Air Transport World

Qantas is trying to rise from 1989 turmoil; Australia's flag carrier has many decisions to make as it faces the '90s. (includes Qantas at a Glance article) (company profile)

Australia's flag carrier has many decisions to make as it faces the '90s. Privatization is a key issue.

Sydney--A look at Qantas's numbers going into the second half of 1989 would lead one to think that Australia's proud flag carrier was on something of a roll. It had just enjoyed its best fiscal year ever, the one that ended last June 30. It produced a record Aus$177 million (U.S. $135 million) operating profit on top of another record operating profit for the preceding year. Passenger traffic was up nearly 16% for boardings and 12.6% for RPKs. In fact, Qantas's passenger-traffic growth had been in the double digits for four of the past five years, averaging a nice 13.7% boardings and 12.8% RPK growth since the financial year that ended March 31, 1984, a time when most of the world was just beginning to snake off the effects of the oil-crisis-included economic slump of the early '80s.

Then came the second half of 1989, when Australian airlines were pummeled by a number of negative factors, chief among them the Aug. 24 mass resignation of pilots, which virtually shut down the nation's domestic-airline system (ATW, 5/90). The domestic Australian airlines have not yer recovered--neither has the country's tourist industry, nor has Qantas.

Qantas's pilots are not affiliated Australian Federation of Air Pilots and thus were not involved in the strike. In fact, the AFAP actions disturbed Qantas's pilots as much as anyone. One irate captain accosted this writer to voice criticism of the Air Line Pilots Association of the U.S. for its donation of $100,000 in support of the AFAP.

Though Qantas was not shut down during the domestic crisis, it suffered significant traffic cuts as Australia's tourist industry became a shambles. Timing of the walkout couldn't have been worse, as Australia's tourist season gets under way in October and November.

Qantas's new chief executive, John Ward, puts it this way: "Domestic aviation all but ceased. Australia lost all credibility as a tourist destination." He says that nearly 70% of Qantas's business is foreign-originating and the domestic-pilots' walkout caused many to abandon plans for travel to Australia. This was particularly true in Japan, where travel agents wrote Australia off. These actions were especially painful to Qantas, which had been successfully building up its business in Japan, increasing frequencies from seven round trips per week in 1984 to 18 last year, surpassing frequencies on the famous "Kangaroo route" to Europe. And the carrier had planned to increase its Japanese service to 25 round trips per week by the end of last year. But by last December, Japanese traffic had fallen off 30%, according to Ward.

Qantas's plight was exacerbated to some extent because of its recent successes. Incoming tourist traffic had been growing by 25% per year beginning in 1986 and carrying right through the 1988 bicentennial celebrations. …

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