial operating loss in the final three months of the 1990/91 UK financial year. This follows a dramatic 20% drop in traffic since the start of the Gulf War.

As a result of the recently announced figures, BA is to reduce total employees by 4,600 though early retirement and a severance scheme will account for most of these. A further 2,000 will be stood down on half pay for periods of up to a year, to be recalled when traffic sufficiently improves.

The airline has also deferred the planned 1991 introduction of up to five Boeing 7678 into its fleet, while TriStars will be withdrawn from Heathrow operations by the end of April 1991, which will release nine aircraft for disposal. Other cost saving measures include reducing summer season capacity, reducing capital expenditure, further cuts in advertising and promotions, training, vehicle replacement and the deferment of property programs.

The above cost cutting measures are designed to lessen the blow of the downturn in traffic, which BA blames not only on the effects of the Gulf War and the terrorist threat, but also the US and UK recessions, which have hit hard the airline’s two most important markets. Despite cost cutting, the final 1990/91 quarter and the 1991/92 financial year are not expected to be easy.

Qantas Execs Take Pay Cuts:

Qantas executives have accepted effective pay cuts of about 5%, in the face of rapidly worsening financial woes for the airline and the prospect of having to lay off up to 3,000 employees.

The airline is looking at an operating loss of possibly as much as $500m for this financial year, cushioned only by the sale of nine 747-200 aircraft, a timely move that may well see only a small loss being made at the end of the day.

Also of concern to the airline were press reports during late March which indicated that Qantas had entered into secret agreements in 1989 with Brierley Investments, JAL and American Airlines to guarantee the mini. Mum value of their Air New Zealand share-holdings if they should choose to sell in a depressed market. Whilst Qantas did agree to a minimum value of $NZ2. 38 for Brierley and $NZ1. 92 for American and JAL, Brierley and JAL presently are retaining their shareholdings though Qantas is discussing with American the sale of the latter’s 7. 5% shareholding.

Though Qantas is not legally bound to take up the shareholdings of the other major ANZ investors it is considering upping its ANZ ownership to a total of 27. 4% via the Ameri- can share acquisition at a cost of $NZ40m.

Soviets Suffering From Soaring Fares:

Domestic Soviet air fares have increased by a massive 80% average in recent months, the result of an across the board attempt by the embattled USSR Government to stabilise the crumbling Soviet economy.

The move was described by the Soviet civil aviation minister as an inevitable flow-on effect of the massive increases in fuel costs and the doubling of the cost of new airliners being delivered to Aeroflot. In 1990 Aeroflot made a meagre systemwide profit of about 10 billion rubles (roughly $US18m), however it is now believed the airline is losing about 8 million rubles per day, and the new ticket prices are expected to recoup this loss. The price rises will vary in different regions, for instance the Far East and Polar North, which are heavily dependent on air transport links will suffer less than the central and western USSR regions where road and rail networks can be better used.

BA Offers Free Seats in Unique Marketing Blitz:

British Airways has commenced a six month, $125m worldwide marketing campaign, with the initial draw card being the offer of free seats to 50,000 passengers.

The free seats were made available for travellers flying on any international BA flight on 23 April, so in effect all passengers flying with the airline on that day were flying free. All passengers already booked to fly on the chosen day received a free ticket to use at another time, while all unsold tickets went into a worldwide draw to determine winners in the massive ticket giveaway. As a result of the free ticket offer, the number of inquiries to BA’s Australian offices were up to three times higher than usual.

The marketing campaign is continuing as BA act to stimulate the market and get travellers back to their airline in the wake of the Gulf war. Besides the successful free ticket offer, BA have reduced the prices for First Class and Club World (business) passengers, with savings of over 20% being offered. Under the new fares Australian travellers can fly to Europe and back for $6,080 First Class and $4,900 Club World from the east coast, and $5,600 and $4,500 respectively from Perth. Two stopovers each way are included, and the new, cheaper fares are valid for tickets sold up until the end of this year, with travel to be completed by 31 March 1992. Meanwhile, the upgrading of BA’s economy class, designed to attract more economy travellers to the carrier, continues on schedule.

Third Runway Update:

At the closing date for public comment on the Draft Environmental impact Statement for the pro- posed third runway at Sydney Airport, over 2,000 submissions had been received by the Commonwealth Department of Arts, Sport, the Environment, Tourism and Territories. The period for submissions was extended for two weeks by the Federal Government because of mail delays over the busy Christmas period.

Some of the submissions were petitions from various interest groups but the majority were short letters from interested households. Several were major studies commissioned by various anti-runway groups, including the local Councils around the airport.

Surprisingly, many airlines did not bother to put in a submission. Only six of the thirty-nine international airlines serving Australia took the trouble to state their preference for the third runway. Various regional airlines were represented by a submission from the Rural Airlink Action Group. Qantas and Ansett Australia forwarded major papers while Eastwest and Australian Airlines merely submitted letters in support of the runway. One hopes these major beneficiaries of the third runway are not taking the decision for granted.

Qantas argued against any Parliamentary review of the project because this would delay the process even further. It has already been well over two years since the Government decision to build the third runway subject to a satisfactory EIS Australia’s international carrier is concerned that a failure of the project to proceed on environmental grounds could force their operations out to Badgerys Creek Airport. The airline estimates its relocation costs at over a billion dollars. It validly notes that at least a quarter of the international traffic at Sydney is of comparable sector length to domestic operations. In contradiction, Australian Airlines wants international flights at Badgery’s Creek Airport before domestic services have to go there. One could conclude that market forces are saying nobody wants Badgerys Creek Airport.

Ansett Australia notes the option of traffic management has only limited use before runway capacity would have to be added in the Sydney basin. It states that the third runway is not a permanent alternative to Badgerys Creek Airport. However, the airline strongly supports the third runway as the only economically acceptable way of meeting the medium term demands for air transport to and from Sydney.

Ansett make the useful observation that the benefit of noise reduction offered by the third runway would be realised as soon as the parallel runway was operational. In contrast, the noise increase for residents under the new flight path would be incremental and not new noise as is claimed. This is because the existing flight path is just over a kilometre to the west and a lot lower because the 16R threshold is 2 kilometres to the north of the threshold on 16L.

The Civil Aviation Authority made an extensive submission concentrating on operational aspects and bird strike hazards of the proposed runway. Importantly, the CAA submission noted that if departures to the north followed by an immediate right turn were allowed from the new runway, considerably fewer people would be affected by noise because the track passes over industrial and parkland. Under the operating conditions imposed by Federal Cabinet, departures to the north from the new runway are not allowed forcing all northerly departures to track along the extended centreline of the existing runway. Under the CAA scenario, persons under the existing northbound flight path would get some relief from these movements. The logic of the CAA suggestion certainly warrants further consideration of the operational limits currently imposed on the third runway.

The CAA also notes that splitting a given total of arrivals between two runways will disperse the tracks and result in a probable reduction in the total number of people affected by noise. This follows from the fact that noise contours expand over a greater area if aircraft are strictly kept on a flight path. The most contentious debate will be over the proposal to eventually limit the cross runway to commuter aircraft. There is disagreement amongst the submissions about the operational necessity to keep runway 07/25 available for widebody aircraft. For example, the CAA believes that the cross runway may be needed for extended periods at certain times of the year.

One of the reports submitted by the Councils opposing the third runway deals with the historical analysis of winds at Sydney Airport. It uses different data to the Draft EIS and concludes that the winds around August and November are some five to six times more likely to force the use of the cross runway than the winds in March and April. Similarly, the cross runway is more likely to be needed during the afternoon than during the night. While such material may weaken the short term case for limiting the use of the cross runway (before Badgerys Creek Airport is available), it does not lessen the medium term benefits of the third runway.

The advantage suggested by the closure of the cross runway is that 56,000 people currently affected by noise on the east and west of the airport will get complete relief (not to mention a rise in property value). This is obviously a major selling point for the parallel runway. Interestingly, the bulk of private submissions came from the north of the airport which suggests that the people to the east and west who stand to gain from the reduction in noise are keeping “quiet”. Such insight does not seem to be shared by some politicians.

The majority of submissions are of poor quality and add little to the technical analysis or policy debate. Some of the professionally prepared submissions are worrying for their lack of rigour. One exception is a paper by Dr Will Sanders of the Australian National University. He contends that the “capacity gap” justification of the third runway is a furphy and goes on to consider the implications for the viability of a second airport. Similarly, the submission by the University of Sydney also raises this issue when it says “The materiality of the capacity gap warrants probing. ” This silly line, obviously written by an academic committee, is the only light relief in all the 2,000 submissions.

Kinhills, the Consulting Engineers doing the EIS, must now complete a Supplement which will address every point raised in the thousands of submissions. Then the Federal Cabinet must make a final decision on whether to proceed.

Meanwhile, the Federal Airports Corporation is prudently preparing plans for both the third runway and the development of a second airport. This is to ensure that congestion at Sydney can be relieved as quickly as possible once a decision is taken, possibly in July.

In the meantime, anti-runway groups will continue their coordinated campaign for a public inquiry. These calls, plus a possible legal challenge, may divert the Federal Cabinet from making a final decision. The third runway is not a sure thing by any means. (Ken Ryan).

Ansett Battles for Cairns Holiday Market:

Ansett Australia has announced its Cairns Fun Fare, which allows holiday makers to fly to the popular resort area for just $389.

Ansett’s latest offer is for special Saturday and Sunday evening flights out of Sydney. Ansett Australia NSW Manager, Mr Paul Donovan, claims that “there are no advance purchase conditions attached to the fare, and passengers can return at their convenience on one of the specially designated flights”. However passengers are of course restricted to returning only on a Saturday or Sunday, as this is when the special Cairns Fun Fare flights operate.

But still a very well priced and competitive holiday can be arranged, with a special additional $99 accommodation package providing six days at Caims Holiday Lodge on a twin share basis costing, giving a holiday with all flights and accommodation for $488 – a very competitive option to foreign resorts such as Bali, Fiji, and even New Zealand.

Such fares clearly illustrate the benefits of deregulation, particularly in allowing embattled Australian resorts to compete on a more equal basis with their Pacific and Asian counterparts. And with Australian and Compass also flying into Cairns, competition is really hotting up for the tourist dollar.

 Indonesia Grants “Beyond” Rights:

Indonesia has granted Qantas beyond rights for services via the country. Qantas is now entitled to land in Indonesia en route Singapore, Malaysia and Thailand and to carry traffic from Indonesia on these routes. In return, Garuda have been granted access to Brisbane and Adelaide, and either Caims or Townsville. However, neither airline has at this stage announced firm plans for using their new rights.

Ba Gets Us/Australia Rights:

In a tradeoff in the recent bilateral US/UK air services agreement, British Airways have gained increased US rights, including the right to fly nonstop between the US and Australia.

The bilateral talks were aimed at allowing United and American Airlines to take over the Heathrow rights of PanAm and TWA respectively. The United purchase of PanAm’s rights were crucial to enable PanAm to sur- vive, however British negotiators stood firm to gain additional rights for BA, and it is believed the talks came very close to breaking down because of this. British Airways did, however, get its additional rights, and although not entirely pleased with the new arrangements, does at least have additional marketing and operational power to compete with the two new US carriers, both recognised industry giants. Besides being granted the right to fly Seattle/Sydney, BA have gained the right to fly to the US from Belgium, France, Germany, Ire land, Luxembourg and the Netherlands, though it is by no means certain that all these options will be taken up. The airline also gained greater route rights between the US and Canada, Asia and Latin America. Thus it is better able to compete with American and United, who with their extensive US domestic route structures hold considerable marketing power in several travel markets, though BA believe that overall their own profits will still be hit quite hard.

Meanwhile, BA are also reeling over the decision to grant Virgin Heathrow/Japan rights, thereby again undermining BA’s strength in its traditional Heathrow hub stronghold, the London destination which remains the most attractive for many and competing airlines alike.

 Air Caledonie Launches Hibiscus Business Class:

Air Caledonie has introduced business class on its Australian and Pacific flights.

Eight Hibiscus class’ seats are now installed on the airline’s 737-300 flights from Australia, as well as onward services to Pacific destinations such as New Zealand, Fiji, Vanuatu and Papeete via Wallis Island.

 Compass Last Seat Availability With Galileo:

Compass has signed an agreement with the Galileo computer reservations system (CRS) for last seat availability.

Compass already offers last seat availability through the Fantasia CRS, but the Galileo deal now enables Australian travel agents to access all major domestic carriers as well as Qantas through the system.

Galileo, incidently, is marketed in Australia by Compass two rivals, Australian and Ansett, however it is obvious that Compass see access to Galileo as being yet another move with considerable commercial advantages.

Lismore Flights Delayed:

Direct Sydney flights to Lismore in northern NSW have been delayed until further improvements are made to Lismore airport. (refer p. 31 March 91 AA)

The local council has just finished a $1m upgrade to attract a direct service. It was expected that Eastern Airlines would be granted the service using Dash 8s, but an eleventh hour bid by competitor Ansett Express wooed the NSW government to approve F50 services. The CAA has now inspected Lismore airport and says the apron has to be extended to take the larger F50 aircraft. Ansett says it now hopes to get the new once a day Lismore service (whichis

triangulated with Ballina a mere 30nm away) up and running in April.

Meanwhile, Tweed Council in northern NSW has swayed to local pilot concerns over a bizarre right of way law at Murwillumbah airport, 15nm southwest of Coolangatta. As the council ordinance stood, maintenance workers mowing the grass runway had right of way over aircraft – even those in the air. However, the council has decided in the interest of safety that the runway will now only be mown at night. (Halden Boyd)