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The problem with WA is finding a jet that can handle the large number of secondary quality airstrips that are a characteristic of the state. Operations with 737/MD-80 aircraft into such ports as Carnarvon, Karratha, Kalgoorlie, Geraldton, Broome and Kununurra are either impossible or demand payload limitations. Whilst some of these ports are slated for major upgrading, their full capability to take max capacity jets in the 737 class is some years off.

On the east coast the airline will concentrate on the business market between Sydney, Brisbane and Melbourne with less frequent services to Canberra, Launceston, Hobart, Coolangatta, Perth and Adelaide. To provide the required minimum frequency between primary ports the airline will require six jets for the east coast and three more for WA. King said that his team was making a final decision on aircraft type before August and was at presstime about to embark on a final evaluation of both the MD-83/88 at Long Beach and the 737-300 at Seattle. Both types were fairly equal though the Douglas twinjet featured a better cabin, lower acquisition cost and a higher cruising speed (Mach 0. 80 vs 0. 75). On the other hand the Boeing product had the advantage of eventual spares/support commonality with other local operators and crew and support staff already familiar with type.

So why does Australia need yet another mainline operator? The answer to this is essentially that Capt King believes that whilst Compass has tapped into a vast leisure/discount orientated market there still exists a strong full fare business market that has not enjoyed any benefits from deregulation. As any business person knows, it is extremely difficult to take advantage of even some of the milder deals that are available to the leisure traveller who can plan weeks or months ahead and fly at a time to suit the airline rather than the traveller.

TransContinental consequently is planning to configure its aircraft in a three class first/business/economy arrangement with roughly two thirds of the cabin dedicated to the two premium fare classes. Essentially they are aiming to charge business class fares for first class service, full economy for business class and offer a standard discount rate for the economy cabin. On a Sydney/ Melbourne fight TransContinental is quoting $285 for a first class one way fare as against the present $353 from Ansett and Australian. Business class would be $224 as against $267 whilst economy would be $154 versus $229.

To be able to afford the high service standards allied with a discount fare environment and to be able to break even at around a claimed 50% load factor, Capt King cited that his airline, like Compass, would not have the accumulated infrastructure of the estab- lished carriers and would have lower outgo- ings with a small, highly efficient staff, leased aircraft and subcontracted maintenance. This latter area would be the province of ASTA though the airline would also have to have some form of support capability in each of the ports it serves.

AA Comment: If TransContinental does make the runway then the potential effect on both Ansett and Australian could be far greater than they have to date experienced from Compass. What Compass did was to stimulate the overall leisure market with fares that make even the greatest sit at home’ want to explore our great country. The established airlines naturally had no choice but to compete head to head and begin offering a realistic proportion of their capacity to real- istically discounted packages. The net result was a considerable increase in traffic (up about 25% on the same period last year and 13% on the boom year of 1988) at a time when traffic would have probably been 10 to 20% less than 1988 if deregulation had not been introduced last November.

This has naturally hurt both Ansett and Australian as their yield has been cut drastically. What TransContinental would do would be to also undermine their premium fare markets forcing both carriers to respond with heavily discounted business travel fares.

In a way this is already happening as both AN and TN are currently offering everything from free car hire, free accommodation and an assortment of bonuses to stimulate a flagging corporate market. TransContinental could well be the nail in their premium fare coffin, though one wonders if the market is big enough for so much capacity, particularly in WA where there is surely not enough traffic to support three jet operators.

Sold Out or Selling Fast!

Readers are advised that the popular Beaufort, Beaufighter & Mosquito book in our Australian Airpower Collection is now totally sold out. Also extinct are hard cover editions of the Lincoln, Canberra & F111 though limited supplies are still available in soft cover. Also on finals is

Dakota, Caribou & Hercules. Though this book was produced only late last year, because of unprecedented demand it is doubtful if supplies will exist after August. Our next book in the series will be on the Wirraway, Boomerang & CA-15. This book will be released in October and includes a wealth of never before published data (and photos) on these important CAC products of the war era.

Compass Demands Apology for Improper Practice:

Compass Airlines has demanded an apology from its rivals Australian and Ansett for an unauthorised survey of its passengers, but without success.

The survey of Compass passengers was undertaken on 10 April 1991 at Tullamarine. Compass staff discovered that a survey team was questioning Compass passengers as they left the terminal after landing at Melbourne, the basic gist of the questions being whether the passengers were aware that they could get similar deals (je pay no more) with either Ansett or Australian Airlines.

Compass management was naturally unimpressed with the questioning, and demanded to know who the clients of the survey, conducted by ANOP Research Services P/L, were. The information was not forthcoming and court action was taken.

On 1 May Justice Beach of the Victorian Court ruled that Compass was entitled to know who had employed ANOP – and low behold, Ansett was implicated, while it also became evident that Australian at least knew of the survey in advance. Considering the survey to be improper and against the ideal of fair competition, Compass demanded that both Ansett and Australian apologise for the affair, or face legal action.

At the time of writing, both Ansett and Australian had refused point blank to apologise, with the result that the matter has been taken to the Trade Practices Commission.

Meanwhile, also with Arbitration is the matter of rent charged to Compass by Australian Airlines for the use of their facilities at Sydney Airport (refer Bryan Grey interview this issue).

Compass believe that they are being over-charged for the use of the Australian terminal facilities. An airline spokesman stated that this belief was derived at after Compass had already moved into the terminal facilities and were properly able to assess just what they were getting for their money; this could not be done prior to signing the fease agreement with Australian, according to Compass.

Caa Accused of Not Supporting Local Industry:

The CAA has been accused of ignoring the capabilities of local industry in developing the requirement for its two centre ATC concept.

Six overseas companies – IBM, Siemens Plessey, Thompson CSF, Hughes, NEC and Alenia are tendering for the $350m+ contract. What has angered local firms is their virtual exclusion from the tendering process. Pressure from the Association of Australian Aerospace Industries (AAAI) and last minute discussions with Industry Minister, Senator Button and his aviation counterparts Kim Beazley and Bob Collins have ensured that the CAA has now brought Australian companies into the briefing cycle for the advanced ATC program.

According to the AAAI, a number of Australian companies have considerable expertise in this field and their exclusion from being able to compete or at least team with an overseas specialist goes against every fundamental rule of government policy in developing a high technology base within Australia. The AAAI estimates that at least 60% of the program’s total value could be retained in Australia via companies such as Kinhills, AWA, CSA, HdH, Vision Systems and BAeA. Australian companies have teamed with their overseas partners on programs such as the Jindalee (Jom) OTHB and the Collins submarine andAnzac frigate programs with great success, and the same should also occur on civil programs such as it does on the CAAS current RASPP radar sensor program.

Meanwhile, the CAA gives as reasons for its haste to exclude local firms the requirement for a final decision to have been made on the two centre complex system by late July to be able to get it fully operational by 1994/95. To involve local industry would have greatly lengthened the lead times required. and increased the total project cost, claims the CAA, something that the aviation operator must ultimately pay for in the end.

At presstime, local bids were being accepted though it was still doubtful if sufficient time was available to physically satisfy the requirements of the potential teams involved. At last call the CAA was resolute in pursuing the most cost effective, speediest solution to the ATC requirement even if it was at the long-term expense of the local aerospace industry.

Qantas Announces Major Restructure, Job Cuts:

The long awaited Coopers and Lybrand Review for restructuring Qantas has identified annual savings of $243m for the airline, with measures to be implemented before the end of this year to improve 1991/92 results by some $150m, at the cost of 18% of the Qantas

workforce.

The major part of the savings plan entails reducing the Qantas workforce by 18%, or 3,651 of the 20,800 personnel across the Qantas group. More than 680 of these positions have already gone under staff reduction schemes introduced late last year. Management ranks, which have been considered for some time as bloated, will be reduced by about 33%, while other staff will be reduced by 16%.

Following the announcement of the job reductions, unions were given until 18 June to comment on the scheme, after which the Voluntary Redundancy scheme would be introduced for two weeks (four weeks for crews). after which compulsory retrenchments would commence in early July with the dismissals to be completed by the end of September.

The across the board staff reduction will represent a 30% reduction in corporate ranks, 18% in the commercial area, 14% in technical and 19% in subsidiary companies. One complete level of management has been abolished, there now being just four layers of management between the chief executive and work supervisors. CEO John Ward and the airline’s two deputy chief executives, Julian Hercus and Ted Radford, remain in their positions following a board meeting on 6 June. The savings accrued are expected to total $161 million of the $243m to be saved ultimately, the other $82m coming from additional cost cutting initiatives already built into the 1991/92 financial year budget.

The cost cutting measures are considered by all as absolutely necessary to try and get Qantas out of its current financial doldrums, which come after the worst 18 months of operations for the carrier. The troubles cant be traced back to the now infamous AFAP dispute, which was a major contributing factor in the airline suffering a huge $302m profit turnaround in the 1989/90 financial year. The dispute cost Qantas its strong financial growth in what was until then a boom time for the Australian travel and tourism industry some $100m being lost from the Japanese market alone.

Before the airline could recover from the dispute, the worldwide recession began to take its toll and the carrier continued its downward spiral. Consequently, it found itself overstaffed (about 5,000 new employees were taken on between 1988 and this year) and with too many aircraft in service. Also bleeding the national carrier, due to the lack of a proper equity base by its government owners, was its debt to equity ratio of 80:20, well above the industry average of around 50:50.

Then came the Gulf War, which hit carriers worldwide hard and which pushed Qantas’ 91/92 fuel bill from $455m to a staggering $775m. At the same time bookings plummeted by 10,000 a day, and routes had to be rerouted at a cost of about $80,000 a week. To recover from all this something drastic had to be done, and the Coopers and Lybrand Review has confirmed this.

Sharp Pacific Load Factor Drop Predicted:

American Airlines’ regional managing director for the South Pacific, Bruce Jarman, has warned that unless demand for trans-Pacific tickets increases significantly over the coming months, trans-Pacific load factors will drop 12-15% because of the increasing capacity being offered on the routes in question.

By the end of this year for instance, American aims to have daily trans-Pacific services to Australia, and also has long term plans to serve Melbourne, Brisbane and Caims. Northwest also will be swelling the ranks of trans-Pacific carriers with its four flights pert week being offered from the beginning of July and is likely to lobby for additional frequencies over the coming year.

During the coming months, therefore, it has been predicted that load factors will remain 12-15% below that of last year. And what is more, the situation is not ideal for Australia. Outbound traffic presently accounts for 65% of American’s trans-Pacific passengers, while the US Travel and Tourism Administration has projected that outbound traffic from Australia is set to increase for the next two years while US originating traffic stagnates or may decline further.

Meanwhile, both United Airlines and Qantas have stated that they will not follow American’s lead and scrap First Class on trans-Pacific services. American will be operating two-class DC-10s to Australia, effectively removing First Class though upgrading Business Class, a move which took competitors on the route by surprise. It is understood, however, that Continental had similarly been considering scrapping First Class, however when it went into Chapter 11 protection it put these plans on hold.

Tnt Offloads Us Operation:

TNT has sold its investment in US company Air- bome Freight for an estimated $70m, in what is expected to be the first of a series of asset sales by the financially embattled transport organisation.

TNT held an 11% stake in Airborne Freight, however the investment was considered a non-core asset so was sold to help consolidate the parent company’s financial status. Other sales of the organisation’s assets are also expected, most notably a partial sale of the cash draining European Express operation. Rival Federal Express is believed to already have approached TNT regarding a European partnership. Other competitors are less likely to seek shares in the European operations. United Parcel Service (UPS) is considered already in a sound financial position in the market and has no need to buy into TNT Europe, unless a fire sale price is asked. Prime European competitor, German operator DHL, already has arrangements with Lufthansa.

Another non-core asset considered likely for sale is the 26% stake held in America West. Other assets will probably also be sold, with analysts continuing to warn on TNT’s financial situation. The stockmarket value of TNT shares has been plummeting. and the organisation recently announced an $89. 4mloss forthe nine months to the end of March. The key to staying afloat would appear to be improving the immediate cash flow situation, which only sales of non-core assets such as Airborne Freight can effectively achieve.

Ansett Absorbs Eastwest’s Sydney Base:

Ansett Australia is absorbing. Eastwest’s ground engineering operations at Sydney Airport as a cost efficiency measure.

The two airlines already share terminals and ground handling at the airport, as well as the Ansamatic computer reservations system. Combining the maintenance facilities will provide economies of scale and lower operating costs for both Ansett Australia and Eastwest, both of which are part of the Ansett Transport Industries group. The financial effects of the recession, falling passenger numbers and deregulated competition with reduced fares have made it even more important that costs be cut.

Eastwest’s 48 line maintenance staff at Mascot will now be taken on by the Ansett engineering base, effective 1 July. Eastwest’s general manager Neil Berkett stated that there would be no redundancies among the engineering staff as a result of the move, which effectively brings Sydney into line with other capital cities where Ansett already performs line maintenance for the Eastwest aircraft.

Meanwhile, Eastwest is proceeding with its cutback of its Tamworth supply division, which has been responsible for ordering all Eastwest needs from spares to stationary. All purchasing activities for the airline will now be undertaken by Ansett’s Melbourne head office; four employees are being retained for clerical duties at Tamworth, while another five will move into the Ansett organisation. The Tamworth engineering operation, which currently employs some 280 personnel, will not be affected by the changes.

Major Restructuring to Eliminate Half of Caa Workforce:

The long awaited report on the major restructuring of the Civil Aviation Authority has recommended the slashing of around 55% of the authority’s 7,000 strong workforce over the coming half decade.

It is believed that 3,600 jobs will go as the CAA prepares for lean times when many of the former Dept of Aviation’s functions can- not now be funded and indeed are being questioned as to their relevance in the 1990s. Precise details as to what functions, what departments and specific operating units are to be disbanded or reformed are unclear as in-depth consultation is now taking place between the unions, workers and CAA management. This process is expected to continue through July with a hoped-for official announcement from management as to the specific nature of the changes being made publicly during early August.

Obvious areas of change concern the ATC and Flight Service areas, some airworthiness functions and various safety regulation units where there has been much potential for radical change in recent times.

Expected casualties are the Air Safety Digest magazine, which has taken a mauling for credibility in recent years and may now be merged with the Authority’s monthly Aviation News journal and possibly the operations of the Flying Unit, which may utilise smaller aircraft to undertake its airways calibration tasks as is done in most other countries. It is believed that around 17% of the personnel cuts will have been effected by year end with more than a third of the total retrenchments being made by mid 1992.

 Caa to Introduce Fine System:

The CAA is to introduce a system of fines to replace its cumbersome, costly and relatively inefficient existing method of penalising legally those who attract prosecution. Covered by the new system, which is expected to become operational towards the end of the year, will be around 70 offenses. These will essentially be for non flying offenses such as failure to keep adequate documentation or records, failure to implement ADs, etc and will not cover any flying breaches.

The on the spot fines will vary from $100 to $500 and will be similar to the system successfully used in the US by the FAA. It is expected that this will make it easier for CAA surveillance staff to better ensure that operators take seriously their commitment to safety and to avoid much of the time consuming legal work that is now required to prosecute operators for slack maintenance and operational procedures. In its ‘new’ form, the CAA has also served notice that it will be greatly beefing up its surveillance capability with RPT and charter operators as it is in this area that most of the procedural breaches have traditionally occurred.

 New Life for Old Runways:

Evans Head airport in northern New South Wales has been used as a testing ground for a new cold bitumen process that’s likely to give a new life to country aerodromes.

After CAA approval, Richmond River Shire Council contracted West Australian company Spraypave to reseal the main 1,360 metre 18/36 strip at a cost of just $85,000, which is a fraction of the charge of a hotmix overlay. The cold seal bitumen has a rubber component and dries ready for use just ten minutes after laying, cutting down considerably on runway closure times.

The cold seal, which looks and performs like hotmix, could be the answer for rural councils which are holding back on maintaining facilities such as airports because of tough economic times. Albany council in WA is also looking at a cold seal runway upgrade and the Spraypave company has had several enquiries after its first airport reseal at Evans Head.

Meanwhile, Evans Head will be the focus of what’s expected to be one of the largest sport aviation fly-ins ever seen on the east coast of Australia. Richmond River Shire has given the thumbs up to the event being organised by the Ballina Ultralight Club which will be held at the picturesque seaside aerodrome between 27-29 December this year. (Halden Boyd)

 Charter Restrictions Costing “Millions”:

Australia is losing millions of dollars per year because of the Federal Government’s tight restrictions on foreign charter operations, and in particular charter flights into Sydney Airport, according to the NSW Tourism Commission.

New South Wales in particular is seen as the big loser under the present restrictions. Whilst charter operators can fly into Perth, Melbourne, Adelaide, Canberra, Coolan-gatta and Caims, Sydney is effectively barred, even though Sydney is the preferred gateway to Australia for some 70% of inbound tourists. The decision to ban charter flights into Sydney will cost Australia $12m a year, if not more, according to the Tourism Commission.

Charter operators, such as Britannia Airways which is quite actively marketing Australia to its European market, are finding it more difficult to sell Australia as a destination without direct access to Sydney. However there appears little chance of a policy change in the near future.

Ansett Offers Mystery Travels:

Ansett Australia has introduced a new offer of Mystery Nights, under which travellers are offered interstate holidays to mystery destinations.

The Mystery Night packages cost from $199 per person including airfares and quality accommodation, or $249 for two Mystery Nights on a twin share accommodation basis. Passengers only find out where they are going when they check in at the airport prior to departure. The offer effectively expands Ansett’s very popular same-day return Mystery Fare and Mystery Tour concepts which are already marketed for departures from Brisbane, Canberra, Sydney. Melbourne and Adelaide. Bookings can only be made in person at Ansett Australia Travel Centres, airports or AFTA travel agents, with payment at the time of booking.

Meanwhile, Ansett is increasing the number of flights on offer between Launceston and Melboume. An additional six flights per week will now be offered, with all 35 being flown by jet aircraft, the 13 former Fokker 50 services being eliminated.

California Lost 60,000 Aerospace Jobs in Five Years:

California has lost 60,000 jobs in the aerospace industry since 1986 when US defence spending cuts began to hit home, according to a report commissioned by the Los Angeles Area Chamber of Commerce.

Currently the aerospace industry accounts for 1. 2 million jobs in Califomia, including more than one in five manufacturing jobs in Los Angeles. However, according to the report, “California’s aerospace/defense industry is at a critical turning point”, with military contracts down and several companies moving at least some of their operations to other states. For instance, whilst California was seen to win either way in the ATF competition (both F-22 consortium member Lockheed and YF-23 members Northrop and McDonnell Douglas are primarily California-based), Lockheed recently announced its decision to complete assembly of the winning F-22 in Georgia instead of Los Angeles. Also, MDC is studying the feasibility of assembling the planned MD-12X in another state, and already is expanding its MD-80/90 production facilities at Salt Lake City, Utah.

Reasons for companies moving operations include: high housing and labour costs; environmental restrictions; competitive offers from other states to attract new business, and a corresponding lack of support by Californian politicians, and more productive workforces elsewhere. California does however still receive the largest share of defence contracts, and this should continue to be the case for some time yet.