Skippers lose out on air service tender

[topend3]

Media Release - 10 August 2005

Skippers Welcome Ministerial Announcement
on New Air Service Operators for Regional WA

Skippers welcomed the announcement today from Minister for Planning and Infrastructure, The Hon. Alannah MacTiernen, of the results of a recent tender process which will see a change in air service operators servicing destinations across regional Western Australia.

The process was initiated on 20 April this year when the Department for Planning and Infrastructure (DPI) invited all qualified air service operators to bid for either or both of two newly structured regional air service networks:

a coastal network, comprising the regional ports of Albany, Esperance, Exmouth (Learmonth) Geraldton, Carnarvon, Kalbarri and Shark Bay; and

a northern Goldfields network, comprising the ports of Leonora, Leinster, Laverton, Wiluna, Meekatharra and Mt. Magnet with limited access to Geraldton.
Skippers applied for and were successful in their bid for the Northern Goldfields network.

Skippers welcomed the opportunity to continue its current services to Geraldton, Meekatharra, Wiluna and Laverton under revised schedule arrangements and initiate new services to Mt Magnet, Leonora and Leinster. It is the aim of all operators to achieve a seamless transfer of services in line with each region's requirements by the end of 2005.

Whilst delighted at the outcome, Skippers CEO Rob Swann had mixed feelings toward the news. “We're disappointed that the process did not make it possible for us to be able to continue to service those destinations such as Kalbarri and Monkey Mia which we have spent a lot of energy and resources developing. Both of these communities are significantly underrated as tourist destinations and have natural assets that equal and even exceed other iconic destinations within the country. We can only hope that the new operator is successful in unlocking the full potential that these locations inherently possess.”

“We are, however, looking forward to having a more focused strategy which is more aligned with our core business – servicing the mining industry and adding value to the communities and businesses which support it.”

Air services in Western Australia have been heavily regulated since the collapse of Ansett in 2001. Skippers stepped forward to take on many of the routes which would otherwise have remained unserviced, and has successfully built services to a number of destinations previously deemed unviable. Skippers have increased air traffic to the city of Geraldton some 46% since January 2002, and Meekatharra has grown from 9 seats twice a week to its current capacity of between 19 and 30 seats, four days a week.

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For further information, please contact:
Rob Swann on Ph: (08) 9478 3989

[SkySista]

Hmm. Will be interesting to see how XR plan to service KAX and Shark Bay with an F-50... didn't think that much capacity was needed... unless of course they plan to do stops on the way to Geraldton. :confused:

It does seem a little silly to take a route off a carrier that worked to develop the destination when the "big guys" seemed not to take any interest in the port (as far as I know I admit). I suppose XR flying in to Kalbarri and Monkey Mia with a 50-seat aircraft means less frequent services until demand for seats catches up??? Or am I figuring this out wrong??

Also, does this mean that the operator going to say ALbany, Esperance etc has sole rights to those routes? E.g. no more charter down there? Or are they talking RPT here??

[topend3]

this is RPT only, so no change in the case of Albany/Esperance where XR is currently sole-RPT operator

[Continental-520]

It seems to be shared between these two: Skippers and Skywest. Skywest had it before Skippers, and now again. So, wonder what's changed?

Shark Bay will never be a huge money maker, no matter how much you put into developing it. I do agree that it is underrated though.


520.

[SkySista]

don't Maroomba do a regular service to Mt Magnet...? So if Skippers now have rights, does this mean Maroomba can't fly in there any more??

I probably sound pissed off, and a bit biased, coz i know some guys who fly for Skippers, but it seems crazy to pretty much take routes off a carrier that at least is Australian owned, and give them to XR where the money goes straight overseas!!! Good one, MacTiernan, really supporting Aus here.... :rolleyes:

I can bet you XR weren't really that interested in Shark Bay - only because they had to take it to get Geraldton... bet they've been waiting to limit the Skippers flights into GET considering they've managed to get a big share of that market.... will be interesting to see how they go about 'developing' the destinations...

I just really hope this 'restructure' of the route bidding structure doesnt drive the smaller operators out altogether... otherwise they'll have to rely soley on charter wont they??

[Whoop Whoop - Oops]

Unfortunately Moroomba is the loser in the whole deal.

They've been running to Mount Magnet for years when no one else was interested and have now lost it to Skippers.

Hope there is no adverse effect on their Jetstream and the guys who drive it.....

Effectively Mooromba lose Mount Magnet and gain nothing.

Skywest lose Leonora & Leinster but gain Kalbarri & Shark Bay.

Skippers lose Kalbarri & Shark Bay but gain Leonora, Leinster & Mount Magnet.

Skysista - can you tell us how MacTiernan was meant to give Skippers the coastal routes when they didn't even tender for them?? Maybe that had something to do with her decision??

Also.........
bet they've been waiting to limit the Skippers flights into GET considering they've managed to get a big share of that market
Don't know what you're on about Skysista - the number of seats into and out of Geraldton by each carrier is regulated by the state government. The new tender allows for both Skippers and Skywest to increase the number of seats into Geraldton. (SKippers still has 'limited access' to Geraldton under the terms on the new tender.)

[SkySista]

I probably didn't make myself understood - sorry. My comment about MacTiernan was more a general one about the whole thing - Maroomba lose out Mt Magnet, Skippers are pretty much made to take Leinster and Leonora (YLEO being a stop XR likely (in my opinion) probably wanted to get rid of anyway to free up a plane), and then of course Skywest having sole access to Shark Bay and Kalbarri. Geez I really hope they proved they're committed to serving those two ports and aren't just in it for Geraldton as I have the feeling, coz those communities sure will be pissed off if XR drops the flights after a few months or a year... I mean look what happened after Ansett went under... not many were interested in remote communities at all.

And I bet Skippers aren't happy about having Mt Magnet considering Maroomba go there... correct me if I'm wrong but I thought Maroomba also do some work for them (aircraft-wise) so if they go under it can't be good.... perhaps Skippers will be able to run Mt Magnet using Maroomba a/c and thus keep them in the loop...? ANyway those are the guys I feel sorry for!

Thanks for explaining the Geraldton thing - I misunderstood the comments in the press release - 'limited access' implies one airline having almost sole rights with the other only permitted some flights. Also I thought one winning a bid meant the other couldn't have it either - are you saying both could still be flying into Geraldton if both tendered? Or am I still misunderstanding you? (Sorry big night out last night :}) - just for clarity's sake can you please tell me (if you know) how many seats for each were allowed peviously, and how many now??

I'd also be interested to know other opinions on the tender - was it better before this new 'route structure'?? Or in your view will it be better now?? (Just trying to understand the logic behind this move by the Govt...)

[Whoop Whoop - Oops]

The tender process came around due to the federal governments 'competition policy' meaning that the routes could no longer me 'allocated' but had to be put up to tender.

In the lead up to this the WA Government commissioned a "Review of Intrastate Regulated Air Services in Western Australia" which can be seen here (http://www.dpi.wa.gov.au/aviation/docs/regulatedservreview.pdf)

Some of the findings of this were:
! For most of the routes examined, the level of passenger traffic remains too low for sustainable competition.
! An open market without economic regulation would encourage new entry on a number of routes. However this competition would not be sustained and a shake-out would occur leaving the strongest (most efficient or cashed up) participant.
! Smaller communities would find that airlines provide services with the “spare aircraft time” after meeting needs of passengers on competitive routes. Ultimately service levels may fall on these routes.

The review also suggested breaking the regulated turbp-prop routes into two networks. Coastal & Northern Goldfields.

The 'networks' consist of profit making ports and loss making ports. Once given access to one of the networks the operator must operate to all ports on the network and not 'cherry pick' by dumping the loss making reports. This is one of the reasons behind regulating the market. Deregulating the market may mean that some ports may not get a service or may get a degraded service.

Skippers are probably happy about picking up Mount Magnet. Come December (when the tender decision is implemented) Moroomba will no longer have rights to fly RPT to Mount Magnet and Skippers will be the only RPT operator on this route. It's unlikley they will use Moroomba on a permanent basis. Under the terms of the tender you could 'sub contract' routes to other operaters but you had to specify this in your tender documents.

Skippers currently have 'limited access' to Geraldton and this will continue as they have won the Northern Gold Fields Network.

I'm not sure what the current capacity limits are but:

The winner of the Coastal Network gets a maximum of 92,352 seats per year for flights to/from Geraldton.

The winner of the Northern Goldfields Network gets a maximum of 32,240 seats per year for flights to/from Geraldton.

The current ratio of 'full access' versus 'limited access' is about the same as the above figures.

Overall - Morooba get shafted having built up Mount Magnet over the previous years.

Skippers get Leonora Leinster (in additional to Laverton which they already have) This will no doubt become the old Laverton - Leonora - Leinster route that Skywest used to operate. They will no longer have to fly Perth - Laverton - Perth with bugger all people however the pax will be in for a longer trip.

Skywest pick up Kalbarri and Shark Bay which probably have a better chance of picking up with Skywest than Skippers due to Skywests increased tourism and package holiday focus.

[SkySista]

thanks for the explanation, it makes things a lot clearer. actually i know someone studying tourism marketing; this may be an interesting case study for her... watch and see what happens, really.

The 'cherry picking' analogy explains it quite well really. I can see why they'd want to prevent the loss of services to certain places who rely on it...

wrt Mt Magnet, yes I guess anyone would be happy getting a new route that makes money (or so I hear) but on the flip side as I said, if it adversely affects Maroomba, Skippers can't be happy about that surely...? Guess we'll have to wait and see...

As you say with the Lav-YLEO - Leinster trip, will be interesting to see how that gets done aircraft-wise - going from Skywest with an F-50 to Skippers - probably a Brasila or Metro - bit of a difference there!! :}

[The Voice]

Forgive me, but Skippers in to Mt Magnet won't be a new phenomenon. They used to go in and out of there a few years back.