iscover
Issue 110: September 1995
Down But Not Out
That thorn in the side of the major airlines, Bryan Grey, is back in town and about to make life hell for Qantas again. Grey’s proposal to launch Aussie Air, an eight jet widebody airline, may or may not get airborne, though in the meantime he has created a situation where he could win a substantial sum in the courts from Qantas if that airline persists in not allowing him access to its terminals (refer Airline Affairs for full details). Grey’s return to the airline scene poses some interesting questions about the realistic viability of a major new entrant taking on the likes of Qantas and Ansett domestically. Since deregulation got under way in November 1990 there have been only two new airlines to make it to the jetway. The first was Grey’s Compass which launched on December 1 1990 via $65m from one of the most successful share floats in Australian stock exchange history. However, initial trading problems through a lack of aircraft, a reservations/phone system that failed to cope with demand in the first crucial month and an instant evaporation of start up capital followed by a fierce discounting war resulted in the airline ceasing just 13 months later with debts in the region of $170m in addition to 11,192 investors who had lost it all.
Compass II followed with a viable operating formula but a critical lack of capital and in retrospect management that wasn’t perhaps being entirely upfront with what was actually happening within the airline. Compass II lasted just half as long as its original namesake and really put to death the concept of a third airline ever becoming a reality in Australian skies. To muddy the waters for any potential Biggles, the Federal Government merged Australian into Qantas and allowed Ansett to fly internationally. Both moves that significantly increased their overall strength and market presence. That, and the very high profile failures of the two Compasses though did not dampen the appetites of some people who naively thought that they could do it their way and win. Names that have faded into oblivion such as TransContinental, Triple A, Australia Northwest and Australia Air have all worked hard to bring reality to that famous adage – how do you make a small fortune out of aviation? Begin with a big one!
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