Here's the real story.
Ozjet on ground as its parent pulls plug
Steve Creedy | May 22, 2009
Article from: The Australian
OZJET Airlines' parent has placed the troubled carrier in administration after it was abruptly forced to cease operations from Perth on Wednesday.
The airline, started by Formula One racing identity Paul Stoddart and now owned by Sydney-based Heavylift Cargo Airlines, was forced to axe its flights after Perth airport refused to handle its planes because of unpaid debts.
Ozjet had three older Boeing 737-200s in Perth performing ad-hoc charters as well as flying a scheduled service to Derby and operating flights to Bali on behalf of travel company Indojet Asia.
At least one of those jets,
VH-OZD, was listed for sale on the internet yesterday for $625,000.
The move forced Indojet, which says it was not told until Wednesday about the airline's problems, to scramble to make alternative arrangements for holidaymakers stranded in Perth and Bali.
Ozjet blamed the decision on problems with the Civil Aviation Safety Authority and Indojet Asia, although both have since rejected the claim.
But Perth airport confirmed that it had refused to continue handling the airline because it had become a credit risk.
Perth airport chief executive Brad Geatches said that Ozjet had arrears amounting to hundreds of thousands of dollars and extending back to 2008.
He said the airline had broken "dozens of promises" and Ozjet had become a significant credit risk after parent Heavylift had told the airport it would no longer support the airline.
Ozjet blamed its position primarily on CASA, saying it would not allow it to add cargo aircraft to its air operators' certificate.
It also claimed that money owed by Indojet had further exacerbated the situation.
"The resultant lack of revenue has resulted in a significant impact on the airline's overall business plan," it said.
A CASA spokesman confirmed that Ozjet approached the regulator seeking to add a cargo aircraft to its air operators' certificate.
"Ozjet put the application on hold before providing any further documentation," he said.
Indojet Asia's lawyer, Andrew Chelvathurai, also denied that the company owed Ozjet money.
He said Indojet, which runs resorts in Bali and chartered the Ozjet planes to fly passengers to the island resort, had paid for those charters.
"Indojet has been paying in advance," he said.
Mr Chelvathurai said Indojet had discovered only on Wednesday that Ozjet was in arrears with its landing fees.
He said about 60 people were stranded in Bali and Indojet was making alternative arrangements to fly them home on other budget carriers.
It was also talking to the carriers about setting up another charter arrangement for future flights.
Mr Chelvathurai said that Ozjet had failed to tell Indojet about the arrears and that it was in financial difficulty.
"It would have been better if Ozjet had told them in advance that they were having problems because this problem has been festering for more than 10 months, since last September," he said.
Queensland-based Alliance Airlines confirmed yesterday that it had begun flying the Perth-Derby service under a charter arrangement.
It said it would enter into a more permanent arrangement from next Tuesday.
Ozjet has had a chequered career, including a failed attempt by Mr Stoddart to set it up as an all business-class airline.
The experiment ended up costing Mr Stoddart $1 million a week and he abandoned it in March 2006 and quietly converted the airline into a charter operation.
At least three operators have failed in Australia in the past 18 months -- Queensland-based MacAir and SkyAirWorld and O'Connor Airlines, based in South Australia.