Airline Affairs

Mas/Virgin Combine On Uk/Australia Route

Mas/virgin combine on uk/australia route: Malaysia Airlines and Virgin Atlantic Airways have established a codesharing arrange 1,500 to 4,000), Leichhardt (9,710 to 12,240), Newtown (4,260 to 5,920, ment between London and Sydney via Kuala Lumpur. Lower than the estimate), Kurnell (430 to 1,120) and Petersham/Lewisham (3,950 to 7,560). On the other side of the coin, some suburbs have seen substantial improvements. The Qantas and British Airways and will supplement the airlines’ existing services to Australia. Virgin already operates between London and Hong Kong where its flights link with Ansett services to Sydney. A report into the loss of a China Airlines 747-400 at Hong Kong’s Kai Tak in 1993 has blamed pilot error as the cause, finding that there was confusion between the

China Airlines

Bexley/bardwell park area had 11,920 people affected by noise before the third runway and now it has none. In the service will offer direct competition to Coogee the figure has dropped from 10,650 to off the runway into Kowloon Bay. Investigations into the accident found that there nil. Other suburbs better off include Rosebery (7,180 to 50), Kingsford (7,630 to nil), Maroubra (5,880 to nil) and Mascot (5,160 to nil). Worthy of note are the facts that the estimates have at best only a passing resemblance to what actually happened and that since the opening of the third runway, the overall number of people seriously or moderately affected by noise has dropped from 138,820 to 79,860! Reopening the east-west runway is seen to be a solution to the overall problem by those areas presently affected, and this was recently sanctioned by the airlines only to be quickly overturned following pressure from the Federal Government, four of ground to a halt following mass cancellations when the plague hit.

Air India Hit By Plague

Air india hit by plague: Airlines usually lose large amounts of money for reasons such as overcapacity, low yields and uncontrolled debt, but in Air India’s case, its current poor financial performance has been caused by an outbreak of plague. Since the plague hit in late 1994, the airline’s strong profits from the 1993-94 financial year have all been consumed and losses continue. Heavy cancellations (about 25,000) and a 50% drop in traffic from Europe, Japan and parts of the Gulf have added to Air India’s problems. Encouraged by an enthusiastic response from tourist operators, Air India had planned to revive its charter operations for holidaymakers but this has also 20 trips reflecting the greater use of QF A300 and 767-200 aircraft in day to day domestic use in addition to the occasional use of 767-300 and 747 widebodies. The Ansett fleet is primarily made up of narrow bodied jets. However, it needs to be said that we are reporting on events that occurred more than half a year ago and may or may not reflect the situation as it presently stands. Now that the airline infighting has ceased, the Dept of Transport’s Avstats division is working hard on bringing the stats up to date and we hope to be able to bring you the December quarter figures in the very near future.

Japan Wants Revised Us Bilateral Treaty

Japan wants revised us bilateral treaty: Japan has informed the US that it won’t grant additional commercial air routes to US airlines unless the current bilateral treaty is revised. Japan claims the current agreement is unequal as it gives US airlines almost unlimited rights to fly beyond their first destination in Japan to another country. Talks between the two nations are scheduled to take place during the life of this issue. Until the situation is resolved, Japan won’t allow US airlines to start new services in or out of Japan. Although there are no applications for flights to Japan pending, some US operators have expressed an interest in flying to the new Kansai International Airport near Osaka.

Air Pacific Increases Services

Air pacific increases services: Air Pacific has increased its Brisbane/Nadi direct services from three to five per week and its Sydney/Nadi frequency from five to six flights each week. The new services came into effect in March and will be operated by Boeing 737-300/500 (Brisbane/Nadi) and Boeing 747/767 aircraft (Sydney/Nadi). Air Pacific also offers two weekly Melbourne/ Nadi services using 747s and 767s.

Airline Deaths Up

Airline deaths up: The number of people killed in airline accidents reached 1,385 in 1994, a 25% increase over the previous year. The number of fatal accidents dropped slightly from 48 to 47 but 1994 was a bad year for the insurance industry with claims expected to reach a record figure of $US2bn. Five of the fatal accidents involved US domestic operations and this has contributed to the high level of insurance claims.

Us International Traffic Growth

Us international traffic growth: The number of international passengers travelling to and from the USA will nearly treble over the next 17 years according to the Air Transport Action Group (ATAG). ATAG – a coalition of organisations formed to lobby for economically beneficial aviation capacity improvements around the world – claims that the number of US international passenger Air France has rescheduled its twice weekly Sydney/Paris services from April 1 with departures now on Wednesdays and Fridays, with return services to Australia on Tuesdays and Wednesdays, following a system wide review of the carrier’s utilisation of its 747-400 fleet. Further, Air France has been awarded Australian traffic rights for the second of its two 747-400 services between Sydney and Noumea. (Bill Dionisiou) movements will reach 226 million by 2010, compared with 78.8 million in 1993. Canada’s figure will more than double to 33 million during the same period.

Adelaide Runway Extension Delayed

Adelaide runway extension delayed: Plans to extend Adelaide Airport’s main runway have been put on hold pending decisions on the planned privatisation of Australia’s 22 airports controlled by the Federal Airports Corporation (FAC). The South Australian government wants work on the $40m runway upgrade to start now but the Federal Government is not expected to assess a package of reforms for the airport’s privatisation until June this year. If difficulty is encountered in finding someone to lease Adelaide Airport, there is no guarantee the runway extension will be carried out. The privatisation project will not be finalised until next year at the earliest, leaving Adelaide in a position of uncertainty until then.

Us Airlines Still In The Red

Us airlines still in the red: Despite substantial improvements over the previous year, the nine US ‘major’ airlines collectively returned a loss of $US160m in 1994, compared with a loss of $US712m in 1993. The result is disappointing as many observers expected a small overall profit, although six of the airlines did end the year in the black. Of these, three (American, United and Northwest) had recorded losses in 1993. The profitable airlines were (with 1993 profit/loss in parenthesis — all figures in US dollars): American $228m (-$96m), United $50m (-$50m), Northwest $296m (-$115m), Southwest $179m ($170m), America West $62m ($37m) and the Alaska Air Group $23m ($31m). The big loser was once again USAir with a loss of $US685m ($393m in 1993) while the others to lose money were Delta $159m (-$226m) and Continental $132m (-$39m). Most airlines suffered by the costs involved with restructuring, Continental’s result, for example, including $US400m for that. Delta has faced similar charges for its restructure while United’s employee ownership reorganisation has cost $US150m. USAir continues to get deeper in trouble, ongoing attempts to win $US500m in cuts from its unions still not bearing fruit, while it has also had to contend with low fare competition from Continental on the US east coast. Southwest — which has profitably developed the ‘no frills low cost’ concept in the USA – has also faced aggressive fare cutting from its competitors but managed to increase its profit despite lower yields and load factors. Passenger yields declined across the board, only Northwest showing a worthwhile improvement while Continental’s yields were marginally improved. The others all suffered lower yields and the airlines collectively recorded a 2.4% decline in this area. Southwest and Continental returned slightly lower load factors in 1993 while the overall figure was up 3.1%. Average load factors ranged from 62% for USAir up to 71% for United, while the industry average was 66%, significantly below what we enjoy in Australia though tempered to some extent by the fact that US airliners are usually configured to carry more passengers than are Australia’s on a type for type basis.

Aussies Holidaying At Home

Aussies holidaying at home: Australians are holidaying at home in record numbers with Qantas recording a 76% increase in sales of domestic travel packages over the past year. According to the airline, cheap domestic airfares and additional aircraft have combined to create a boom for many local tourist destinations. Qantas has increased available capacity by 33% in the last year, meaning greater potential for attractively priced holiday deals. The six months up to February this year saw the sale of 3.5 million discounted airfares, or 75% of all economy class travellers. Economic recovery and aggressive marketing by state tourist commissions have also contributed to the growth. The capital cities experienced spectacular growth in 1994, holiday pac to Canberra increasing by 277%, Brisbane by 140%, Melbourne by 124% and Sydney by 117%. The Gold Coast remained Qantas’ most popular package tour destination in 1994 with 86,000 packages sold, up 38%. Qantas recorded exceptional growth on package holidays to other centres as well including Cairns (up 78%), Tasmania (68%), the Sunshine Coast (117%), Townsville (126%), Rockhampton (134%) and the Whitsundays (168%). Across the other side of the continent, the West Australian market grew by 49% in 1994.

Compass Settlement Reached

Compass settlement reached: A $2m settlement has been reached between the Australian Securities Commission (ASC) and 11 former executives and directors of the failed Compass Airlines (Mark 1). The ASC took out a civil action against the directors and executives — including former managing director Brian Grey — with a view to recovering some funds which will go to creditors via Compass’ liquidator. The money will be used to partly meet claims by former employees of the airline. Another $10.35m is also being claimed from the Civil Aviation Authority by the liquidator. A decision to award this money to the CAA (itself a Compass creditor) was overturned in the Federal Court last December, but the CAA has appealed to the High Court.

Qantas/Ba Offer The World

Qantas/ba offer the world: Qantas has combined with British Airways to offer a new range of stopover options for those travelling to Britain and Europe from Australia. The combined resources of the two airlines can now offer travellers the option of flying to Europe via Africa, Asia, Japan or North America. Packages start at $2,299 and include return airfares, a free return side trip to Europe and 14 days’ car hire in Britain or 10 days’ hire in France, Germany and Italy. These ‘Round the World to Britain and Europe’ packages are available between April 1 this year and March 31, 1996.

Stranger Than Fiction!

Stranger than fiction! It’s a funny old world sometimes, as these two incidents from the wonderful and occasionally glamorous world of air travel indicate…

Incident no 1: a drunken passenger with one leg (not two, but one — count it) decided he wanted to get off a USAir Express commuter aircraft while it was halfway through its takeoff run and leapt (or is that hopped?) into the cockpit, grabbed the controls and punched the copilot. A wrestling match developed in the cockpit until one of the other eight passengers on board grabbed the man by his one accountable and functional foot and dragged him to the floor while the pilots regained control and brought the aircraft to a safe stop.

Incident no 2: the pilot of a Monarch Airlines Boeing 757 had to organise a whip around among his passengers before the aircraft was allowed to fly back to Britain from Romania. The 757 was finally cleared for takeoff three hours late after $1,900 had been raised to meet what was claimed to be an airport tax, which Romanian officials demanded in cash! We bet you don’t need three guesses to work out where the money probably really ended up!

New Car Park For Tullamarine

New car park for tullamarine: The Federal Airports Corporation (FAC) has released plans to build a multi storey carpark for more than 3,200 vehicles at Melbourne Airport. The $545m project will increase the airport’s short term parking capacity by 60% as well as providing more long term parking. Work will begin this July and is scheduled to be completed in April 1997. The carpark will include a series of covered pedestrian bridges to directly link it with the international terminal and the two domestic terminals. The building will also house accommodation for hire car companies and the police.

Polynesian-Anz Link

Polynesian-anz link: in what is possibly a lifesaver for Polynesian Airlines and the Samoan economy, the airline has agreed to develop a range of marketing, sales and operational relationships with Air New Zealand. A key component of the agreement is the provision for codesharing on thin routes which have development potential. On some of these routes, ANZ will provide the aircraft and Polynesian will purchase seats and then resell them on a codeshare basis to travellers. On some other routes, the arrangement will work in reverse. Other important points in the agreement include the incorporation of Polynesian into ANZ’s reservations system, rationalisation of ground handling services at appropriate airports, ANZ providing technical and training assistance to Polynesian and coordination of capacity utilisation and scheduling.

Lauda Wants Independence

Lauda wants independence: Only a year after establishing joint sales, marketing and reservations units in Australia, Lufthansa and Lauda Air look set to go their separate ways. Lauda Air has reportedly decided to assert its own identity by reestablishing its own operations in Australia but will continue working with Lufthansa where there is a commercial benefit involved. Lufthansa owns 39% of Lauda Air’s voting shares but it is understood that founder Nikki Lauda is concerned his airline’s negotiating position on bilateral rights could be compromised if it is perceived to be under Lufthansa’s control. Lufthansa recently announced it was pulling out of the Australian market but quickly changed its mind despite continuing losses on its three weekly Boeing 767 flights between Sydney and Frankfurt. Lufthansa is committed to remain in the region only until this September but has in the meantime been talking to Thai Airways about a joint service.

Fac Airport Sale Update

Fac airport sale update: At presstime the Government’s asset sales taskforce was meeting with potential bidders for the FAC’s airports to brief them on what was intended in the sale/lease programme. Officials met with the British Airports Authority, Lockheed, Johnson Controls and Mayne Nickless in addition to many others including ironically the government owned operator of Amsterdam’s Schiphol and Aeroport de Paris which runs Charles de Gaulle and Orly airports. Of great magnitude to the long term future of aviation in this country is the fact that the government is still insisting on selling off the airports individually. In other words, you can buy money making assets like Tullamarine and KSA but you don’t have to purchase the loss making regional GA airports in the package. Previously (and existing Coalition policy) the airports were going to be sold as regional clusters where the high profitability of the primary airport would enable the unprofitable GA and secondary aerodromes to survive. For obvious reasons this has GA based groups deeply concerned as not one such airport makes a profit and even with the massive (paper) FAC debt removed would still battle to break even on present throughput. The Government also believes that the same bidders cannot nominate for more than one primary airport on the basis that this will stifle competition between airports. Obviously they have not yet figured out that people fly to a destination, not an individual airport because it has a prettier fountain than another. If this sounds ridiculous then it is even more absurd to realise in the cold light of reality that our senior bureaucrats and their mandarins actually don’t get the joke! Fact unfortunately is certainly stranger than fiction. The Government’s plan is to achieve privatisation of the first airport during 1995/96, the bulk of the remainder the following year and the last by 1998. Sydney’s KSA was listed as the first to be sold though with the worsening public image of this crucial national asset it might instead be Tullamarine or Brisbane which is sold first. The Government has also not ruled out the payment of federal subsidies being made to bidders agreeing to take over the loss making airports. For the record, of the FAC’s 22 airports, only three are major money makers, four make good returns on their turnover though of low overall volume whilst the rest, including several major centres, make a loss. Another concern was that as the airports aren’t being sold outright, but on whimsical 50 year leases (to appease the ALP Left) then there is the very real chance that an operator will not invest sufficient funding into developing their asset in the twilight years of the lease. This could have a long term detrimental affect on Australia’s all important airport infrastructure as all of these leases would enter this era at the same time with the opportunity of a worst case scenario seeing our entire national airport infrastructure degenerating as the final decade of a lease unfolds. The threats to the viability of aviation in all this are extreme to say the least and need to be carefully monitored by everybody who gains their employment from our continually beleaguered industry.

Asia-Pacific Growth Continues

Asia-pacific growth continues: Airlines operating in the Asia-Pacific region recorded strong growth in 1994 according to figures released by the Orient Airlines Association (OAA). Passenger traffic grew by 11% during the year, raising the average passenger load factor by one percentage point to 69.4% despite a 12% increase in available capacity in the final two months of the year. The year also saw freight traffic increase by a healthy 17%. Available passenger capacity grew by 9.2% overall but the November and December increases resulted in reduced load factors in that period. The capacity increase is expected to be necessary to cope with 1995’s anticipated traffic growth, allowing the average load factor to further improve. The Kobe earthquake will probably have a short term impact on Japanese passenger traffic.

Bombardier has announced that Canadair is increasing production of the Regional Jet from three to four per month and that it will deliver 40 RJs in the 1995/96 fiscal year, compared with 27 delivered during the recently completed 1994/95 FY. Deliveries of the RJ originally began in October 1992 at a rate of two per month, while Bombardier announced an increased three per month rate in February 1994. The 50 seat RJ has been going from strength to strength recently, with the latest orders coming from Delta Connection airline Comair. Comair converted five options to firm orders, while placing options on a further 35 aircraft, taking the airline’s total firm orders for the RJ to 35. Pictured is an RJ in the colours of Delta Connection sister airline Skywest.

Direct Services To Vietnam

Direct services to vietnam: Scheduled air services between Australia and Vietnam are likely to begin in November this year following the successful conclusion of talks in Hanoi. An agreement has been reached which provides for two direct services each week between Australia and Vietnam with provision for expansion to three per week from late 1996. At the moment, Qantas and Vietnam Airlines each operate one charter service per week from Australia to Ho Chi Minh City (formerly Saigon).

Qantas Apologises To Agents

Qantas apologises to agents: Qantas recently became a victim of its own success in selling holiday packages when a very high level of incoming calls to its reservations section caused serious delays. The airline apologised to travel agents who were inconvenienced by the delays and put on extra reservations staff to help handle the backlog. Jetabout and Viva will go onto the same computer system this month, enabling enquiries and bookings to be more efficiently handled. Some unidentified travel agents are reported to still be unhappy with the situation, claiming Qantas is simply understaffed in its crucial sales support section.

Air Vanuatu Boosts Australia Capacity

Air vanuatu boosts australia capacity: Air Vanuatu will boost its Australia to Vanuatu capacity from late June this year by introducing a Melbourne/Port Vila nonstop Boeing 737 flight and doubling Sunday capacity. When the new schedules come into effect, Air Vanuatu will operate round trip services from Sydney to Port Vila on Wednesdays, Sundays and Mondays, the latter service replacing the current Saturday flight. Brisbane departures remain unchanged with flights to Port Vila on Wednesdays and Fridays, while the new service from Melbourne will operate on Sundays.

Queensland/New Zealand Charters

Queensland/new zealand charters: New operator Kiwi Travel Air Charters is this month introducing a 10 month programme of charter flights between five Queensland cities and the New Zealand North Island regional centre of Hamilton. The weekly flights will be alternated between Brisbane, Cairns, Townsville, Rockhampton and Coolangatta with flights operating on Sundays. Package prices range from $699 to $799 depending on the point of departure, the packages including air fares, transfers and accommodation at either Hamilton or nearby ski fields. Kiwi will use a Boeing 737-400 chartered from Air Nauru.

Eva Air To Melbourne

Eva air to melbourne: Taiwan operator Eva Air will begin services to Melbourne in June this year using Boeing 767-300s. The twice weekly service will operate from Taipei to Melbourne via Brisbane and then return non stop to the Taiwanese capital. The announcement of the flights comes after year long negotiations between the airline and Tourism Victoria.

New Qld International Airport Proposed

New qld international airport proposed: Coolangatta may lose its chance to become southeast Queensland’s second international airport if two Labor federal government MPs get their way. Wayne Swan and Kevin Rudd have called on the Federal Airports Corporation to begin planning a second airport as they believe that there will be sufficient demand for one early next century. Coolangatta’s upgrading plans are meeting strong resistance from local residents who fear increasing noise problems while that issue could become reality for some future residents who move into home units which have recently been approved for construction by Tweed Shire Council. The proposed units are situated on a site which falls within the Australian recast limit and their approval has even been criticised by Transport Minister Laurie Brereton. Also in that area of Queensland, Maroochy Shire Council has decided to acquire land for the potential expansion of the Sunshine Coast airport over the next 20 years. A report looking beyond 2015 which recommends infrastructure investment of up to $75m including a 3,300m runway has been adopted by the council. The report says that by that time the airport will be handling more than one million passengers each year.

Anz Profit Up

Anz profit up: Air New Zealand has recorded an after tax net profit of $NZ140.5m (approx $A120.8m) for the six months to January 31 1994, a 59% improvement over the corresponding period of the previous year. Revenues increased by 16% to $NZ1.47bn ($A1.26bn). International operations saw strong growth with revenue passenger kilometres (RPKs) increasing by a stunning 22%, providing an average load factor of 70% during the period in question, down slightly from the previous six months but accounted for by a capacity increase of 25% due to the delivery of two Boeing 767-300s (replacing two slightly smaller 767-200s) and the incorporation of two leased 747s into the fleet. All key sales regions recorded substantial improvements in revenues, Asia/Japan growing by 26%, Australia 22%, New Zealand 28%, the Americas 26% and UK/Europe 16%. Domestic passenger operations achieved a 14% increase in revenues while RPKs improved by nearly 15%. Domestic load factors were 64%, four points up on the previous year though indicating that the airline is continuing to operate domestic jets too big for the available market. While international yields improved, those for the domestic market were basically stagnant. The airline’s interim report to the New Zealand Stock Exchange notes that the “main trunk Boeing 737 aircraft fleet operations continue to produce inadequate returns on the significant investment involved…” ANZ’s cargo operations grew by 25% in terms of tonnage carried, mainly the result of buying capacity on two dedicated DC-8 freighter. The airline notes that the political impasse between the New Zealand and Australian governments over the latter’s unilateral freezing of the Single Aviation Market overshadows its regional strategies and that the NZ Government “continues to remind Australia that the matter is neither forgotten nor off the bilateral agenda of the two countries. For the further development of regional tourism, and in the best interests of the travelling public of both countries, it is important that the Australasian process of aviation reform be resumed without undue delay”.

Northwest-Anz Marketing Agreement

Northwest-anz marketing agreement: Northwest Airlines and Air New Zealand have entered into an international marketing agreement under which ANZ will participate in Northwest’s WorldPerks frequent flyer scheme, the two carriers offering joint fares as well as sharing sales support and airport facilities. ANZ’s recent move into Terminal 2 at the LA International Airport where Northwest is located is part of the arrangement and will streamline operations and transfers between the two airlines. The partnership offers fares to 80 cities served by Northwest in the USA and the airlines will provide sales support for each other’s connecting flights. In addition, the airlines’ customers will have reciprocal airport lounge access when travelling first or business class on connecting flights.

Baa-Superannuation Airports Link?

Baa-superannuation airports link? British airports operator BAA Plc is reported to be linking with State Superannuation Investment and Management Corp to bid for Australia’s leading airports when they are privatised. State Super manages a $14bn fund and will probably join with BAA’s other partner, the AMP Society, as the core members of a very powerful bidding group. Other local institutions will be recruited to join the consortium in tendering for some of the prime city airports on offer including Sydney and Melbourne, assuming this will be permitted under cross ownership rules.

Albury Upgrade Underway

Albury upgrade underway: A $1.6m upgrade of Albury’s airport has begun, with a view to attracting new aviation industries to the area. The airport’s general aviation area will be extended, as will the runway which is also being strengthened and resurfaced. Resurfacing the runway is the most expensive part of the upgrade, costing about $1m.

Wide Ranging Aviation Conference

Wide ranging aviation conference: The ‘Aviation To 2000’ conference will be held in Sydney this month, covering a wide range of topics of interest to those professionally involved in the aerospace industry. The conference will take place on April 26-28 at the Airport Hilton, topics to be covered including airport privatisation, airport planning and development, airport management, safety, the environment, airline strategic alliances, marketing strategy, increasing export opportunities, developments in aircraft technology plus various workshops and a tour of Sydney Airport’s new air traffic control tower. Among the many notable speakers are the Minister for Finance, Kim Beazley, Max Hazelton, Nick Tate (British Airways), Chris Hoare (BAA Plc), Dick Smith, Brick Bradford (McDonnell Douglas) and James Strong (Qantas).

Smoking Banned On Australia/North America Flight

Smoking has been banned on all nonstop passenger flights between Australia, the USA and Canada from March 1 following an agreement reached between the three countries late last year. The landmark government enforced ban (as opposed to airline imposed bans) will also be extended for all international flights out of Australia, regardless of the destination, from July 1 1996. The blanket bans are part of the Commonwealth government’s compliance with the recently formulated National Health Policy on Tobacco, which aims to eliminate or reduce the exposure of Australians to tobacco smoke. It is expected that under ICAO recommendations, and individual government initiatives, that all airline flights will be non smoking by 1998 at the latest.

Ansett Profits, Marketshare Down

Ansett profits, marketshare down: The last six months of 1994 were tough for Ansett, the airline losing domestic market share to Qantas and suffering a fall in profits. Ansett Australia Holding’s profit contribution to 50% owner TNT before tax for the six months to last December was $33.9m, down from $38.5m for the same half of 1993. TNT has also announced that it is not interested in selling its half share in Ansett. A number of factors contributed to the fall including significant delays and congestion at Sydney airport (where the hourly movement rate is at about 50, down from 75 before the new runway was opened with Ansett and Qantas both claiming they have the equivalent of a 737 orbiting the airport 10 hours a day in relative fuel, time and utilisation wastage), the startup costs of the long haul international operations, lower yields, the expenses associated with the emergency landing of the 747-300 at Sydney, an increasingly aggressive Qantas which has significantly boosted its domestic capacity and the traditionally soft second half. These problems were countered in part by good performances from Ansett New Zealand, the Hayman Island resort and good revenue and traffic performance on Hong Kong services. Ansett has said that it now only holds 50.5% of the domestic market for the last three months for 1994, while Qantas for its part has recently claimed market leadership. The 50.5% result is down two points from the same period in 1993. On the plus side, Ansett reduced its debt during the last half of 1994 by $175m. Meanwhile, the profits of sister company AWAS also fell during the period, but the actual amount is not known.