Airline Affairs

Greek And Dutch Rightsdecisions Confirmed:

The International Air Services Commission(IASC) has confirmed the draft decisions it made last February concerning applications for capacity to In South Australia, the Holand and Greece. State Government is trying to ensure that Adelaide Airport is the first to be sold if the privatisation plans go ahead. It has written to Canberra asking that Adelaide be first off the rank as a kind of test case. The South Australians are worried that if the eastern states’ airports are listed first (as will probably be the case), interest in Adelaide will wane and improvements such as runway extensions will not proceed. Fokker has delivered the first of two Fokker 50s Royal Brunei has on order. Configured to seat 56 passengers in an all economy layout it will be used on flights from Bandar Seri Begawan to Labuan, Miri and the Malaysian centre of Kota Kinabalu. The second Fokker 50 will be delivered in November. (Fokker) New entrants Australia Air International and Australia World Airways had both applied for rights to offer scheduled services from Australia to Greece and the Netherlands. , The IASC has found that Australia World’s proposal satisfied public interest criteria but its financing was not sufficiently organised to warrant the granting of rights. The vacant capacity will not be allocated but placed “on the shelf”, meaning that Tasmania’s reaction has been against the plan, with both the Premier and Opposition Leader saying that as Tassie’s airports are currently subsidised by the profitable larger airports, costs would rise substantially if they were sold (refer table p4). The Federal Minister for Small Business, Customs and Construction, Chris Schacht, counters that by claiming the sale would give Tasmanians a perfect opportunity to extend Hobart’s runway, thus providing greater export opportunities for the state. This comes at a time when air freight services to and from Tasmania are being investiborrowings so its crucial works programmes can continue. The government has also had to assure bond holders about their exposure to the FAC amid fears of a major selloff. Some overseas bond holders have already indicated they will sell unless the government provides an assurance that the FAC will continue covering its debt obligations under the issues. Without this, the FAC would probably face a downgrading of its long term credit rating from the current AA plus. For further comment on the airports privatiSation issue, refer Reece on page 4 of both this and the June issue. any Australian operator can apply for it. Australia Air is continuing efforts to raise sufficient capital to start its own operations though at presstime it appeared doomed as the proposed float ran out of steam following a shunning of the new entrant by Australia’s institutions, many of them already bitten by two successive Compass failures. The airline has until July 11 to come up with the necessary amount, or it will lose the China rights it has already been granted.

Go East, Young Man:

Fartcy a job in the sun? Then look no furth°er! Emirates, the international airline of the United Arab Emirates is looking for cabin crew in Australia as part of a worldwide recruitment drive. The airline is seeking male and female crew aged between 21 and 27 – preferably with a second language – to be based in Dubai. The package offered includes tax free salaries and fully furnished accommodation in what is described as the most cosmopolitan of the Gulf area cities. If you’re interested, contact Emirates’ marketing manager Roy Zuzarte on (02) 264 7346 during business hours.

Whale Of A Time:

A 19 years old man named Tresk Sean Whale (no,really!), an interior decorator and discjockey (what else), has been orderedto pay Qantas more than $12,000 fordamage he inflicted on one of the airline’s Boeing 737s at Adelaide Airport. Whale broke into the 737 last November and in an orgy of expressing his individuality (or something) damaged flares, ripped seats, broke an emergency exit door and the toilets and damaged various other items. In addition to the compensation, Whale was given a 10 month suspended jail sentence on condition he enter into a $100 good behaviour bond. Pity he wasn’t also ordered to changehis name to something sensible!

Delta C Its Wor Kfor Ce:

Major US airline Delta is to introducea series of job cuts over the next fewmonths in an attempt to reduce costs. Delta Airlines will reduce its workforce by 20% from 74,000 to 59,000 and an interesting part of the decision is the fact that the cuts are being made to allow Delta to be more competitive with profitable Southwest Airlines, the low cost, no frills and union freeoperator which concentrates on short haul flights between highly populated centres in the USASouthwest’s imaginative and innovative management has put the airline in a position where it is steadily eating into its opponents’ market share whilst maintaining a good level of profitability, a direct contrast to its larger competitors. Observers of the US airline industry are becoming increasingly convinced that overall, it has severe structural problems which need to be resolved. So far, job cuts in the industry have been relatively small and avoided where possible, and Delta’s decision to make large cuts is widely regarded as a radical but necessary move considering the very high cost of unionised labour.

Taiwan Rethinks:

The recent crash of a China Airlines Airbus A300in Japan has prompted major changesin Taiwan’s Civil Aeronautics Administration and within the airline itself. The CAKs director general resigned and his successor has announced a four point plan to enhance safety. The plan includes phasing out old aviation systems and recruiting aircrew from backgrounds other than the National Air Force College, to date the only source of Taiwanese domestic pilots. China Airlines has retested all 440 of its pilots as a result of the crash and has indicated those who don’t come up to scratch could be suspended. The airline cancelled 169 international and domestic flights in May while the tests were being carried out though fortunately for the airline this coincided with a temporary ban on travel to China after a Taiwanese tour group of 34 were machine gunned by bandits in rural China.

Mas Cadets Grounded:

Amiscalculation of supply and demandby Malaysia Airlines (MAS) has resulted in more than 200 of its cadetpilots being grounded as there is nowork for them. The cadets will be left in the lurchfor between six months and three years and will have to seek employment elsewhere while they wait for work to become available. The problem arose when MAS’s growth (and therefore its need for new pilots) failed to match the predicted levels. The cadets will be brought back toMAS twice a year so they can keep in touch with the industry.

Harare Services Goingstrong:

The joint Qantas Air Zimbabwe services to Harare are enjoyingincreased patronage despite South African Airways’ return to Australia, reports Julian Green. Malcolm Barnett, Managing Director of South Pacific Express, GSA (General Sales Agent) for Air Zimbabwe in Australia, said that the increasing popularity of Zimbabwe as a tourist destination and Air Zimbabwe’s increasing activity in through services to Africa and Europe from Australia may lead to increased capacity on the Sydney, Perth, Harare route some time this year. Harare has developed into the gateway to Africa, with a wide spread of schedules to the major destinations within the continent. “Business traffic to South Africa through Harare is a thing of the past. Harare used to be a means of accessing South Africa, but this has not been the case for a least a year now,” Barnett said”With the increasing amount of tourism and business traffic from Australia, our (Air Zimbabwe/Qantas) flights are very heavily booked well into the future. We are very satisfied with the profitability of the service, there is no question that the Harare route is not there for the long term.” The increase in business passengers from Australia has been most noticeable since BHP recently commenced platinum mining operations in Zimbabwe. The country is also catering to an increasing amount of conference and incentive traffic from Australia. The service is presently operated by a Qantas 7 47-400 aircraft on a weekly schedule on a codeshare basis.

Birds Of A Feather:

US carrier Kiwi International Airlines hascelebrated the carriage of its one millionth passenger in a slightly strangealbeit imaginative manner. On the day nominated as the one on which number one million would be carried, any passengers arriving at the airline’s Newark, New Jersey terminal dressed as a kiwi (bird, not NZ national!) received a $US50 discount on a future Kiwi International flight, and the lucky millionth person (decided byYearended Dec1991ticket number) won a holiday for four. All very good, but several questions arise: how may Americans know what a kiwi looks like (or have even heard of it); and is it worth getting dressed up like an idiot for a measly 50 bucks? Reminds us of when another US airline celebrated Elvis’s birthday with the announcement that anyone dressed as the ‘King’ would get a free ticket. Needless to say the carrier’s terminals that day were filled with would be EPs getting their free tickets and in the process gaining the airline a wave of free TV airtime that it could never get by just promoting its excellent meal service. Only in America!

Qantas Flight Deck Privileges Expanded:

Members of Qantas’ domestic airport lounge club,Flight Deck, will now be able to usethe airline’s Captain’s Club lounges before international flights. In order to take advantage of this, Flight Deck members need only to present their membership card or Gold Frequent Flyer card at check in to be able to move into the comfort able and well equipped Flight Deck lounge. One guest can also be taken, providing he or she is travelling with Qantas on the same day.

Lufthansa/United Codesharing Starts:

Following approval by the US Department of Transport, Lufthansa and United Airlines began a codesharing arrangement across the Atlantic last month. The arrangement gives Lufthansa access to 12 new cities in the US on flights from Europe via Chicago and Washington, while United will be able to offer its passengers German domestic flights to eight destinations. The codesharing flights will be gradually extended to other US ports, and in future, passengers will be able to check in for onwards flights from all German airports. In financial news, Lufthansa’s 1993 performance showed an improvement over the previous year, but a loss of $US65.2m was still recorded. This compares with a loss of $US22lm in 1992.

Safety Review Criticised:

A report commissioned by the Australian International Pilots Association (AIPA) and prepared by Worksafe Australia has criticised a CAA draught paper on pilot duty hours and described it as “deviant and psychophysiologically unsound” and “seriously deficient”. The CAXs draft proposal seeks to extend the maximum duty period for pilots to 22 hours from the previous maximum of 16. It is based on draft regulations by the European Joint Aviation Authorities. The current maximum duty time of 16 hours usually includes no more than nine hours actually flying an aircraft, and according to Worksafe, this is a sensible maximum. Beyond that, it says “performance is impaired and frequencies of significant errors increase rapidly. Also criticised is the CAA report’s proposal to allow up to 60 hours’ duty in a seven day period and 100 hours in 14 days. Worksafe says that aviation medicine research indicates 55 and 80 hours, respectively, are reasonable limits.

Deregulation Has Encouraged Air Travel:

Statistics show that although the rate of growth in the Australian domestic air travel market has slowed from the large increase which immediately followed deregulation, the trend is still upwards. Much of this is thanks to deregulation and the lower air fares which resulted. Before deregulation, only 18% of Australians travelled by air compared with 25% now. Passenger numbers have increased by 64% since deregulation and fares have fallen by nearly 24%. Ansett now sells more than 70% of its seats at discounts of up to 70% off the full economy fare, while before deregulation only 40% of seats were discounted and the maximum reduction in fares was only about 45%.

Cairns Foreign Investment Mooted:

The Cairns PortAuthority (CPA) is considering allowing a foreign investor to help fundCairns Airport’s long term international airport expansion programme. The $500m project is likely to be attractive to overseas investors considering Cairns’ high rate of growth, and the idea comes in the wake of the British Airports Authority and others showing interest in the Federal Government’s plan to sell off some airports. Another Queensland airport, Proserpine, is also subject to plans for upgrading, in this case to international status. Ansett is pushing for investors to contribute to the many millions of dollars required to complete the upgrade. At the other end of the country, a South Australian government member has slammed his own colleagues’ plans to extend the main runway at Adelaide Airport. According to Mr Heine Becker, chairman of the government’s Economic and Finance Committee, the plan is a “waste of money” and he has called on the government to ensure compensation would be paid to residents affected by the extra noise he claims will be generated by the extension.

Hazelton/Comet Freightdeal:

Regional operator HazeltonAirlines and TNT’s Comet Air Expresshave joined forces to provide an airfreight service on Hazelton’s 23 NSW, Queensland, Victorian and Tasmanianroutes. The freight will be carried on Hazelton’s normal services and the airline has the capacity to carry about 13 tonnes each week The move is designed to take advantage of the grow ing regional freight market and follows a similar arrangement between TNT and Western Australia’s Skywest. Flight West’s latest Embraer Brasilia has returned to service wearing the corporate colours of Ansett Australia. This particular aircraft was last pictured in AustralianAviation on p72 of our April issue, still in the colours of its former operator Cabo Verde. (John Rodgers)

Ba Cancels Boeing Options:

British Airways has cancelled options on 25 Boeing airliners as a result of a continuing effort to cut costs. Despite recording an increased profit of $454m in 1993-94, BA needs to continue reducing costs, and part of that effort has been to cancel options on seven Boeing 747-400s, seven 767- 300s, one 757 and 10 737-400s. The airline still has orders and options for a further 94 Boeings including 49 747- 400s and 30 777s. Four new aircraft are scheduled for delivery this year. Part of BA’s problem is its loss making US partner, USAir, in which it has a 24% stake. BA could be forced to write off its $400m investment in the airline if the major cost cutting concessions it wants from its employees do not occur. In the meantime, USAir has deferred delivery of 40 Boeing 737s from the 1995-98 period to 2003-2005 andcancelled options on 63 further 737s, 11 757s and two 767s. Delivery of 18 757s which are already underway will not be affected.

More Qantas Domestic Seats:

Qantas will add more than 21,000 seats to its domestic :network from this month, increasing capacity by 10% overall. The airline’s new schedule offers large increases in capacity for business travellers on the six main trunk routes, with more than 9000 extra seats between Sydney and Melbourne (a 19% increase), over 6000 additional seats on the Sydney/Brisbane route (up 21%) and more than 1500 extra seats on Melbourne/Brisbane (up 12%). The increase in Sydney/Melbourne services means that during evening peak hours – between 3.30pm and 7.30pm – travellers can choose from half hourly services between the cities. Similar frequencies are offered on Sydney/Brisbane services between 4.10pm and 6.10pm on the busiest days, while passengers flying between Brisbane and Melbourne will have hourly services during the evening peak time..Qantas’ domestic leisure routes will also benefit from increased capacity, as will other routes such as Adelaide/ Perth, Sydney/Coolangatta, Melbourne/Perth and Brisbane/Cairns.

Anz Direct To Osaka:

AirNew Zealand will begin operating direct flights to and from Osaka, Japan,from September 5 following the opening of the new Kansai InternationalAirport. Initial services will comprise three weekly flights from Osaka to Auckland and Christchurch with Osaka to Brisbane to be added from the end of October. This service will also be thrice weekly, operatingon Tuesdays, Fridaysand Sundays.joint Ansett/British Aerospace flying training academy at Tamworth, NSW. Mr Ward left the helm of Qantas last year and joins former Australian Airlines chairman Ted Harris who has taken on the position as chairman of the flying training school which has now been renamed the Australian Air Academy. Launched in 1991, the $75m academy, which has contracts with .the Australian Defence Forces and a number of Asian airlines, specialises primarily in training airline pilots and can also link in with the vast resources of Ansett to provide specialist simulator training and even endorsement on type training.

Another Chinese Air Disaster:

June 6 saw the loss of yetanother Chinese airliner, this time aRussian built Tupolev Tu-154 trijetwith the loss of 160 passengers andcrew including one Australian. during 1992 when 276 people were killed in four major jet airliner accidents all attributed to human error. It is anticipated that despite massive expenditure on airport and airways infrastructure improvements, massive pilot training programmes and the introduction of modem Western equipment that it will still be the end of this decade before the system begins to catch up with the dynamic growth that is now part and parcel of the modem era China.

Indian Privatisation Delayed:

Indian government plans todivest part of its full ownership of AirIndia and Indian Airlines have beendelayed. According to India’s civil aviation secretary, the delay is due to the need to improve the quality of the products before offering them to the world money markets. Competition fromindependent Indian operators has caused the national airlines to look hard at the quality of service on offer. Both airlines need a cash injection to expand and modernise their fleets, Air India alone needing more than $US2bn.

Ho Chi Minh Cityairport Upgrade:

ANZ already flies to Tokyo and Nagoya from New Zealand and sees the new Osaka services as completing its recognition in Japan as a specialist carrier to the South Pacific area. The Australian Tourist Commission has predicted that capacity on the Japan/Australia route will increase by 30% once the new Kansai International Airport is opened. A full update on Kansai Airport begins on p37 of this issue.

T Rans Tasmanrecord:

An Air NewZealand Boeing 7 47-400in May set a new transTasman speed record, From last month Aeroflot was due to take delivery of two 767-300ERs for operations between Russia and the east and west coasts of the USA. The two aircraft will become the first Boeings to be operated by Aerof/ot. The 767s are being leased from General Electric Capital Aviation Services, with whom Aeroflot signed a definitive agreement in Moscow last May. In preparation for the aircraft’s entry into service Boeing has trained almost 30 pilots and 60 maintenance personnel at Seattle and Boeing confidentially expects more of its aircraft to join Aerof/ot’s fleet in the near future. Pictured is one of the two 767-300ERs outside a paintshop at Boeing’s Everett plant. Interestingly the aircraft is painted in the traditional Aeroflot livery, rather than the new western style scheme adopted for the carrier’s three remaining Airbus A310s. (Boeing) The Vietnamese government is looking to spend $US1.8bn to upgrade Ho Chi Minh City’s (formerly Saigon) airport to one of the largest in the region, capable of handling 50 million passengers each year. Passenger traffic at the airport trebled last year to 1.6 million and 24 international and domestic airlines are now using thecovering the 1165nm (2158km) distance between Sydney and Auckland in just 1hr 54min, three minutes faster than the previous record held by an ANZ 747-200 set in 1991. Cruising at 39,000 feet, the 747 was assisted by a 190 knot (352kmh) westerly on its tail, giving a groundspeed of more than 610 knots (1130kmh). These jetstream’ winds are not unusual at that time of the year, but to experience them consistently over the entire route is a much rarer occurrence.

Life After Qantas:

Former Qantas chief executive, John Ward,has joined Ansett Transport Industriesas a consultant in the areas of communications and advanced technology inaddition to taking over as chief of the 22 Australian Aviation July 1994 The aircraft had just departed Xian in heavy rain for the southern city of Guangzhou when it reportedly exploded. There have been more than a dozen airliner crashes in China since 1990 in addition to 11 hijackings to Taiwan. The International Airline Passengers Association recently listed China as the most dangerous place in which to fly. Massive growth and an infrastructure unable to cope with even a quarter of the annual growth rates experienced over the past half decade have left China’s air transport environment highly stressed. Though the past eighteen months have not been too bad after a major tightening up of operational procedures by the government body responsible for standards, CAAC, there was a four month periodairport. The number of passengers is expected to increase to 8 million annually by the tum of the century and $US400m will be spent over the next three years on a new terminal capable of handling these. Asia represents a huge potential market in the areas of airport maintenance, upgrading and construction (refer p20 June 94 AA) with more than 100 major projects worth up to $200bn currently proposed.

Anz Daily To Los Angeles:

Air New Zealand is to increase capacity on its long haul Pacific routes by introducing daily non stop Boeing 747 services between New Zealand and Los Angeles from early July. Demands on capacity have caused ANZ to revise its schedules and the type of aircraft used on its Los Angeles routes, with 747s now operating on all the airline’s services to that destination. 767s were previously used on some of them. According to ANZ, the changes will ensure both the business and leisure traveller will have the maximum flexibility and freedom to arrange their trans Pacific travel itineraries while through connections at LA to London and Frankfurt will allow a realistic option for Sydney and Melbourne passengers to travel to Europe via the US.

Qantas To Refinancedebt:

Qantas is planning to refinance its $lbn debt over the next fewmonths in the lead up to its publicfloat, at this stage probably takingplace in March-April next year, although the coming October-Novemberperiod is also still being considered bythe Asset Sales Taskforce and Cabinet. Preparations for what should be Australia’s biggest share offering are well advanced, with a series of 147 presentations in Australia and overseas to banks, institutions and other possible investment groups already being undertaken by managing director James Strong and director of finance Barry Toomey.

Cairns Chasing Cash:

TheCairns Port Authority, -operator of thenorthern Queensland city’s rapidlygrowing airport, is looking at ways ofraising $500m to fund further development. The CPA is discussing ways of introducing private investment with several merchant banks and BAA Plc (the former British Airports Authority) has indicated an interest in investing. Cairns airport needs major expansion to cope with the expected continuing rapid growth it is now experiencing.

Canberra International Hopes Fade:

Plans by the ACTgovernment to have Canberra airportupgraded to international status intime for the 2000 Olympics seem to bediminishing. A marked lack of interest in the idea has been shown by the airlines and now a submission prepared by the consultants Airplan has indicated the way to go is via five upgrading stages over a number of years, resulting in full international status well after 2000. Each stage would not take place until there is sufficient passenger demand to warrant it. The ACT government has acknowledged that to spend $80m upgrading the airport when there was no demand would be a waste. Complicating the matter is a just launched joint ACT/Federal Government funded feasibility study into building Speedrail, a 300kmh+ trainusing existing French TGV technology to link Canberra with Sydney which could be operational by 2000. The 75 minute travelling time between both CBDs would indeed create a real alternative to air travel on this high traffic route and would also provide stops at Sydney KSA (also providing a much needed rail link between Central and the airport) and a connection to Sydney West as well as stops at Campbelltown, Bowral and Goulburn, effectively turning these into potential future dormitory suburbs of Sydney. However, the third government in the equation, NSW, is still unmoved by the Speedrail concept, preferring itself a slower Tilt Train proposal. Meanwhile, on the north coast of NSW, plans are afoot to build an international airport near the tourist centre of Coffs Harbour. Promoted by local business people, the idea is to build a new airport in place of an existing $18m plan to redevelop the current airport to make it capable of accommodating aircraft of Boeing 767 size. An entirely new airport, if built, would be capable of accommodating 747s and the plan is to have it partly financed from money generated by the sale of the existing airport and by subdividing the land on which it sits. The local council has so far not been moved by the plan and indeed has recommended that control of the existing airport be handed over to a ‘gateway authority’ corporation comprising aviation, business and community representatives. Such a corporation would manage all promotions, business and airport upgradings and profits would continue to go to the council.

Us Airlines Slightlyhealthier:

The nine largest USairlines showed an improved performance in the first quarter of 1994 compared with the same period of 1993,but between them still recorded overall losses of $US474m. the Marchquarter 1993 figure was $US844m. Three of them returned profits: Southwest with $US42m ($US40m in 1993), Northwest staged a major turnaround with an $US18m profit compared to a $US100m loss the previous year, and America West made $US15m ($US2m in 1993). The other airlines’ losses were (with first quarter 1993 losses in parenthesis): American $US7m ($US22m), United $US71m ($US138m), Delta $US78m ($US152), Continental $US72m ($US109m), TWA $US124m ($US304m) and USAir $US197m ($US61m), the latter the only operator to return a worse performance. This has caused shareholder British Airways some concern – refer Airline Affairs elsewhere this issue. Extremely bad weather in January and February and increasing competition from low cost operators inhibited further recovery, although most airlines are predicting further improvements in the June 1994 quarter.

Air Freigh T To Melbourne:

Phoenix based freight operator American International Cargohas introduced a weekly Boeing 747service between Melbourne, Aucklandand Los Angeles. The carrier says its service fills the large cargo gap left by the withdrawal of Continental and Northwest Airlines from Australia/US services. AIC will be represented in Victoria by World Aviation Systems (Australia) Pty Ltd, a company which has also been instrumental in securing scheduled flights to Melbourne by two passenger airlines, Gulf Air and Air Caledonie, plus charter flights by Air Lanka. It is now working with Air Malta with a view to introducing Melbourne/Asia/ Malta services in 1996. The world air freight market seems to be picking up, if DHL Worldwide Express’s expansion plans are any indication. The operator has embarked on a five year $US2bn expansion programme of which about one third will be spent in its south-eastern area of operations stretching from India to Australia. Among its plans are a new gateway and customer service centre in Sydney. Worldwide, DHL employs 34,000 people in 220 countries and operates 137 aircraft.

Airline Threatens Western Samoa’s Economy:

Polynesian Airlines’ debt of nearly $49mcould threaten Western Samoa’s economic stability, according to a reportprepared for the country’s financialsecretary. Of the total debt – much of which is to Air Canada and Kuwait Airways for leased Boeings – the Western Samoan government is liable for more than $27m, or the equivalent of about 26% of its total budgeted receipts for the 1993-94 financial year. The airline has been trying to raise a $9m loan from foreign commercial lenders, but it is considered unlikely any would be willing to take the risk, even with government guarantees. Samoa’s treasury holds the view that the country’s economy is not large enough to support such a foreign debt. At presstime, Australian Aviation believes that Solomon Airlines will downphase from a Boeing 737-400 to a -300. The Qantas aircraft will feature the white fuselage and tail markings of Solomons with appropriate designation on the fuselage. As with Air Vanuatu, Qantas will operate the aircraft domestically at different times of the week.