Air Transport World

Lean, mean leisure machine. (East-West Airlines Ltd.) (company profile)

Sydney-The cover of the Bulletin magazine is impressive. A confident looking Neil Berkett, general manager of Eastwest Airlines, stares into the camera with the bulbous black nose of a Fokker F28 looming over his right shoulder. However, the headline, Airline deregulation, high anxiety," gives the impression that deregulation somehow might alter the course of this successful airline that "deregulated" itself four years ago. Deregulation is having little effect on Eastwest, although the airline fought hard to bring down Australia's restrictive 2-airline policy.

Berkett explains: "In 1987, we took the position that in order to survive, we had to do something fundamentally different" from Australia's two major domestic airlines, Australian and Ansett.

"Back then, we were a supplementary, trunk, regional, business and leisure airline. We were a bit of everything and didn't perform any of those functions particularly well, because we were all over the place. We had no vision or grasp of where we wanted to be and we were losing a hell of a lot of money," he remembers.

In order to stop the bleeding, the airline developed a business plan that concentrated on the one area of the market that was largely neglected-leisure. The plan called for standardizing the fleet and divesting all nonleisure activities, including unprofitable routes. The airline since has sold off its cargo operation, charter service and all general-aviation activities, such as its air-ambulance service.

Its plan was developed in conjunction with a planned public float that never materialized. in July, 1987, TNT- headed by Sir Peter Abeles and Rupert Murdoch's News Corp., which have equal, controlling shares of Ansett-acquired the struggling Eastwest (ATW, 5/90). At the time, airline observers believed that the acquisition was aimed at putting Eastwest out of business. Eastwest, then called East-West, was a constant annoyance to Ansett, they said. Abeles stated shortly after the takeover that the leisure-carrier image would be enhanced and the airline would operate independent of the Ansett Group. Blessing in disguise

Other observers felt that the takeover was a blessing in disguise for Eastwest, which had suffered heavy losses for years. …

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