Airline Affairs

Runway Court Challenge

Labor controlled councils near Sydney Airport have wasted no time in attempting to frustrate the new Federal Government’s plan to reopen the east-west runway by threatening a court injunction. An urgent court injunction will be sought from either the Federal or High Courts in order to stop the reopening. At the time of writing (three days after the election), the new government was within days of directing AirServices Australia to put into motion the necessary administrative work to get the runway reopened. It will take some time to achieve as new terminal management and airspace plans have to be drawn up and new procedures taught to air traffic controllers. The councils involved consider that a new environmental impact study will have to be conducted before the east-west runway can be reopened, although the new government’s legal advice is that reverting to a previously (and quite recently) existing situation does not require an EIS. The new government will maintain existing curfew arrangements and cap airport movements at 80 per hour.

Hazelton Battle Resolved

An attempt by Hazelton Airlines founder Max Hazelton to regain control of the regional airline has failed, shareholders voting against his resolutions to remove four fellow directors, including chairman Sir Brian Massey-Greene, from the board. The next issue of Australian Aviation will be on sale April 25, don’t miss it! 16 Australian Aviation April 1996 Institutional shareholders backed the board, their votes overpowering those of small private shareholders, many of whom supported Mr Hazelton. The vote has done little to resolve the sometimes bitter battle between the Hazelton family and the board of directors, installed after the airline became a public company in 1993. The Hazeltons still hold 33% of the shares. Both sides have claimed the other is affecting staff morale and profitability. The airline lost $2.35m in 1994/95 following which Mr Hazelton and his wife were relegated to non executive roles on the board. The Hazelton Airlines saga is not necessarily over yet following news that Qantas is considering making a takeover bid for the regional carrier. The key to any such takeover is the willingness of the Hazelton family to relinquish its shareholding, valued at about $10m.

Australian Start-up Applies For International Route Rights

New proposed start-up international airline Australian Connection Airlines has applied to the International Air Services Commission for route rights from Melbourne and Sydney to Madras or Bombay in India and Athens in Greece. The new airline is currently being formed in Sydney and subject to IASC approval says it would begin operations from mid year. It plans to use Boeing 747s and will build up to three services a week on the Australia/India/Greece route. Australian Connection Airlines’ flights would be the only direct nonstop services between Sydney and Melbourne and India, Air India and soon Qantas operate services via Singapore. The aircraft will be configured in a two class business/economy configuration.

Russian Traffic In Decline

Russian airline passenger traffic has fallen for the fifth consecutive year according to figures released by the Russian Transport Department. The 1995 figures reveal 31 million passengers flew on Russian airlines during the year, 5.6% down on 1994 and just over one third of the peak (90.7 million) achieved in 1990. Revenue passenger kilometres fell to 71.4 billion (1.3% down) but freight tonne kilometres increased by 7% to 1.56 billion despite a decline in the overall freight tonnage carried. Of the 37 ‘top’ carriers listed in the figures, only 10 reported an increase in passenger volumes. Interestingly, Transaero, the only operator listed which is not a former Aeroflot division, nearly doubled its passenger volume to 1.03 million.

Ansett Boeing 767 Crew Deal

Ansett will be able to operate its two additional Boeing 767-200s with two person crews following concessions gained from its flight engineers. The first aircraft arrived in March and the second is scheduled to enter service in June. They will be flown on domestic routes and will allow Ansett to expand its capacity on peak hour business services by about 10%. The new 767-200s are in addition to seven already in service. Ansett’s five original 767s are the only examples of their type in the world with a flight engineer’s station incorporated in the cockpit following a dispute over two crew aircraft in the early eighties. The engineers successfully argued their case on ‘safety’ grounds and part of the agreement was that any of them employed before July 1988 have been guaranteed a job until they turn 60. The problem re-emerged in 1994 when Ansett obtained a former Britannia Airways 767 with two crew cockpit. As a result, Ansett was forced by the flight engineers’ union to pay $10,000 to each of its engineers as compensation for ‘breaching’ the ‘job for life’ agreement. The two new 767s have been allowed by the union on condition that the earlier, three crew aircraft are not replaced by them. At one stage Ansett had plans to modify these three crew 767s to the standard two crew configuration but this was prevented by the union.

Aipa Covers All Pilots

Australia’s international and domestic airline pilots will now be covered by a single union, the Australian International Pilots Association (AIPA). Changes to the AIPA’s constitution which will allow the union to represent its previous Qantas members but also the 850 pilots employed by Ansett have been approved by the Industrial Relations Commission. Most Ansett pilots have already joined, bringing the union’s membership up to about 2200. The AIPA previously represented only Qantas pilots when it was a purely international operator and the ill fated Australian Federation of Air Pilots was the domestic pilots’ union. The 1989 AFAP dispute saw the end of that organisation as a credible industrial body representing airline pilots and resulted in the domestic pilots forming new associations within their own airlines. The merging of Qantas and Australian Airlines resulted in all Qantas pilots becoming AIPA members.

Traffic Growth In Asia Spurs Unprecedented Airport Developments

Figures released by the Airports Council International (ACI) showing up to 8.3% traffic growth in the Asia Pacific region will force the region’s governments to hasten major airport developments, reports Danielle Doney. The ACI also says that simultaneous growth in air freight (14% in Asia and 10% in the Pacific) provides further incentive for airport operators to improve airport infrastructure. China is leading the surge of new airport developments, with 22 new airports to be developed in the nation’s eastern economic zones. The $9 billion infrastructure projects, including those at Shanghai, Guangzhou and Zhuhai, are designed to triple China’s capacity to 180 million passengers a year. The People’s Republic is seeking major foreign investment to capitalise the programmes in joint ventures. Heavy restrictions on the level of foreign investment, however, limit non-Chinese companies to a ceiling of 35%, with voting rights capped at 25%. Recognising the need to improve facilities at its 19 international airports, the Indonesian Government recently announced a $7.5 billion five year programme to upgrade facilities and associated ATM systems. Upgrades at Narita, as well as new airports at Kobe and Wasaka Bay, are planned for Japan, while South Korea’s plans include five new airports by 2000. The first phase of Seoul’s new international airport at Yongjong Island will open in mid 1999 at an estimated cost of $5 billion, supporting existing infrastructure at Cheju, Kimpo and Kinhae airports. The Kuala Lumpur International Airport currently under development at Sepang is due to be completed in 1997, providing capacity for the forecast 35 million passengers annually. Australian companies are already playing an important role in the broad scope of developments throughout the Asia Pacific region, assisted by the collective construction and aviation organisations of Airport Industries Australia Inc.

Alitalia Seeks Government Assistance

Fending off bankruptcy, Alitalia has sought an injection of $US950 million from the Italian Government as a means of funding a major restructure of the organisation, reports Danielle Doney. The central goal in the restructure is a reduction in staff numbers; a measure which has been blocked by the airline’s strong union movement. The new management, led by recently installed CEO Roberto Schisano, is attempting a soft approach to the issue, opening dialogue with the nine unions as a means of reducing excess staff in a “non traumatic way”. Other measures to be undertaken in the overhaul include a review of route structures and the forging of new commercial alliances to minimise competition and maximise market penetration.

Australian Wins Mongolian Contract

Australian based aviation management consulting company, the Michael Kellaway International Group, has secured the contract for a human resources and systems development programme and detailed design and implementation supervision for the National Air Navigation Development plan in Mongolia. The contract is part of a $US24m loan from the Asian Development Bank to support the implementation of a new air traffic management (ATM) system that will support the development of CNS/ATM routes within Mongolia. The scope of the project is far reaching and intended to improve the overall safety standards of aviation in that part of the world. A team of 15 consultants will be responsible between 1996 and 1999 for the design, documentation and supervision of an ATM system capable of complying with CNS/ATM requirements and to include a nationwide VSAT system, VHF RCAG and air traffic control centre in Ulaanbaatar. In addition, specialists in RFFS, AVSEC, airworthiness, airline business planning, search and rescue, airline ground handling, HRD, GNSS, air traffic control training and technical training are being fielded to assist the Mongolian CAA and the national airline to modernise its air transport capabilities.

Duty Times Furore

Plans by the US Federal Aviation Administration to introduce new rules governing pilot flight and duty times have received vicious criticism from various industry associations. The proposed rules cover both scheduled and ‘on demand’ charter operators and in the case of the latter, the effects could be serious. Intended to improve safety by reducing pilot fatigue, the proposed new rules have been described as “potentially the most expensive rulemaking ever proposed”, “a knee jerk reaction to a few accidents” and so on. Some operators say they will have to increase the number of pilots on their payrolls considerably and payroll costs will jump by at least 50%. The US National Air Transportation Association is leading the fight against the proposals, which will basically result in more pilots flying fewer hours. 18 Australian Aviation April 1996 The Association says the rules will put many operators out of business.

Lights, Camera, Action

British Airways has begun trials which could see it become the first airline to launch its own worldwide television network. If the trials prove successful BA-TV will provide daily programmes for the company’s 53,000 staff in nearly 100 countries, keeping them up to date with various issues involving the airline. The trials feature twice daily live transmissions from the company’s business fair at Heathrow with programmes beamed by satellite to eight locations in the UK and BA facilities in Sydney, New York, Paris and Cairo.

Us Airlines In Profit

Although the combined 1995 net profits of the nine major US airlines fell slightly short of the predicted $US2bn, the $US1.77bn result achieved is nevertheless pleasing and a major turnaround from the $US1.08bn loss recorded in 1994. Only TWA recorded a loss, the figure of $US227m halving 1994’s figure and preceding plans to cut costs and renew its aircraft fleet so as to help ensure its future (refer separate item). TWA has only recently emerged from its second term in Chapter 11 bankruptcy protection. The net profits for the remaining eight airlines were (with 1994 figures in parenthesis, all in US dollars): American $167m ($228m), United $349m ($51m), Delta $510m (-$159m), Northwest $392m ($296m), USAir $119m (-$685m), Continental $224m (-$613m), Southwest $183m ($179m) and America West $54m ($62m). The figures reveal massive turnarounds for Delta, USAir and Continental, all of which recorded increases in yields which outweighed cost increases. USAir returned the highest yields of all (10.35 cents/RPK) against the industry average of 7.93 cents/RPK, itself 3.1% up on the previous year. Overall costs were down slightly to an average 5.32 cents/RPK, reflecting the airlines’ efforts in recent times to restructure and reduce costs. Overall traffic increased by only 2.4% to just under 807 million passenger revenue-kilometres of which United, American, Delta and Northwest carried about 72% between them, in that order. The fact that the profits have been recorded with such a modest increase in traffic indicates once again the effects of cost cutting and the quest for greater efficiency. Capacity increased by 1.1% overall, with Delta, Continental, USAir and TWA all reducing the number of available seats. Southwest was the only operator to substantially increase capacity, by 12.6%. Load factors averaged 67.4% overall (up slightly) while individual airlines’ load factors ranged from Southwest’s 64.5% (undoubtedly influenced by the substantial capacity increase) to Northwest’s 71.5%.

Twa Looks Ahead

Trans World Airlines is looking to a more secure future following a stronger financial performance in 1995 and the unveiling of a $US1bn fleet modernisation plan. Although the airline recorded a net loss of $US227m in 1995, this was half the 1994 deficit and, significantly, included an operating profit before abnormals of $US25.1m, its first since 1989. In 1994, TWA returned an operating loss of $US279m. 1995’s improved result was achieved despite reduced revenue and static traffic figures but included lower costs. Charges relating to restructuring of $US159m helped keep the net profit result in the red. TWA’s fleet modernisation plans revolve around the delivery of 20 Boeing 757s from this July. A further 20 have been optioned and the new aircraft in the main will be used to replace the airline’s 14 Lockheed L-1011 TriStars. TWA has the USA’s oldest fleet with the age of its aircraft averaging 19 years. Its TriStars average 21 years of age. The airline is also looking at establishing up to six strategic alliances with other (non US) operators over the next year in an attempt to boost its market presence worldwide. Analysts are cautiously optimistic about TWA’s future, Standard & Poor’s saying that costs cannot be lowered much more and that most future improvement will have to come from increased revenue. S&P says that TWA’s weakest link is its poor route structure relative to its competitors.

Airlines Look To Increase International Services To Asia

Ansett and Qantas are pushing forward with plans to add Shanghai to their networks, and are looking seriously at adding the northern Japanese city of Sendai to their networks, reports Danielle Doney. Both carriers have sought Government assistance in negotiating expanded bilateral agreements to take advantage of Shanghai’s growing economic and cultural prosperity. China is currently serviced by Qantas and Air China, operating weekly 767 and twice weekly 747SP schedules respectively. Sendai’s business and tourism potential has aroused both carrier’s interest, however both are cautious about the readiness of the market to react to a new Japanese destination which is largely unknown in Australia. Ansett, meanwhile, will benefit from a new bilateral agreement with Hong Kong, allowing it to operate daily services from Sydney.

Nan A Dud

The No Aircraft Noise party proved to be a flop at the recent federal elections, despite pre election claims it would have an influence on the outcome of the seats it contested. The party contested four seats in Sydney, achieving 13.9% of the primary vote in Grayndler (which it hoped to win), 2.9% in Lowe, 7.0% in Sydney and 1.7% in Bennelong, the seat of new Prime Minister John Howard. The three Labor held seats recorded swings against sitting members and one was lost, while Mr Howard recorded a 4% swing to him. In each case the NAN influence was just about non existent. Of interest is the fact that the NAN did not contest Kingsford Smith, the seat of former transport minister Laurie Brereton. TOP 20 DOMESTIC ROUTES – OCTOBER 1995 (Courtesy DoT) Route Total Pax Total RPKs The party suffered from internal bickering and now is looking to broaden its appeal by becoming an “urban issues party” dealing with vote winners such as motorways, Optus Vision’s cables and lead poisoning.

Domestic Holidays Ups And Downs

Australia’s domestic airlines have recorded differing results in the holiday market recently with Ansett’s spectacular growth of recent years flattening out and Qantas achieving improvements. Ansett recorded massive growth averaging over 30% annually in the domestic holiday market between 1991 and 1994 but this has subsequently remained static. In order to promote its holiday packages, Ansett has begun to move away from destination type holidays to products aimed at the non traditional family and people taking short holidays more often. Qantas, meanwhile, has made the most of its extra capacity to achieve a record 22% growth in package tour passengers last year, particularly between Sydney and Melbourne. Theatre specials played a major role in lifting Melbourne business by 51% and Sydney by a monumental 110%. Qantas is now focussing on event related packages, short break holidays and ‘romantic escapade’ holidays to its own resorts such as Dunk, Brampton and Bedarra Islands. Rev Pax LF % Trips Route 415,006 265,058 1. Melbourne/Sydney 2. Brisbane/Sydney 293,409,242 70.9 199,323,616 66.5 2,205 1. Melbourne/Sydney 2. Brisbane/Sydney 2,999

Singapore Airlines Revises Services, Mas Boosts Darwin And Adelaide Loses Nz

Singapore Airlines will introduce A340s to its Sydney and Melbourne services from July as part of a strategy to fine tune its capacity to key markets, reports Danielle Doney. The frequency of flights to Australia will increase from 39 to 46 per week with the introduction of twice daily services to Sydney. The A340s will replace 747-400s to Melbourne, and will replace one 747-400 service to Sydney. The region’s most profitable carrier will also increase the number of flights within Asia, to the Middle East, Africa, Australasia, North America and Europe as a means of increasing its market share against rising competition, at an average rate of 8 to 10% per annum (refer Airline Profile on p29 for an in depth report on SIA). Meanwhile, Malaysia Airlines will commence a second weekly service from Kuala Lumpur to Darwin from April 2. The new A330 service complements an existing service originating in Cairns, and will similarly connect in Kuala Lumpur with onward services to London and continental Europe. To the south, the only direct air link from Adelaide to New Zealand will cease in April. Air New Zealand will commence a codeshare arrangement with Ansett offering up to 98 services a week via the east coast ports. Air New Zealand states that two thirds of the traffic from Adelaide already transits Sydney or Melbourne, and that the revised services will enhance passenger and freight services.

Asa To Train Chinese

AirServices Australia has begun training staff from the Civil Aviation Administration of China (CAAC) in the art and science of airspace design and air route planning. The training programme results from a Memorandum of Co-operation signed with China last year, this in turn resulting from several years’ work on winning the contract. To gain some understanding of the magnitude of the task, an ASA delegation visited China last September to inspect its air traffic service facilities and air route and airspace systems. A high level CAAC delegation made a reciprocal visit in December 1995 during which ASA’s facilities were inspected and briefings received on redesigning China’s airspace plus the technical standards and training required for CAAC’s staff. The result is a formal programme which will run through 1996 and will see the training of six Chinese aviation staff in airspace design, the creation and joint development of an aviation design standard for Chinese airspace based on Australia’s system and international practice, and an initial redesign of China’s airspace and air route structure by the end of the year.

Continental Out Again

US carrier Continental Airlines is pulling out of Australia, again, this time through its Pacific area associate Continental Micronesia. The carrier’s thrice weekly DC-10 service from Guam to Sydney ended in late March this year after 12 months. Loads have been disappointing and suggestions that a more economical Boeing 757 might replace the DC-10 on the route have not been taken up. Continental Airlines itself withdrew from Australian services in late 1998 after 14 years of services.

Air Nz/Ansett Latest

The New Zealand Government’s blocking of Air NZ’s planned purchase of TNT’s half share in Ansett has prompted some interesting manoeuvring in order to get around the antitrust problems involved (refer AA 3/96 p5). The NZ Commerce Commission has ruled that Air NZ and Ansett Holdings would become “associated persons”, as defined by Section 47 of the NZ Commerce Act. Under the Act, “associated persons” are deemed able, either directly or indirectly, to exert a substantial degree of influence over the activities of the other. The result, according to the Commission, would be a monopoly on NZ domestic routes and therefore higher fares and reduced service standards. Aeroflot is to lease four additional PW4000 powered Airbus A310-300s, as part of its strategy to modernise its long range fleet. This will bring to 10 the number of A310s operated by Russia’s flag carrier in the very near future. In addition Aeroflot will take delivery of an A310 simulator which will enable it to train its own pilots as well as developing capabilities to offer this service to other airlines. The A310 became the first Western aircraft to join Aeroflot’s fleet in July 1992. (Rob Finlayson) In view of this, Ansett’s other shareholder, News, is reportedly planning to assume full control of Ansett New Zealand via the issuing to it of two special shares if Air NZ succeeds in purchasing TNT’s half share in Ansett. If the deal goes ahead, Ansett NZ would also be recapitalised and its structure reorganised so that associated operations such as New Zealand air freight operations would be transferred from Ansett Australia to Ansett NZ. News Corp says that the planned new arrangements would result in Air NZ being unable to gain control, either directly or indirectly, over Ansett NZ and therefore satisfy the antitrust laws. The NZ Commerce Commission has postponed the date of its final determination on the overall situation to early April, giving the parties some extra time to sort out the myriad of possible permutations and courses of action. The latest possibility which has been subject to speculation involves the radical one of completely shutting down Ansett NZ in order to allow the Air NZ purchase to go ahead. According to an Air NZ director, this is an option about which the Commerce Commission should be made aware and one which obviously makes any antitrust concerns irrelevant. In the end this would still result in a single carrier having a monopoly on NZ domestic services, which the Commerce Commission is specifically trying to counter.

Produce Marketing Co-Operation

The NSW Farmers’ Association, the Inland Marketing Corporation and the Australian International Pilots Association have got together to promote the concept of air freighting Australia’s high value agricultural output to the world. In a joint statement, the three organisations have called for considerable change along the supply chain from grower to consumer in order to achieve a share of this rapidly expanding world market. They expressed the need for a wide ranging and collaborative effort among a broad range of interest groups to drive the much needed changes which will see Australian agriculture in all its forms become a dominant supplier to the world market. Among the changes the group sees as necessary are a commitment by industry and all levels of government to get produce to markets in top quality, and ensuring the infrastructure to meet this aim is in place and fully resourced. The farmers urgently need assistance to make the necessary change from production driven to market driven agriculture. The AIPA’s president, Captain Bill Pike, said that detailed research carried out by his Association highlighted the complete failure of the air freight transport sector in Australia. It is the Association’s view that the export of perishable food products was being impeded by the lack of a competitive air freight sector and that Australia needs to take an active role in developing dedicated air freight operations, either through the existing international airlines or a new organisation. The bottom line of all this is the group’s support for a regional freight hub from which fresh produce can be exported to the world. This will require reversal of the current practice of bringing the catchment to the uplift by bringing uplift to the catchment, in other words an airport capable of handling large freighter aircraft near the growing areas rather than in the major cities. The group says Australia could be exporting over 200,000 tonnes of agricultural products within five or six years. The Inland Marketing Corporation has received widespread support for its plans from both political and community sources. But in order to achieve its aims, a massive increase in air freight capacity is required.

Air Pacific’s New Us Rights

Fiji’s Air Pacific has secured new traffic rights to the USA including Guam and the Marianas. The new agreement allows Air Pacific to fly from Fiji via Auckland to Hawaii and Los Angeles and beyond to Vancouver as well as Los Angeles to Frankfurt and direct from Fiji to Hawaii and San Francisco. In addition Air Pacific will also be able to fly to the Northern Marianas and via Guam to Tokyo. In return US airlines are able to operate from the US to Fiji and beyond to Australia, New Zealand, the South Pacific and Asia.

Airports Update

Lismore: A tea tree plantation proposed for the perimeter of Lismore Airport in NSW could be used to finance a new terminal. Lismore City Council has given conditional approval for the plantation, the company involved having to pay $85,000 per annum rent on the 110 hectare (275 acre) site as well as maintain the airport’s gardens and grassed areas. If built, the terminal will operate as a 24 hour business enterprise and include a road house and other businesses.

St Helens: The Tasmanian airport is to have the touchdown areas of its grass runway gravelled to avoid the rutting that has been occurring. This is the first step towards eventually sealing the entire strip.

Coolangatta: Ansett is to increase seat capacity on its weekend services to the Gold Coast by 35%, the result of obtaining new aircraft for its fleet. The airline is putting four extra Boeing 767 services into Coolangatta, providing 1000 more seats each weekend. Cairns and Townsville will also have extra capacity due to the fleet expansion, allowing Ansett to offer more discounted seats and holiday packages for the Queensland market.

Albury: Albury Airport is to have a $220,000 upgrade of its western general aviation taxiway, allowing an increase of the current 5700kg weight limit to 25,000kg. This will allow larger aircraft to use the airport’s maintenance facilities and encourage resident organisations to upgrade those facilities. Several new GA operators are already planning to base their aircraft at Albury. Potential users of Albury Airport will have a chance to check out its features at the airshow there on Sunday, March 31.

Brisbane: Qantas is considering building a new airbridge at Brisbane Airport (its seventh) to cater for Boeing 747s used on domestic services. The airbridge will cost about $2m and if built will match similar facilities in Sydney and Melbourne.

Warnervale: The information published in the March issue of this magazine on the new GA Airport complete and detailed update will be forthcoming in the near future. The original information came from a normally reliable news bureau.

Wangaratta: Tourism Victoria is looking at instigating a skiers’ flight service between Adelaide and Wangaratta using a BAe 146 jetliner. The plan is to sell packages which include the flight and accommodation. Talks have been held with charter companies and chalet operators.

Bendigo: The City of Bendigo has released a plan which if implemented would see the airport at East Bendigo become an aviation business park. The plans comprises three stages: subdivision and sale of lots of the existing businesses and developments at the airport; creation of a series of lots with direct runway access; and development of several large lots to attract larger aircraft businesses looking for a freehold site with direct runway access.

La Trobe Valley: La Trobe Valley Airport in Victoria is to undergo a series of improvements starting with a widening of the runway by five metres. Tenders for the upgrade of the airport’s terminal will be called in the near future.

Brisbane: Just before the federal election, former Transport Minister Laurie Brereton said he would consider imposing a curfew on Brisbane Airport, banning commercial flights between the hours of 11pm and 6pm. Labor candidate for the seat of Griffith, Kevin Rudd, claims there is an average of about 700 flights per month during those hours.

Jandakot: In another pre election statement, the Member for Fremantle, Dr Carmen Lawrence, had promised that a re-elected Labor government would introduce various curfews and restrictions at Perth’s Jandakot general aviation airport to reduce noise following “representations from some residents”. Among them was an undertaking to move “noisy aircraft types from training activities as soon as possible”. Yep, those F-111s will have to go! No matter, the government went instead!

Avalon: The sale of Avalon Airport should be finalised by the middle of the year following the receipt of tenders from a wide range of companies.

Perth: The Federal Airports Corporation (FAC) has begun development of the 75 hectare (187 acre) Airport West Estate, a multi purpose property development on the airport’s western and northern domestic areas. An early user of the estate will be Australia Post, which is building Perth’s new central mail exchange there.

Geraldton: More people are flying between Geraldton and Perth following an increase in competition on the