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An artist's impression of Ansett Australia's first 747-300. Two will be leased from Singapore Airlines for five years with options on three more, refer text for full story.
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Ansett Makes Its International Move:
After months of speculation Ansett finally revealed its international strategy on May 3. Speculation that the airline would be acquiring a whole new fleet of international and domestic jets was quashed with the announcement that instead the airline would be leasing two existing 747s from Singapore Airlines (with an option on a further three). The 747s are being taken on a five year dry lease with only heavy maintenance being undertaken in Singapore. Consequently Ansett will be requiring around 250 extra personnel to initially staff its international operation, about 50 of which will be pilots. More than anything the move signals a major change of direction away from the ‘conquer the world’ era of Sir Peter Abeles to one of ‘steady as she goes’ with yield, margin and minimal risk being the newfound and long overdue centrepiece of the Ansett domestic and international marketing strategy. Ansett will commence Boeing 747- 300 services from Sydney to Osaka on September 4 and to Hong Kong one week later. Osaka’s new Kansai airport (built totally on a man made island in Osaka Bay) will be served by five Ansett services a week whilst HK will initially get three with two additionals commencing in April ’95. The move to acquire used quality Boeing 747-300s is smart and logical. The aircraft has similar medium range performance to a new 747-400, has essentially the same cabin configuration and yet (according to Avmark) costs around $US650,000 a month to lease versus just over $US1,050,000 for a new -400. Singapore acquired its 14 Pratt & Whitney powered -300s during the early eighties and usually begins to replace aircraft after they have served more than 12 years so the Ansett lease is timely for SIA and may have led to a better deal than suggested above in the Avmark figures. Singapore Airlines will also assist Ansett in the tactical operation of its international services in addition to Ansett being able to now source much of its support services and overseas provisioning using the massive buying power of SIA, one of the world’s largest airlines. Ansett expects to lose no more than $50m in its first year of international services as it writes off the not insignificant start up costs incurred in commencing an all new operation (Ego driven upstart dreamers please take note. Ed) though expects to be loss neutral in the second year and profitable from then on. Revenue in year one should equate to around 5% of ATI’s total rising to at least 10% in year two. The airline will also be placing a heavy emphasis on freight and Ansett’s ability to link in with its massive domestic cargo network. In some airlines such as BA, JAL, Korean and Lufthansa, freight can boost overall revenue by more than a fifth. These are conservative estimates claims ATI co-Director Ken Cowley and may well be bettered given the air An artist’s impression of Ansett Australia’s first 747-300. Two will be leased from SingaporeAirlines for five years with options on three more, refer text for full story. line’s massive domestic base and the strength of its Golden Wing membership which is now approaching 300,000 high profile frequent flyers. Ansett should indeed be optimistic. The Osaka region in Japan covers an arc with a GDP twice that of Australia’s, hosting 21 million people. Osaka Kansai will be Japan’s only 24 hour airport whilst Osaka itself is moving to become Japan’s major international gateway by the turn of the century. The region also has close diplomatic relations with both Victoria and Queensland whilst a large number of corporations with major investments in Australia are located in the region. Furthermore, Ansett trumped rival Qantas on gaining full blooded access to Kansai with its five 747-300s whilst Qantas received IASC approval for just five 767-200 flights. However, Ansett initially received approval for four 747 and three 767 services meaning that it now has a surplus of about 200 seats a week Obviously there is now a case for Qantas to press the IASC to allow it to take up the unused Ansett capacity so that it can upgrade from its 200 seat 767-200s to more efficient 240 seat 767-300s. This would give Qantas a better chance of gaining credibility in the market whilst also allowing additional -200s to be freed up for domestic operations. Hong Kong also looks to be winner in the long term. Whilst the Japan/ Australia route grew by 12% last year, Australia/Hong Kong recorded dynamic growth of 16.5% obviously on the back of ever increasing Australia/ China traffic which is something that Qantas is apparently now only beginning to fathom. Many of Ansett’s frequent flyer partners also operate from both Kansai (when it opens) and HK so this is also to be considered another asset where the traveller is flying to a destination beyond these immediate ports. Meanwhile, plans to service Malaysia and Singapore have been put on hold (meaning the IASC may also review Ansett’s rights to maintain its route allocations) while services to Seoul might be initiated during 1995/ 96. Ansett Tasman services have also been discounted in the short to medium term, apparently the airline con
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16 Australian Aviation June 1994 siders that there simply is not sufficient yield on this market which traditionally is made up of about 85% leisure based travellers.
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