Air Transport World

'Toto, I have a feeling we're not in Kansas anymore.' (Deregulation)(includes article about labor costs at Australia's airlines)

When Australia's two-airline policy (TAP) expires on Oct. 30, ushering in an era of domestic-airline deregulation, the country still will be reeling from the effects of last year's pilots' walkout. The financial damage caused by the mass resignation of 1,640 airline pilots cannot yet be measured but certainly, it runs into the billions of dollars. Fallout from the action will affect Australian aviation and indeed, the entire travel and tourism industry for years to come. It has thrown a monkey wrench into the deregulation process and created opportunities for existing and start-up carriers alike.

Though ultimately they will save something-an official at Australian says pilot costs will drop from 6.5% of costs to 4.50/&-both Australian and Ansett have lost millions of dollars as a result of the strike. East-West and other Ansett affiliates have been hard hit. Commuter airlines that depended on the trunks for their feed likewise suffered and the chain of hurt extends all the way down the travel infrastructure to the taxicab driver waiting for a traveler who never will arrive. The strike has left a reservoir of ill will among the traveling public toward the pilots but also toward the trunk airlines, especially Ansett, according to industry observers. Whether this animosity will last long enough to give the new entrants and East-West a boost remains to be seen.

It has been suggested that both trunk airlines misread the intensity of the strike and did not move quickly enough to replace the pilots after they resigned en masse on Aug. 24, because they believed that the pilots would return when it became clear that the airlines and government would not agree to their demands. One thing is certain: Neither Ansett nor Australian could field any aircraft during the first 21 days of the strike. Even after four weeks, by which time the nation had cobbled together a Dunkirk fleet of military and foreign aircraft, Australia's domestic airlines were providing only 8,500 seats per day, compared with an average of 50,000 seats per day before the strike. By Dec. 31, four months later, the airlines were up to about 40,000 seats per day, 80% of prestrike capacity. Measured in terms of seat km, the story is equally grim. Industry capacity fell from 1.6 billion ASKs in July, the last full month of operations prior to the walkout, to 273 million ASKs in September. With such a drastic decline in capacity, it is not surprising that industry uplift plunged 44% in the fourth quarter of 1989 to 2 million passengers and that it was off 26% to 10.6 million for the calendar year. Traffic fell from 3.5 billion revenue passenger km in the fourth quarter of 1988 to 2 billion RPKs in the fourth quarter of 1989. Even when things normalize' and Ansett, Australian and East-West say they now are operating "normal" schedules things will not be the same. According to industry observers, the public has soured on air travel. Business executives are faxing more and flying less. Foreign tourists, scared off by the strike, have yet to return to the country in force. Holiday makers are learning to take their holidays in the neighborhood or are going outside the country to avoid the mess altogether. Shattered careers As for the pilots, they, too have paid. For starters, only slightly more than half of them will ever work as commercial transport pilots in Australia again. Ansett Airlines, which employed around 500 pilots before the strike, today employs between 260 and 280, according to GM Graeme McMahon. …

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