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The situation as to what is actually occurring though is muddied by Airbus CEO Jean Pierson’s recent claim that it was Airbus Boeing was discussing collaboration with whilst the view from Seattle is somewhat different with Boeing stating that it is only pursuing initial discussions with the various partners on an individual company by company basis.

The move could be an extremely clever ploy by Boeing to neatly tie up the future megajet market as legally no Airbus partner can build any aircraft that conflicts with an existing Airbus design. Members are thus free to build below the A319 and above the A330/340 and their planned derivatives. If Deutsche Airbus or BAe, for instance, became heavily involved with Boeing on a megajet it would then put incredible strain upon the Airbus alliance and either exclude BAe’s involvement in Airbus or Airbus building its own megajet, which it has already provisionally designated the A350 and has been publicly discussing since the late eighties for an expected launch later this decade.

The bottom line though is that no one company could afford to finance such a gargantuan programme on its own whilst the market is not really big enough for two megajet players. The last thing the industry needs is a re-run of the Tristar/DC-10/747 flasco of the seventies.

A comprehensive liaison between Airbus Industrie and Boeing on this highly complex and expensive programme in many ways makes a lot of sense and could well lead to a follow on programme to build a successor to Concorde.

Helicopter School Open Day:

Those interested in a career flying helicopters should consider attending Bankstown Helicopters’ open day on March 13.

The open day will provide a great opportunity to discover more about what is involved in a career in rotary wing flying. Static displays will include the Bankstown Helicopters’ fleet of R22s, Bell 47, Squirrel and Jetrangers. Visits are also scheduled from various Polair, rescue, media and milltary helicopters throughout the day. Those interested will have the chance to enjoy a trial introductory flight and there will also be joyflights available. A BBQ will be held and entertainment will run through the course of the afternoon.

Activities will commence from noon at Bankstown Helicopters, Marion Street, Bankstown Airport. For details ph (02) 791 0500. Bankstown Helicopters is one of Australia’s largest and most respected helicopter training establishments, a feature article on their operations appeared on p45 Aug 92 AA.

Tornado Deal Struck:

As part of the Al Yamamah II deal, Saudi Arabia has finally confirmed its intention to buy 48 Tornados.

The deal is of immense importance to British Aerospace, who had they not received the order, would have been forced to close the Tornado production line prematurely. The deal is believed to be worth as much as $A9bn. In addition the order is expected to safeguard almost 20,000 jobs as, like almost all other aerospace companies in recent times, BAe has had to lay off thousands of workers. The deal ends months of speculation that the order for Tornados would not go ahead, especially since Saudi Arabia has only recently ordered additional F-15s.

BAe is continuing to negotiate with Saudi Arabia over other elements of the Al Yamamah II deal, notably for more Hawks and PC-9s.

American Invests in Canadian:

American Airlines’ parent group, AMR Corp, will invest nearly $US200m in Canadian Airlines International in exchange for a 33. 3% stake.

Part of the deal is Canadian signing a 20 year contract for airline management and data processing services through AMR’s Sabre organisation, worth about $US2bn. For its part, Canadian stands to save millions in costs. The two carriers will also integrate their frequent flyer schemes but will continue to operate independently. The deal will not effect Canadian’s international routes, American’s services to Canada will remain intact and American will not have the right to fly from Canada to nations other than the USA.

There are no plans to coordinate the two airlines’ schedules (although the option remains to do so on some routes if there are benefits for both) and the integration of other areas such as maintenance and crew training has not been part of the discussions. At the time of writing the deal was awaiting approval from both governments. While these negotiations were going on, American Airlines meanwhile announced a loss of $US200m for the fourth quarter of 1992, bringing its total loss for the year to a staggering $US935m. The airline lost $US250m in 1991, chief executive Robert Crandall stating the obvious when he said “we simply can’t have another year like 1992” and then adding the worrying rider “although the company has shown some signs of strength, we think much of the optimism is unwarranted”.

American, which has always been regarded as one of the world’s best run majors is not alone in recording record losses. For calendar 1992, United declared a total loss of $US956m and Delta $US564m whilst the only large US carrier to record a profit was Southwest.

Whilst Continental is now expected to claw its way out of Chapter 11 via its newfound relationship with Air Canada, Northwest, TWA and America West are expecting the worst for 1993 with possibly two of the above ceasing operations.

Wangaratta Chosen as Sport Aviation Centre:

Wangaratta in north-eastern Victoria has been selected as the site for the National Sport Aviation Centre (ASAC) following a recent meeting by the Australian Sports Aviation Confederation.

The centre has been planned since 1988 when the Civil Aviation Authority offered Mangalore airport to sport aviation for that purpose but this opportunity was lost when Seymour Shire handed the airport to a aviation firm.

The centre will be established on land adjoining Wangaratta airport and will be built in three stages. Stage one- costing about $3. 5m will begin in May this year and will include the infrastructure necessary to conduct world, national and state championships, club competitions, training camps, conferences, fly-ins, seminars, technical courses and so on. Stages two and three include plans for an Institute of Sport Aviation, a wind tunnel, Museum of Sport Aviation and an Aviation Hall of Fame. A $250,000 federal government grant has got the ball rolling and other backing from sponsors and governments is being sought.

Canada Approves Single Turboprop Commercial Operations:

Canada has taken a step which the rest of the world must inevitably follow by allowing commercial passenger carriage in single engine turboprop aircraft, at night and in instrument meteorological conditions (IMC), providing those aircraft and their engines have demonstrated suitable reliability and are equipped with certain items of operational equipment.

The move allows full commuter and charter operations for aircraft which were previously limited to private, corporate or cargo use and applies only to factory built aircraft, not conversions of previously piston engined aircraft. The decision particularly effects four aircraft types, the Cessna Caravan, Aerospatiale TBM 700 and Pilatus Porter and PC-12.

Australia’s CAA is liaising with Transport Canada on the matter and is expected to follow suit, while the US Federal Aviation Administration has been compiling a database of single turboprop accidents in order to make a decision some time this year. The European Joint Airworthiness Authority however, surprisingly has gone the other way, taking several steps backwards, its proposals on the matter not allowing single engined aircraft-piston or turboprop to operate IFR at all, even on private, corporate and cargo operations.

AA Comment: If this move does come to pass it could well prove to be the most significant boost to GA for many a year. Essentially, an ageing class of piston engined light and medium twins can now be eventually replaced by far more modern, reliable and younger turbines in the commuter and charter role increasing safety and customer appeal in the process.

In purely commercial terms the approval also provides a massive kickstart for significant sales of the Cessna Caravan, Pilatus PC-12 and TBM 700. Three types that were all designed around what has for a long time been aviation’s most reliable engine and optimised for the day when IFR charter operations would be logically sanctioned for this new breed of aircraft.

Elal Blames Boeing:

The crash of a Boeing 747 freighter into an Amster dam apartment block last October has been blamed on Boeing, and Dutch air traffic controllers have been attacked by ELAI, the operator of the aircraft.

ELAI claims that Dutch controllers made the attempt at landing at Schiphol significantly more difficult than it needed to be but says Boeing is solely responsible for the accident, which resulted from the separa- tion of the No3 engine after a fuse pin in the engine mount attachment broke. The No 3 engine hit No 4 after it detached, causing the latter to also separate from the wing. Additional damage to the wing made the aircraft difficult to control and the combination of factors resulted in a total loss of control. A China Airlines 747 freighter suffered what appears to be a similar problem not long before the EIAI disaster.

Boeing has declined commenting until the results of the official investigation are published.

Qantas Chief Named:

Mr Gary Pemberton, currently the managing director of Brambles, will take over the chairmanship of Qantas after the sale of 25% of the airline’s stock to British Airways is completed.

Mr Pemberton’s appointment is for five years and he will replace Bill Dix, whose services will be retained as a consultant for the float of the remainder of the airline later this year. Gary Pemberton has been Bra- mbles’ managing director for nearly a decade and he was also a former director of Australian Airlines. He has also sat on the boards of other organisations including the Commonwealth Bank and John Fairfax holdings.

 Qantas Premium Fare Cuts:

In a move designed to stimulate business travel, Qantas has introduced first and business class fare reductions of up to 38% to 11 destinations in Asia, the USA and Canada from various Australian departure points. The new return fares apply to Singapore, Bangkok, Hong Kong, Kuala Lumpur, Jakarta, Manila, Taipei, Los Angeles, San Francisco, Honolulu and Vancouver. Most of the reductions are in the order of 10-15%, but those travelling to North America get the best deals. Passengers travelling from Melbourne or Sydney to Los Angeles, for example, will pay $6799 first class return (down from $11,064) while the business class return fare on the same route is reduced from $7576 to $4799.

Boeing Cuts Hurt Everyone:

Cuts in the production rates of various Boeing models have effects beyond that of just the manufacturer, the fallout also effecting the thousands of vendor companies which supply parts.

Cancelled or postponed orders have forced Boeing to reduce the production rate of the 737 from 14 per month to 10 by next October (after peaking at 21 a month during 1991), the 767 from 85 to five by September, the 767 from five to three by October and the 747 from five to just three per month. The company expects to build 340 airliners this year, 101 fewer than 1992.

These significant cutbacks from Boeing (and its rivals) have a snowballing effect. Engine manufacturers General Electric and Pratt & Whitney have both introduced large staff reduction programmes while Australian industry could also be affected as between them ASTA and HDH produce 737 ailerons, 747 leading edge slats, 757 wing ribs, 747 Krueger flaps and 757 composite rudders in addition to a wide range of com- ponents for Airbus, BAe and McDonnell Douglas.

Compass to Coolangatta:

Compass Airlines has begun daily return services from Adelaide, Melbourne and Sydney to Coolangatta and will increase the schedule to two flights per day when its sixth MD-80 is delivered in March.

Prior to full time premises being upgraded to a suitable standard, Compass will operate from an interim terminal at Cool-angatta, the former Eastwest site, away from the main terminal. The Queensland government is assisting Compass in the preparation of interim terminal facilities preparatory to a new common user being completed by the middle of next year.

Meanwhile, Compass has introduced trial off peak weekend flights to and from Cairns in response to an increase in ticket demand. The aim of the trial is to assess the ongoing level of demand with a view to introducing regular off peak weekend services. Compass plans to double services to Cairns and Townsville with the arrival of its seventh MD-80 in April.

 Ansett Gets Indonesian Approval:

Ansett has been given approval to start services to Indonesia following the issue of an International Air Services Commission draft determination which allocates Ansett the equivalent of 3. 9 Boeing 747 services a week between the two countries which is technically the equivalent of daily 767 services.

Ansett was also allocated the equivalent of 0. 25 747 services a fortnight between Port Hedland and Denpassar/Jakarta (or weekly BAe 146 services). Ansett’s application to introduce services to Singapore and Hong Kong is still being considered, while services to Malaysia have been approved. As noted elsewhere in this issue’s Newsdesk, approval for services to Japan’s new Kansai Airport (due to open in 1994) has also been given, albeit not with the capacity desired.

Fac Slugged by Tax Office:

The Federal Airports Corporation (FAC)- which has become a corporate taxpayer for the first time this year – is already in conflict with the seemingly insatiable demands of the Australian Tax Office.

The FAC has been unable to obtain deductions for depreciation on certain aviation infrastructure assets constructed before February 1992. This has resulted in an effective tax rate for the year of 71% as opposed to the legislated rate of 39% and reduces the FAC’s ability to provide all the infrastructure required by the aviation and tourism industries.

The FAC has so far approved $1. 6bn in capital works at 23 airports and the total is expected to reach $2. 8bn by June 2001. It has already spent $850m, including about $300m on Sydney Airport’s international terminal and a further $300m will be spent on all projects this financial year.

Qantas la Flights Threatened:

Northwest Airlines has asked the US Government to suspend Qantas’ right to fly non stop between Australia and Los Angeles in retaliation for restrictions placed by the Australian Department of Transport and Communications on North-west’s New York/Osaka/Sydney service.

The DoTC has stated that no more than 50% of passengers arriving in Sydney can board the aircraft in Japan, a move which Northwest has described as “unwarranted and illegal” and one which violates its rights under international agreement.

The Japanese government also endorses the restriction as this route is looked upon by Japan and Australia as being a New York/Sydney route rather than a tool for US carriers to eat into the lucrative Japan/ Australia traffic base. Northwest has also threatened to pull out of Australia altogether, the move coming with an interesting sense of timing-just two weeks before Australia/US bilateral aviation talks were due to be held in Canberra. Qantas currently flies 10 weekly non stop services from Sydney to Los Angeles.

Meanwhile, United Airlines has long held plans to fly between Sydney, Tokyo and New York but continuing problems with discussions between the USA and Japan have so far thwarted these. Japan objects to the proposed services and though United has been allowed three services a week by Australia the airline is demanding daily frequencies on the basis that anything less would be providing a non competitive service.

The greater issue involved here in what has been an ongoing problem for some time is the existing US/Japan bilateral agreement which was established in 1952 and gave US carriers generous access to Japan whilst Germany is also in the same situation. United and Northwest are the current main beneficiaries of the arrangement which was put into place when there was no Japanese international airline and very few Japanese were travelling overseas.

Japanese and other Asian carriers now want a greater part of the available market – their local market, in effect – while US airlines see the growing Asian market in an attractive light, particularly when their overall financial performances are examined. Japan wants the bilateral agreement renegotiated but is disinclined to do so because of other tensions being created by Japan’s significant trade surplus with the USA at a time when US manufacturers are complaining their products are not being given proper access to the Japanese domestic market.

Qantas is caught in the middle of all this, a series of issues which go far beyond mere airline landing rights.

Bainto Usair:

Following on from its purchase of a 20% stake in Qantas, British Airways has finally gained a long awaited shareholding in USAir.

The $US300 million deal, which should see the three airlines become the first truly global carrier, involves BA obtaining a 19. 9% voting stake in the airline, and three seats on the new extended board. This could rise to 21. 8% depending on USAir’s shareholder’s approval. The two carriers will enter into a code sharing agreement which will allow BA’s trans Atlantic flights to link into USAir’s domestic routes, finally providing BA with access to the US domestic market.

The new alliance takes the place of BA’s original proposal to acquire a much larger holding ($US750m in total) which was on the verge of rejection by the US Department of Transport on the grounds that it gave the carrier too much control. The current deal does however permit BA to invest a further $US450m in the future, increasing its holding to 32. 4%, depending upon regulatory and financial conditions.

Gama Calls for Tax Relief:

The US General Aviation Manufacturers Association (GAMA) has again called upon the US Federal Government to reform product liability laws and to give tax incentives to the alling US GA manufacturing industry.

As revealed by GAMA’s annual industry review, slow economic activity and crip- pling liability laws have seen yet again a decline in aircraft production. The review records that shipments of aircraft units in 1992, dropped to a record low of 899, almost 12% lower than in 1991. The value of exports from the US also fell by over 22%, although actual units exported dropped by 5% to 363. Corporate jet deliveries dropped by 8%, turboprops by 20% and piston engined aircraft by 10% to 561 units.

GAMA has however been encouraged by the recent growth in US GDP and a move afoot to introduce product liability reform legislation in Congress.

Indeed the view from Washington is that President Clinton will have to do some- thing about the litigation madness that is generally recognised as one of the greatest single impediments to economic growth within the US. Whether a Democrat Presi- dent that reportedly received a third of his campaign funding from the legal profession is able to bite the bullet and take the lawyers head on is another story. Perhaps Hil- ary Clinton’s efforts to reform the equally debilitated health system will also bear fruit for the manufacturing community as litigation is slated as a major, and mostly unnecessary, fiscal burden upon the US health system.

Caa in Turmoil:

Following a marathon 14 hour board meeting, the CAA decided on February 2 to accept the resignation of its chief executive, Frank Baldwin and approved the long term removal from the TAAATS programme of its former director Dr Rob Edwards.

Dr Edwards had till February 5 to accept a position in R&D within ICAO (via the CAA) though at presstime it was not known if he would indeed accept this post or choose to resign.

The board considered that the CAA would be unable to operate effectively, efficiently and harmoniously without public and internal controversy, and recommence TAAATS if Mr Baldwin were to remain as CEO and Dr Edwards as GM of the Projects Division. An update on the Macphee report is on p28 of this issue.

The CAA will now begin the search for a replacement chief executive and has already advertised for a replacement for Dr Edwards while the TAAATS programme itself has been effectively delayed by at least two years. Thomson CSF is rebidding in competition with Hughes, the tenderer most observers thought would have won the bid in the first instance.

AA Comment: We have covered the TAAATS programme in great detail in numerous issues over the past year so we need not review the entire debacle here. However, as the entire board originally was briefed on the Thomson bid and approved it accordingly why isn’t the board sharing some of the responsibility for what followed? The entire TAAATS situation has cast an aura of incompetence over the CAA at a time when it needs strong leadership. The board is there to vet what is happening within its organisation. If it endorses a deci- sion that proves to be so wrong that a parliamentary committee has to be called in to investigate that decision and senior executives of that organisation have to lose their jobs then isn’t the board also responsible to some extent? Mr Macphee in his investigation may have publicly exonerated the board of any wrongdoing though one wonders if in real private enterprise such a broad brushed forgiveness would be appropriate, likely or justified- we think not. ”

Dinner Anyone?:

Qantas Flight Catering has had what is believed to be its busiest pre Christmas period yet.

In the week to December 12 last year the Sydney Flight Catering Centre produced an incredible 142,008 meals, handling 287 aircraft, while in the four weeks ending December 26 the centre produced a staggering 563,615 meals and provisioned 1140 aircraft. In the first 26 weeks of 1992/93 the centre produced over 3 million meals and provisioned over 6700 aircraft.

These figures are all the more impressive when one takes into account the very different requirements each airline has that the centre services, and the three distinct levels of service almost all international airlines provide.

Meaningless Numbers:

Australia’s two major domestic airlines are at it again, taking the same set of statistics and both claiming market leadership as a result. We’re not going to bore you with the details of this; suffice to say a Roy Morgan Research survey resulted in press releases with the following headlines: ‘Ansett Aus-tralia Leads in Business Market’ and ‘Australian Leads Business Market’, both backed up with impressive looking and percentages. . .

Rmit Wins Rnzaf Contract:

The Royal Melbourne Institute of Technology’s Department of Aircraft Technology has been awarded a contract by the RNZAF to train its engineering officers.

The contract was awarded after a six month assessment of over 50 aerospace training institutions around the world, the criteria including the ability to meet detailed training specifications in aircraft mechanical, avionic and armament systems. The 12 month course will incorporate various aerospace subjects including propulsion, aerodynamics, avionics and materials.

 Klm and Jal to Share:

KLM and Japan Airlines (JAL) have entered into a code sharing arrangement which will result in the Dutch airline carrying JAL passengers to European destinations via Amsterdam.

From early April, JAL will cut direct flights from Tokyo to Madrid and Zurich (the first two cities covered by the deal) and fly passengers into Amsterdam’s Schiphol Airport from where they will swap to a KLM aircraft using a JAL flight number. KLM currently uses Boeing 7378 on these routes but will replace them with higher capacity multi class Airbus A310s.