Recce

As we clearly stated in our May issue analysis, Compass did not have a cost problem, it simply had a short term revenue problem that would have been overcome if the airline could have operated for another six months or so using the credible marketing plan outlined by Sam Coats to the NAPC on February 23.

Compass entered the market at a bad time, a period where for the first time in years month on month traffic was actually in decline. That has since been fortunately reversed and if the confusion over the airline’s management credibility hadn’t taken place and the two additional aircraft had been introduced to service then it is more than likely that the airline would have been in the black by the spring.

That the airline could have been saved for a relatively small amount, say around $25m is incredible given that most of the commentary at the time from those charged with ‘saving’ the airline was focused on closing it down rather than actually saving what was generally considered a viable asset.

Australian Aviation believes that a number of highly accredited investors were eager to examine the possibility of becoming involved in saving Compass but got nowhere in their efforts. Phone calls weren’t always accepted, or returned and the period between a receiver being appointed and the airline being officially closed down was so incredibly short that little if anything could have been done to save the airline, tens of millions of dollars of investors and creditors. funds and the jobs of a thousand or more people.

From where we stand, Compass didn’t die, it was quickly and professionally put to death.

With Friends Like This Who Needs Enemies?

The incredible move by the US Dept of Trade to threaten. withdrawal of traffic rights for three of Qantas’ 10 weekly trans Pacific flights has surprised all concerned.

An update of the potentially devastating situation appears in Stop Press though to recap briefly, the issue centres on the right of US mega carriers to plunder the Japan/Australia market. Air rights between sovereign states are highly valuable assets and thus strictly controlled. Qantas for instance cannot fly at will to any US destination it chooses and the same applies to the US carriers serving Australia. The Japan/ Australia route is the preserve of Qantas, JAL and All Nippon with QF having about two thirds of the market which this year should carry more than three quarters of a million Japanese. Northwest (and United) wants to muscle in on that territory. with its New York/Osaka/Sydney rights. The near bankrupt US carrier desperately needs the revenue that such a route would provide to feed its massive debt which could make it the next US major to declare Chapter 11 insolvency.

Australia and Japan allowed Northwest onto the route only on the proviso that no more than 50% of its capacity was Japanese Osaka/Sydney through traffic. This rule has never been taken seriously by Northwest which has now applied its political muscle in Washington (where it has considerable clout) to ensure that Australia pays a dear price for not allowing the US mega carrier free access to our, and Japan’s market.

The situation really is pathetic. The Americans regularly espouse free trade, reducing barriers to competition, and then turn around and restrict access to their own markets, reintroduce talk of subsidies to uncompetitive companies (ie Boeing vs Airbus) and want to swamp everybody else’s market whilst restricting access to their own.

Australia as a nation has always gone hand in hand with US diplomacy. We, as a nation, gave our best in Korea, Vietnam and diplomatically throughout the Cold War era slavishly supporting the US cause. Remember the Moscow Olympics? The 1986 raid on Libya and more recently our unquestioned involvement in the Gulf War. For this support as an unswerv ing ally in a world that has not always supported Washington’s point of view Australia constantly gets knuckled with heavily subsidised wheat and grain sales that have literally destroyed our traditional export markets for these resources. I suppose we can thank God that they didn’t invent sheep! The Clinton administration needs to take a long hard look at our supposed hand in hand relationship before taking unjustified action to deliberately precipitate a highly damaging airline trade war. Australia and Japan have done nothing. wrong in this battle, though if it continues the losers will be many.

Perhaps it’s time to send the US a rental statement for hosting their surveillance bases on Australian territory? After all, with ‘friends’ like this, who really needs enemies?