Airline Profile – Airlink

Developing Markets

“The role of Airlink in general terms is to develop markets. Airlink was devised to provide appropriate sized aircraft to be put on lower volume city pairs and to provide the greater convenience of increased frequency. Progressively with this new fleet of -100, -200 and -300 series 146 aircraft, we can develop a market in preparation for the switch to larger aircraft. The beauty of a fleet with three different versions of a single aircraft type means we are better able to do that now.”

This, then, suggests that Airlink will give up services that have outgrown its current fleet, turning over to Qantas and its 737s routes that have increased in volume sufficiently to warrant the use of larger aircraft. Bearing in mind that this expansion programme has only recently started, it is premature to accurately foresee the day when this will occur. Mayo said, “Airlink has just gone through a period of rapid expansion and obviously we need to bed down the network and have a look at how passenger growth will move over the next couple of years.”

Airlink’s use of the BAe 146 family to accomplish its clearly defined role in the Qantas Group seems natural when examining the nature of the routes on which the airline operates. The airline operates predominantly in the northern and western states of Australia, including Queensland, where it has a base at Cairns in the far north and Brisbane in the southeast, the Northern Territory, and Western Australia where it has most recently established an operational base in Perth. Combined, these states cover a vast 5.61 million square km, or an area equivalent to nearly two thirds the size of the Australian continent.

With the recent expansion, Airlink now serves five cities in Western Australia, four in the Northern Territory, five in Queensland and has services to Adelaide and Canberra. These 16 ports provide the airline with a reasonable mix of both tourist and business traffic, and leasing the additional 146 aircraft aims to address these different markets and their projected growth over the coming years.

The Bae 146 Family Concept

As with a growing number of airlines, Airlink has favoured the family concept for its fleet, using the commonality of three sizes of a single aircraft type as a sound means of expanding and fine-tuning its services around its network. Its progression from the -100 series aircraft through the -200 to the largest member of the BAe 146 family has meant that Airlink has the ability to critically match the behaviour of the sub-networks with correct capacity and frequency.

The -300 series aircraft, delivered in November last year and leased for three years, are based in Cairns and service Ayers Rock (Yulara), Alice Springs, Perth, Gove and Darwin. With the exception of the Darwin to Gove services, the majority of uplift throughout the Cairns based network is tourist traffic which arrives in Cairns from ports in Asia, North America and Europe, or from the southern cities of Brisbane and Sydney. Nearly 20% of Airlink’s revenue comes from overseas passengers, the majority of whom travel through the increasingly important international hub of Cairns down to the red centre of Australia and beyond. It is on these routes, then, that the -300 series aircraft have been placed to cater for the high international volume of group tourist traffic.

“The aircraft we had previously on those routes, (the -100 series aircraft with 58 economy seats) weren’t providing the international market in particular with the right number of seats to cater for group demand. With the average group size being between 25 and 30 people, an aircraft configured with 58 economy seats was not the ideal size. The -300, with 79 economy seats, gives us a greater ability to accept group business which is critical to the success of those operations.”

The slightly smaller 76 seat -200s which were delivered in September 1994 and leased for three years, are based in Brisbane, deployed on the Rockhampton, Mackay, Proserpine and Canberra routes, where the international market is not yet focussed, making the aircraft ideal for the independent domestic tourist and business travel markets.

The -200 series are fitted with eight business class seats, which are an option used by regular industry and public service travellers on services to Canberra, Mackay and Rockhampton. “In fact, Business Class has proved so popular on the Brisbane to Canberra route that capacity has been increased to 16 Business Class seats through the reconfiguration of one aircraft, which from July 1, has been dedicated to Canberra services.”

“The -200 series increased capacity to those markets which were already doing quite well,” Mayo says of the southeast Queensland network, which also serves a growing local market to key tourist destinations such as Proserpine and the island resorts of the Whitsundays. “Since 1991 we have moved from a -100 to a -200, in areas where there has been good growth. In the future, we will have to cater for further growth,” Banston says, suggesting that the area could well see a -300 in the future if growth continues as it is.

The southeast Queensland network reflects Airlink’s role in servicing lower volume routes more economically. “In places like Rockhampton, Mackay and Proserpine prior to Airlink coming on line, Australian Airlines had a 737 into those ports, and it was seen that a more appropriate aircraft could operate there giving greater frequency, and consequently the 737 was replaced with the 146.”

Airlink has also demonstrated its ability to develop markets in the recently expanded services from Brisbane to Canberra. Increasing flight frequency from six to 20 per week and doubling the number of business class seats were calculated moves to address a growing business market. However, Mayo also sees an opportunity to stimulate tourism traffic through Brisbane’s growing importance as an inbound gateway for visitors from Asia, the higher frequency of services to Canberra and the increasing move toward hub-bypassing of the Australian eastern seaboard.

All these developments open up the potential to include Canberra on more itineraries offered by overseas tour operators, particularly as passengers show an increasing preference to services that avoid the ever-congested Sydney Airport and the inconvenience of aircraft transfers.

The Western Australia Network

“Western Australia was the missing link in the Qantas network,” says Barry Mayo about the need to develop a network here. “There had been a lot of pressure from large accounts for a long time to have a competitive presence there.” Services to four ports from Perth commenced on November 14 1994 with three BAe 146-100s, serving the principal tourism port of Broome and the mining industry townships of Port Hedland and Karratha in the northwest of the state and Kalgoorlie.

The decision to start up services in the region was influenced by the possibility of Qantas gaining some of the lucrative resource industry contracts that are in the process of being renewed by the numerous mining companies in the state, ferrying staff to and from the remote townships and Perth. These contracts have sustained Ansett’s presence since the late sixties and it will naturally be reluctant to give up its lifeblood. Similarly, the airline was encouraged to offer an alternative choice to Ansett’s monopoly on tourism services by many people in the local communities who had previously been at the mercy of comparatively high fares.

With new aircraft delivered to take up demand on the remainder of the network, Airlink’s move into WA was timely. “We did not have the right equipment previously to launch those services, but Airlink, with the arrival of the new aircraft, the three -200s, the two -300s, and in May this year, an additional -100, gave us an opportunity to mount an operation in WA.”

“All the ports have been receptive to the operation; for a long time they have had only one airline there.” Loads have so far been very encouraging according to Barry Mayo, particularly on the Broome and Kalgoorlie sectors, though he admits that it is too early to accurately forecast a regular volume of business given that operations started just prior to the traditional Christmas peak holiday season. He also suggests that it will be some time before the existing contracts expire, allowing people not contracted to fly with Ansett to make a choice between the two airlines and sample the service now offered by Airlink. “If our market share exceeds our seat share in the initial twelve months of operation, I’d be very happy.”

Airlink does not intend to match Ansett in every respect of its schedules and frequency. It does see, however, with steady growth in the tourist and business markets that there is room for two major carriers to compete, offering the obvious advantages to the community. Fare prices immediately fell upon Airlink’s entry to the market, stimulating non-business travel and creating a boom for tourism centres in the northwest. With fares now more within reach, there is a greater ability for residents of Perth to travel around the state to view its spectacular natural sights.

“Travellers are getting a better deal now that there is competition,” says Barry Mayo. Full economy and business class fares have been reduced, while promotional fares were introduced for the start-up services and will be used on occasion to stimulate further traffic. Increased family travel has been generated by attractive child fare discounts on promotional fares. The positive influence Qantas has had on providing access to reasonably priced regional air services will no doubt foster a high level of community support for the Airlink operation, and the airline has also gained appreciable support from the WA State Government.

Airlink’s ability to open up the state to tourism, both local and inbound, is seen as one means of further increasing the state’s attractiveness to visitors. International traffic arriving in Perth from Europe and Asia on Qantas and its interline partners will now have the advantage of being able to connect directly with Airlink services within WA and to the centre of Australia and onwards without having to hub via Adelaide, Sydney or Melbourne.

In fact, Barry Mayo is confident that Perth will become a natural gateway to Australia, given the shorter flying time to continental Australia from Asia and Europe. With Qantas’ worldwide distribution and marketing, there is now the ability to promote Perth and Western Australia more actively than ever before, and these activities are receiving the due support from communities, government and the tourism industry alike.

Mayo recognises, however, the long-term viability of Airlink’s operations in WA will be dependent upon achieving resource industry contracts, and WA sales staff are actively promoting its operations to mining companies. It is hoped that the airline will start achieving this goal from July this year, when it expanded its Western Australia operations with a 50% increase in capacity.

The expansion of services, and a range of ‘celebratory fares’ was announced by Qantas Regional Manager for Western Australia, Terry Simpson, on May 17 this year. The leasing of an additional -100 aircraft from National Jet Systems has enabled daily flights to Broome, twice daily services to Port Hedland, three services a week from Kalgoorlie to Adelaide, and additional flights between Perth/Kalgoorlie and Perth/Darwin. With the addition of the new WA network, Barry Mayo is aiming at increasing Airlink’s total annual passenger uplift from around 400,000 in 1993/94 to the vicinity of 700,000 per annum over the coming years.

Fitting Into The Qantas Framework

Airlink connects with Qantas’ prime domestic and international gateways at Perth, Adelaide, Brisbane, Cairns and Darwin, offering effective connections to tourism destinations from those centres. To ensure that the airline’s operations are not developed in isolation and that they are integrated with the services of the other regional and trunk line operations throughout the country, Airlink’s scheduling is contracted to the Qantas Group at the corporate headquarters in Sydney.

The regional carrier does not duplicate any route of another Qantas carrier, making its services completely autonomous. It does, however, complement the services operated by its regional counterpart in southeast Queensland. Airlink and Sunstate Airlines (operating Shorts 360 and Dash8 aircraft) interact closely, feeding one another’s services with their respective aircraft offering capacities to match the demand to cities they jointly serve. Airlink’s ability to feed Sunstate’s lower volume sectors such as those to offshore resorts ensures that the Qantas product is maintained at all levels and that traffic is kept wholly within the Qantas group. It is vital that this product is seamless, offering passengers a level of service that is maintained from international to trunk domestic to regional feeder sectors.

Oncarriage varies according to city pair, though in the southeast of Queensland where resorts are widespread, the majority of Airlink’s traffic originates from ports other than those in its own network, such as Melbourne and Sydney. Conversely, routes such as point-to-point services like Brisbane to Canberra attract comparatively low oncarriage. The international and local marketing provided by the Qantas Group greatly assists Airlink while effectively achieving generally high oncarriage rates, and with the QF designator it is immediately identifiable in international markets as a carrier of renown.

Barry Mayo readily recognises the need to promote Airlink at home as well as abroad. In some markets such as southeast Queensland, for example, Airlink needs to retain its own profile in the community as a regional carrier. “In general terms,” he explains, “Airlink will be marketed worldwide as Qantas, but it may be appropriate for more emphasis to be placed on the Airlink identity in places like Rockhampton and Mackay, where international traffic is lower in volume than in Alice Springs, which is sold as part of an international product.”

So, too, has Mayo identified the need to promote Airlink within Qantas, which, as with all cases following a merger of airlines, suffers from some lack of product knowledge. He sees it as vital for the success of Airlink that Qantas staff understand the role of Airlink in the wider context of the Group and the services the airline offers. Previously, Qantas staff were geared towards selling an international product, with little need for a knowledge of regional carriers such as Airlink which Qantas has inherited with the acquisition of Australian Airlines. With the domestic and international products now combined under Qantas, it is essential for Airlink’s profile to be increased, and Mayo’s internal promotion of Airlink will aim to achieve higher internal recognition and to secure the commitment of Qantas’s local and international sales forces.

A Unique Qantas Operation

A small management team is based in Sydney at Qantas corporate headquarters, and Airlink is unique among all Qantas regional carriers in that it is the only one of the Group to base its operations on wet leased aircraft. The British Aerospace aircraft are leased from the manufacturer and operated by National Jet Systems of Adelaide who provide logistics, crew and engineering and technical support for the nine aircraft. The operations of National Jet were reviewed in our June issue.

“The rationale behind the wet lease arrangement is that Airlink has been established to pioneer new routes in low density markets and to test new product concepts, with NJS providing serviceable aircraft fully equipped with crew on routes that we designate, and at costs lower than Qantas is normally able to operate at,” explains Barry Mayo.

At the three bases in Perth, Cairns and Brisbane, National Jet has established engineering infrastructure to cater for routine progressive maintenance on the aircraft during overnight turnarounds. All heavy maintenance, repair and overhaul is performed at the company’s central base in Adelaide. Together with Canberra, Rockhampton and Mackay, the bases also act as centres for flight and cabin crew. With no centralised base and technical staff in the three main bases, Airlink is in a better position to immediately attend unserviceable aircraft, keeping the schedule intact. A third BAe 146-100 is kept at Brisbane on standby in the event an aircraft becomes unserviceable.

At airports, Airlink integrates with the other parts of the Qantas Group for its on-ground requirements such as baggage handling, reservations and check-in and catering. Where there is no Qantas presence at a port, Airlink has contracted work to local ground service operators. With NJS support in the day-to-day operations, Barry Mayo is able to clearly oversee the Airlink activities, freeing up time for assessment of the network’s performance and for strategic planning.

Into The Future

In considering the immediate future of Airlink, Barry Mayo says, “There is nothing negative on the horizon. We will be continually reviewing the network, and seeking new opportunities to pioneer routes that support and add value to the Qantas core product.” The management team is keen to consolidate its position in new markets and to ensure that the new aircraft are providing the optimum capacity on the three networks.

“We do have some downtime on the aircraft and we could possibly increase services if appropriate on some city pairs. I do expect there will be growth with the recent expansion, but we will have to see how the new routes respond before committing to any new frequencies.” Having moved into the West Australian market, Airlink has set about tailoring its operations to meet the unique requirements of the resources industry there, so as to provide it with a reasonable chance of success in gaining the crucial contracts it needs to make that regional operation viable in the long term, and who knows, someday it may even have a presence in far off New Zealand!

Airlink — Developing Qantas’ Regional Network