Airline Affairs

Cathay Solving Pilot Problems With Cross Crew Qualification

As an operator of both Airbus A330s and A340s, Cathay Pacific is beginning to solve a problem that has for some time afflicted all long-haul operators. The problem is that as aircraft like the 747-400 came on the scene in the late eighties, sector length has increased accordingly with the result that a pilot flying regular ultra long-haul routes may only average two or three landings a month whereas three to five times this number was previously the norm. The problem is also further complicated by the fact that ultra long-haul aircraft carry relief crews and naturally everybody wants to fly the ‘fun’ part of the mission rather than merely occupy the jump seat as a tired and bored supernumerary. Cathay is looking forward to being able to combat this problem to some extent when it gets its A330/340 fleets fully up and running via the Airbus Cross Crew Qualification (CCQ) system, which allows pilots to swap between both types with ease as the aircraft’s fly-by-wire system provides exactly the same ‘feel’ for each type. Thus a pilot may fly long-haul nonstops from Hong Kong to Europe or North America one week and revert to shorter range high frequency regional services the rest of the month, allowing the opportunity to fly many more takeoffs and landings than would be the case if he or she was crewing purely ultra long-range A340s or 747-400s. Cathay believes that CCQ has the potential to improve long-term safety, increase aircrew job satisfaction and allow greater pilot productivity through being able to deploy crew assets better at different times of the year. The Airbus A330/340 and smaller A319/320 and 321 are the only aircraft that provide this useful capability.

France’s Air Littoral has taken delivery of its first of five Fokker 70s for use on services on behalf of Air Inter and Air France. The Fokker 70 is configured to seat 79 passengers in a single-class arrangement. Air Littoral also recently took delivery of a Fokker 100, while Air Inter has five Fokker 100s on order which are currently being delivered. Meanwhile the Mesa Air Group has taken delivery of its first of two Fokker 70s it will use on hub-buster routes on behalf of America West Express. The Fokker 70s are the first jets on order for the New Mexico-based Mesa group, which, through its five regional divisions, operates over 180 turboprop airliners, making it the largest independent regional airline in the USA. The Mesa Fokker 70s are configured to seat 78 in a single-class arrangement. (Fokker)

Qantas China Regional Deals

Qantas has signed letters of intent with three Chinese regional airlines with a view to exploiting the rapidly expanding Chinese domestic market in the future. Yunnan Airlines, Shanghai Airlines and China Northwest are the operators involved and all three have agreed to examine joint commercial arrangements on crew training, engineering, maintenance and other commercial areas with Qantas, which in return gets the possibility of long-term partnerships and the third-party future business that this should generate.

Ansett ‘Flat Out’

Ansett’s campaign to provide the best first and business class seats on its long-haul international flights has taken another step forward with the introduction of new seats and increased pitch. The airline’s 747s now have 12 US-made Weber 8080 seats in first class set at a pitch of 211cm (83in). The $25,000 seats are fully reclining, offering a ‘flat out’ sleeping position. They were originally designed for the Sultan of Brunei and Ansett is the first airline to install them. Business class travellers on Ansett’s 747 ‘Spaceships’ have also benefited from an additional 10cm (four inches) of legroom, their seats now pitched at 137cm (54in) whilst pitch in economy is also greater than any other long-haul operator’s.

Thomas Cook Wins Airport Bank Contract

The world’s largest foreign exchange retailer, Thomas Cook, has been awarded a contract by the FAC to provide foreign exchange and financial services at Sydney Airport. The Sydney contract began in May this year and runs for five years. Thomas Cook already runs similar operations at Adelaide, Perth, Darwin and Hobart airports and since taking over at those locations has overseen increases in foreign exchange trading. The company expects a similar situation to occur at Sydney.

Aviation Conference Questions Privatisation Issues

The Aviation 95 conference held recently in Sydney and supported by Australian Aviation, explored the environment in which Australia’s airports and international symbol, Qantas, will be privatised, reports Julian Green. Opened by Laurence Price, Vice President of SH&E aviation consultants in London, who described the experiences of overseas markets in their quest to liberalise and privatise their various airlines and airports. Laying the foundation for much of the discussion at the conference, Mr Price said, “It is ironic that an industry that has been growing consistently between 4 and 5%, and in many regions of the world faster than that, particularly in the Asia/Pacific region, is making such poor returns on their turnover and investment. With 40% of the world’s air transport occurring in the Asia/Pacific region or to and from it by the year 2000, it is hoped that carriers in these markets will realise their potential profitably, unlike the US and European experience.”

The challenge of this growing market will also need to be met by airport designers and operators, as well as industry service providers, to ensure capacity meets the forecast demand. “The key to meeting demand will be to understand the market, control supply, yet recognise the need to adapt and review constantly,” he said. “Australia has the opportunity to show the world how it can be done.”

Underlying nearly every discussion during the event was the pending privatisation of FAC-operated airports around Australia. The successes of airport privatisation in the UK by the BAA was demonstrated by Vernon Murphy of Scottish Airports Ltd, who described his operation’s success in meeting the diverse range of requirements by airlines, passengers and service providers alike. BAA’s customer-driven focus reaches across the board and, in line with other European airport operators, aims to attract as much feedback from customers as possible to continually review and improve standards of service and operation. These service standards, he says, are vital for the successful co-operation between the airport operator and its users.

The path to airport privatisation was not so warmly welcomed by Max Hazelton, who is understandably cautious about the impact on regional operators. Mr Hazelton’s concerns over private airport operators squeezing the smaller regional and commuter operators out of major airports will be brought about by the ‘profit first’ motive, he says. “I believe that the privatisation of airports will ultimately mean increased costs to airlines at unprofitable airports (in regional centres) in order to make those airports profitable.”

The first Boeing 777 for Cathay Pacific and the first to be powered by Rolls-Royce Trents successfully completed its maiden flight on June 2. The Trent-powered 777 will be used for certification of the 777/Trent combination (the 777 was certificated with PW4084s in April), including route proving flights within Asia next February, before delivery in March next year. Cathay’s 11 777s initially on order will seat 50 business class passengers and 293 in economy, and will be used on regional and medium-range routes within Asia largely as a replacement for the airline’s 747-200 while Cathay is using its smaller A330 twinjets to replace its Lockheed TriStars.

Mr Hazelton also believes that, as a result of a Bureau of Industry Economics Report in 1994, showing that landing charges at Australian airports are low by world standards, “It would be my view that one of the first things a private owner would do is to increase landing charges at the profitable airports using the argument of world parity pricing to justify this inevitable increase.” Continued access to Sydney Airport, Mr Hazelton suggests, would not be guaranteed given the push to greatly limit the number of ‘smaller aircraft’ movements, and in the event that access would be made available, the cost of such operations may well be prohibitive to regional and commuter carriers. “Privatisation will affect not only a well-entrenched and stable aviation infrastructure, but could also have an enormous impact on the social and economic well-being of many isolated communities. I still believe that one body should be responsible and accountable for developing, maintaining and operating the airports as part of the national transport network.”

James Kimpton, Manager Aviation Policy with Ansett, suggests conversely that user charges at privatised airports will in fact fall as a result of competitive pricing structures and innovative management. “Airline users of the FAC’s airports first and foremost expect privatisation of those airports to improve efficiency, lower costs and reduce charges and rents. This should occur as a result of three factors. First, the introduction of private sector management motivated by private sector objectives should ensure that the most imaginative and innovative approaches are applied to the operations of airports. Secondly, the sale of separate 50-year leases of each of the airports to individual buyers will result in the abandonment of the pooling of airport revenues and costs as has occurred under FAC ownership, and should result in location-specific pricing reflecting reasonably incurred costs. Thirdly, in limited instances, airports will compete with each other with consequent disciplinary effects.”

Noting the substantial investment airlines have already made in airports throughout Australia, Mr Kimpton urged the regulatory environment under which privatisation will take effect to protect the airline’s assets which have been embodied in current leases. “The security of tenure provided by those leases provides the security pursuant to which lenders and shareholders provide funds to the industry,” Mr Kimpton said. Indeed the differences of opinion on airline access and charges at airports reflect the intrinsically diverse operations of major airlines and the regional and commuter carriers.

To the privatisation of Qantas, Peter Forsyth of the University of New England indicated that the airline’s value will be greatly influenced by the Government’s ability to resolve as many uncertainties in the airline’s operating environment as possible. “When an airline is being privatised it is desirable that the regulatory environment in which it is to operate be as settled as possible. Granted that there are always many uncertainties surrounding the environment within which the airline will operate, and that these will reduce its overall value, it is sensible for the Government to resolve as many of these as possible. This can involve financial restructuring, removing contingent liabilities (e.g. unresolved court actions), and making its regulatory policy as clear as possible. It will also need to make clear what strategic alliances the airline will be permitted, and not permitted to form.” Peter Forsyth said that while the Government had settled on its international aviation policies for the most part, it must still resolve the questions hanging over it regarding Air New Zealand. “Air New Zealand is both a competitor for, and a partner of, Qantas. This is an unsatisfactory situation in the long term. There are few advantages under the current arrangements.” While a commercial association between Ansett and Air New Zealand would effectively remove one competitor, Prof Forsyth said, “… its new competitor would be larger and have a more extensive route network, something which would be valuable in marketing.”

The privatisation of Qantas would greatly enhance its ability to become more financially flexible, it was generally agreed at the conference. However, the airline’s strength in its operating environment as a whole was not believed to be particularly attractive to potential investors, given uncertainty about bilateral agreements with Hong Kong and the competition it faces from airlines operating with lower labour costs such as is still found in many Asian countries.

Paul Couvret spoke of “Whether Qantas is a good buy”, and while noting that the airline’s debt-to-equity ratio had improved and that it had at last consolidated its financial situation, he said Qantas had to be a well-managed company, and not just a well-managed airline. In a poignant reminder of the airline’s prospects under public listing, Mr Couvret said, “Most investors don’t care if the companies they are investing in fly aircraft or clean grease traps – what counts is the return on investment. And this is where Qantas is going to find it most difficult. Investors will put their money wherever they can get the best return, commensurate with the desired amount of risk. As far as the sharemarket is concerned, Qantas will not be competing with other airlines, but with all other potential uses for investors’ funds. This will include every other listed Australian company, not to mention overseas companies that are listed on the world’s stockmarkets.” A major analysis by Paul Couvret and Jim Thom on the viability of the Qantas float appears elsewhere in this issue.

The conclusion of the programme left little doubt that the industry in Australia, and as part of the whole, is in a great period of change. There will be no easy course to airport privatisation nor necessarily to the Qantas float. One factor that did receive complete accord, however, was the overwhelming need for the Government to clearly lay down the regulatory infrastructure under which the airports and Qantas will be fully privatised, and that it must reasonably, and immediately, resolve outstanding issues which could affect the value of its assets prior to sale.

Airshows Big Business

Politicians (national, state and local) please note: airshows are very big business, last year attracting audiences second only to baseball in North America alone. It is estimated that 27 million people will attend airshows in the USA and Canada in 1995. A steady 2% growth in the number of people attending these events over the past eight years has meant that in 1994 nearly twice as many people visited airshows in America than attended NFL football games. The shows generate about $US2bn in revenue each year in North America. In Europe, both Farnborough and the Paris Salon are major boosters to the economies of their relevant cities.

Regionals Keep Growing

US regional airlines have recorded record passenger uplift figures in 1994 and this is set to further improve this year as more larger and faster aircraft enter service. US regionals carried 57 million passengers last year (8% up on 1993), average load factors increased to 50% (from 49%) and revenue passenger miles (RPMs) flown rose by a substantial 13% to 12.01 billion. Departures increased from 4.58 million to 4.62 million. US regional airlines have recorded overall growth of 35% over the last three years.

US Airlines Face Declining Quality

The quality/customer satisfaction performance of the nine major US airlines has declined for the fifth successive year following release of the Airline Quality Report (AQR), a survey based on consumer feedback. The report rates American Airlines as the most consistent performer followed by Southwest and United, these three being the only ones to record a higher rating than 1993. Worse off (in descending order) were Delta, USAir, Northwest, America West, TWA and Continental, the latter running a long last due to a poor customer image caused by denied boardings, bad service and unsatisfactory on-time performance. The AQR results are based on several criteria including financial stability, on-time performance, denied boarding, lost luggage and 14 other factors. On the question of lost luggage, it’s interesting to note that on average, US airlines lose one out of every 200 pieces.

Royal Tongan Sydney/Auckland

Royal Tongan Airlines has begun operating a weekly service on the Sydney/Auckland/Tonga route using a Boeing 737-300. The flight operates on Fridays. The 737 is jointly leased by Royal Tongan and Air Pacific and carries the livery of both airlines, one on each side. It is configured to carry 126 passengers, eight in business and 118 in economy.

Malaysia/Virgin Australian Codeshare

Malaysian Airlines and Virgin Atlantic have been given permission by the Federal Government to operate codeshare services to Australia from London via Kuala Lumpur. Under the codeshare agreement, Virgin will gain access to a total of 660 seats per week on seven of Malaysia Airlines’ scheduled services – two flights from Sydney, three from Melbourne and two from Adelaide each week – and be responsible for the marketing and promotion of these seats to the Australian public. Malaysia Airways aircraft and their technical and cabin crews will operate all the services but Virgin will supply some cabin crew on most flights, which will have commenced operations by the time these words are read.

United Daily to ‘Frisco

United Airlines has increased its thrice weekly San Francisco/Sydney service to a daily service, a year after taking over the route from Qantas. An increase to six flights per week comes into effect this July and the seventh service comes on line in August. United already flies daily services from Sydney to Los Angeles and from Melbourne to Los Angeles via Auckland. Qantas originally dropped its Sydney/San Francisco services due to a supposed lack of demand, although United says there has been an “outstanding response” to it. The airline’s excellent connections at the other end probably help, San Francisco being its major west coast hub.

BA/Singapore Profits Up

British Airways and Singapore Airlines have continued to return excellent financial performances, both airlines reporting increased profits for their financial year to March 31, 1995. British Airways recorded a record pretax profit of $A983m for the year, up a massive 61% on the previous year’s result. The after-tax but before-abnormals figure is $815m, this reducing to $543m after an abnormal provision for $272m against BA’s investment in ailing USAir is taken into account. The airline’s other alliance partners – Qantas, Deutsche BA and TAT European – contributed more than $109m to the profit figure, and although the latter pair actually recorded losses, these were largely offset by the ‘feeder’ contribution they made to the overall picture. Turnover was up 8.7% to $15.6bn. Meanwhile, Singapore Airlines’ pretax profit for the year was$A939m, up 9.9% on the 1993-94 figure. Revenue increased by 5.1% to $A6.42bn while expenditure was $A5.5bn, up 3.8\%. Air freight revenue was a large contributor to the overall result, this area increasing by 11.2\% to$A1.13m. On the debit side, subsidiary regional airline Silk Air lost money and SIA Engineering’s profits were down. The airline’s overall load factor rose slightly to an average 69.8%.

March Quarter Domestic Traffic Soft as Expected

Dept of Transport data for the March quarter indicates that both Ansett and Qantas were correct in having concerns about the drop-off in domestic traffic during this traditionally quiet quarter. Compounding the problem this year was the fact that Easter fell in April and February traffic was actually lower than previously anticipated. Unfortunately due to non-co-operation from the airlines through 1993/94 there isn’t comparative data to make a valid comparison with the same period last year, though the quarter is understandably well down on the December and September 1994 quarters. Some interesting conclusions though are drawn from the data. Ansett topped Qantas on Revenue Passenger Kilometres (RPKs) though actually carried less passengers, whilst Qantas on the other hand made substantially less trips with a higher average load factor. This reflects Qantas’ greater use of its large 767 fleet against its competitor’s primarily narrow-bodied 737/A320 fleet which flies smaller planes more frequently between most ports. Qantas also has around 10% more overall capacity in the domestic marketplace than Ansett, though again most of this is as a result of replacing 737s with widebody 767s on key routes, a move that gains it more passengers but possibly at a lower overall yield. Qantas increased systemwide capacity by 23% last September while Ansett replied with a boost of around half that figure. Considering its gutsy move at throwing so much additional capacity into the market, Qantas has done well to keep its load factor where it is. The June quarter is traditionally quiet, though at least this year it will be boosted somewhat by a record Easter. From now on we will be able to feature the monthly Top 20 Route tables as soon as they are available from the DoT and will summarise each quarter as soon as that information is available.

Qantas Contains Costs

Qantas is looking to cut an immediate $100m annually from its operating costs in the first part of its strategy to eventually gain a 12.5% rate of return on shareholders’ funds. The first half of the 1994-95 financial year saw the airline record a 9.5% increase in revenue to $A3.67bn with costs rising by 7.5% to $3.45bn. Within that, staff costs increased by 12% and sales and administrative costs by 14%. Some of these were one-off expenses associated with last year’s product relaunch and not necessarily ongoing costs. Qantas’ aim is to achieve a unit cost increase of between zero and 1% per annum. The airline has told its employees there will be no loss of jobs associated with the cost reduction programme.

Impulse Nonstop Newcastle/Brisbane

Fast-growing regional operator Impulse Airlines has begun operating nonstop flights between Newcastle and Brisbane in response to demand from business and leisure travellers. The service operates twice each weekday using 29-seat Jetstream 41s. Refreshments are served on each flight. The new services supplement Impulse’s existing weekday two-stop flights between Newcastle and Brisbane, operating via Coffs Harbour and the Gold Coast.

High Rollers

The US Department of Transportation (DoT) has ruled that under a new American law, foreign airlines which do business in the USA may install interactive flight entertainment systems which have the capacity to offer casino-style gambling. Federal law prohibits carriers from transporting and operating gaming devices on flights that originate or terminate in the USA, but the DoT’s interpretation of it states that as long as the gaming portion of the system is disabled on aircraft operating to or from the United States, the carrier may install the equipment. For example, a carrier operating a flight from New York to London via Montreal could allow gaming on the Montreal to London segment of the flight. From Montreal to New York (and vice versa) the gaming programmes would have to be disabled. Inflight gambling is a potentially huge source of income for airlines with several hundred credit-card-armed people on an aircraft looking for something to break the monotony. Virgin Atlantic already operates ‘flying casino’ flights between Hong Kong and London, these reportedly turning into ‘nice little earners’.

Call to Lift Adelaide Curfew

Adelaide business leaders have called for the lifting of the city airport’s 11pm-6am curfew, claiming it is inhibiting international trade and tourism. Not surprisingly, the call has raised the ire of nearby residents with state Liberal MP Mr Heine Becker from the neighbouring electorate of Peake warning that any attempt to lift the curfew will be fought. Nevertheless, the SA government is going to discuss the curfew. In the meantime, the Labor candidate for a Brisbane seat affected by aircraft noise has suggested that land to the west of Ipswich is the best site for a second Brisbane Airport. Mr Kevin Rudd was responding to a statement by Queensland Liberal leader Joan Sheldon that building another airport for Brisbane would involve expensive land resumptions in the Brisbane/Gold Coast corridor.

Air Fares Down

Australian domestic air fares declined by 1.9% in the second half of 1994, thus easing Prices Surveillance Authority (PSA) concerns. According to the PSA, fares on major interstate routes increased by only 1.8% over the whole of 1994 despite rises in the first half of the year. The overall result was a decline (in real terms) of 0.7%. Until the second-half results were issued, the 1994 rise in average fares had been about 6% for most of the year.

The small crew at Australian Aviation would like to sincerely thank each and every one of our readers for their continued support through the past year. This support has enabled your aviation magazine to report a modest increase in audited circulation at a time of continuing sluggishness in both the publishing and aerospace industries. For calendar year 1994 Australian Aviation was able to record a CAB audited circulation of 17,284 per issue. By comparison, our primary competitors Aircraft & Aerospace recorded 5,507 for the last three audited issues in their reporting period and Australian Flying an ABC audit of 11,699.

Sydney Airport’s 75th Birthday

Sydney (Kingsford Smith) Airport is 75 years old this year and alongside the celebration activities (which include open days, tours, fashion parades and competitions) it might be appropriate to put the airport’s contribution to the Australian economy into perspective. About 60% of all international visitors to Australia pass through Sydney Airport, a total of 5.7 million in 1993-94. In addition 11.6 million domestic passengers used the airport during the same year. The airport is very much a ‘mini city’ with 497 employer groups who provide full-time jobs for 30,000 people, about half of which live within 15km of the airport. Another 29,000 people are employed in associated industries in the region. Each year, some $3.5bn in economic benefit is generated locally because of the airport. Those who campaign for the airport’s closure should perhaps bear these figures in mind!

Older Pilots Win in Court

Two Qantas captains have had their age 60 compulsory retirements overturned by an industrial relations court, although one recorded only a partial victory due to the nature of his flying. The first pilot – who flies domestic routes – was found to be entitled to reinstatement to his former position, his employment to be regarded as continuous and he be repaid lost remuneration. The second pilot (who flew long-haul international routes) won his case on the medical and safety issues involved but his application for reinstatement was overturned on the basis of ‘operational factors’, mainly the fact that the USA and some Asian countries won’t allow airline pilots over 60 to fly into their airspace. The judge was “… positively satisfied that there is a better alternative to mandatory retirement at age 60 – an alternative that need not compromise Qantas’ high safety standards”. Ansett has already abandoned the age 60 rule.

Mother Nature 79, American Nil

American Airlines and its American Eagle affiliates suffered a major setback in late April when a severe hailstorm ripped through Dallas/Fort Worth Airport damaging 79 of their aircraft. Many were out of service for several weeks while undergoing repairs, causing large numbers of flight cancellations and financial losses. The hailstones were enormous, varying in diameter from 8 to 15cm (3 to 6in) and causing damage mainly to wings, flaps and control surfaces. Although the repair of sheet metal surfaces was straightforward, composite surfaces were more difficult and most had to be replaced, causing an immediate shortage of these parts. The different behaviour of the materials is interesting: sheet metal just dents while the composites often shattered and lost structural strength under the force of the impacts. The final toll was damage to 54 American Airlines aircraft (about 9% of its fleet) comprising 27 MD-80s, 12 Fokker 100s, seven 757s, seven 727s and one MD-11; while 24 American Eagle aircraft (ATRs and Saab 340s) were also damaged. Although American got the worst of it, Delta Airlines had 12 aircraft damaged by the storm while scores of other aircraft were also affected.

Two of Our Pilots Are Missing

Here’s one for those who collect oddball stories about the airlines! According to a newspaper report, a Malaysian Airlines flight was recently delayed for three hours when stewards discovered the cockpit was empty after all the passengers had been seated. A slight organisational problem in the area of duty scheduling was blamed for the lack of pilots in the pointy end of the aeroplane when it was due to depart on an internal flight. Two other pilots were eventually found to take over and the flight carried on, albeit somewhat behind schedule.

Russian Skies Opened

Russia has decided to open its skies to commercial flights operating between North America and Asia, thus providing more direct routes which will save airlines fuel, time and money. The first route – north of the Kamchatka Peninsula and Sakhalin Island to the Sino-Russian border at Khabarovsk – is already operating. It was over Sakhalin where Soviet fighters shot down a Korean 747 in 1983. The opening of the airways will bring financial benefits to Russia which is charging airlines for the privilege of flying through its airspace.

Across the Tasman by Kiwi

Kiwi Air Travel Charters – the New Zealand operator which recently began operating charter flights between Queensland and New Zealand – has announced it plans operating scheduled services from Sydney and Brisbane to New Zealand from August. The planned schedule (still subject to government approval at the time of writing) is for five return flights each week. Of these, two flights per week will be between Brisbane and Hamilton, two between Sydney and Hamilton and one from Brisbane to Dunedin. Kiwi has signed a Memorandum of Understanding with National Jet Systems (NJS) to provide a 124-seat Boeing 737-300QC for the services. NJS will also provide air and cabin crews.

Qantas & Air Pacific Rejig Services

Qantas and Air Pacific have announced a reorganisation of their joint codeshare services to Fiji and Los Angeles. The reorganisation has been planned jointly by both airlines to improve their operational efficiencies and to boost their reach into the US market (subject to government approval). The changes will be introduced progressively from October and will involve: a Qantas return weekly Melbourne/Nadi service to complement the existing once-a-week Air Pacific flight; Air Pacific will operate all six weekly Sydney/Nadi flights, taking over two Qantas frequencies; Qantas’ two weekly Sydney/Nadi/Los Angeles 747 services will become Sydney/LA nonstops; while Air Pacific will add a second weekly 747 Nadi/LA service and has mooted a third. In addition, Qantas will market 50% of the seats on Air Pacific’s Nadi/LA flights and increase the share of seats it markets on Australia/Fiji flights. Air Pacific will also be added to Qantas’ frequent flyer programme, and have access to potential advantages of closer association with Qantas’ other alliance partners, including British Airways.

Extra QF Flight to Johannesburg

Qantas is to introduce a third weekly flight between Sydney and Johannesburg, starting next November. The flight will continue on to Harare in Zimbabwe. The new service departs Sydney each Monday, supplementing the existing Thursday and Saturday flights. Heavy demand has prompted the need for the new service, the number of visitors from South Africa to Australia doubling in the last two years.

Ticketless Travel Coming

The era of ‘ticketless’ air travel is nearly upon us with electronic booking and ticketing processes set to take over from the familiar multi-page paper tickets. This advance will save the airlines money. Manually handling a paper ticket costs about $US8 – electronic ticketing reduces that to just $US0.45 per unit. United Airlines introduced ticketless travel on its low-cost, low-frills shuttle subsidiary a few months ago as part of its $US3bn cost-saving programme. Ticketless travel relies on the use of a credit or debit card. Passengers book over the telephone, pay by their card and get sent a receipt but not a ticket. When they arrive at the airport, travellers go directly to the departure gate and collect a boarding card. US airlines United, Southwest, Delta and USAir have been contributing to a taskforce established by the Air Transport Association to define common standards. Once in place, the ticketless system will also allow passengers to switch from one airline to another. The basic technology for ticketless air travel is already in place – banks use it every day – and now the airlines have realised its cost-saving potential.

US Airlines Reduce Losses

The nine major US airlines have recorded better results for the first quarter of 1995 than the equivalent period of last year but overall losses are still evident. Between them, the airlines lost $US242m for the March quarter, almost exactly half that of the previous year. Individually, net profit makers were (with first quarter 1994 figures in parenthesis): American $US38m (-$US7m); United $US3m (-$US97m); Northwest $US3m ($US18m); Southwest $US12m ($US42m); and America West $US5m ($US15m). The United turnaround is particularly notable. Loss makers were Delta $US11m ($US78m loss in 1994); USAir $US101m (-$US190m); Continental $US30m (-$US72m); and TWA $US123m (-$US124m). While Continental, Delta and to a lesser extent USAir all showed better results than before, TWA continues to struggle and is to go back into Chapter 11 bankruptcy protection at the end of June this year. This planned move is part of a further restructuring of the airline and is scheduled to last only two or three months, although some industry observers expect it to be longer. The Standard & Poor’s credit rating agency has gone so far as to warn that if TWA’s cashflow deteriorates or the bankruptcy process drags on, it could face a liquidity problem and possibly have to liquidate. TWA last emerged from Chapter 11 in late 1993 but has since failed to either make a profit or to significantly reduce its $US1.8bn debt. Overall, load factors averaged 63.8% (up slightly); revenue passenger kilometres flown increased by 4.9%; available capacity was up by 4.9%; yields were down 1.9%; and seat costs reduced by 3.9%. Only Northwest and Continental recorded improved yields while everyone managed to reduce their seat costs except Northwest. Across the board revenue increased by 2.8% to $US13.01bn, all airlines reporting increases except TWA which suffered a 9.1% drop.

Russian Air Travel in Decline

Russian commercial aviation suffered its fourth successive year of decline in 1994, the 413 registered air carriers moving 32.7 million passengers during the year compared with 39.9 million in 1993, a fall of nearly 20%. Aeroflot’s successors accounted for more than 60% of the total and 99.6% of the total traffic was carried by just 157 operators, leaving more than 250 operators with the scraps. Many of these operate a single aircraft such as the An-2 biplane or Mil helicopter. The problem stems from a lack of organisation and money, these aspects reflecting both commercial and military aviation in Russia at the moment. Investment in air transport has fallen drastically, and this is the key to a difficult – perhaps even ruinous – future according to analysts. There were 47 unsold airliners at Russian factories at the end of 1994 and although the airlines wanted and needed them, there was simply no money with which to purchase. Safety is an ongoing concern. There were 15 fatal accidents in Russia last year, three of them involving passenger jets. The Russian Ministry of Transport’s Air Transport Department (ATD) performed safety inspections on 287 airlines in 1994 with the result that no fewer than 76 operators’ licences were either suspended or withdrawn and international authority was removed from 15 others. The ATD also ordered the withdrawal from service of 84 aircraft and imposed operating limits on 36 airports. These statistics alone indicate an industry in serious trouble. Many of the aircraft manufacturers are owed money both by the Russian government and others for aircraft already built. Examples include MiG-29 and MiG-31 fighters, Il-76 and Il-62 transports and 192 combat helicopters which were built for export but placed in storage with no obvious sales prospects. The resultant shortage of funds has meant that some workers have not been paid for months. It is estimated that no fewer than 84% of Russia’s aircraft companies (comprising 134 production facilities and 111 design offices/research institutes) are insolvent. A few years ago it seemed that Russian transport aircraft manufacturers thought all they had to do to sell airliners to the west was to replace the original powerplants and avionics with American, British or French units and the customers would come rushing to their doors. This has proven to be a false promise with all such projects now either floundering or suffering delays.

Qantas Pair Off ANZ Board

Qantas chairman Gary Pemberton and managing director James Strong have resigned from the board of Air New Zealand, growing areas of commercial competition between the two airlines preventing them from participating in a range of boardroom discussions. The specific issue at the heart of the matter is ANZ’s negotiations to purchase News Corporation’s 50% interest in Ansett Australia, Qantas’ main competitor. The situation clearly made the Qantas pair’s position untenable. They have been replaced by two independent directors who are able to fully participate in ANZ board matters while still representing Qantas’ interests. Qantas owns 19.9% of ANZ. The ANZ-Ansett deal is reported to be close to finalisation at a price of about $550m. Ansett has meanwhile had a disappointing year so far, losing domestic market share to Qantas and according to analysts liable to record a 1994-95 net profit of only about half the $152m achieved in 1993-94. Ansett has also received some good news of late with the winning of seven new contracts worth about $40m each year. The contracts are with the CSIRO, the Australian Sports Commission, Australian Taxation Office, the Departments of Finance and Treasury, the Office of Veteran’s Affairs, the Australian War Memorial and the Insurance and Superannuation Commission.

New Brazilian regional airline Interbrasil Star has taken delivery of the first of three Embraer EMB-120 Quick Change Brasilias. The EMB-120s will be used for services out of the capital Brasilia and to Sao Paulo to feed Transbrasil (Interbrasil’s main shareholder) domestic and international services. Interbrasil Star is the sixth Brazilian EMB-120 operator. (Embraer)

Meanwhile, Ansett’s international operations are gradually expanding with the International Air Services Commission (IASC) approving two Boeing 747-300 services per week between Australia and Taiwan from November this year. In addition, Ansett will launch twice weekly services to Kuala Lumpur at the same time. A third 747-300 will be leased to fill these schedules which add to existing services from Australia to Hong Kong and Japan. Ansett also has as yet unused rights to Singapore and Korea.

Sydney Flightpath Plan Rejected

The Federal Government has rejected a Civil Aviation Authority proposal for a new noise-reducing flightpath for aircraft landing on Sydney Airport’s new runway, Minister for Transport Laurie Brereton saying it is totally unacceptable, environmentally unsound and potentially unsafe. Mr Brereton’s opinion is no doubt based on his vast experience in the air transport industry rather than political expediency (!) but the issue is probably irrelevant anyway as opposition leader John Howard has confirmed his government will reopen the east-west runway if the Coalition comes to power after the next election. This, of course, is the best solution to Sydney’s noise problem – as has been pointed out ad nauseam by those who know – but has been rejected by Mr Brereton as it means aircraft would fly over Labor-held seats including his own. Mr Brereton claims the east-west runway cannot be reopened for safety reasons but critics point out that the busiest airports in the world seem to be able to manage safe cross-runway operations. For the record, the CAA’s proposed flightpath takes aircraft over the Harbour Bridge and the city to Central Railway and then follows the railway line to St Peters station before turning left towards the airport. Mr Howard has meanwhile confirmed that a coalition government would maintain the 11pm-6am curfew at Sydney, despite the organisers of the Olympic games wanting it eased when the expected large numbers of visitors arrive in Sydney for the 2000 event. In other airport noise news, the government is looking at expanding its aircraft noise compensation scheme to other airports where nearby residents are affected by noise. Adelaide and Melbourne have been mentioned by Mr Brereton as possible candidates for this and therefore the so-called ‘noise tax’ on airlines which accompanies it. The noise levy – set at about $3.40 per passenger – is scheduled to come into operation from July 1 this year. Mr Brereton says “the noise tax can apply to any airport the government determines should have such a programme and which has residences affected meeting the Sydney criteria”. AA Comment: What a vote puller! Listen for an aircraft (that you never noticed before) and we will give you money! Hang on, I think I can hear one now….

Airport Sale Restrictions Eased Further

The Federal Government is to reduce cross-ownership restrictions on its airports privatisation programme, a 25% cross-shareholding limit being under consideration. This, in association with the decision to allow Sydney and Badgery’s Creek Airports to be sold as a package, will allow consortia to establish a kind of ‘network’ of airports around the country combining – for example – a 100% interest in the two Sydney Airports along with up to 25% of other major airports. This scheme is in direct contrast to Labor’s original resolution to keep ownership of Sydney, Brisbane, Badgery’s Creek, Melbourne, Perth and Coolangatta entirely separate. A cross-ownership decision will increase the options for bidders – and the potential revenue for the government. The major consortia involved so far are: BAA Australia (including AMP and State Super); Australian Airport Services (Lend Lease and Brambles); and Airport Group International (formerly Lockheed Air Terminal). In another significant change of policy, the government has now decided that the Federal Airports Corporation will not be permitted to bid for a role in the major airports, namely Sydney, Brisbane, Melbourne and Perth. It will be able to bid for an interest in the ‘second string’ airports such as Adelaide, Darwin, and Coolangatta.