Airline Affairs

Mr Keating said that if only 49% of Qantas was privatised as stand alone assets, the total proceeds would have to go into recapitalising the airline, leaving nothing for the government. He said: “The alternative would be to sell down the value of 100% of Australian and 49% of Qantas, which would be about 70% of [the new] Qantas. We could do that by a float to the Australian people, as we did with the Commonwealth Bank, and maybe reserving in that float substantial sections of the shares for other major international airlines who might want to take a piece of it and manage it. ” The decision has ramifications for others, particularly the Ansett group which may well now have to find an international airline partner, although the government has set up a commission (refer separate item) to specifically award Ansett international routes. One reason for the surprise change in policy was the lack of serious interest that the two floats had engendered individually as a trade sale. AA believes that British Airways was the only serious (cashed up) bidder and even that offer fell far short of what the Government was valuing it’s assets at. A combined airline with guaran teed air rights is a different matter and obviously is being seen as worth substantially more than two separate carriers flying within a seemingly undefined regulatory environment (refer Recce).

 Airlink Expansion:

Australian Airlines’ regional subsidiary Australian Airlink is expanding with the introduction of two new services between Brisbane and Alice Springs and Cairns and Mackay.

The weekly service to Alice Springs is designed to exploit the tourist market of both ports while the Mackay service fills a gap which previously saw many passengers having to fly from Cairns to Mackay via Brisbane. It is also designed to better cater for overseas tourists wishing to visit Mackay.

Us Domestics up Slightly:

Figures released by the US Air Transport Association show that US domestic airlines recorded a very slight increase in traffic in March this year, compared with the same month of 1991, which marked the end of the Gulf War.

Domestic traffic increased by just 2. 2%, a marked contrast to the 45% improvement recorded by US international airlines in March 1992 compared to the same month a year earlier. In the first three months of 1992, US domestic traffic increased just 0. 3% over 1991 but the internationals improved by 38. 4%. Unfortunately a traffic decline is likely following the May riots in LA as both inbound and domestic traffic suffered as a consequence of these tragic events.

Terminal Smoking to Be Banned:

Smoking is to be banned in all passenger terminals at all major airports owned by the Federal Airports Corporation. These include Sydney, Melbourne, Brisbane, Canberra, Adelaide, Perth, Townsville and Darwin.

Announcing the decision to exclude smoking in terminals, the Managing Director of the FAC, Mr Bill Swingler said the Corporation was following an ever increasing trend to improve the environment in airport terminals for the majority of airport users. “Given the increasingly adverse community (and legal) reaction to smoking within public buildings, we propose to implement the ban within terminals from July 1 1992. We are particularly concerned that airport staff, who spend a considerable period in terminals, should be shielded from danger to their health and we know we have the support of Staff Associations in taking this action”, he said.

Recent workers compensation cases relating to the effects of smoking have also placed a considerable responsibility on the FAC as owners of public buildings to ensure the safety and comfort of occupants. As smoking is already banned on domestic flights, it is arguably inconsistent to ban smoking on aircraft while allowing it in terminals.

Smoking has been banned in the FAC’s offices for the past three and a half years and airlines have also designated no smoking zones within their leased areas along similar lines to that of the Corporation. Terminal buildings will be clearly marked with the ‘no smoking’ symbol and an FAC By-law will be implemented to provide penalties for offenders.

Airlines Show Some Recovery:

The latest set of figures released by the International Air Transport Association (IATA) shows that the world’s airlines are recovering somewhat from their recent doldrums but as yet not enough to reflect continued recovery.

Passenger traffic growth in the first quarter of 1992 (in revenue passenger kilometres RPKs) was a substantial 27% greater than the heavily depressed same period of 1991 but only 8% better than the more representative first quarter of 1990. Freight continues to be depressed, showing growth of just 5% over the first three months of 1991 and 2% more than the same period of 1990. Overall passenger load factor for the March 1992 quarter was 65%.

Extortionists Sent Down:

A man and woman who threatened to blow up Qantas aircraft and gas the airline’s Brisbane terminal if they were not paid $750,000 last November have received ten years’ gaol between them. Julian Jablonski received six years and his offsider, Anna Nociforo, received four.

More Flights to Cairns:

The importance of Cairns and the Japanese visitor to Australia’s tourist industry has once again been emphasised with the announcement that World Air Network (a charter subsidiary of All Nippon Airways) last month flew the first of eight charters it is operating between Japan and Cairns.

The charters are operating during the peak season from late June until the end of July. All Nippon itself operates five weekly flights between Tokyo and Sydney and is considering increasing this to seven, while World Air Network has already indicated that if the current group of charters is successful, it will look at another batch in November and December. World Air Network is using Boeing 767-300s for the charters, which will add to the 64 scheduled Qantas and Japan Airlines flights between Japan and Cairns each month.

Australian Tourism Industry Association figures show a 30% increase in Jap- anese arrivals during the March quarter of this year compared with 1991. During the first three months of 1992, Australia was visited by 166,700 Japanese, 54,000 of them in March.

 Fares Still Lower Than Before Deregulation:

Despite an average 13% increase in standard fares during the first quarter of 1992 (the first period measured since the Compass collapse), domestic airfares remain more than 22% lower than they were in the December 1990 quarter, when deregulation began.

The biggest increases have been on the busiest sectors (Melbourne/Sydney and Melbourne/Brisbane), up by 17-18% in the March 1992 quarter and reflecting the sometimes stupidly low prices offered in the second half of 1991 as much as anything else. Despite this, average fares on Australia’s 18 main domestic routes fell 13. 7% in the year to the end of March 1992 compared to the previous 12 months. Good news for the airlines is the fact that average revenue passenger kilometres (RPK) have increased on the medium and long distance routes in particular, helping the airlines recoup losses made during the price war with Compass.

 Delta Cancels Aircraft Purchases:

Following a recent trend among many operators, Delta Air Lines is cancelling more than 100 aircraft it planned to add to its fleet over the coming nine years, saving over $US5bn in the process.

As yet, the airline has not specified which orders and options will be cut, although in May this year options it held on 10 MD-888 and two Boeing 757s expired. At the beginning of the year Delta had 155 aircraft on firm order comprising 14 7578, 25 MD-88s, 57 737-300s, 26 MD-90s, 12 767-300s, 12 MD-11s and nine A310-300s. Older aircraft will be retired less quickly than originally planned and new aircraft will be added at a reduced rate. The result of this will still be a larger fleet than today’s and about the same number as previously projected for the turn of the century, albeit with fewer new aircraft.

Qantas to Offer Individual In-Flight Entertainment:

Qantas is to install in-seat videos in its First and Business Class cabins on all aircraft.

Deputy Chief Executive, Mr Julian Hercus, said “We have conducted a detailed evaluation of the many inflight entertainment systems available to ensure we have the best. We first tested in-seat videos aboard a 747-300 aircraft in 1988. Since then the quality and dependability of the technology has improved significantly. We are now ready to make this major commitment which will dramatically improve the quality of long haul travel. ” The video system is manufactured by Matsushita Avionics Systems. Screens will be mounted on retractable arms housed in the central arm rest of each seat. First class passengers will also enjoy the complete flexibility of having individual video cassette players in each seat. These will allow passengers to select tapes from an extensive onboard library and play programmes at will.

Business Class will have access to a 12

channel system which will run movies, news, documentaries and short programmes on a continuous basis. Pas- sengers will have a programme channel to inform them of when various features will commence in much the same way as many hotels offer in-house cable TV programmes. First Class passengers will also have access to the Business Class system.

Installation of the in-seat video and cabin management systems will begin on Qantas 747-400 aircraft in August and 767-300s in October. The remainder of the fleet will be progressively modified during 1993. A trial of seat back videos in Economy Class will be conducted on a Qantas aircraft during 1993.

Compass Lessors Challenge Caa:

The lessors of the former Compass Airlines’ fleet of Airbus aircraft have begun a High Court action against the Commonwealth, claiming more than $13m in damages.

The action by Monarch Airlines, Polaris and Canadian Airlines stems from the Civil Aviation Authority’s seizing of the Compass fleet last December due to unpaid charges. In order to regain posses- sion of the aircraft, the lessors had to pay the outstanding charges of $13m, albeit under protest and with the proviso that the money would be recoverable if a court should decide the liens placed on the air- craft by the CAA were invalid or the charges imposed were illegal, void or unenforceable.

The action is of great importance as it will test the validity of charges imposed by the CAA on the aviation industry generally as well as trying to establish that the liens on the aircraft were not valid. In addition, it challenges the CAA’s power to seize and even resell the aircraft (refer p47 June 92 AA). The three lessors are aiming to recover the money paid to the CAA plus damages. The case could have substantial ramifications for the entire Australian aviation industry.

Qantas Plans More Flights:

Qantas will introduce a revised schedule which includes a substantial increase in flights later this year, with increased frequencies on some established return services as well as some new destinations being added to the network. The new flights will begin in October and stem from the increase in capacity provided by 16 alien Quistion the arrival of four new Boeing 747-400s and one new 767-300.

Qantas plans include an increase from three to seven services per week between Hong Kong and Bangkok and between Hong Kong and Singapore; the introduc- tion of two flights per week to Sapporo in Japan; two flights per week to Seoul, three new services per week linking Melbourne with Bali and Bangkok; an additional weekly service to Jakarta; an increase of weekly services between Australia and Frankfurt to four; an extra weekly service from Cairns to Los Angeles and from Cairns to Singapore via Darwin; and three extra Sydney to Los Angeles nonstop ser- vices per week, making ten in all. The airline is also believed to be examining the possibility of introducing a Sydney/ London express service via Los Angeles, something that would be fairly time competitive if a short stopover in LA could be guaranteed. Oddly enough, at present no airline seems to be able to transit that particular airport in less than two hours, a far cry from the rapid turnarounds at Singapore and Bangkok.

Qantas also plans to replace its charter flights to Ho Chi Minh City (Vietnam) with a scheduled service and also intends its subsidiary – Australia Asia Airlines – to begin a fourth weekly service to Taipei in the peak November-February period.

 Southwest Thrives Where Others Fail:

While most others around it lose large amounts of money, go into bankruptcy protection or fail outright, American domestic airline South-west carries on profitably, offering low fares, reliable service and keeping costs under control.

Southwest is now in its 20th consecutive year of profitability and sustaining modest but real growth by not becoming too adventurous and by expanding not for its own sake but rather for sound commercial reasons. The key to its success lies in its ability to keep costs down. A passenger mile costs American Airlines 8. 8c and United Airlines 9. 6c. At Southwest, a passenger mile costs just 6. 8c, the result of achieving rapid turnaround and high util-isation of its single type fleet and other efficiencies.

Surprisingly it tends to ignore some of the ‘conventions’ of the modern US airline system – it is not a member of any com- puterised reservation system, it flies only one type of aircraft (Boeing 737), it does not abide the hub and spoke system, flying shorter non stop sectors instead, it does not serve meals and it doesn’t add new destinations to its network until at least eight daily flights can be justified.

If it wished, Southwest could add many cities to its current tally of 34 in 15 states. In fact no fewer than 51 cities asked the airline to start services last year but only Sacramento was added. This year, Cleveland and Columbus (both in Ohio) have been added, and that is it for 1992.

Southwest’s unconventional success in many ways reflects its unconventional CEO, Herb Kelleher. Whether he be arm wrestling over the rights to use a slogan (refer p16 June 92 AA), painting his air- craft as the Texas flag or as a killer whale or boarding an aircraft dressed as a lep- rechaun, 61 years old Kelleher obviously knows what he’s doing and won’t be swayed by what others suggest he should be doing. We could do with a few like Kelleher in Australia, what with our high load factors yet seemingly invisible profit ratios.

 Eastern Not in TN Figures:

Our ‘Rubbery Figures’ item on p5 of the June issue suggested that Australian Airlines might also be including some of their Eastern uplift in their own mainline figures. Australian have since assured us that this is not so, particularly as their Dash 8 propjets are configured with 36 seats and only aircraft of 38 seats plus are eligible to be counted in the mainline DoTC statistics. Whilst it is refreshing to officially hear this it is interesting to note that the carrier has recently moved to fly many of its Dash 8 regional sectors under TN flight designators (refer Traffic this issue).

Townsville Takes Off:

Townsville airport had a big year in the 12 months to the end of March 1992 with the number of passengers using the airport increasing by 9. 1% to 441,874 compared with the same period in 1990-91 The major domestic airlines recorded passenger growth of 3. 9% during the period in review – despite reducing aircraft movements by 15%- but the number of passengers using Townsville on commuter flights (defined as aircraft with less than 38 seats) increased by a substantial 35%. Healthy growth is expected to continue at Townsville, particularly when Compass 2 operations commence later this year.

Aviation Reform Top Subject at Big Industry Conference:

As part of worldwide shifts towards deregulation, the Australian aviation environment is currently undergoing major changes.

Firm concepts such as national borders and air routes for domestic and international carriers are changing in significant and permanent ways. What the repercussions of these changes will be in practical terms is vital intelligence for everyone involved in the aviation and travel industry. To address the critical issues, IIR Conferences has developed a comprehensive two day seminar, “Aviation Reform”, to be held on September 22 and 23 at the Golden Gate Park Plaza, Sydney.

The conference programme features a spectrum of viewpoints from government, industry and various research bodies. These include: The Civil Aviation Authority, Department of Transport & Communication, the Industry Commission, Ansett Australia, Qantas, Australian Airlines, the Trade Practices Commission, Jetset Distribution, Northwest Airlines, the Tourism Task Force, and Kendell Airlines. There is also a special Canadian address on globalisation and frequent flyer and other product loyalty programmes.

Topics include: the trans Tasman joint market; bilateral agreements, multiple designation policy and route allocation; growth opportunities for niche markets; alliances, mergers and economies of scale; privatisation of what was the national flag carrier; consumer demand, the new domestic carrier and travel trends; and the new line up of deregulation regulators.

For further details and a copy of the bro- chure, contact IIR on (02) 929 5366.

Virgin Introduces Mid Class:

Virgin Atlantic Airways is to introduce what it calls ‘Mid Class’ in an effort to attract more cost conscious premium fare business passengers.

The new class will give passengers business class comfort at full economy fares and complements the airline’s existing ‘Upper (first class service at business class fares) and its normal heavily discounted economy classes. Mid Class passengers will get a portion of the cabin (30-38 seats) dedicated to them, 38 inch seat pitch, separate check in, priority baggage handling, pre takeoff drinks, amenity kits and video monitors in the armrests. The fare will be about two thirds lower than Virgin’s main competitors on the transatlantic route.

Overseas Air Rights Body Established:

The Federal Government is establishing a special body designed to allocate international air rights to Australian airlines wishing to expand into the overseas market. Initially, the International Air Services Commission will allocate only Qantas’ unused rights. The Commission will comprise members from the aviation, tourism and public sectors and is designed to provide benefits for tourism, trade and consumers. Some of these overseas rights are expected to be available to carriers by the end of the year, with links between Australia and New Zealand the first to be clarified. This will enable Ansett to achieve its aim of flying across the Tasman relatively early and also allow Air New Zealand into the Australian domestic market, as was proposed in the government’s One Nation statement of last February.

Of Australia’s neighbours, Qantas has unused rights with the Philippines, Indonesia, Brunei, and Malaysia but few or none with Japan, Singapore and Thailand. Qantas has just announced an expansion of services from October this year, particularly in the Asian region (refer Airline Affairs this issue).

Whitsundays Battle Hots Up:

Following Australian Airlines’ threat to legally challenge Ansett’s monopoly on Hamilton Island flights and the island’s current financial problems comes news that Ansett is considering buying the half of the island’s airport not already owned by the TNT/News Corp group If the move comes off, Ansett would have full control of the airport and be in a stronger position to ward off any attempts by Australian to move in. Fifty per cent of the airport is currently owned by Keith Williams’ Hamilton Island Enterprises, which is now in receivership.

Australian Airlines has meanwhile said it will consider allowing Ansett landing rights on its own islands, presumably as a ‘softener ahead of negotiations over Hamilton Island. Australian has no current interests in the Whitsundays, a prime holiday spot, and is keen to establish a market base in the region other than nearby Proserpine.

Nsw Intrastate Air Transport in Disarray:

Data supplied by the NSW Dept of Transport (refer table below) indicates that of 38 ports serviced, over the past decade no less than 28 have suffered significant downturns in traffic.

Interestingly, the data also shows that the trend will turn around with 29 of the 38 ports tipped to increase their respective traffic base by the end of the decade. Analysing the passenger throughput of the 38 ports over the period 1978/79 through to 1988/89, the big losers were Bourke, Cowra, Cooma, Dubbo, Grafton, Griffith, Inverell, Maitland, Narrabri, Parkes, Temora and Williamtown. Causes for the declines range from continuing rural recession (usually via drought) in some areas to continuing improvements in road and rail transport to Sydney in others. For instance, by this time next year the journey from Wagga to Sydney will be about three hours quicker than it was a decade ago due to the ever improving Hume Highway.

However, all is not negative as the DoT predicts a solid turnaround later this decade with the general trend being reversed, largely thanks to tourism. Ports slated for quite significant gains in the years ahead will be Albury, Coffs Harbour (which should have direct jet services from NZ by 1994/95), Dubbo, Gunnedah, Moree, Port Macquarie, Taree and Wagga. It is expected that the NSW intrastate air transport system will be selectively deregulated during the coming year.

Qantas Sells Simulator:

Virgin Atlantic Airways has contracted to buy a Boeing 747-200 flight simulator and al fixed base simulator from Qantas.

The flight simulator is representative of a Pratt and Whitney powered 747. With Qantas’ introduction of the 747-400 and reduction if its 747-200 fleet, the simulators had become surplus to requirements. Virgin operates two ex-Qantas 747-238Bs, registrations G-VJFX (VH-EBH) and B-VLAX (VH-EBI) and hopes to operate services to Australia by 1994.

Aeroflot Gets Sabre:

Aeroflot is to employ the Sabre computerised reservations system in an attempt to tidy up the inefficient and messy system now used.

When operating in many of the former Soviet republics, Sabre will considerably improve the lot of Aeroflot’s estimated 150 million annual passengers. Originally developed by American Airlines and IBM

some years ago, Sabre revolutionised the ticket reservation process when introduced. American and IBM have been contracted by Aeroflot to develop and install the system in a deal which could be worth up to $US100m.

 Cathay Pacific Makes Ban on Smoking Permanent:

Little more than halfway through a three month trial smoking ban on Australian routes, Cathay Pacific has made the ban permanent.

The early decision was prompted by strong passenger acceptance of the smoke free flights which commenced on April 1. -Of the tens of thousands of travellers fly. ing Cathay Pacific between Hong Kong and Australia, only one passenger declined to board a flight because of the smoking ban, claim Cathay.

“We have been very pleased by the results of our trial which was originally scheduled to run until July 1,” said Mr Bill Rothery, Cathay Pacific General Manager for Australia and New Zealand. “In Sydney, for example, about 20 people objected to the ban, but hundreds more complimented Cathay Pacific for being the first international airline to ban smoking. Our inflight survey revealed that over 50% of smokers supported the ban. Because smoking has been our greatest single cause of passenger comment, our complaint letters have fallen dramatically. ” Cathay Pacific’s trial smoking ban on 13 hour Hong Kong/Vancouver services has also been successful and the airline has now banned smoking on flights from Los Angeles to Hong Kong, effective July 1. The daily flight from LA to Hong Kong, which can take up to 16 hours, is one of the world’s longest scheduled services.

“As a company, we are committed to the environment,” Mr Rothery said. “There is no doubt that a smoke free environment makes for more comfortable travelling, particularly on long distance flights. ” • AUSTRALIAN

Boosts Cairns Services:

Australian Airlines is increasing services to Cairns from this month in preparation for the peak tourist season and also presumably to help fight Compass Airlines’ activities in that market when it gets up and running. Australian has added two extra direct flights from Sydney and Brisbane to Cairns, and has also reintroduced direct flights from Brisbane to Cairns each Saturday and Sunday.

Heathrow Plans New Terminal:

The British Airport Authority has announced plans to build a fifth terminal at London’s Heathrow Airport.

To be located near the airport’s western perimeter, Terminal 5 will nearly double Heathrow’s present passenger capacity without the need for more runways or extra night flights, assuming the introduction of new generation high capacity widebody transports early next century. At the moment, Heathrow is handling 40 million passengers annually and the present terminals have a capacity of 50 million. The new terminal will increase the airport’s annual capacity to 80 million per annum and will cost an estimated $A1. 6 to $A1. 9bn. If the necessary approvals are given, work on the new terminal could begin in 1996 and be completed (in three stages) by 2016.

Behave, or Else!:

Air India has apparently opened up a whole new era of public relations, if the training of their stewardesses gives any indication.

A recent airline press release on the topic has noted that subjects covered during the stewardess training programme include food, wine, grooming, speech and. . . karate! We must remember not to complain about the food on Air India flights from now or not request chops for dinner!

Protection for Travellers:

The Universal Federation of Travel Agents Associations (UFTAA) which represents some 35,000 travel agents in 82 countries, has vowed to force the introduction of a total protection scheme to protect consumers when travel organisations collapse.

The proposed scheme will cover all travel arrangements made through licenced agents including air travel, accommodation bookings, car rental and sea and land travel. The organisation believes a small fee imposed on each travel transaction would quickly build a compensation fund to cover consumers who have suffered when an airline or other organisation fails. The Compass experience is a good example of this. After the airline’s demise, the major Australian credit card companies recharged travel agents for the cost of worthless tickets bought by their card holders, even though the agents had previously passed the money onto Compass. Passengers who paid cash or bought tickets direct from the airline were left with no recourse. The UFTAA says that previous efforts to introduce such a protection scheme have been “stymied by the International Air Transport Association • EVERYBODY OUTSKI!: Proving how quickly they can adapt to western industrial methods, pilots from the former Soviet Union have begun labour negotiations with Aeroflot and have threatened to strike unless the airline agrees to wages and benefits more akin to those enjoyed by pilots in the west. For its part, Aeroflot is studying western methods so as to discover exactly what those wages and benefits are and comparing them to those on offer in Russia and other former Soviet republics.

Hong Kong/NY Non Stop:

Cathay Pacific is examining the possibility of non stop flights between Hong Kong and the eastern seaboard of North America by the middle of the decade. Ports such as New York, Toronto and Chicago are present possibilities.

The airline says it has no immediate plans to expand its presence in North America but is considering the new services because of the improved fuel burn which will be offered by the Rolls-Royce RB211 engines in Cathay’s fleet of Boeing 747-400s. Cathay is also working with Boeing in an attempt to improve the -400’s flight management computer so as to optimise the aircraft’s cruise pitch attitude. This could result in a 1% fuel saving, or about a tonne over a 10 hour sector.

Second Australian Aviation Psychology Symposium to Be Held Later This Year:

A major international aviation psychology symposium is to be held in Sydney between November 16-20 1992.

The objective of the symposium, which follows on from the successful initial symposium held in 1990, is to provide a forward looking forum in which new strategies for the contributions of psychology and related disciplines to the safe and effec- tive functioning of aviation organisations and systems will be proposed, debated and developed.

A central theme of the symposium will be to bring together, in workshop format, practitioners from aviation psychology and its related disciplines, flight operations personnel, safety managers, cabin crew, ATC, staff from investigatory and regulatory bodies, and relevant aviation industry researchers and academics.

There will be three major streams to the symposium; aviation selection and training; aviation safety system development; and human factors and crew resource management. There will be additional workshops on related subjects with each workshop running for two days and chaired by prominent field experts.

The venue for the symposium is the Manly Pacific Parkroyal Hotel. Further details can be obtained from Brent Hayward, ph (03) 2853801 or fax (03) 2853401.