Airline Affairs

 Northwest/America West Team Up:

Northwest Airlines and America West Airlines have joined forces on a broad-based marketing program. Under the terms of the agreement, the two airlines will cooperate in providing passengers in their Pacific and US west coast markets with combined booking services using both carriers and with streamlined ticketing and baggage handling. The agreement includes a two year option for Northwest to purchase America West’s Honolulu to Nagoya (Japan) route authority.

In addition, the airlines will adopt code-sharing on some flights, initiate computer reservations systems coordination, introduce reciprocal use of their airport clubs and explore reciprocal use of their frequent flyer programs.

America West is currently operating under Chapter 11 bankruptcy protection and an important part of the deal is that Northwest will provide $US20m in working capital.

Union Favouritism?:

Qantas will have just about completed its planned staff cutbacks of 3,400 by the time these words are read, amid claims that the airline is proportionately sacking more non-union than union staff.

One of those hit with compulsory redundancy was the 1990 apprentice of the year who completed his training last February and was thought to have a long and rewarding future with Qantas. The airline denies the charge.

Of the 3,400 jobs which have been lost, cabin crew account for 719, pilots and flight engineers 238 (thought most of these are on secondment), catering staff 263, corporate staff 349, sales staff (including overseas) 400 and engineering staff and maintenance staff 563.

 Frequent Flyers’ Fabulous Freebies:

Ansett and Australian Airlines have simultaneously announced frequent flyer programs, designed to encourage repeat business by offering free flights, accommodation, goods ranging from sets of kitchen knives to computers and other attractions to travellers who compile sufficient points to qualify (refer Recce).

First, passengers have to join either the ‘Ansett Frequent Flyer or Australian Airlines ‘Frequent Flyer Plan for a cost of $30 and then begin accumulating points whenever they travel or use one of the specified services in combination with the plan. Ansett Golden Wing and Australians’ Flight Deck members are automatically enrolled free of charge.

The more air kilometres logged, the more points, with the points allocated depending on the level of fare paid. Those flying on discounted fares will accumulate points at a slower rate than full fare economy passengers, who in turn dont earn as many as business or first class passengers.

Worth watching will be whether passengers would rather have the chance for free goodies or will simply chase the cheap- est fares. Of interest is the fact that frequent flyer programs contributed to serious cash-flow problems for some US airlines during the 1980s, some of them finding there were periods when few passengers were actually paying for their flights! To a large extent this contingent liability threat will be eliminated in Australia through the accumulated points having a redemption life of just twelve months.

 Hazelton Axes Nsw Routes:

Hazelton Airlines, one of Australia’s major regional airlines, has drastically cut its New South Wales intrastate services due to increasing aviation charges and the ongoing rural recession.

Sixty of the airline’s staff of 169 have been retrenched and the airline’s fleet of 18 aircraft will be reduced to 12. In the past year. Hazelton’s revenue has dropped by 43%, including a massive 27% since July.

The last services to Forbes, Cowra, Young. Cootamundra, Walgett, Coonamble. Brewarrina, Bourke, Nyngan, Lightning Ridge, Gunnedah, Quirindi and Coona-barabran were operated on 6 September. These centres represented about 20% of Hazelton’s earnings, while services to Cobar, Condobolin, Cudal, Dubbo, Mudgee, Orange, Canberra, Moruya to and from Sydney will continue.

The ongoing recession and falls in major agricultural commodity prices coupled with continued market uncertainty and irregular rainfall have led to a dramatic fall in farm incomes and severely reduced spending. Additionally, major increases in aviation charges have led to higher air fares.

On this sensitive issue, Hazelton’s GM, Mr Bevan Coote stated that he felt that many of the small councils that had been left with responsibility for their local aerodromes were ill equipped to do so in financial terms. These councils then instituted charges on these airfields which were in no way representative of the operator’s ability to pay. He went on to say that the government should be prepared to fund aviation as it does road and rail, as a national resource whereas it has actually taken the opposite tack, formed the FAC and CAA and is bleeding aviation dry as just another means of gaining revenue.

Meanwhile, the State Government responded by announcing it will investigate ways of encouraging country air services following Hazelton’s announcement.

Compass Gets New Airbus:

Compass Airlines has increased its passenger capacity (along with its scheduling flexibility) by nearly 25% with the delivery in August of its fifth widebody Airbus (refer Traffic this issue).

The brand new A300-600R joins the four other A300/310s already in service, while a

sixth Airbus, a slightly smaller A310 leased from Canadian Airlines, will arrive in November. Compass already has 10% of the total Australian domestic market and 21. 3% of the routes it is contesting. By the first anniversary of its inaugural flight-1 the airline expects to have 30% of the markets it is contesting.

Aerodrome Changes Proposed:

Currently circulating through the aviation industry for comment are the CAA’s proposals to change the system of regulating aerodromes.

Currently, Australian civil aerodromes are divided into four categories; the plan is to reduce these to just two Licenced and Unlicensed (Commuter) Aerodromes.

Under the proposals, only aerodromes used by aircraft certified to carry 30-38 passengers (the exact number is still to be determined) on scheduled or chartered public transport operations would need to be licenced. The owners of other aerodromes can choose to licence their strips if they wish to and would be required to submit an annual aerodrome status report to the CAA. This also applies to the larger aerodromes and will have to be prepared by a suitably qualified person who will report on the aerodrome’s facilities complying with safety standards and confirming that the aerodrome manual and information in the AIP-A enroute supplement is accurate.

At present this costs the CAA (and thus) industry) over $12m a year or an average of $28,000 an airport, many of which are little used dirt strips. This has traditionally been a cost that has been paid for by the Government under its safety contract agreement, an agreement that it walked away from in last year’s Federal Budget leaving industry with an additional $73m to recoup each year to pay for services that the Federal Government once promised that it would never remove its financial support for.

Other aerodromes would not need to be licenced but could still be used by commuter aircraft with fewer than the prescribed number of seats for scheduled or charter public transport services. The thousands of Authorised Landing Areas (ALAs) now extant would be renamed Aircraft Landing Areas. The final responsibility for ensuring that any aerodrome is safe and meets the required standards remains with the aircraft operator and pilot. Northwest

Northwest Expands:

Airlines’ presence in the Australian market will most likely further increase following US government approval for the carrier to introduce nonstop flights between Sydney and Los Angeles and to serve Brisbane for the first time.

The approval is for two years, although permanent authorisation will be applied for. Earlier, applications were lodged for Northwest to introduce services from Sydney to New York via Osaka. The airline has still to receive approval from the Australian and Japanese governments for the new services. That process is currently in train.

A Smaller Panam:

Following Delta Airline’s acquisition of most of PanAm’s international routes and its Northeast Shuttle (refer Airline Affairs last month), it has been announced that the formerly great carrier will not be allowed to die but will instead carry on in a much reduced way.

The “new” PanAm will be in many ways a small carrier reminiscent of its early days- plying the Latin American markets from which it got its start in 1927 along with several African routes.

What’s the Difference Between Peter Jones and Michael Smith?

Not much. Both are typical AA readers living in a major east coast city, are in their thirties and work in the aviation industry.

However, Peter is a direct subscriber and received his Sept AA on Friday 23rd August”. Michael on the other hand is not a direct subscriber and had to wait till the following Wednesday (28th) at the earliest to get his copy of his favourite aviation magazine. Michael also paid the standard newsagency price of $4. 90 whilst Peter only pays $3. 45 as he is a direct subscriber with a two year sub, something that not only saves him nearly $30 during the period but also guarantees him that meagre price in case the cover price increases in the coming year. Additionally, as he works in the industry and has proof of purchase his AA subscription is a legitimate tax deduction”. Who would you prefer to be – Peter or Michael? If perchance you are not a subscriber then check out our great deal on page 19. of this issue – it can save you both considerable time and money.

“Our new mailing process is getting AA delivered quicker than ever with a majority of subscribers on the eastern seaboard now routinely getting their magazine before the weekend prior to newsagency release. “Check with your accountant for precise details.

Delta paid $US416m for PanAm’s assets and will invest a further SUS455m in establishing the reorganised PanAm and covering some of its operating losses. In exchange, Delta has the opportunity to become the largest airline in the USA and a major player on the international market. Delta will retain a 45% interest in the new PanAm and the remainder will be split between creditors including major employee groups. Final approval of the plan is expected shortly.

However, much of the airline’s fleet will have to be returned to lessors, worsening the current glut of second hand airliners, while other aircraft will remain and others will go into Delta’s fleet. PanAm’s 143-strong fleet will be divided up as follows: 24 Boeing 747 (nine retained, 15 returned to lessors): 85 Boeing 727 (28-31 retained, 24 to Delta, 30-33 returned to lessors); 13 Airbus A300 (all retained); 21 Airbus A310 (all retained).

 Compass Achieves Ministerial Approval:

Compass Airlines has gained a modest psychological victory in its battle to win the lucrative public service market, the contract for which (held by Australian and Ansett) comes up for grabs in December.

The Federal Minister for Resources, Mr Griffith, recently flew with Compass and has instructed his staff to fly with the new airline when it offers the cheapest fare. Mr Griffith went on to say that MPs should back Compass in order to save taxpayer’s money.

Meanwhile, Compass Airlines chief executive Bryan Grey is amused by the way Sir Peter Abeles’ Ansett Australia keeps imitat- ing his fare price initiatives. Recently sending this cheeky fax to Ansett general manager Graeme McMahon: “In the interests of world conservation and to preserve our dwindling forests, rather than have you duplicate every one of our fare ini- tiatives would you like us to incorporate your name in conjunction with ours on our fare change schedules?”

Pilots Protest:

Some 140 pilots (mainly from Ansett but also from Kendell) have signed a petition protesting the closure of the Bureau of Meteorology’s office at Melbourne Airport.

The petition claims the closure will result in “a serious degradation of weather services which will impact on airline safety and economy”. Another petition has recently been circulating around Bankstown Airport, pro-testing the planned closure of its briefing office.

 Japanese Top Tourists:

Japanese tourists created something of a precedent last year when more of them visited Australia than did New Zealanders, the first time this has happened.

The figures are 450,000 Japanese compared with 380,000 Kiwis while 310,000 came from other parts of Asia, 289,000 from North America, 272,000 from the UK and Ireland,249,000 from Europe and 100,000 from other countries. The Japanese are also the biggest spending tourists, parting with an average $259 per day compared with $147 for North Americans, $135 for New Zealanders and just $75 for the Brits and Irish.

Eastwest Consolidating:

Leisure airline Eastwest is strengthening its position in its chosen market, if recent trends are any indication.

Overall bookings have been 36% up on last year and there has also been a dramatic increase in holiday package sales. Bookings for these packages are running at about 2,000 per month compared with an average of only 800 per month last year.

Another area which has been performing strongly is Eastwest’s share of the international inbound market. Despite a slowdown in the number of overseas visitors to Australia this year, the airline has recorded substantial increases in passenger numbers. Revenue generated from Japanese visitors has grown by no less than 150% compared with 1989/90, while that from the Americas is up by 82% and the UK/Europe by 60%.

Local Maintenance Pool:

Qantas, Air New Zealand, Australian Airlines and Ansett are considering forming a consortium to rationalise engine and component overhaul, airframe maintenance and spares inventory for their fleets of Boeing and Airbus aircraft.

If combined, the $600m worth of spares currently held by the four airlines could be halved in addition to offering potentially large savings in labour costs. An agreement for Air New Zealand and Qantas to combine maintenance is reportedly already close to finalisation, with Qantas taking care of 747 airframe and RB211 engine work for both airlines and ANZ looking after 767 airframes and their CF6 engines. Meanwhile, ANZ would also look after the GE CF6 engines on Ansett’s 767-200s and Australian’s A300B4s with the domestics probably overhauling ANZS JT8s on its existing 737-200s and the CFM6s on the new 737-500s that the airline will put into operation in the coming three years.

More Virgins:

It seems virgins have been featuring strongly in Airline Affairs’ lately (refer p. 22 Sept 91 AA), well here’s another example.

Richard Branson, the boss of Virgin Atlan- tic airlines, has been summoned before a British parliamentary committee for extending the limits of what is considered good

taste. A female Labour MP told Branson that

while “Virgins this way!” might be an acceptable way of calling passengers to their flights, “First class virgins this way!” was dis- criminatory. That’s the trouble with socialists, they’ve got no sense of humour. . . MALAYSIA’S 747-400s: Malaysia Airlines will operate Boeing 747-400 aircraft on its four times a week service to Australia from later this month.

The airline flies from both Sydney and Melbourne and is the first Asian carrier to operate regular-400 services into these two cities. The use of the new aircraft also allows the airline to offer an extra 136 seats per week between Malaysia and Australia.

Cairns Growing Fastest:

Cairns is Australia’s fastest growing airport, according to figures covering the quarter ending June 30.

During that three month period, Cairns saw 245,000 domestic passenger movements an increase of 54% over the same period in 1990. Also well up were international arrivals and departures at 486,000 (a 35% increase) while domestic movements increased by the substantial figure of 52% to 1,261,000. In addition, 98,000 transit passengers passed through the airport. • FLYING HIGH!: Qantas recently had an interesting experience when a first class passenger went berserk, screamed obscenities, assaulted a crewmember, forced his way through a locked door into the cockpit and demanded he be allowed to fly the

aircraft.

The man was uncontrollable for some seven hours and was obviously suffering the effects of alcohol, drugs or both. The incident began shortly after the aircraft left Los Angeles, bound for Sydney. He was ultimately handcuffed to a chair in the crew rest area behind the cockpit and then handed over to security staff on arrival at Sydney. He was then sent back to LA on the next flight, using his return ticket.

Smaller Badgery’s Cheaper but Still Inadequate:

An FAC report has revealed that a development the size of Adelaide Airport at Sydney’s Badgery’s Creek would cost less than the building of a third runway at Sydney’s Kingsford Smith and subsequent international and domestic terminal development.

The report puts the cost of such a development at about $465m, compared with $1. 5bn for the much larger airport as is now planned. Construction would take five years as opposed to 10-15. The cost of the third runway and associated facilities at Mascot is $272m, while the development of terminals adds another $492m.

Naturally, the anti third runway brigade has jumped on this, claiming a cost effective solution to the problem as well as removing the need for a third runway at Sydney. However, its arguments fail to take into account the fact that a substantially smaller Badgery’s Creek will in no way provide sufficient capacity for the future, and even if such an airport was up and running in five years, it (and a lack of expansion at Sydney) would be unable to cope with expected growth by the early part of next century and beyond.

Sydney needs both a third runway at King-sford Smith (now), and a major airport at Badgery’s Creek as soon as possible.

Sunstate Upgrades Fleet:

Australian Airlines affiliate, Sunstate Airlines Queensland is upgrading its fleet with the introduction to service of two 36 passenger De Havilland Canada Dash-8s and a single 18 passenger Embraer Bandeirante.

The new aircraft replace one of the airline’s three Shorts 360s, two of its Shorts 330s and its DHC Twin Otter. The aircraft will fly routes between Brisbane, Rockhampton, Mackay, Townsville, Cairns, Bundaberg. Gladstone, Emerald and Blackwater and will provide daily connections between the Gold Coast and Cairns via Australian Airlines’ flights out of Brisbane. The Bandeirante replaces a Cessna 404 on services between Thangool and Brisbane.

 Northwest Hoping to Boost Us Arrivals?:

The introduction of USA/Australia services by Northwest Airlines has focused attention on a route which has seen a steady decline in passenger numbers over the past three years.

Some 200,000 passengers flew from the USA to Australia in 1985, a figure which steadily increased until 1988 when it peaked at about 325,000. Since then, the figure has constantly dropped, reaching just 250,000 last year. Signs of a recovery, or at least a “bottoming out’ are now evident, and it will be interesting to see if Northwest’s arrival can boost business. Northwest joins American, Continental, United, Qantas and Air New Zealand on the route.

Northwest has meanwhile introduced an innovative introductory incentive for first and business class travellers who book with their American Express cards. Cardholders will receive an additional ticket for the price of one, covering roundtrip flights from Sydney to Honolulu and Los Angeles.

 Air India Rat Problem:

It has been reported that Air India flights have been delayed by rats found on board aircraft even though traps are laid and the aircraft regularly fumigated.

Rats are regarded as one of the greatest dangers to aircraft as they can chew through control cables and electrical circuits, and can also get into spaces not normally accessible for inspection. For Air India the problem is exacerbated by the Hindu religion which teaches that the rodents are holy and consequently does not permit them to be killed. However Air India has assured its passengers that it is taking all measures to control the menace.

 BA Fares Slashed:

British Airways has brought air travel between Australia and the United Kingdom within reach of most with its announcement of new fares for the months of October and November 1991. From Sydney, Melbourne, Brisbane and Adelaide, an economy class return ticket to London will cost just $1,799 in October and November and from Perth the cost will be $1,749 in those months. Children will be charged 75% of the adult fare and infants. 10%. Passengers are allowed one stopover in each direction and there is a minimum stay of 14 days and a maximum of six months.

This Is Getting Monotonous. . . :

We reported in last month’s Airline Affairs that the third incarnation of that once great carrier, Braniff, was up and running with flights between New York, Orlando and Fort Lauderdale.

Unfortunately, “Braniff III”, as the latest version is referred to in the industry, survived only five weeks of regular flight operations before filing for Chapter 11 bankruptcy pro-tection. Its owners optimisticly insist the filing will not disrupt operations and its limited services will be maintained while things are being sorted out.

The Beech 1900D has been officially launched with a mega order from New Mexico based Mesa Airlines for 58 of type. The D is essentially a derivative of the long established C with greatly increased headroom by way of a rather unusual vertical cabin stretch. Mesa will replace its existing 39 C models with the new D versions.

 Qantas Crew Revue on Again:

Each year the Pathfinders, a dedicated group of Qantas employees, stage a revue that is second to none. In our March issue this year we reviewed the video of last year’s revue and found it good fun viewing.

The live performance however is even better and runs from 28 October thru till 2 November at the Paddington-Woollahra RSL Club. Aptly entitled, Privateyes – or the first cut is the cheapest, this stage show abounds with plenty of aviation wit and humour and is definitely a must see.

As usual, all proceeds from Pathfinders activities go to the Royal NSW Institute for Deaf and Blind Children, so as well as enjoying a fun evening you are also helping a group of children less fortunate than ourselves.

Bookings open on 23 September and tickets are available at the door or from any Ticketek outlet.

 Afap Into Australian:

The Australian Federation of Air Pilots, the union which caused the disastrous pilot’s “strike” in 1989, has expressed an interest in purchasing a stake in Australian Airlines when it is privatised.

The union has lodged its interest with the federal government’s Assets Sales Task Force, joining Air New Zealand and Compass as potential shareholders. It says the intention is not a pilot buyout of the airline but simply to ensure a reasonable proportion of the stock is offered to staff.

Northwest to Buy Continental?:

It looks as if another of the formerly great. US airlines might change hands.

In August, Continental Airlines had to weather a particularly stormy few days during which its chief executive officer, Hollis Harris, resigned, staff cutbacks and flight reductions were announced and rumours that the airline was subject to a buyout attempt by Northwest Airlines abounded.

Continental has been operating under Chapter 11 bankruptcy protection since last December, while the influential Wall Street Journal has reported that Northwest is “seriously pursuing” the acquisition of Continental and that officials of both airlines have had several meetings to discuss a merger. Northwest is the USA’s fourth biggest airline and Continental the fifth.

Anz Helps Ansett:

Air New Zealand has given rival Ansett NZ a free plug by featuring the opposition airline in an inflight video.

The video is shown near the end of Sydney/Christchurch flights and features information on how to clear immigration and then how to check in for domestic flights. The only trouble is, Ansett NZ is featured in the latter segment and ANZ doesn’t get a look in! The airline is suitably embarrassed, although the situation has arisen as a result of a long standing marketing contract between Qantas and Ansett where the international operator promotes Ansett as its preferred domestic carrier. Sydney/Christchurch flights are flown by Qantas aircraft under a seat share arrangement with ANZ. The flights carrying joint Qantas/ANZ flight numbers.

 Worth Their Weight in Woodchips!:

One of the very annoying things about the way the monthly current account deficit information is presented to the public is when Qantas’ importation of another 747 is conveniently blamed for a high import figure.

This completely ignores the fact that the aircraft generates many times its cost in export earnings over its life and is financed offshore anyway as Qantas earns roughly two thirds of its total income in overseas currency.

Figures released by the group fighting for Sydney Airport’s third runway show that the average tourist spends $2,000 during his or her visit to Australia, meaning that just 60,000 of them (or about 180 typical 747 loads) pays for the importation of one aircraft. Therefore, the average 747 pays for itself in under eighteen months and makes a profit for Australia for a long time after that. That $2,000 expenditure also provides the income equivalent of 11 tonnes of wheat or three bales of Merino wool or 35 tonnes of coal or 26 tonnes of woodchips. It is also sufficient to cover the cost of importing 80 tonnes of oil or a typical personal computer.