Preflight

The tangible result of the move to strengthen ties will be American’s return to Australia with its own metal for the first time since the early 1990s, with its inaugural Boeing 777-300ER flight from Los Angeles due to touch down in Sydney on December 19.

And American will also be present across the Tasman from June, when it deploys a Boeing 787 Dreamliner on the Auckland-Los Angeles route, bringing competition to a city-pair currently only served by Air New Zealand.

Further, Qantas was due to return to San Francisco with Boeing 747-400s on December 18 after a five-year absence.

The airlines say the nature of the joint venture, which involves coordinating pricing on hundreds of city pairs such that a Darwin-Boston ticket costs the same whether the flights were booked with Qantas or American, means it does not matter which airline operates which routes.

“We are going to be indifferent as to which of our airplanes is flying it,” American chief executive Doug Parker said in Sydney on November 13, when the airline flew one of its Boeing 777-300ERs to Australia for a promotional visit.

“As this gets more and more to be a joint venture we won’t care and we will do what is best for consumers by making sure we have the right aircraft matched with the right mission. ” Qantas chief executive Alan Joyce concurred, noting his airline had its flagship Airbus A380 operating to American’s largest hub, Dallas/Fort Worth, a route that the US flag carrier could not serve with its own aircraft. Similarly, the 787s American will use to Auckland was the perfect vehicle for such a route and not part of the Qantas fleet until 2017, when the Australian carrier takes delivery of the first of eight 787-9s on firm order. Joyce said the extended range of those aircraft meant Melbourne-Dallas/Fort Worth and Sydney-Chicago would be in the mix given the support of American on the US side.

“We have to bed down what we have, and there is a lot of growth going into what we have, but we can build from there,” Joyce said.

There are the right ingredients for it to go bigger

“There’s lots of opportunities this partnership opens up potentially. ” American has been tweaking its onboard product and amenities in preparation for the return to Australia, thanks to insights gained from its partner Qantas.

And bringing the 777-300ER to Australia for a promotional flying visit – in itself a huge investment in this market – was part of raising the profile of a carrier that had been absent for more than two decades and highlighting its credentials as a full-service airline.

“We don’t do this generally,” Parker said of flying the 777 to Australia for promotional activities. “But this isn’t a normal event. ” “It was really, really important because this market is so important. We recognise since it has been so long since American has been flying here that there may be some misperceptions about what American is today, so we wanted to help educate as to what the new American looks like. ” That’s important as Qantas will be selling seats on the American flights as if they were its own, with both airlines keen to stress their interdependence on each other to make their joint venture a success.

“We are very conscious that if the Qantas code appears on a flight we are selling to our passengers it has to be a comparable product to a Qantas product and this is,” Joyce said. “We have a responsibility to do that. ” And American marketing US-Australia routes to its 100 million-strong frequent flyer base “is going to improve the pie for all of us” Joyce said.

“Our operation is dependent on American’s success in promoting that and American’s success is dependent on us making sure that Australians and our market continues to flow on to it,” Joyce said.

Joyce said American’s return to Sydney gave the world’s biggest airline “skin in the game”, helping ensure the success of the new joint venture.

“What was very clear with the codeshare was … American didn’t have any skin in the game and it does mean probably your organisation, your people are not excited about a destination,” Joyce said.

“And what we find is if skin gets in the game, ie you’re flying your own aircraft and it is part of a bigger joint venture, it works a lot better. ”

CASA proposes new funding model

Civil Aviation Safety Authority (CASA) chairman Jeff Boyd says a new funding model that includes international operators would be a more equitable way of funding the organisation.

Currently, CASA receives the bulk of its funding from a fuel excise on domestic flights. International flights are not subject to the fuel excise.

The downturn in the mining industry has resulted in less money flowing in – CASA suffered an operating deficit of $5. 5 million in the 12 months to June 30 2015 and is budgeting for an operating deficit of $10 million in the current financial year.

Boyd says the organisation needs to find different ways of funding itself.

“One thing we would like to see is the internationals contribute something to the running of CASA,” Boyd told a charity lunch hosted by consulting group AvLaw in Sydney on December 4.

“One of the suggestions we would have is some form of a levy that everyone pays. It could be as little as 20 cents or 25 cents, but if that is across the board – every person coming or going on every flight whether it be domestic or international in Australia – we could remove the fuel levy altogether.

“I think that is a far more equitable way of funding the organisation. I just have to convince the Minister and might need a bit of help from industry for that. ” Boyd, who was named chairman in July 2015 after joining the board a year earlier, acknowledged the implementation of CASA’s Part 61 licensing regulations had been a “debacle”.

The nation’s aviation safety regulator has formed a full-time taskforce and an industry advisory panel in an effort to resolve issues raised by Part 61, which covers pilot ratings, licences and endorsements, as well as a number of other licensing regulations.

Boyd said the Part 61 regulations were written up without adequate communication with industry and he lobbied against their introduction before he joined the CASA board.

“We knew Part 61 was never going to work. It got put in a drawer for 12 months and instead of being reworked and rejigged unfortunately the very last day that our previous CEO was in the organisation he promulgated Part 61 as it was 12 months previously,” Boyd said.

“The results have been horrendous for the organisation and for industry. It’s a debacle. ” The rewriting of CASA’s licensing suite is just one aspect of the reforms currently underway at the organisation.

In November, CASA also unveiled a corporate restructure that sought to improve service delivery and operational efficiency, part of its response to the Aviation Safety Regulatory Review, and due to be be completed by the end of 2015/16.

“I know we are copping flack at the moment because we are not implementing things fast enough in this ASRR report,” Boyd said.

“No-one more than me would like to see things happen quicker than it is but it is happening. ” There would be three main groups under a restructured CASA, comprising aviation, stakeholder engagement and sustainability.

The restructure would be conducted in stages and was expected to be completed by the middle of 2016.

Boyd said the new-look organisation would reduce the number of executive managers from 10 to five and save $5. 2 million in management salaries.

“I think we are well on our way to a new, invigorated organisation,” Boyd said.

Freighter hopefully the start of something big

Cathay Pacific Cargo 747-8F touches down in Wellcamp

Cathay Pacific and Brisbane West Wellcamp Airport are hoping November’s historic freighter service from the airport is more than just a one-off.

Thousands of people descended on Australia’s newest airport at Toowoomba to watch the Boeing 747-8F, B-LJA, arrive a little after 1430 local time on November 23, from invited guests enjoying the day inside the terminal to those in their cars parked on the opposite side of the runway having a day out in the sun.

The inaugural international flight from Wellcamp caps off a remarkable year for Australia’s newest airport and is the culmination of 10 months’ planning that involved representatives at Cathay, airport owners Wagners, federal and state government bodies and the support of the local business community and producers in the area.

The Cathay freighter spent a touch over two hours on the ground at Wellcamp being loaded with chilled beef, chicken, mangoes, pecan nuts and grains from the surrounding Darling Downs region before departing to Hong Kong. There were also two helicopters bound for the US and South America on board.

All up, Cathay carried about 70-75 tonnes of cargo from Wellcamp. Such was the demand, Cathay was unable to accept some cargo.

Customs made the trip from Brisbane to conduct all the necessary processing, while a fuel truck was brought in for refuelling the aircraft and the ARFF celebrated the arrival with a monitor cross.

Wagners chairman John Wagner said the first international flight from Wellcamp, which celebrated its one-year anniversary in November, was just the start of things to come.

“Our view is this airport facility is sitting right in the middle of the biggest agricultural hub in the country, the biggest concentration of feedlot cattle in the country,” Wagner told Australian Aviation on the day of the flight.

“There are five major abattoirs within an hour and a half of the airport, all wanting to export product. ” “Today is a turning point for not only Toowoomba and not only our region and not only the state, but also the country, where we can really capitalise on the demand for agricultural exports. You will hear a lot more about Wellcamp over the next 12 to 18 months.

“We will be having more discussions with Cathay Pacific to see if we can convince them at some time in the future to start a scheduled service into and out of Wellcamp. ” Cathay general manager for South West Pacific Nelson Chin said there was much potential in Wellcamp, particularly given the recently negotiated free trade agreement between Australia and China, and described the first flight as a “great start”.

“There are the right ingredients for it to go bigger,” Chin told reporters at Wellcamp on the day of the flight.

“In the long term, what makes it a success is the regular shipments that we would love to see moving forward.

“It is an exploratory trip but hopefully this will lead to better things, bigger things. ” Wagner said the airport was also in discussions with other airlines about live animal exports from Wellcamp, and flagged a closed charter passenger flight from Wellcamp to China in April.

On the domestic front, Wagner was confident there would be more passenger flights from the airport announced in 2016. Currently, QantasLink flies to Sydney and Regional Express (Rex) operates a number of Queensland government regulated routes through Wellcamp.

“The next stage of our growth will be a Melbourne service and we think a Cairns and Townsville service which we are well down the track of negotiating with another airline on,” Wagner said.

“What we are finding is once people travel from Wellcamp they don’t go back because it is so convenient. The service is fantastic. It takes two and a half hours to drive to Brisbane Airport. You can be in Sydney in an hour and a half. ” Wellcamp is the 436th airport certified to accept the Boeing 747 family of aircraft.

Cathay general manager operations Captain Mark Hoey said the flight was a “great can-do story”.

“The planning started about 10 months ago. Line operations and performance engineering did months of preparation and analysis to have every possible contingency covered, as the operation wasn’t how Cathay traditionally worked,” Captain Hoey told the December edition of Cathay’s staff publication CX World.

Cathay manager cargo sales and marketing Mark Sutch said it was exciting to be part of the project.

“We managed to test the practical aspects from the flight operations and cargo services points of view, and have a commercial success at the same time. This flight has been very satisfying for all involved,” Sutch told CX World.

Qantas tips bumper first half profit

Qantas tips bumper first half profit Qantas expects to more than double its underlying profit before tax in the first half of 2015/16 as the airline group benefits from lower fuel prices, its cost reduction program and improved revenue.

The company has forecast underlying profit before tax, its preferred measure of financial performance, to be between $875 million and $925 million for the six months to December 31 2015. Qantas reported underlying profit before tax of $367 million in the first half of 2014/15.

“We’ve seen improved revenue in our domestic and international operations, reduced costs across the group through the Qantas Transformation program, and expect another record half-year result from Qantas Loyalty,” Qantas chief executive Alan Joyce said in a statement on December 15.

“This strong performance is underpinned by our continued focus on delivering the best service for our customers in all of the markets we serve. ” Moody’s vice president and senior credit officer Matthew Moore said the guidance reflected the impact of improved operating and competitive conditions.

“Qantas’s guidance for the first half of FY16 reflects the continued strong performance of the company, highlighting the airline’s considerable progress on its transformation and cost-saving initiatives,” Moore said in a research note on December 15.

“Qantas’s earnings have also been benefiting from the significant drop in average fuel prices over the period and the depreciation in the Australian dollar, which we expect will continue to provide benefits, especially for its international segment. ” On a negative note, Qantas said there would be a $25 million one-off impact due to the disruptions caused to Jetstar’s Bali operations from the two volcanic ash cloud events in August and November, while there would also be a $17 million “non-cash negative impact of bond rate movements on employee provisions”.

Qantas received a welcome 95th birthday gift in mid-November when Standard & Poor’s upgraded the airline group’s long-term corporate credit and issue ratings to ‘BBB-‘ from ‘BB+’, ending a near-two-year period when the airline was ranked as below investment grade.

The return to investment grade alongside just six other airlines – Air New Zealand, Alaska Airlines, Lufthansa, Ryanair, Southwest and WestJet – “incorporates our expectation that Qantas will realise an enduring benefit from previously-announced restructuring initiatives while limiting pressure on its balance sheet”, S&P said in November.

Virgin Australia too expects to be in the black in 2015/16 after chief executive John Borghetti reaffirmed the airline group’s financial guidance for a return to profitability in the current year.

“We outlined at our 2015 financial year results in August that we expected to be profitable in 2016 and deliver a return on invested capital in line with our cost of capital – and I am pleased to confirm that we remain on track to meet this target,” Borghetti told shareholders at the company’s annual general meeting in Brisbane on November 18.

Qantas, Virgin and the rest of their airline peers are expected to generate a combined US$36. 3 billion in profits and return their cost of capital in 2016, the International Air Transport Association (IATA) said.

The 2016 forecast, published by IATA on December 10 in Geneva, represented a net profit margin of 5. 1 per cent and an increase from the US$33. 1 billion profit airlines are likely to post in 2015.

IATA director general Tony Tyler said airlines were expected to achieve a return on capital of 8. 3 per cent in 2015 and 8. 6 per cent in 2016. The cost of capital is about seven per cent. “The industry is surpassing an important benchmark,” Tyler said during the IATA global media day in Geneva in prepared remarks. “We are finally – after years of destroying capital – delivering the minimal level of profitability that an investor would expect.

“With average per passenger profit of less than $10, I would say that the profitability is still better described as fragile rather than sustainable. And, as I well know from decades in the industry, we should enjoy the benign trading conditions while they last but not get used to them. ” While lower oil prices – IATA forecast Brent crude oil to average US$55 a barrel in 2015 and US$51 a barrel in 2016 – supported the improved profitability, its impact had been offset by the strengthening of the US dollar.

IATA said demand for air travel was expected to grow 6. 9 per cent in 2016, while on a negative note sluggish growth was forecast for cargo volumes due to weakness in some trading markets. Further, cargo revenue was tipped to fall slightly in 2016.

“Passengers are benefiting from greater value than ever – with competitive airfares and product investments. Environmental performance is improving. More people and businesses are being connected to more places than ever. Employment levels are rising,” Tyler said.

In terms of the outlook for particular regions, North American carriers were expected to account for more than half the industry’s profits in both 2015 (US$19. 4 billion) and 2016 (US$19. 2 billion), with air travel boosted by a strengthening US economy, rising US dollar and following the recent consolidation among the major airlines.

American Airlines chief executive Doug Parker said having a profitable airline industry in the US was good news for consumers, employees and investors.

“It’s able to provide returns on capital and it never was before,” Parker told reporters during a visit to Sydney on November 13.

“It is a business that can stand on its own two feet and where employees don’t have to worry about whether the airline is going to be there for them a year from now, and provide them employment irrespective of what kind of job they do. ” Closer to home, Asia Pacific carriers were forecast to post profits of US$6. 6 billion in 2016, a US$800 million increase from 2015, with strong passenger growth offset by ongoing weakness in cargo revenues.

“Although the Chinese economy has slowed, air travel remains strong,” IATA said.

“The region’s carriers will benefit more fully from the impact of lower fuel prices in 2016 as hedges unwind. The region is, however, in the front line for the impact of continued weakness in cargo revenues. ” While describing the outlook for the industry as a “good news story”, Tyler cautioned that Africa and Latin America were still weak, while political instability in areas such as the Middle East had impacted regional carriers in that market.

“The industry’s results are good, but they are not outstanding when compared to the profits that are generated in other parts of the global economy,” Tyler said.

“The point that I want to make is that the airline industry has strengthened its profitability to an ordinary not an extraordinary level.

“The core of that success is primarily in North America. Large parts of the industry are still struggling – including some making losses. ” IATA has about 260 member airlines and represents roughly 83 per cent of global air traffic.

China Eastern plans permanent Shanghai-Brisbane flights

China Eastern will operate year-round flights between Brisbane and its Shanghai hub from November 2016. While the airline has already committed to serving Brisbane over January and February 2016 as a seasonal service, November will mark the start of the airline’s permanent presence on the route. China Eastern will use Airbus A330s on the route three times a week and its alliance partner Qantas will place its QF airline code on those services. In August, the ACCC approved China Eastern and Qantas’s application to partner on Australia-China services.

Rex in strong position to withstand weak economy

WA services to begin from February 28

Regional Express (Rex) deputy chairman John Sharp says the airline is in a strong position to withstand the current weakness in the national economy. However, other regional operators may not be so fortunate.

“The Australian economy, reflecting the worldwide one, continues to be weak and this will prolong the crisis affecting regional aviation,” Sharp told shareholders at Rex’s annual general meeting in Sydney on November 27 in prepared remarks.

“Rex has the wherewithal to see through this downturn but weaker operators may fail as we saw this year with Skytrans and no doubt others in the coming months ahead. This leaves the path clear for Rex to consolidate its position and capitalise on the opportunities. ” Sharp said he was confident Rex would “emerge stronger when the recovery comes”.

The company said it expected the falling Australian dollar would increase engineering costs, while a weaker Australian economy has depressed demand for air travel.

On a positive note, Rex would continue to benefit from lower fuel prices, as well as its recent expansion into Queensland and upcoming entry into WA. Further, the airline’s pilot training academy was benefiting from world demand for pilot training.

As it did at Rex’s full year results presentation in August, the company declined to offer financial guidance given the “net outcome of headwinds and tailwinds is uncertain”.

In other Rex news, the company on December 8 signed the deed to operate two Western Australian government-regulated routes – Perth- Albany and Perth-Esperance – from February 28 2016.

“This foray into WA is significant not only because the two routes alone would increase our passenger numbers by more than 10 per cent but also because it gives us a solid base to build up a strong regional presence in the very vast territory of WA which is ideally suited for regional aviation,” Sharp said.

“This reminds us of our beginnings in Queensland five years ago when we similarly started with two regulated routes servicing seven ports. Today Rex flies to 24 ports in Queensland. ” Residents of Albany and Esperance in Western Australia’s south will receive more flight options, although not necessarily too many more seats, once Rex takes over the two routes from Virgin Australia Regional Airlines (VARA).

Published schedules showed Rex planned to offer four flights a day on the Albany-Perth route on weekdays, and three flights over the weekend for a weekly total of 23. This was up from 13 weekday flights and two weekend services from VARA under the current contract.

And Rex will have three flights a day on weekdays between Esperance and Perth, with a further three on the weekend, lifting the weekly total to 18. VARA offered two flights a day during the week and three over the weekend.

While Rex flight schedules represented a significant jump in frequency, the increase in available seats will be more modest given the Saab 340s Rex will use have 34 seats compared with 46-seat Fokker 50s VARA deployed on the two routes. The number of one-way seats at Albany and Esperance is going up by about six per cent and two per cent, respectively.

Rex said it would begin ticket sales once it had reached a deal with the two local councils on airport charges.

“We need to highlight that current airport charges at Albany and Esperance are significantly higher than in Rex’s eastern network,” Rex general manager for network strategy and sales Warrick Lodge said in a statement.

“Rex will work hard with the councils to reduce this cost but if this is not successful then inevitably ticket prices will have to reflect this. ” VARA decided not to bid to continue operating the two government-regulated routes, given they were losing money.

“The losses, frankly were just too big,” Virgin Australia chief executive John Borghetti told reporters in Perth on November 13.

“We just couldn’t find a way to make it work. ”

RAAF operates C-17 proof of concept flights to Antarctica

WATCH VIDEO

A RAAF C-17 Globemaster has delivered over 12 tonnes of cargo including a Hägglunds tracked vehicle to Wilkins Aerodrome, Antarctica in support of the Australian Antarctic program.

The flight from Hobart on November 21 was the second in a series of proof of concept flights to Wilkins – which serves the nearby Australian Antarctic base of Casey Station – being operated between early November through to February to validate the use of the C-17 to support Australian Antarctic Division operations.

“The C-17A is the largest aircraft to have flown to Wilkins Aerodrome in Antarctica, and it offers an unprecedented cargo capability that complements the Division’s existing transport options,” Minister for the Environment, Greg Hunt, said in a statement.

As well as the dual-cab Hägglunds vehicle the 36 Squadron C-17 (A41- 208) also delivered two quad bikes and building materials.

Then, “whilst on the ground at Wilkins, the Royal Australian Air Force conducted a simulated aeromedical evacuation that could provide further options for the Royal Australian Air Force and the Australian Antarctic Division to work together in the future,” Minister for Defence Materiel, Mal Brough, said.

The C-17 has a 70+ tonne payload, “However, to get in on the ice at Wilkins all the way from Hobart we carry about 20 tonnes of equipment and people,” Commander Air Lift Group AIRCDRE Richard Lennon, who was on the flight, told the ABC.

“That enables us to return to Hobart without refuelling. ” The proof of concept flights aim to validate the feasibility of using the C-17 to operate to Antarctica, supplementing the existing Skytraders-operated Airbus A319 airlink and the Aurora Australis supply ship. (The US Air Force already operates C-17s between Christchurch, New Zealand and Pegasus Field near McMurdo Station under Operation Deep Freeze. ) “The Air Force has worked closely with Australian Antarctic Division on this concept, with a heavy-aviation capability identified as an important capability in the 20 Year Australian Antarctic Strategic Plan report, commissioned by Government in 2013,” Minister Brough said. “Following the proof of concept flights, a full review will be undertaken by the Australian Antarctic Division and the Air Force. There are no future commitments past these initial flights,” the Australian Antarctic Division notes.

The flights are the first time the RAAF has flown missions to the Australian Antarctic Territory since 1963.

Essendon planning for security screening in first quarter of 2016 for Jetgo flights

Essendon Airport is hopeful of having the appropriate security screening facilities in place for Jetgo to begin flights from Dubbo in the first quarter of 2016.

Jetgo had planned to fly from Dubbo to Melbourne Tullamarine starting in late October 2015 but was unable to secure terminal space at the airport. Moves to operate into nearby Essendon Airport then hit a roadblock because of a lack of passenger screening facilities and regulatory hurdles from the Office of Transport Security (OTS).

Eventually, the regional carrier launched its Melbourne service at Avalon Airport, which is accommodating Jetgo’s three flights a week from Dubbo on a temporary basis while security facilities are set up at Essendon.

Currently, Essendon Airport has regular public transport (RPT) service from Free Spirit Airlines, Par Avion Airlines and Sharp Airlines, serving regional centres such as Griffith, Flinders Island and Merimbula.

Those services do not require passenger security screening and Essendon Airport chief executive Chris Cowan said the airport was working on a solution that did not impact the existing RPT airlines at the facility.

“We are looking to do this in an efficient way that doesn’t disadvantage the other operators here,” Essendon Airport chief executive Chris Cowan said.

“It can’t diminish the ability of the other regional operators to come in here and operate in a fairly low-key regional environment which they enjoy.

“We will see an answer to that in the first quarter of next year. ” Cowan said passenger numbers at the airport had increased from 10,000 to 40,000 a year over the past 18 months, highlighting the attractiveness of Essendon for regional services.

There is scope for further growth given the main passenger terminal at Essendon was built to handle 200,000 passengers a year.

Further, Essendon provides a shuttle bus to nearby Tullamarine for regional passengers connecting onto domestic or international flights.

“While it is off quite a low base it is quite a substantial increase and it does reflect that there are further opportunities for regional services from Essendon,” Cowan said.

“It is quite a good sign for the future. When you talk about regional passengers flying from Essendon it makes sense to most people. ” The airport has spent about $20 million on runway overlays and two new hangars at the airport in recent times.

OTS regulations require passengers on regular public transport service (RPT) with Jetgo’s ERJ-135 regional jets go through security given they have a maximum takeoff weight of 20,000kg.

Jetgo managing director for airlines Paul Bredereck has said previously the airline had unsuccessfully sought a short-term exemption until the facilities at Essendon could be upgraded, given its aircraft were right on the maximum takeoff weight limit.

Alliance acquires Austrian Airlines’ Fokker fleet

Alliance Airlines will acquire the entire Austrian Airlines fleet of 21 Fokker 100 and Fokker 70 aircraft under a deal that will see the Australian-headquartered fly-in/fly-out and charter operator diversify its operations into Europe, and the Lufthansa-owned Austrian become a shareholder in Alliance.

The US$15 million deal, announced on November 25, involves Alliance acquiring Austrian’s 15 Fokker 100s and six Fokker 70s over a 26-month period from December 2015, a US$9. 5 million cash payment and the issuing of new shares to Austrian Airlines worth US$5. 5 million (giving it a 12 per cent stake in the company).

“This purchase now provides Alliance with the opportunity to expand Alliance’s revenue stream into new areas and geographies and also provides a cost-effective long-term supply of parts to our existing Fokker fleet,” Alliance managing director Scott McMillan said in a statement.

“These opportunities both in Australia and through the establishment of an office in Europe will allow Alliance to generate new income streams that are not directly related to the Australian fly-in/fly-out resources sector. ” Alliance says the ex-Austrian aircraft will be acquired by wholly-owned subsidiary Alliance Aviation Services Slovakia, and will be available for wet and dry leasing, for future onward sale, or for breaking up for spare parts for reconditioning and resale. The aircraft engines could also be sold or leased.

Aircraft to be broken up for spares will be parted out by Austrian Technik Bratislava, which Alliance earlier in 2015 contracted to perform heavy maintenance on its own Fokker fleet after announcing the closure of its Brisbane heavy maintenance facility.

Alliance currently operates 15 Fokker 100s, eight Fokker 70s and five Fokker 50s, and says it plans to continue operating the types in Australia for the next eight to 10 years. All three types have been out of production since Fokker’s bankruptcy in 1997.

“For Austrian Airlines, selling the entire fleet to one of their existing customers and the world’s largest operator of Fokker aircraft in one transaction was a clean and attractive proposition,” McMillan said.

In August Alliance said its focus for the current financial year was on securing more non-mining work and reducing costs amid a “sustained downturn in the resources industry” after posting a full year $36. 6 million statutory net loss in 2014/15 due to fleet writedowns and other one-off charges.

The full year result was impacted by a first half charge taken on the carrying value of the fleet, as well as restructuring costs for sending its Fokker fleet to Bratislava for heavy maintenance, one-off costs from the sale of two Fokker 100s and staff redundancies.

New RAAF pilot training contract signed

Formal contract arrangements have been signed between the federal government and Lockheed Martin Australia to provide and support the Australian Defence Force’s new pilot training system, after the company was named as the preferred tenderer for the AIR 5428 project in September.

Under the acquisition and services contracts, which are worth $1. 2 billion, Lockheed Martin will deliver 49 Pilatus PC-21 trainer aircraft, seven flight simulators, a modern learning environment for students and updated courseware, along with support for an initial seven-year term. Basic flying training will be delivered at RAAF Base East Sale in Victoria.

The first courses will begin in early 2019 with an annual intake of up to 165 trainee pilots, and will allow the ADF to increase the number of graduates from 77 to 105 each year.

As prime contractor, Lockheed Martin will provide overall project management for the pilot training system and will deliver the ground-based training systems. Partners Pilatus Aircraft will provide the PC-21 aircraft and through-life engineering and airworthiness support, and Hawker Pacific will provide maintenance and fleet support services.

The Lockheed Martin-led Team 21 was selected ahead of a competing bid from BAE Systems, which together with CAE Australia and Beechcraft had offered a solution based around the Beech T-6C.

Airservices undertakes diagnostic review

Airservices acting chief executive Jason Harfield says a review of the air traffic manager’s processes will help put the organisation on the right path to meet the future aviation needs of the country.

Harfield says a “business diagnostic and efficiency review”, which started in mid-November, would “look at everything we do, and how we do it”.

“I see this as the first step on the transformation road so we ensure we’re best placed to meet our future challenges,” Harfield told Airservices’ Waypoint conference in Canberra on December 3.

“The outcomes of this review and the forward plans will be put to the Airservices board in the first quarter of the New Year.

“I’m cognisant that for Airservices, and ultimately our industry, to succeed into the future, the constraints of the past cannot become the assumptions of our future. ” The review comes at a time when Airservices’ revenue has come under some pressure from the drop in fly-in/fly-out traffic.

Airservices’ 2014/15 annual report showed the government body posted revenue of $1. 012 billion in the 12 months to June 30 2015, a drop of 0. 84 per cent compared with the prior year.

Meanwhile, expenses were up 1. 25 per cent to $1. 006 billion, with the increase kept to a minimum thanks to a combination of recruitment freezes for non-operational staff, cuts in non-essential discretionary costs and paying suppliers less.

Harfield said Airservices needed to become more adaptable and change the way it operated if it was to continue to safely and efficiently manage the nation’s skies amid the changing environment.

“It’s a misconception that bureaucracies, government agencies, are not the drivers of change – that it’s easy just to do things as they have been done.

“That’s not my approach, and it’s not the approach of Airservices, the organisation I lead. We are drivers of change, change that will benefit this industry and all the Australians our industry serves, and will continue to serve in the future. ” Airservices is seeking to raise charges for air navigation services by an average of 3. 3 per cent a year over the five years from 2016 under its proposed new long-term pricing agreement (LTPA), which covers charges for its en route navigation, terminal navigation and aviation rescue and firefighting (ARFF) services.

It said in August 2015 the price increase would fund new services, deliver safety and flight efficiency improvements and contribute to the development of the OneSky air traffic management system – which will combine Australia’s seperate civil and military air traffic management systems, into one program.

Harfield said feedback on the proposed LTPA, which covers a customer base – ranging from some of the world’s largest international airlines to general aviation training and everything in between – featured a “broad range of diverse and sometimes conflicting opinions”.

“Our challenge in a price-setting context is to meet our service obligations, through a charging arrangement that encourages economically-efficient resource decisions while at the same time mitigating against localised economic distortions that may result in prices for particular services or segments of the industry that become unaffordable. ”