Airline Affairs

The move is seen as a strategic fillip for the successful launch of a rejuvenated Compass (refer p23 April 92 AA) as it not only gives a degree of credibility via official governmental endorsement of the airline but also guarantees $10m in capitalisation if the share issue does not reach its target.

Whilst the fiscal endorsement will certainly help Compass it may also cost the Queensland Government nothing as the offer will only be taken up if the $60m of shares on offer via the public float does not raise the prescribed amount. Southern Cross Holdings hope to launch their float via underwriters JB Were & Co during the course of this issue with a commencement of services in the August/September period if the share issue is a success. A quarter of the total shares available have been reserved for existing Compass shareholders and creditors.

Cathay to Adelaide:

Cathay Pacific will start a weekly Hong Kong/Adelaide service on October 4 this year if ratification by the Hong Kong government is forthcoming as expected.

The new service is made possible by a new air services agreement signed by the Australian and Hong Kong governments last year. Adelaide joins Sydney, Melbourne, Brisbane and Perth as Cathay’s Australian ports of call and the airline intends doubling its Australian flight frequencies over the next three years. • QANTAS REVENUE DOWN: Figures covering Qantas’ performance for the first. six months of the 1991-92 financial year have shown disappointing trends with revenue 4. 6% below budget, revenue passenger kilometres 2. 4% down and yields 4. 2% down. Freight revenue is also significantly below expectations, with yields down 7. 1%. Continued tight control of overheads and lower fuel costs have helped ease the situation.

The results are particularly disappointing in view of the forthcoming sale of 49% of the airline and the fact they to a large extent negate the extensive cost saving measures implemented last year. Despite this, the airline feels a small profit for the year is still possible if revenues pick up slightly. Unbudgeted revenue from contract maintenance, extra Taiwan flights and charters will help.

AAA Calls It a Day:

After a period of well publicised troubles, aspiring new entrant AAA Airlines has been placed in provisional liquidation before it even got off the ground.

An application for liquidation was made to the NSW Supreme Court by a AAA director, Mr Mare de Stoop, and by the time these words are read a hearing to consider the winding up of the company will have been held.

Tnt Strengthens FedEx Ties:

TNT has strengthened its association with Federal Express by purchasing the American company’s French operation for $A25m.

Federal Express’s Chronoservice French domestic express business was sold to TNT as part of its disposal of all internal European operations. For TNT, the acquisition fills a gap in its extensive European domestic network. Additionally, TNT has signed an agreement which is due to come into force this month under which it will handle as a subcontractor to Federal Express all inbound deliveries to ten European countries.

Ansett UPS the Ante in Class War:

Ansett Australia has responded to Australian’s rejigging of its classes (refer p. 6 Apr 92 AA) by offering its own classes for less money.

The former first class fare is gone, and passengers who used to pay business class fares will now fly first class with the four abreast seating and the service standards that that implies. Meanwhile, full fare economy passengers will move up to what was business class (still four abreast) and those on discounted fares will fly what was economy with a full hot meal service, etc as standard.

AA Comment: In our December 91 issue Recce we made the prediction that 1992 would be the year when the airlines would shift their sights from fighting for market share at the back of the bus to at last providing fare relief for the business traveller. We were right and AA now hopes that the Australian air traveller appreciates just what incredibly high standards we enjoy in this wonderful country. The cabin standards now considered as ‘ops normal” in Australia are so far in advance of anything in either Europe or North America’s domes tic aviation environment that a comparison is almost too embarrassing to make. Similarly, members of either Flight Deck or Golden Wing lounges enjoy a standard of facilities and associated services far better than do their fellow business travellers in the northern hemisphere.

The Ansett move is of particular interest as it largely relies upon seducing full fare economy passengers away from Australian and onto its own services. Something that in our opinion won’t be too difficult given the obvious physical differences in the full fare economy product being offered by both airlines. Whilst this should actually serve to boost Ansett’s already high load factors it should also increase their yield though only if they are successful in attracting a larger number of full fare paying passengers from the competition. If they don’t then it will only dilute their yield further whilst for its part Australian will simply have to follow Ansett in making its Club (full economy fare) class also four abreast if it begins to lose traffic to its rival. How long before we have 100 pax 737s?

 Southern Pacific Expands:

Southern Pacific Airlines has expanded its fleet to four Nord Mohawks, and is unique in that it is the only Mohawk operator in Australia.

With its headquarters in Brisbane, Southern Pacific continues its services from Brisbane to Bundaberg and Gladstone. The regional airline also operates in NSW flying Sydney to Dubbo and Sydney to Tamworth directly on behalf of Ansett Express. Southern Pacific has now commenced new services: Brisbane to Newcastle direct and Brisbane/Coffs Harbour direct. These two latter services are in direct competition with Oxley Airlines. (Peter Gamble)

Australian Island Monopoly: Challenges

Australian Airlines is threatening legal action to end Ansett’s monopoly on direct jet flights to Hamilton Island which has the only jet compatible airstrip in the Whitsunday group of islands.

Australian currently has to fly tourists to Mackay or Proserpine and then transfer them to the islands in smaller aircraft or by launch, while Ansett can fly Boeing 7678 direct to Hamilton Island. The island’s airstrip is jointly owned by the resort and Ansett and the exclusivity is seen by Australian as a breach of trade practices legislation.

Hamilton Island has already received direct charter flights from Condor of Germany and is preparing for similar flights from the UK by Britannia Airways. The British charter operator will fly to the island once a week for five months from November using Boeing 7678.

Sydney Airport Rail Closer:

Sydney Airport’s desperately needed rail link came a step closer to reality in March when the New South Wales government said it would commit $60m to the project.

A 12 kilometre line linking the domestic and overseas terminals with Sydney’s Central Station is planned, and if approved, construction could be underway by the middle of 1993.

 Us Traffic up From Gulf War Low:

The Gulf War was at its peak in February 1991 and as a result, US airlines recorded poor passenger traffic figures for the period.

Not surprisingly, the airlines’ figures for February 1992 show substantial improvements over the same month in 1991. February month this year was also one day longer which equates to an extra 4% in potential activity. In terms of revenue passenger kilometres (RPK) flown, American Airlines’ traffic was up by 27%, Northwest’s by 30%, United’s by 21%, Delta’s by 17% and Continentals’ by 4. 7%. In terms of actual passengers carried in February 1992, American heads the list with 5. 8 million followed by Delta (5. 75m – a huge increase resulting from the purchase of PanAm’s Atlantic routes) and United (4. 35m). US domestic traffic increased slightly compared to the previous year but international figures showed a dramatic improvement.

Load factors were only slightly improved because of continuing increases in capacity (to just under 60% in most cases, some 20% below the Australian average!) while Delta’s load factor decreased by 4. 5% to just 53. 6% due to a 27% increase in capacity from its PanAm purchases.

Lufthansa’s first 747-400 female copilots are shown presenting the airlines new women pilots’ uniform. Female airline pilots are now becoming more numerous, in Australia there are a number of women pilots flying with our airlines. (Lufthansa)

Northwest Reconsiders Qantas Investment:

Following the recent Federal Government aviation policy revisions, Northwest Airlines is reassessing its plans to invest in part of the 49% of Qantas which is being offered for sale.

According to Northwest, the changes had resulted in uncertainty in the market and the “product which is for sale is a lot less. defined than it was nine months ago”. The opportunity for Qantas to enter the domes-

tic market and for the Australian domestic airlines to fly internationally further clouds the issue as does the merging of Australia and New Zealand into a single market and the opening up of competition in the Pacific area. Northwest signalled its intentions to bid for a slice of Qantas in July last year as part of plans to create a global airline in conjunction with

Klm. New Australian International:

Australia’s second overseas airline is scheduled to begin services in November this year if current plans are realised.

Australia World Airways will operate twice weekly low cost non scheduled services between Melbourne and Europe, using Boeing 767-200ER aircraft configured in an all economy 250 passenger seven abreast 32in pitch arrangement. A return airfare to London is expected to cost less than $1,000 and flights will be made via Sumatra and Colombo.

However, AWA will not sell its tickets to the general public but seats will be booked en masse by tour operators and wholesalers, as is the case with many similar overseas charter airlines. To achieve this the airline has entered into a marketing agreement with Aviareps, one of Europe’s biggest airline representative companies. AWA is privately owned but intends going public in about three years time when it will also consider starting scheduled services.

More than half of all international passengers and almost all leisure travellers flying out of the United Kingdom presently do so with charter operators catering to the holiday market.

GPA Goes Public:

The world’s largest aircraft leasing organisation, with nearly 400 aircraft on its books, the Irish based GPA Group, will be publically floated in June this year, a float which could see the company valued at $A4. 6bn.

Share listings are initially planned for the New York, London and Dublin stock exchanges with Tokyo to be added later. The float was originally planned for last year but postponed because of the Gulf War. GPA’s aircraft serve with more than 100 airlines around the world.

Anz’s Quiet 737s:

Air New Zealand will fit Nordam hushkits to its fleet of seven Boeing 737-200s in order to meet Stage 3 noise regulations. The city of Wellington requires aircraft operating into it to com- ply with the regulations by January 1 1995.

Air New Zealand’s 737-200 fleet is a relatively young one (average age 6. 5 years) and the decision to fit hushkits removes pressure to quickly replace them with current 737-300/500 models. New 737s will nevertheless be progressively introduced, beginning in September 1996 and continuing through 1997. Hushkitting of the 737-200s will be completed by August next year, well in advance of Wellington City Council’s deadline.

Ansett Won’t Take Qantas Stake:

Ansett will not take a share of Qantas when it is privatised, but will develop its own international routes instead.

Joint chairman Sir Peter Abeles has said that Ansett is not interested in a minority stake in Qantas and prefers to have total control of its investments. Sir Peter said that Ansett would like access to international routes but the preparation for such a move would take at least two to three years. After several years of losses, Ansett’s financial performance is constantly improving, according to Sir Peter, although it will probably not return to profitability this year.

By Airline to Bankstown:

In what can be seen as an innovative and potentially lucrative move, Wagga based Western NSW Airlines is this month starting daily scheduled services from its home city to Sydney’s Bankstown Airport. Using two Piper Chieftains initially (a pressurised Metro III will take over in September), the new service will provide 24 round trips between Wagga and Bankstown per week, giving the people of western Sydney a much more convenient point of departure than Sydney Airport. The company recognises that the Parramatta area is now the geographical centre of Sydney and that the population of the western Sydney area is steadily increasing as is the number of businesses in the region.

Western NSW Airlines has built its own terminal facility at Bankstown (next to the Flight Service office) and after negotiation with the CAA, it has been decided there will be no changes to published GAAP procedures at the airport.

Western NSW expects to carry between 10,000 and 15,000 passengers in its first year. The airline is an Ansett affiliate and the fares include a taxi or minibus service from Bankstown to Parramatta, other suburbs, Sydney’s central business district and Sydney airport. How long before a Bankstown/Moorabbin service, something that would surely be a winner if served by a 30/36 seat high speed turboprop?

Jal Prepares for Australian Tourist Boom:

Japan Airlines has considerably increased the number of seats available for flights to Australia in anticipation of an expected large increase in Japanese tourists.

The airline’s five times a week services from Tokyo to Queensland are now flown by Boeing 747s instead of McDonnell Douglas DC-30s, providing more than 800 extra seats per week. Interestingly, the number of Japanese tourists visiting Queensland has not been as great as the public perception, at least according to 1990 figures, the latest available. In that year, 90% of all visitors to Queensland were Australians and of the remainder, just 14. 6% (or 1. 46% of the total) were from Japan.

Cathay Pacific is also increasing its weekly flight frequency to the ‘sunshine state, services from Hong Kong to Brisbane going up from three to four next August. This will give the airline more than 1,000 seats a week into Brisbane.

Air Pacific All Jet:

The delivery of a new Boeing 737-500 to Fiji’s Air Pacific this August will make the airline an all jet operation. The 737 will replace ATR42s and will be used to develop new services to Cairns, Wellington and Christchurch. Air Pacific’s fleet currently comprises a 747-200, a 767-200ER and two ATR42-300s. Refer our Major Airline Directory elsewhere this issue for more information.

 Asc Sues Compass Directors:

The Australian Securities Commission has begun a multi million dollar damages action against ten former directors and executive officers of Compass Airlines Pty Ltd and Compass Holdings Ltd.

The ASC’s statement of claim alleges that Compass was basically insolvent from its first day of operations and that the direc tors were negligent and “breached their duties to each of the companies and relevant creditors by permitting the airline to trade while insolvent”. The ASC has emphasised that there is no suggestion that any of the ten being sued acted dishonestly. Included in the ASC’s statement of claim are a number of alternative insolvency

Jal Prepares for Australian Tourist Boom:

Japan Airlines has considerably increased the number of seats available for flights to Australia in anticipation of an expected large increase in

Japanese tourists.

The airline’s five times a week services from Tokyo to Queensland are now flown by Boeing 747s instead of McDonnell Douglas DC-30s, providing more than 800 extra seats per week. Interestingly, the number of Japanese tourists visiting Queensland has not been as great as the public perception, at least according to 1990 figures, the latest available. In that year, 90% of all visitors to Queensland were Australians and of the remainder, just 14. 6% (or 1. 46% of the total) were from Japan.

Cathay Pacific is also increasing its weekly flight frequency to the ‘sunshine state, services from Hong Kong to Brisbane going up from three to four next August. This will give the airline more than 1,000 seats a week into Brisbane.

The airline’s five times a week services from Tokyo to Queensland are now flown by Boeing 747s instead of McDonnell Douglas DC-30s, providing more than 800 extra seats per week. Interestingly, the number of Japanese tourists visiting Queensland has not been as great as the public perception, at least according to 1990 figures, the latest available. In that year, 90% of all visitors to Queensland were Australians and of the remainder, just 14. 6% (or 1. 46% of the total) were from Japan.

The airline’s five times a week services from Tokyo to Queensland are now flown by Boeing 747s instead of McDonnell Douglas DC-30s, providing more than 800 extra seats per week. Interestingly, the number of Japanese tourists visiting Queensland has not been as great as the public perception, at least according to 1990 figures, the latest available. In that year, 90% of all visitors to Queensland were Australians and of the remainder, just 14. 6% (or 1. 46% of the total) were from Japan.

Cathay Pacific is also increasing its weekly flight frequency to the ‘sunshine state, services from Hong Kong to Bris- bane going up from three to four next August. This will give the airline more than 1,000 seats a week into Brisbane.

 Air Pacific All Jet:

The delivery of a new Boeing 737-500 to Fiji’s Air Pacific this August will make the airline an all jet operation. The 737 will replace ATR42s and will be used to develop new services to Cairns, Wellington and Christchurch. Air Pacific’s fleet currently comprises a 747-200, a 767-200ER and two ATR42-300s. Refer our Major Airline Directory elsewhere this issue for more information.

Asc Sues Compass Directors:

The Australian Securities Commission has begun a multi million dollar damages action against ten former directors and executive officers of Compass Airlines Pty Ltd and Compass Holdings Ltd.

The ASC’s statement of claim alleges that Compass was basically insolvent from its first day of operations and that the direc tors were negligent and “breached their duties to each of the companies and relevant creditors by permitting the airline to trade while insolvent”. The ASC has emphasised that there is no suggestion that any of the tenbeing sued acted dishonestly. Included in the ASC’s statement of claim are a number of alternative insolvency Melbourne and Brisbane $379, Adelaide $569, Cairns $639 and Perth $899. Conditions include travel only between April 22 and June 30 with a minimum six day stay except in the case of a two day weekendtrip which must include a Saturday.

Fare Wars Continue:

With or without a fourth major domestic competi tor, Australian Airlines, Eastwest and Ansett continue to offer special deals for travellers.

All three are offering a series of low prices for travel during May and June this year, Australian’s under the name ‘Mid Year Seat Sale’ and Ansett’s as ‘Autumn Saver’ fares. The schemes require tickets to be purchased 28 days before travel and offer discounts of up to 65%. An example of a return fare under the schemes is Sydney/ Melbourne for just $169.

Fares like these are designed to fill other. wise excess capacity at off peak times and should be available to most leisure travellers who can plan ahead and don’t need to fly on a peak period flight.

Words Seem Inadequate. . . .

It’s a delicate matter, this, but it seems-as one writer put it-that a “knicker led recovery” is going to help Australia fight its way out of the recession we’re all terribly grateful we needed to have.

As this issue was being prepared, “the largest offshore move of a Japanese group to any nation” (apart from 50 years ago. presumably) comprising 5,500 ladies’ underwear saleswomen was about to descend on Sydney as part of sales incen- tive programme, bringing with them about $8. 5m in spending money and the need to use 27,500 bed nights in seven five star hotels during their five day stay. Four air- lines are bringing the purveyors of panties and other fun things to Australia, including Qantas.