Stop Press

A major reason the Bill was rejected was the excellent performance put together by the various industry associations in marshalling their combined forces (refer p5 May 92 AA) for an all out assault on the proposed Bill. Full credit goes to the Air- craft Owners & Pilots Association, the General Aviation Association and in particular Harvey Ritchie of the Australian Sport Aviation Confederation for a mature and well thought out tactical assault on this immoral and unjustified attack on the entire aviation industry.

 Rubbery Figures

Keen students of the DTC’s March quarter domestic airline traffic data (refer p21) could well be forgiven for being a trifle confused.

Not surprisingly the source of the confusion relates to the ongoing battle

between Ansett and Australian for aerial passenger supremacy. Whilst in the past these figures have always been taken as ‘gospel’, the results of the March quarter report has well and truly thrown this blind. faith into disarray.

The root of the problem is of course the seemingly poor performance of Ansett Express, an operation most of us in the trade thought was going pretty well. The DTC data indicates that in pax uplifted terms, Express declined from 165,472 in the March 91 quarter to just 102,839 for the latest period. The more relevant Revenue Passenger Kilometre (RPK) comparison saw a drop from 96,675,000 to just 59,119,000 at a time when Express was well and truly growing.

So where did the missing pax go?

Where they went of course was into the Ansett Australia overall data which appears to have neatly counted more than half of their junior airline’s uplift into the figures for Ansett Australia. What this results in of course is a situation where big brother (AN) is then comfortably well ahead of rival Australian. The official DTC figures have Ansett Australia ahead of Australian in both pax uplifted and RPK terms. However when adjusted for “reality” the data for year ended March 31 1992 shows Ansett Australia moderately ahead of Australian in RPK terms (7,514,745 vs 7,265,821) but behind (6,630,799 vs 7,000,838) in pax uplifted terms.

However, just to muddy the waters further, Australian is obviously claiming. some Eastern uplift in their own figures. Though this would not be much, owing to the size of the Dash 8 equipment used and relatively minimal frequencies, etc, it still gives an inaccurate comparison between our two mainline carriers. We would be surprised if Ansett Australia wasn’t also counting data from Ansett WA services using an AN flight prefix just as it obviously has with Express.

By cross referencing the specific route data from DTC, Australian Aviation has been able to approximately estimate the ‘missing’ figures for Ansett Express. Thus in the March quarter we find that Express in fact recorded an increase in pax uplifted by around 50% rather than a decline of 38%. RPKs are a little harder to define but we believe them to be in the region of a 45% gain as against a near 39% decline in the official DTC figures.

AA Comment: The fudging of official figures given to a government department is indeed an extremely questionable affair. Ansett Express is Ansett Express, Ansett WA is Ansett WA, Airlink is Airlink and Eastern is Eastern. That they might fly under a TN or AN prefix has really no bearing on the official data. It is the specific carrier which provides the service that counts and that is the way it should be. Each airline’s performance is its performance and not the property of the parent carrier to manipulate as it sees fit for its own short term publicity gain, particularly when any observer can clearly see the anomalies with just a cursory review of the DTC data. How, for instance, can Express have a decline of nearly 38% in pax uplifted for the March quarter whilst simultaneously enjoying increase in load factor from 64% to 70% at a time when they also added capacity! Come on guys, really!

If either airline continues to abuse the official DTC traffic data in this manner then the only reliable statistics available to the industry will be the overall level of activity of each airline group, hardly a viable benchmark by which to make important industry comparisons either at a government, managerial or personal level. If this farcical situation repeats itself in the June quarter summary then AA certainly hopes that the Minister will move to inform those responsible of their obligations to provide truthful data to what is a government entity charged with recording facts not fiction. AA believes the Minister is seriously concerned whilst the DTC itself is understandably not amused at the prospect of their official figures being con- trived purely for short term commercial gain. Those responsible take note!

Hamilton Island Woes a Boon for Australian?:

The announcement on May 11 that the Hamilton Island resort was being placed into receivership might well prove a source of inspiration for Australian Airlines.

The Island’s jetport is of course half owned by Ansett with that airline, and Eastwest, having sole rights to run RPT jet services into the resort. For the past few months Australian has been preparing at legal case against its exclusion so that it can increase its overall market share into the high potential Whitsunday region.

With Hamilton Island having debts in the region of $200m and looking at every avenue to increase its overall occupancy rate from just 60% to something closer to 80%, industry observers now believe it will be difficult for the receivers to deny Australian eventual access to the Island’s jetport. Australian’s insistence that a dozen extra jet services into the island each week would fill a lot of now empty beds will be difficult to argue against in or out of court as would be the extra landing fees that such operations would produce.

Meanwhile, Ansett was quick to announce that all air services into Hamilton Island will be unaffected by the move to receivership, as is the entire operation of what is truly a unique Australian holiday destination.

Caato Adopt Aviation Safety Changes:

The CAA is to implement changes to further improve safety following the release of an independent report on air safety in Australia.

Commissioned jointly by the CAA and BASI, the report found that while Australian Air Traffic Services (ATS) is fundamentally sound, there is still room for improvement.

A review team, headed by Dr Robert Ratner, closely examined Australian ATS procedures and operations as well as meeting and liaising with a wide spectrum of organizations within the industry, including airlines, general aviation groups, GA operators, pilots and air traffic controllers. The report released on the findings of the group outlines a number of changes, with a view to creating a safer, yet more efficient system which can cope with the growth in the number of aircraft operations expected in the coming decade. Currently some 20 million ATC clearances and instructions are issued each year.

The report lists 24 recommendations, all of which will be implemented by the CAA and BASI within six months. Recommendations include stricter controls over and better controller training for SIMOPS, improvements to the pilot training syllabus by adding new modules, including see and be seen theory and practice and navigation near CTA boundaries, and giving air traffic controllers training in a similar style to the cockpit resource management training now given to airline pilots.

GA Slips Again:

After a moderately encouraging if not wonderful 1991, shipments of US general aviation aircraft have slipped in the first quarter of 1992.

During that period a record low 192 units were delivered comprising 115 piston engined aircraft, 31 turboprops and 461 business jets. The latter was the only category to improve on the same period of last year (up 15%) while the other two categories dropped significantly. Billings increased by 10% to $US394m (reflecting the business jet figure) but exports declined markedly to just 65 aircraft.

Finland Selects Hornets:

McDonnell Douglas has had much success with its F/A-18 Hornet of late with Switzerland recently officially ordering the type (refer Newsdesk this issue) and now Finland will join the list of operators.

In a deal worth about $US3bn, Finland has ordered 64 Hornets comprising 57 single seat F/A-18Cs and seven two seat F/A-18Ds. The seven Ds will be the first delivered, direct from the McDonnell Douglas factory at St Louis in 1995. The single seaters will be assembled by Valmet Aviation in Finland and the aircraft will replace Saab Drakens and MiG-21s. Final delivery is scheduled for 2000.

 Eastwest Reorganises:

East-West Airlines is undergoing some reorganisation to reduce costs and strengthen its financial position after continuing heavy losses.

Key areas of its administration, aircrew management and sales will be contracted out to its parent, Ansett, although the airline will retain its own identity, board, accounting system and capital structure. The move is seen by some as the first stage in a process which will eventually see Eastwest losing its separate identity.

In addition, Eastwest’s capacity will be increased by about 10% with the introduction of a second Boeing 727-200 which will be shared with Ansett. Revenue generated by Eastwest will now be collected on its behalf by Ansett and the airline will no longer hold a ticket plate of its own. The move affects some 140 staff, about half of which are to be redeployed within the Ansett Group. East west recorded a load factor of just 66% in the March 1992 quarter compared with 79% for Ansett Australia and 84% for Australian, though pax uplifted increased by 9. 3% and RPKs by a healthy 14%, continuing the trend which saw year end rises of nearly 26% and 32% respectively.

AA Comment: Our tip is that Eastwest will more and more become a supplier of deep discount capacity for Ansett Australia following the recent move by that carrier to its four abreast full fare economy class configuration. What this has done is to effectively decrease Ansett Australia systemwide capacity by as much as 20% at a time when it is already fighting for extra capacity with average load factors approaching 80%.

It is thus possible that Eastwest might ultimately benefit by this as its parent is unable to cater for the deep discount discretionary traveller as it has in the past year and a half since deregulation was introduced. As a consistently low load factor has always been seen as the root of the perennial lack of profitability then the airline might at last have an opportunity to increase its load factor to closer to 80% where it obviously needs to operate in order to return a long term profit. We will watch the future with anticipation.

Coalition Supports Avgas Levy Cut:

The Federal Coalition has indicated its support for a reduction in the price of Avgas, meaning a saving of one cent per litre.

The cut results from the Government’s ALOP airport transference scheme running ahead of schedule and an injection of $25m into the scheme as a part of the One Nation statement. A 3c per litre levy was originally due to be phased out in 1994 when the scheme was finalised but this has now been brought forward to June 1993.

1991 Airline Finances Remain in the Red:

ICAO estimates for 1991 indicate that the world’s scheduled airlines as a whole experienced an operating loss for the second year in a row.

The operating revenues of the scheduled airlines of ICAO contracting States (excluding domestic operations in the Russian Federation) are tentatively estimated at SUS203,400 million in 1991 and operating expenses for the same airlines at SUS204,400m, giving an operating loss of 0. 5% of operating revenues. The operating loss in 1990 was 0. 8% of operating revenues and followed seven years of positive operating results.

In per tonne/kilometre terms, operating revenues rose from 89. 4 US cents in 1990 to an estimated 93 US cents in 1991, while operating expenses rose from 90. 1 US cents. to an estimated 93. 4 US cents. The net result for 1901 (after inclusion of non-operating items such as interest and subsidies, and deduction of income tax) is not yet available but is expected to be worse than the 2. 2% loss on operating revenues recorded for 1990. The present situation in airline finances is attributed primarily to a weak economic climate in 1990 and 1991 and the negative effects of the hostilities in the Gulf.

Northwest Back to Osaka:

Northwest Airlines has had its permit to operate between Osaka and Sydney renewed after Japanese authorities withdrew permission for the service earlier this year. The service originates in New York and flies to Sydney via Osaka. Japan claimed the Japan/Australia leg was not in compliance with bilateral agreements between the three countries involved. Launched in October last year, the Osaka/Sydney leg was particularly popular and the overall route is the only direct international service between Sydney and New York via Japan.

Tpc to Monitor Airlines:

The Trade Practices Commission has announced that it will keep a close eye on the airline industry over the next year, looking for breaches of the trade Practices Act particularly, in the area of ticket pric- ing when the new Compass Airlines (Com- pass II in the industry) and other new airlines get up and running.

Compass chief executive Sam Coats has already indicated that any attempt to price his operation out of business will not be tolerated and the TPC will be immediately consulted if this happens. Mr Coats stated that Compass will not indulge in a price war with tickets being sold at below cost, a major factor in the original Compass’s collapse.

 Delta’s Big Loss:

Delta Airlines has recorded a $US151m loss for the first three months of 1992, the result of heavy discounting and high costs associated with establishing its new European routes despite a 22% increase in revenue compared with the same period in 1991.

The much larger than expected losscontinues the woes of US airlines generally, a situation not helped by the recent LA riots, during which the airport was not fully operational due to smoke. Scheduling was badly disrupted and inbound passenger numbers greatly curtailed.

Cabin Staff Recruitment:

Increased business since the demise of Compass late last year has resulted in both Ansett and Australian recently recruiting extra cabin staff.

Australian retrenched some staff in 1991 but subsequently found itself short and took on 20 extras in January and a further 15 more recently. Ansett plans to employ 40 extra flight attendants, taking its total to about 1,500. Australian employs about 1,200 cabin staff.

London City Jet Ops Start:

Jet airliner operations have begun from London City Airport with Switzerland’s Crossair operating BAe 146-200s from the short 1,030 metre strip.

The 146 is the only jet able to fly from the airport which will soon have its single runway extended slightly to 1,200 metres. Other types able to operate from the airport are the DHC Dash 7, Dornier 228, ATR 42, DHC Dash 8, Saab 340 and Fokker 50. Jet services mean that a far greater range of destinations can be served from London City.