Wirraway
14th Oct 2004, 15:49
Fri "The Australian"
Freeing up carriers 'pays $1bn'
Steve Creedy, Aviation writer
October 15, 2004
AIRLINE liberalisation was this week credited with adding $1 billion to the Australian economy as the Howard Government was lauded as a positive example of how governments should leave the private sector to manage the airline industry.
Tourism and Transport Forum managing director Chris Brown said yesterday that growth in overseas tourist arrivals on the back of rising airline capacity in 2003-04 added $1 billion to the Australian economy.
He said this was continuing with a 12 per cent increase in passenger arrivals in August and increases in capacity already flagged for the northern winter schedule.
These included a 9 per cent rise in international capacity to Sydney, a 19 per cent boost to Melbourne, 8 per cent at Brisbane and 3 per cent at Cairns.
"There is no tourism industry on earth as dependent upon its aviation partnership than us," Mr Brown said.
"TTF will continue to promote a policy agenda that opens up opportunities for foreign carriers into Australia, and also forges similar openings for Qantas and Pacific Blue offshore."
Earlier in the week, outspoken Air Canada chief executive Robert Milton told the National Aviation Press Club in Sydney that the Australian Government had "demonstrated a refreshingly progressive pro-market approach, which has allowed Qantas to compete effectively both at home and abroad". Air Canada is among the airlines boosting capacity to Australia, and this summer it will increase flights to twice daily.
Contrasting the Australian handling of aviation with the situation in Canada, Mr Milton praised the Australian Government for ending the "two airline" policy and allowing airlines to run like businesses where market forces dominated.
"They allowed natural market forces to prevail, nurtured Qantas internationally and let Ansett fail, while Canadian Airlines was propped up by our Government for years to the detriment of Air Canada," he said.
Mr Milton steered Air Canada through a major restructuring after taking it into bankruptcy protection under Canada's Companies' Creditors Arrangement Act.
The carrier emerged from CCAA protection two weeks ago after carving out $C2 billion ($2.2billion) in operating costs and $C1billion in labour costs, renegotiating leases at the bottom of the post-SARS market to save $C700 million and slashing supplier costs by $C400 million.
It also cut debt from $C12billion to $C6 billion and raised $C1.1billion in equity in what could be the biggest-ever airline equity raising.
The Canadian airline now operates with 10,000 fewer employees, has its highest cash balance in its history and a pricing strategy that mimics low-cost carriers. Mr Milton said the new strategy was proving a winner with customers.
"Our load factors for the past six months show just how effective this new pricing strategy has been, with six straight record months of loads and the highest load factor in our history this past August," he said.
By contrast, US carriers had taken timid steps while desperately searching for signs of a return of the high-yield domestic business-class customer, which would justify traditional pricing. "Sadly, she's not coming back," Mr Milton said.
Ongoing initiatives include an outlay of $C300 million to upgrade aircraft interiors and inflight entertainment systems and the acquisition of Bombardier CRJ regional jets and 45 Embraer 190 jets in what Mr Milton believes will be a "game changer" for the North American market.
Noting similarities between Australia and Canada and their airlines, Mr Milton had some encouraging words for Oneworld partner Qantas.
"With its introduction of Jetstar and Australian, Qantas is doing what it must in order to protect its domestic market in a highly competitive and very dynamic environment," Mr Milton said.
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Freeing up carriers 'pays $1bn'
Steve Creedy, Aviation writer
October 15, 2004
AIRLINE liberalisation was this week credited with adding $1 billion to the Australian economy as the Howard Government was lauded as a positive example of how governments should leave the private sector to manage the airline industry.
Tourism and Transport Forum managing director Chris Brown said yesterday that growth in overseas tourist arrivals on the back of rising airline capacity in 2003-04 added $1 billion to the Australian economy.
He said this was continuing with a 12 per cent increase in passenger arrivals in August and increases in capacity already flagged for the northern winter schedule.
These included a 9 per cent rise in international capacity to Sydney, a 19 per cent boost to Melbourne, 8 per cent at Brisbane and 3 per cent at Cairns.
"There is no tourism industry on earth as dependent upon its aviation partnership than us," Mr Brown said.
"TTF will continue to promote a policy agenda that opens up opportunities for foreign carriers into Australia, and also forges similar openings for Qantas and Pacific Blue offshore."
Earlier in the week, outspoken Air Canada chief executive Robert Milton told the National Aviation Press Club in Sydney that the Australian Government had "demonstrated a refreshingly progressive pro-market approach, which has allowed Qantas to compete effectively both at home and abroad". Air Canada is among the airlines boosting capacity to Australia, and this summer it will increase flights to twice daily.
Contrasting the Australian handling of aviation with the situation in Canada, Mr Milton praised the Australian Government for ending the "two airline" policy and allowing airlines to run like businesses where market forces dominated.
"They allowed natural market forces to prevail, nurtured Qantas internationally and let Ansett fail, while Canadian Airlines was propped up by our Government for years to the detriment of Air Canada," he said.
Mr Milton steered Air Canada through a major restructuring after taking it into bankruptcy protection under Canada's Companies' Creditors Arrangement Act.
The carrier emerged from CCAA protection two weeks ago after carving out $C2 billion ($2.2billion) in operating costs and $C1billion in labour costs, renegotiating leases at the bottom of the post-SARS market to save $C700 million and slashing supplier costs by $C400 million.
It also cut debt from $C12billion to $C6 billion and raised $C1.1billion in equity in what could be the biggest-ever airline equity raising.
The Canadian airline now operates with 10,000 fewer employees, has its highest cash balance in its history and a pricing strategy that mimics low-cost carriers. Mr Milton said the new strategy was proving a winner with customers.
"Our load factors for the past six months show just how effective this new pricing strategy has been, with six straight record months of loads and the highest load factor in our history this past August," he said.
By contrast, US carriers had taken timid steps while desperately searching for signs of a return of the high-yield domestic business-class customer, which would justify traditional pricing. "Sadly, she's not coming back," Mr Milton said.
Ongoing initiatives include an outlay of $C300 million to upgrade aircraft interiors and inflight entertainment systems and the acquisition of Bombardier CRJ regional jets and 45 Embraer 190 jets in what Mr Milton believes will be a "game changer" for the North American market.
Noting similarities between Australia and Canada and their airlines, Mr Milton had some encouraging words for Oneworld partner Qantas.
"With its introduction of Jetstar and Australian, Qantas is doing what it must in order to protect its domestic market in a highly competitive and very dynamic environment," Mr Milton said.
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