Airline Affairs

A directions hearing was convened on July 11 in the Federal Court in Melbourne while Grey hopes to be able to take the issue further during the course of this issue if the court hearing can be speeded up. Grey is claiming that he cannot lock in his financial backers till the key issue of terminal access is totally resolved. Consequently, as his planned dates for start-up slide, he may technically be in a position to seek damages against Qantas if he wins the day in court by proving that Qantas deliberately ignored his overtures to seek access to terminal space under the terms of the existing FAC/Qantas lease. This is something that his legal counsel advises is highly probable.

The proposal itself revolves around the use of a fleet of eight wide-bodied aircraft. Types presently favoured are the Airbus A300B4, A310-200, and Boeing 767-200. All would be secondhand and are readily available worldwide, a stark contrast to the situation that faced the first Compass back in 1990. If the A300 is chosen, it will be configured in a 24 first and 211 seat economy configuration. The smaller twinjets would be in the order of 24/180 with economy being at a 86cm (34in) pitch, about 5cm (2in) more than is presently available on Qantas and Ansett domestic services. Furthermore, Grey states that his first-class fares will be comparable to the competition’s standard domestic tariff, indicating the possibility of a long-mooted class revamp by Qantas and Ansett. The elimination of the seemingly unnecessary first class for a revised and upgraded business cabin could well be boosted by the arrival of a competitor offering similar standards at economy fares. It is felt by many that nowadays the difference between first and business domestically is so minute that it really lies in the size of the traveller’s ego rather than any physical difference in real-world quality of catering, seats, service, or whatever.

Unlike Compass, the proposed airline would target the freight market from the outset in an effort to make additional revenue from the capacious bellies of its widebody jets. Freight is an important revenue earner for any airline these days and though they are in a different league, it accounts for upwards of a fifth of the total revenue generated by airlines such as Korean, Northwest, JAL, and Lufthansa. Grey plans to build his own maintenance facility at Tullamarine, where the airline would be based, and would not call upon the services of either Ansett or Qantas to undertake day-to-day support tasks. It is anticipated that a minimum of 2000 employees would be needed to support a full eight-aircraft widebody operation.

Aussie Air also plans to operate its own in-house reservations system though this will interface via the American Airlines Sabre system in the US. Sabre is now hosted in every travel agent’s CRS database, which is a better situation than that which faced the original Compass when many agents had problems connecting with the non-TIAS systems of that era. However, it is not realistically expected that Grey’s new airline would receive much support from the travel agent community following their experience with both Compass airlines. Travel agents generally were unfussed about openly supporting the first Compass though did book a lot of traffic as a result of specific client requests, while in Compass II’s case travel agents almost totally shunned the airline largely due to their bad experiences with its former namesake plus the simple fact that over the previous two years most had fallen well and truly under the economic/marketing influence of either Ansett or Qantas.

Grey is mum on financing except to say that the money is supposed to be coming from an international consortium of non-airline financiers and that there is no Foreign Investment Review Board problems with 100% of the capital being sourced from outside Australia. Earlier this year it was planned that the new airline would commence operation from the ports of Sydney, Melbourne, Brisbane, Coolangatta, Adelaide, Perth, and Hobart from November 1 though this has now been shifted to April 1. Even this date may well slide further as commencing operations in the autumn would have the airline searching for much-needed traffic through the usually slow winter period. Consequently, if the project does proceed, the most likely realistic launch date would be the final quarter of 1996. DHL has recently opened a $3m Airside Distribution Centre at Sydney airport and placed into service its new hushkitted Boeing 727-200. The $10m hushkitted 727-200 has replaced a 727-100 and is used on trans-Tasman services, providing an overnight service five days a week between Sydney and Auckland. Ansett Air Freight has committed to take 50% of the freighter’s capacity. DHL’s trans-Tasman shipments have been increasing at the massive rate of 120% year on year for four years. Growth in DHL air express shipments out of Australia to key Asian markets such as Singapore, Hong Kong, China, Malaysia, Indonesia, and Taiwan has grown by 50% per annum for the last three years. The attractiveness of acquiring used modern generation equipment rather than new aircraft for a start-up carrier is reflected in monthly per unit lease costs of around $US175,000 for an A300B4 as against $US720,000 for new A300-600, similar to the ones that the original Compass flew. One major problem that Compass faced was its physical lack of aircraft in its first six months of operation. By leasing already available used aircraft Grey states that this wouldn’t happen and the entire fleet would be up and running within a month or two of the first service.

Nsw Intrastate Route Review On Again

The New South Wales Government’s triennial review of intrastate route licences is on again with a firm announcement of the winners due next February. Contrary to speculation, the newly elected NSW Labour government will not be deregulating its primary intrastate routes and instead will remain with the proven system of specific route approvals that has served the state well in recent years. Low-volume routes between towns in NSW are not regulated as are routes into Bankstown airport; however, all routes into Sydney KSA are strictly licensed for a period of three years with two operators serving most.

Of note is that no approvals will be given for aircraft of less than 18-seat capacity, a move which virtually makes the piston engine RPT Piper Chieftain and Cessna 402/Titan a thing of the past at KSA. Most major routes presently have two operators whilst it is unlikely that any new airlines will win approval over established operators as the start-up costs of operating just one or two routes with modern propjets would prove too high for all but a major airline-backed new entrant. Routes under review are Sydney to Moruya, Merimbula, Grafton, Casino, Ballina, Lismore, Parkes, Orange, Narrabri, Moree, Glen Innes, Inverell, Armidale, Taree, Tamworth, Kempsey, Port Macquarie, Lord Howe Island, Coffs Harbour, Cessnock, Scone, Mudgee, Bathurst, Dubbo, Wagga, Cobar, Narrandera, Maitland, Singleton, Newcastle, and Albury.

Impulse Airlines, which has just returned its 29-seat Jetstream 41s to the lessor and now relies heavily on the 18-seat Beech 1900 and C99, was originally hoping to contest a large number of new routes though is now expected to concentrate largely on its remaining services. Impulse withdrew from its pioneering Newcastle/Melbourne service in June. Hazelton Airlines presently relies on its fleet of 35-seat Saab 340B and 18-seat Metroliners to serve its large and established NSW route structure, while newcomer to the state, Kendell, is presently operating on behalf of Ansett services from Wagga and Albury to Sydney and is mooted to be a possibility for more Ansett services as that carrier moves to downphase its remaining Fokker 50. Expressions of interest closed on August 18 and a firm announcement on the winning route applicants is expected by next February.

Families To Sue Airbus, Cal

The families of some of the passengers killed in the April 1994 crash of a China Airlines (CAL) Airbus A300-600R at Nagoya, Japan have decided to sue both the manufacturer and the airline. Of the 271 passengers and crew on board, 264 died in the accident. Of these, the families of 124 victims are claiming about $US1.1m each in compensation. They claim the aircraft was equipped with defective flight control computer software and that the airline was ultimately responsible for passenger safety. A survivor alleges the flight crew was drinking alcohol during the flight. CAL has attempted to settle the matter out of court, offering about $US150,000 per victim, but this has been rejected. The airline has also begun legal action against Airbus (also citing defective software) in an attempt to indemnify itself against the families’ claims. The final report into the accident is not scheduled to be released until the end of this year.

Gpa Cancels Md-11 Order

The McDonnell Douglas MD-11 has suffered another setback with the cancellation of a firm order for 13 aircraft by leasing company GPA. Loss of the GPA order reduced the MD-11 firm backlog to just 22, although this was immediately boosted with an order for two from VASP and four MD-11 freighters by Saudia. About 140 MD-11s have been delivered so far and options and reserves account for 71 aircraft. The Saudia order emphasises the MD-11’s growing acceptance as a freighter, rather than passenger aircraft. Of the aircraft delivered so far, 28 have been in freighter configuration including 18 dedicated freighters, five convertible freighters, and five combis. These figures exclude the 12 MD-11s FedEx is buying from American Airlines for conversion to freighters and the five aircraft Korean Air plans to similarly convert.

Anz-Saa Agreement

Air New Zealand and South African Airways have signed a commercial agreement intended to develop business opportunities between the two countries and Australia. The airlines want to capitalise on the significant growth potential of the South African, Australian, and New Zealand markets. They have now formalised their intent to investigate opportunities in a number of areas including the possibility of joint operations, schedule agreements and streamlined connections at common gateways in Asia and Australia, joint familiarisation programmes for travel agents, promotion of special events, and joint advertising and promotions. A new bilateral fares package is already in place.

Traffic To Zimbabwe Continues To Improve

Air Zimbabwe will gain major benefits from the introduction of a second weekly service from Sydney and Perth to Harare on November 6. Malcolm Barnett, MD of South Pacific Express, Air Zimbabwe’s Australian representative, said, “Since the route was inaugurated in 1982, we have seen a dramatic increase in passenger numbers. The introduction of the second service will now provide sufficient capacity to meet increasing business and tourism traffic.” Air Zimbabwe, which purchases seats on each Qantas 747 service, has enjoyed continued growth on the sector, with load factors increasing some 10% over the last financial year. “Air Zimbabwe felt bullish about prospects of further growth based on the excellent connections beyond Harare to other parts of Africa, and an increasing trend for Australians to travel to Europe via Harare,” Mr Barnett said. Tourism traffic to the southern African nation has boomed in recent years as has business uplift, largely as a result of increasing foreign investment opportunities there.

Aus Airport Charges Low

A survey of aeronautical charges levied by many of the world’s leading international airports has found that charges at Federal Airports Corporation (FAC) major gateways are among the world’s lowest. The survey, by international transport consultants Travers Morgan, rated Sydney Airport fourth-lowest in a representative group of 40 international airports, with charges representing only 12% of by far the most expensive airport, Tokyo Narita. Only three – Jeddah, Algiers, and Dubai – were less expensive than Sydney and all of these are government-owned and heavily subsidized. The relative charges between airports is interesting. Taking Narita at a value of 100%, others include Frankfurt (the second highest at approximately 55%), Vienna (52%), Chicago (50%) then New Jersey, Berlin, Munich, New York JFK, and Amsterdam all between 40 and 50%. London Heathrow’s charges are only about a quarter of Narita’s, while Gatwick, Hong Kong, and Dallas are all under 20%.

Dangerous Goods Conference

The International Conference On The Carriage of Dangerous Goods By Air will be held at The Landmark Hotel, Sydney, on September 21-22. The conference on this subject of vital importance to aviation safety is being held in conjunction with the first meeting in the southern hemisphere of members of the International Dangerous Goods Board of the International Air Transport Association (IATA). Speakers from Australia, the UK, Canada, USA, New Zealand, South Africa, and Fiji will discuss a range of topics aimed at raising public awareness of those goods which can be safely carried by air, and the correct packaging and marketing of freight. The conference will be hosted by the Australian Dangerous Goods Air Transport Council and will comprise seven sessions covering all aspects of the subject. Attendance will cost $350 per head excluding accommodation and transport to Sydney. For details contact Virginia Krumins on (03) 9318 2488.

Bill Swingler Departs Fac

Federal Airports Corporation (FAC) chief executive Bill Swingler has left the organisation after being at its helm since its inception in 1987. His term of office has ended eight months before his contract was due to expire. Behind him is a period which has seen the revitalisation of Australia’s airports and increased profitability of the major ones, setting the scene for the Government’s planned privatisation of individual airports. Mr Swingler has resigned largely due to the gradual erosion of his responsibilities with more and more aspects of strategic FAC operation being taken over by the Government, the final straw being a recent decision by Transport Minister Laurie Brereton to take the handling of aeronautical charges out of his hands and place that responsibility with an interdepartmental committee comprising non-accountable bureaucrats from Finance and Transport.

The FAC’s chairman, Frank Conroy, said: “Bill Swingler’s contribution to Australian aviation and to the Australian economy has been to oversee the development of airport infrastructure in this country to its present pre-eminent position by world standards. The fact that the airports are established as attractive assets which the Government can confidently privatise is in no small way a reflection of Mr Swingler’s performance as chief executive and managing director over the past eight and a half years.” Morale at the FAC has been suffering since the privatisation process began. There has been about 100 resignations of key people over the past 18 months, while before that there were very few. Most of the people who have left have been specialists in finance and technology. Jack Moffatt (the FAC’s Chief General Manager – Operations) is now Acting CEO pending a permanent appointment, while John Pike has been appointed Deputy Director – Operations. Mr Pike held a similar position at the Bureau of Air Safety Investigation prior to being seconded to the then CAA in late 1994. Around 70 of the 114 Canadair Regional Jets on order are now in service. A Bombardier profile of the RJ’s operations shows that the average annual RJ utilisation rate is 3116 block hours, while the average sector length is 420nm (778km). In comparison the Dash 8 fleet’s annual average utilisation rate is 2478 hours, and the average sector length 164nm (304km).

Mount Cook Buys Atr 72S

New Zealand’s Mount Cook Airline has ordered seven new ATR 72 regional turboprops to replace a similar number of HS.748s. Deliveries begin this month and will be completed in February next year, progressively replacing the 748s which have served the airline since 1968. The ATR 72s will be fitted with 66 passenger seats and will carry the titles ‘Air New Zealand Link’ while still being clearly identified as Mount Cook Airline aircraft. It is expected that the much larger, and faster, ATRs will be used on a number of low-volume Air New Zealand 737-200 sectors, increasing profitability for the airline and enhancing frequency of service for the consumer in the process.

Icao Predicts Continued Growth

The International Civil Aviation Organisation (ICAO) has forecast that total world scheduled airline passenger traffic will grow at over 6% in 1995, 7% in 1996 and 7% in 1997. Total international and domestic scheduled traffic generated by ICAO member airlines is estimated at 2.08 billion passenger kilometres for 1994, increasing to 2.22bn this year, 2.37bn in 1996 and 2.54bn in 1997. ICAO says traffic growth will vary by geographic region because of the input of specific local or regional factors. Asia-Pacific operators are expected to continue to have the highest average passenger traffic growth rate of 9.2% between now and 1997, down on the 12% recorded in 1994 but still ahead of Europe (6.7%), North America (5.5%), Latin America (6.0%), the Middle East (6.6%) and Africa (5.4%).

Chek Lap Kok Opening Delayed

The completion date of Hong Kong’s new Chek Lap Kok Airport has been moved back to April 1998 following the belated signing of a financial agreement on the project with China. The airport’s opening was originally planned to coincide with the handover to China on July 1 1997 but delays in reaching a financial agreement has pushed it back. Three years of difficult and sometimes acrimonious negotiations between the UK and China have finally resulted in agreement, the ratio of government spending to borrowing needed to fund the airport and its related infrastructure being the primary topic of discussion. The agreement will see the Hong Kong Government inject a minimum of $US7.8bn into the airport and its connecting railway, nearly four times what it had planned. The balance was originally raised through land sales and a higher level of borrowing but China’s concerns about being left with excessive debts resulted in demands for a larger amount of Hong Kong Government equity. The total bill for the airport is estimated at around $US20.4bn by 1998.

Stern Australia Sponsors Electric Car

Eastern Australia Airlines is sponsoring an electric vehicle which will be used to transfer passengers, baggage and freight on Lord Howe Island. The Nissan Prairie will be converted from petrol to electrical power as a complement to the strong environmental policy already existing on the island, which is a World Heritage site. It is considered to be only the first stage of an integrated environmental campaign at Lord Howe. The vehicle’s power system will also be used to supplement Lord Howe Island’s meagre electricity supply by using a solar array on the garage roof. This is expected to produce double the power required to recharge the Nissan’s batteries and the excess will be consumed by the local electricity grid. Interestingly, the island’s power supply comes from a single diesel generator run by AirServices Australia and was installed primarily to run the navigational aids and meteorological equipment associated with its air services.

Ansett Increases Norfolk Capacity

Ansett will nearly double its capacity to Norfolk Island from late October when the Fokker F28s currently used are replaced by much larger aircraft. Boeing 737s will initially be used on weekend services ex-Sydney but will also fly the weekday schedules from the end of December. Services between Brisbane and Norfolk Island are also to be upgraded with BAe 146s replacing the Fokkers from late October.

China Needs Pilots

In what represents a potentially great opportunity for flying training establishments in the Asia-Pacific region, China has estimated it will need 5000 extra pilots by the end of the decade to cope with rapidly growing passenger traffic. The country has only one flying training college, at Chengdu, and this is capable of turning out only 200 pilots a year, meaning that only about 10% of China’s needs can be filled from internal resources. Employing foreign pilots is not considered to be a viable option due to their high cost, but this may be the only choice for Chinese airlines such as Air China, China Eastern, and China Southern at least in the short term as they begin to develop their businesses along more Western lines.

Lufthansa Out Of Australia

German flag carrier Lufthansa will cease flying to Australia from October 29 after 30 years’ continuous service. The airline currently operates three weekly services between Sydney and Frankfurt using Condor Boeing 767s and despite the pullout will maintain a marketing, sales and service organisation in Australia. Lufthansa employs 45 people in Australia though this is expected to shrink to less than 20 by year-end. The airline has been concerned about the viability of its Australian services for some time and in fact announced it was withdrawing last year, only to quickly reverse that decision. One of the major factors in the latest decision has been the devaluation of the Australian dollar against the German mark. The dollar has devalued more than 20% over the past year, further eroding the fiscal returns from this part of the world. Lufthansa will continue to work with Lauda Air (which it partially owns), Thai International, and United Airlines, with which it has commercial agreements, but there will be no codesharing agreements with any carrier. A plan to replace Lufthansa’s own flights with four weekly codeshare services operated by Thai has been abandoned.

Indonesian Services Booming

Air services between Australia and Indonesia are developing as one of the most lucrative in the world – especially for Qantas – as the airline increases its Sydney/Jakarta capacity with daily services from next month. Qantas will be operating 29 services between Australia and Indonesia by the end of year while Ansett (which already flies to Denpasar six times a week) is also planning to introduce Sydney/Jakarta direct services next year. High-yield business-class traffic on the Sydney/Jakarta route has grown by a substantial 33% over the past year, with about 40% of seats now being sold to Indonesians. Qantas now has an overall load factor of 75% on the route and regularly achieves 90%+ in business class. The Australian Tourist Commission expects about 140,000 Indonesians to travel to Australia this year, increasing to 300,000 annually by the end of the decade. Inbound tourism from Indonesia has doubled over the last two years.

Fac Denies Eis Fraud

The Federal Airports Corporation (FAC) has strongly denied charges made at the Senate Select Committee on Aircraft Noise that the environmental impact statement on the parallel runway at Sydney Airport was fraudulent. It also rejected suggestions that the FAC had either misled or deceived residents living under flightpaths. In evidence to the Committee, FAC General Manager Technical and Construction, Mr John Lade, said that the EIS – carried out between 1989 and 1991 – was based on the best information and most accurate forecasts available and still stood as a highly professional document. Mr Lade said that traffic growth forecasts had changed and that aircraft movements from Sydney to the north in the short time the parallel runway has been operating were in excess of the EIS projections. These were initially attributed to an abnormally high level of northerly winds but more information is being sought as to why the situation is continuing. The FAC’s former Managing Director, Mr Bill Swingler, told the Committee that the EIS was the most extensive and comprehensive in Australian corporate history. Costing more than $9m, it included the most significant and wide-ranging consultative process. Mr Swingler also made an important point which is ignored by the mass media, and that is the fact that since the runway’s opening, the number of Sydney people seriously or moderately exposed to aircraft noise has been more than halved.

Tam Air Looks At Sydney Taree

Tamworth-based operator Tamair has indicated an interest in opening services between Sydney and the mid-north coast town of Taree. This follows the NSW Government Air Transport Council’s invitation for expressions of interest to provide services on that route and to other centres in the region. Qantas affiliate Eastern Airlines currently operates to Taree and Port Macquarie and it has been reported in some newspapers that there is local dissatisfaction with the services being provided. Taree City councillor Mick Tuck is reportedly “fed up” with the service Taree is receiving from Eastern and believes it has got worse since a meeting on the subject was held a few months ago. According to Mr Tuck: “… coming back from Sydney we landed at Port Macquarie and were bused back to Taree. The bus trip … took longer than the flight. I am not satisfied we are getting good service”. As a result, it has been suggested that many people who have regular meetings in Sydney are driving rather than flying.

Ansett/Anz Merger Off

The proposed ‘merger’ between Air New Zealand and Ansett has been called off following News Ltd’s announcement that it will retain its 50% interest in the Australian transport group “for the long term”. The decision follows months of negotiation during which time it appeared virtually assured that the merger would take place. The price was reportedly put at between $400 and $600 million, but News had become frustrated by Air New Zealand’s delays in agreeing to a figure. An important part of ANZ’s reluctance was due to the fact that there is no guarantee the Australian Government will grant the beyond rights it promised in its ‘One Australia’ policy statement two and a half years ago, a policy which promised ‘open skies’ in the Australia-NZ market but which was subsequently reneged upon. The owner of the other half of Ansett, TNT, has welcomed the news, saying: “With the uncertainty that has prevailed during the negotiation process, the resolution of the shareholding issue will ensure both shareholders can now provide maximum attention to the further growth of Ansett as Australia’s leading domestic airline”. Ansett executive chairman circulated a memo to Ansett staff announcing the decision, saying “It is fair to say that market conditions particularly in the Australian domestic market are very tough and we face difficult challenges in the coming months”. Ansett has been steadily losing domestic market share to Qantas in recent times, the latter now holding 52% of it with a stated intention to increase it further over the coming year. Despite News Ltd’s decision to abandon the talks, Air New Zealand considers the issue is still open and will continue to pursue an equity stake in Ansett. ANZ’s most recent proposal was to become a one-third shareholder but this was quickly rejected by both TNT and News Ltd.

Air Freight On The Up

Qantas and Ansett are both experiencing strong demand for their international air freight services, boosted by increasing imports and a strong demand for local food products overseas. Both are reporting freight load factors of around 75% per annum with peaks of 90% being achieved during the September-April period when Australian primary product exports are at their highest level. Perishable exports account for about three-quarters of all air freight moved around Australia. The airlines’ freight load factors are ahead of most northern hemisphere airlines in what is fundamentally a buyers’ market. International freight rates have increased only slightly over the last three years with prices going up by 2-3% earlier this year despite charges on some routes rising by 5%. On the subject of air freight, Brisbane Airport is set to become a much more substantial player in the market following moves by the Federal Airports Corporation (FAC) and Qantas to develop it as a major hub. Qantas is investing $20m in a new freight terminal while the FAC will build an integrated, common-user air cargo centre at the same time. The amount of air freight passing through Brisbane Airport had doubled to 80,000 tonnes per annum last year from 40,000 tonnes in 1990.

Badgery’s Move Will Cost $1Bn

The Australian Air Transport Association says it will cost Qantas more than $1bn if it is forced to move to Sydney West (Badgery’s Creek) Airport and will impose unfair ‘social penalties’ on the airline’s workforce. It is well known that any move to force airlines out of Sydney Airport to Badgery’s Creek would be strongly resisted by the airlines, particularly those with substantial investments at Sydney. In order for Qantas to relocate its engineering, catering and other facilities associated with international services alone would cost at least $1.1bn. The workforce’s ‘social penalties’ also cannot be underestimated as they would be forced to travel vast distances to work. Presently, more than half of the 20,000+ workforce at KSA live within 10km of the airport. A survey of 33 airlines has revealed that only one international carrier – All Nippon Airways – has indicated it is willing to move, but ANA doesn’t have to worry too much about infrastructure or large numbers of employees. Marrickville Mayor Barry Cotter, a prime figure behind enforcing any move, has apparently rejected any semblance of understanding the real world by reportedly saying that the airlines’ bid to remain at Sydney Airport only reinforced the need to make their shift to Sydney West compulsory. Presumably, he will be delighted to pick up the tab!

Royal Tongan’s New Service

Royal Tongan Airlines will introduce a new weekly service between Tonga and Niue this month. Using Air Marshall Island’s 40-seat BAe 748 turboprop, the service has been put in place primarily to cater for the flow of traffic between Auckland and Niue. The airline has introduced the service at the request of Niue Government ahead of the impending withdrawal of Air Nauru flights.

Us Airlines In The Black

All nine major US airlines have returned net profits for the second quarter of this year – some of them records – providing as good an indication as any that perhaps they have finally turned the financial corner after a long period of losses. The combined $US808m profit for the April-June quarter comes as a result of capacity restraint, the settling down of low-cost competition, increased yields and a slight reduction in overall seat costs. While overall traffic grew by 3.5%, capacity increased by only 1.3% during the quarter, setting the scene for greater general efficiency. All nine operators except American recorded better yields, while Delta managed to reduce seat costs by a substantial 8.8%. The average overall load factor was 68.7% with Northwest topping the list with 72.4%, followed closely by America West and United. Delta and TWA suffered small declines in traffic while Southwest achieved the best growth of 9.9%. This was coupled with the largest increase in capacity (14.5%) resulting in a lower average load factor (67.1%) but a record profit was achieved nevertheless. The individual airline profits for the three month period (in US dollars) were: American $179m, America West $21m, Continental $102m, Delta $251m, Northwest $105m, Southwest $60m, TWA $5m, United $151m and USAir $113m. All except TWA are in overall profit for the year to date. Of note is the fact that Delta’s $250m profit is the same amount the airline shaved off expenses during the quarter in order to achieve its target seat-mile cost.

Sydney Simops Rejected

Residents currently affected by the noise generated from Sydney Airport’s new parallel runway can expect little relief with the announcement that the east-west cross runway will not be reopened. Reopening the runway is seen by most as a way of at least reducing the problem. The decision has been based on safety, Minister for Transport Laurie Brereton producing computer simulations to show how dangerous simultaneous cross runway operations (SIMOPS) at Sydney would be. He dredged up the 1991 near miss between a Thai Airways DC-10 and an Ansett A320 as an example, but didn’t provide evidence of any actual accidents either at Sydney or any of the numerous major airports around the world which have SIMOPS. “This is pretty serious stuff”, he has been quoted as saying. The Civil Aviation Safety Authority (CASA) parroted the minister’s view, saying that “the restoration of SIMOPS procedures at Sydney Airport, while parallel runways are available, would be less safe than the current parallel runway system in operation”. “The Civil Aviation Safety Authority is an independent statutory authority”, the statement goes on to say.

The opinions of pilots giving evidence to the Senate Aircraft Noise Committee into Sydney Airport noise evidently didn’t hold much sway on the decision-making process. They indicated no problems with SIMOPS at Sydney, but were ignored. Reopening the east-west runway would effect residents of Mr Brereton’s seat, as well as that of the Prime Minister. A new report has shown that thousands of residents living on Sydney’s north shore and in the southern suburbs are suffering far greater noise disturbance than envisaged, with Lane Cove, Chatswood, Cronulla, Bundeena, Turramurra, West Killara and West Lindfield experiencing levels similar to those in the inner west. The Federal Airports Corporation has meanwhile said that claims that the new runway had caused a fall in real estate prices near the airport are unfounded, anecdotal and not based on fact. In evidence to the Senate Aircraft Noise Committee, the FAC said it was still too early to measure the impact of the runway on housing prices. The NSW Department of Transport told the Committee that the number of people living in high aircraft noise zones was much smaller than some large overseas airports because much of the noise was emitted over water and Australia had a quiet fleet of aircraft and a relatively low number of movements. The Federal Government’s plan to acquire 113 homes directly under the Sydney flightpath has been criticised, with accusations that the properties are being valued at up to $50,000 less than their real worth. Contracts have been exchanged on 50 properties so far and a further 48 valuations have been completed. The acquisition programme is voluntary with no-one being forced to sell their homes to the Government.

Kendell To Fly Melbourne/Albury

Kendell Airlines will introduce a dedicated Melbourne-Albury service this month as part of an overall plan to increase services to the region. The new flights will provide a 20% increase in seat availability and will provide more convenience for passengers as services to Albury were previously just a stopover between Melbourne and Wagga. Albury-Wodonga passengers previously had difficulty getting seats on the flights as they were often taken by passengers flying through to Wagga. Albury City Council has meanwhile decided to oppose any attempt to downgrade or close its airport’s control tower. A submission to the CASA’s review of general aviation services (which includes examining the closure of various control towers) has been prepared. The council says it is concerned about safety and cites an example where a controller ‘talked down’ a pilot who ran into trouble in low-level cloud. DASA is to convert a further 17 Airbus A310s into freighters. These aircraft are currently in service with KLM, Martinair and Swissair. British Aerospace Aviation Services meanwhile is now offering a freighter conversion programme for the Airbus A300B4. Both aircraft should prove ideal freighters, given their cavernous, wide fuselages, good operating economics and Stage 3 noise compliance, while the A310 is also two crew.

Cathay Loses On Hk/Taiwan

Cathay Pacific has lost an important battle to maintain the existing duopoly with China Airlines on the lucrative Hong Kong/Taiwan route. It has been decided that two airlines instead of one should operate from both Hong Kong and Taiwan, meaning that four carriers will now contest the route. One of the extra operators will most likely be Eva Air (from Taiwan), while Cathay will be able to ease the pain slightly if sister company Dragonair takes the other Hong Kong slot. In other Cathay Pacific news, the airline has overcome political difficulties by starting operations on a new route between Europe and Asia over Afghanistan. Use of the route comes as the result of unprecedented international co-operation and will ensure faster direct, nonstop flights across the region with benefits for both airline and passengers.

Back On Track

Ever wondered what becomes of major aviation identities when they depart the industry? Well, their fates are many and often they return to the industry they love though more as not they simply depart to potentially greener pastures. One sad loss in recent years was the ex-CEO of the CAA Doug Roser, a man who in our opinion was doing a job as good as humanly possible only to become a political scapegoat. Doug is actually lucky to be alive as soon after leaving the CAA he suffered a blood clot in the heart and was saved only by last-minute emergency surgery. We are pleased to report that he is nowadays AOK and alive and well and very active in the executive search industry as a Sydney-based partner with the worldwide TASA group. Any reader wishing to catch up with Doug can reach him on (02) 235 2833. No doubt as time goes by he will be involved in strategic high-level aviation employee placements and to this end we certainly wish him well.

Domestic Air Fare Spiral Ends

The Prices Surveillance Authority has reported that Australia’s domestic airfares rose by just 1.8% during 1994. This follows hefty rises in full-fare economy, business, and first-class tariffs through the previous 18 months, which were overall compensated by a trend towards ever more aggressive discounting on leisure-based economy fares. Though this stimulated the leisure market it did little to assist the full-fare business market which cannot generally avail itself of the special discounts available to leisure travellers. The PSA has reported that the impact of the rises in standard economy and premium class fares in the first half of last year were dampened by bigger discounting and a higher proportion of holiday traffic in the second half of the year. The outcome represented a real decline in average fares of 0.7% for the year. The PSA also reports that average airfares are 17% lower than the levels charged just prior to deregulation in late 1990. In real terms, adjusted for inflation, they were actually 24% lower. The PSA has been monitoring air fares on a quarterly basis since the beginning of airline deregulation.