Air Transport World

Australian plotting a new course for a trip over uncertain waters. (Australian Airlines)

Australian plotting a new course for a trip over uncertain waters

The Australian airline industry is going through a period of significant change. The three main airlines--Qantas, the international flag carrier, and the two domestic carriers, Ansett Airlines, the privately owned carrier, and Australian Airlines (Trans Australia until August of last year) the government-owned carrier--are all changing as well.

Impetus for all the change is a major move by the Australian government to examine its airline industry and decide how it should be regulated in the future, or in the extreme if it should be regulated at all. In March of 1985 the Minister of Transport appointed Thomas May to conduct an Independent Review of Economic Regulation of Domestic Aviation, which has been called the May Inquiry. The group issued its lengthy (862 pages) report last December. It covers in great detail a great many aspects of Australian air transport including studies of the public's perception of the Australian airline industry. It does not actually say what the government should do about regulating the industry in the future, but rather it lists five options ranging from keeping things as they are all the way to total deregulation. What the government actually does with all of this is keeping everybody in Australia guessing. Most observers feel that the final result will be continued regulation, but with much more freedom in pricing and capacity for Ansett and Australian Airlines.

The challenge for the two Australian domestic carriers is to be ready for whatever the government comes up with. Ansett has been making many moves of its own (ATW, 6/86). The huge conglomerate run by Sir Peter Abeles and media tycoon Rupert Murdoch has considerable capital to play with and has been very busy expanding its transport empire.

Things are a little different over at rival Australian Airlines where more government approval is needed for expansion ventures. But many things are happening at the airline which turned 41 this past February.

Strong goal

A new management team was formed at the end of 1985 when Frank Ball retired as general manager of the airline, then TAA. The government brought in James Strong who is about one year older than the airline and was executive director of the Australian Mining Industries Council. Ball and his people had decided to change management before he retired, but most of the actual change has been left to Strong.

Strong's chief goal is to get Australian Airlines positioned for the future, no easy task considering the uncertainties and possible changes that can take place in the Australian industry generally, changes over which he has very little control. But he feels that no matter what the government decides to do with regulation, his airline must be a viable profitable organization well in tune with the markets that it serves.

One of the negative tags that Strong must overcome is the label that his airline and Ansett, for that matter, are simply "cost-plus' operations. This is a charge that Qantas likes to make when it puts in its bid for increased domestic rights, a pitch it is making to the government as part of what changes should be made. Basically Qantas and others feel that the two Australian domestic carriers, much like U.S. airlines under the old Civil Aeronautics Board, are not really market-oriented, but rather have their fares set by the government based on the costs the airlines submit plus a little something extra for their time and effort (profit). …

Log in to your account to read this article – and millions more.