Compass, and the rest

[Dogimed]

Can someone confirm a rumour I heard long since past that Ansett, Qantas, Australian Airlines all spent bucket loads of money to make sure Compass did not succeed?

Dog

[airsupport]

YES, confirmed......... :mad:

[Keg]

Don't know about Qantas being a part of the equation though. At the time of Compass Mk !, QF were a purely international airline!!

Bit before my time though. Still had training wheels on my Trinidad at that stage!

[Dogimed]

Did the pilots of non Compass try to stop this or do anything to pressure the airlines responsible??

Dog

[Whiskery]

Ansett, Qantas, Australian Airlines all spent bucket loads of money to make sure Compass did not succeed?


In the aviation business, believe it or not, this is called competition!


Did the pilots of non Compass try to stop this or do anything to pressure the airlines responsible??


In the aviation business, that statement would be regarded as naive!

Keep the faith:]

[elektra]

Oh get real. Competition had nothing to do with it. The airlines who had grown fat over years and years ofthe two-airline policy spent the money, tied up leases, pulled dirty tricks etc so they wouldn't have to compete. And remember, neither Compass went under because of failure to attract customers.

[topend3]

yes, and terminal access was a big problem back then too with no common user terminals like we have now, and australian & ansett quite understandably did everything they could to make sure compass couldn't get the terminal access they so desperately needed. compass 1's basic problem though was lack of startup capital- they had $50 m to play with - not enough and this combined with a bad choice of aircraft - A310-300s configured with around 270 seats i think were the main reasons they didn't survive, compass 2 did much better with the md-80s, they could fill them up.

[Dogimed]

Whiskery

In the aviation business, believe it or not, this is called competition!


Ooooh, I thought competition was putting on the BEST service and image to try to win customers.


Wonder how much money was spent by Ansett to do this... (if only the money was around now)


In the aviation business, that statement would be regarded as naive!

Sad......... but probably true.

Dog

[Torres]

Dog, they cut the fares so far that had Compass Mk 1 not gone out of business when it did, Ansett would probably have gone to the wall within days.

Bryan Grey said to me on one occasion at Brisbane that the Compass aircraft were carrying near 100% load factor - but he needed a 109% load factor to break even!

And I'm not getting into any debate about the Silver Bogey repaying favours.

[MoFo]

Silver Bodgie.

Bodgie.

Australian slang for 1950's rocker, dressed in black with huge brushed back hairstyle with ducksarse at the back. Wearing shoes with thick crepe rubber soles and chewing gum 24 hours a day.

Usage probably dropped out during late sixties.

Bobbie Boy still looks like an aging bodgie.

[Eastwest Loco]

I will go with Torres' bogey.

Bogey being any airborne enemy.

There was a fair bit of asset stripping (ala Ansett post Sir Reg) that post Brian Greys bal out ensured the fall of the Airline.

Brian was a master of bailing at the right time, God bless him.

Bogeys 2 o'"clock low.

Engage.

Best all

EWL

___________________________________________________


Oooh - ADSL is Sooooooooo kewl!!

[international hog driver]

Operation Know as "Sewen Up"

Big players used BDW Aviation Services in Sydney as Proxy.

Pls explain Australian B727's being prepared for service with dates known in advance to cover the demise in December........

make up your own mind.

Been there, saw it, not my worry anymore.

IHD

[Eastwest Loco]

A little like the AN demise IHD.

A client of mine is an UN operaive, currently based out of NBO - then in up country Sri Lanka - was advised 10 days before the collapse of AN along wih all his Aussie mates to rebook off AN onto QF or alternative services after midnight 12 Sepember, as they would no longer exist. It was obviously known worldwide in the right circles. Obviously we were not the right circles and within he right circles how much insider trading went on?

EWL

[airsupport]

Just to clarify a few things.

It is true that Qantas were fairly neutral in all this, Australian Airlines were not too bad (except for holding celebration parties over the demise of Compass several days before anyone at Compass had the news :( ), Ansett via Abeles were the main ones that spent heaps of money and used all sorts of dirty tricks, assisted by Hawke. :mad:

Compass operated a fleet of A300-600Rs, a single A310 was used reluctantly after one of the new A300-600s was damaged and delayed at Airbus.

The liquidators confirmed that it was indeed Ansett that should have ceased operations, but the Government (Hawke and Abeles) decided to throw all the Compass employees out of work, instead of the larger number of employees at Ansett.

Sadly some of these Compass employees have never been able to get back into the Industry, and market forces have finally done to Ansett what SHOULD have been done back in 1991. :mad:

Just to really rub salt into the wounds, now all these protests about Ansett employees receiving all their "entitlements", yet they had another 10 years work that they probably shouldn't have had, and the Compass employees sacrificed to save them still have NOT received any such "entitlements"....... :confused:

[Whiskery]

Bryan Grey realised he was in for a fight and should have been prepared for a dirty tricks campaign - ala Branson at Virgin Pacific v British Airways. He witnessed the events of '89 and if he didn't realise, after that debacle, how ruthless and low Abeles and Hawke were, he shouldn't have been in the business.

Grey used high cost equipment and an unrealistic fare structure. As
Torres saidBryan Grey said to me on one occasion at Brisbane that the Compass aircraft were carrying near 100% load factor - but he needed a 109% load factor to break even!
You don't need an economics degree to see if your break even load factor exceeds the capacity load factor, you are going to go out of business.

Finally, Grey didn't have the war chest to sustain a fare war with the majors and because his operation costs were sky high, was never going to generate enough cash to stay afloat.

Simply bad management and no marketing plan.

[airsupport]

While I realise that you can just say anything you like here, true or not, can you try to be factual please. :rolleyes:

YES, right at the end that was the situation with the loads, and they were offering 2 for 1, and even 3 for 1, flights at the very end.

Compass was without doubt probably the BEST managed Airline in Australia, and also not much doubt Ansett was the worst.

The A300s were probably not the best choice but Bryan insisted on them, wouldn't be convinced otherwise by anybody. (The MD80s of Southern Cross were a better choice).

Compass had just secured massive freight contracts to fill the holds of these A300-600s, and were in the middle of installing business class seating.

Were it not for the dirty tricks of Abeles and Hawke, things that would be even illegal under current legislation, Compass would have prospered, albeit at the expense of Ansett.

Nothing whatever to do with bad management or lack of marketing..... :mad:

[dogcharlietree]

QUOTE: Dog, they cut the fares so far that had Compass Mk 1 not gone out of business when it did, Ansett would probably have gone to the wall within days.

Graeme McMahon, then CEO of Ansett, admitted on 4 Corners (from memory) that Ansett had spent $250million on putting Compass out of business.
That's what he admitted to. In reality, I would say quite a lot more.

[huntsman]

with Ansett only days away from going under at that stage, perhaps 2 or even 3-for-1 fares were available to the punters just to get over the line. But did Compass know how close Ansett was?
A bigger war chest and things could be very different today.

As for the dirty tricks, any specifics?

[airsupport]

In answer to your questions, I doubt if anyone in Compass knew just how bad things were at Ansett until it was too late. :(

Once Abeles had Hawke shut down Compass, Airbus even offered to continue the leases on the A300s for $1 a month, because they were keen to maintain their presence in Australia and support Compass, so then Hawke had the liens put on the Aircraft. :mad:

Have to be a little careful with the dirty tricks, however just a few that I KNOW are 100% true.

Abeles tried to blackmail the fuel companies into not providing fuel to Compass, luckily they said that they would provide fuel to anyone that needed it and could pay for it.

Abeles also tried to blackmail the Aircraft manufacturers into not providing Aircraft to Compass, because of his (in his mind) power over them as head of Ansett and AWAS, with Compass 2 he actually managed to stop them getting the new MD80s from McDonnell Douglas they had ordered, however McDonnell Douglas arranged for used MD80s from SAS as they had no time for Abeles.

Many many employees at Ansett spent their entire working days, instead of doing their jobs, ringing up and jamming the Compass switchboard so that customers could not get through to it.

[Dogimed]

So where did the pilots come from, and where did they go?

Dog

[CitizenXX]

Elektra, EWL and others,

Anybody can pick up 15% market share if they give tickets away at little cost.

Compass was giving 95% discount to Air Traffic Controllers, and including these in ther stats.

Now I know there's a lot more fat in this business than any managment will admit to, but 95% discount??

Airsupport, be serious. It was Airservices, or whatever they were called then, who shut them down and took liens on aircraft because of $12M in unpaid fees.

[airsupport]

Dogimed,

Most (if not all) of the Pilots were what is called here on PPRuNe 89ers. ;)

They came back to Australia for Compass, and I think you will find most left again afterwards.

CitizenXX,

I did not say Hawke personally applied the liens to the Aircraft, that was actually done by Abeles own security firm TNT Security. :rolleyes:

Abeles via Hawke was determined to shut it down. When it looked like it may survive over Christmas, especially with the generous help I mentioned before of Airbus, Hawke ordered Airservices Australia to get the liens. :mad:

PLEASE stop trying to rewrite history..... :eek:

[Kaptin M]

And by sheer coincidence it just happened to be TNT Security goons that "impounded" the aircraft. :rolleyes:

Be serious CX!

[Al E. Vator]

Righto here goes, with the FACTS.

Citizen X "Airsupport, be serious. It was Airservices, or whatever they were called then, who shut them down and took liens on aircraft because of $12M in unpaid fees". My friend you only know 1/2 the story.

Bloody corruption at the highest level. These ALLEGED unpaid fees were in fact the subject of subsequent defence by the liquidators Ferrier Hodgson and the case was only settled a couple of years back. So FACT, these alleged unpaid fees were a VERY questionable item. The fact that the government shut down an entire airline and placed thousands in unemployment using such questionable reasoning is a disgrace. The fact that this was done by a politician to help a 'mate' who owned another airline should cause that individual involved to hang his miserable head in shame.

Moreover, how stupid is is to shut the airline down 5 days before Christmas? Of course this was intentional in order to cause maximum inconvenience to the travelling public and forever taint the name of any new airline. However if there is any time an airline will achieve profitability it is Christmas. Given the alleged unpaid fees had been an issue since the June of that year why pull an AOC on December 20th? Letting the airline run till Jan 5th and then taking action would have been far more financially sensible but of course that was never the aim. Great country we live in.

Some more facts.............the company that installed the telephone res system for Compass was astounded at the blockages over the first 2 weeks it was up and running. He suspected dirty tricks but Bryan Grey wanted to play things calmly and not slag off at the enemy too much. The CEO of the telephone company however (and he told me this personally) was shocked such tactics would be used and would not let it rest and eventually traced what he then found to be a jamming system to a (now vacant) Franklin St. office.

And what of the Compass baggage conveyor belts mysteriously glued-down one night, or the unfortunate technical breakdown of the large Ansett pushback-tug right behind a Compass aircraft preventing pushback?

Was this just the action of a few rogue individuals? How then do you explain the retired Australian Airlines 727's being recertified weeks before Compass was ambushed? How also do you explain the fact that Australian customs also had pre-planned procedures for the removal of the aircraft and fast-tracked clearances for the crews to remove the aircraft from Australia. This was all part of the now infamous Operation Sewn-Up, which of course no Australian journalist dares persue because certain individuals involved control their salaries and they are thus too scared. What does that fact alone suggest about the state of Australian politicians and the media in this country?

This was in no way Competition, there were criminal acts performed by individuals who have gone unpunished. Of course many of the Ansett staff who conducted these acts are now unemployed. I would never wish that on anybody. Some would say it is Karma, I would say it was simply inevitable. Ansett was an inefficient airline run by buffoons. It survived far longer than it would given normal levels of competition and without being propped-up by politicians with alternative agendas.

Some names worthy of interest in this matter.

Prime Minister Bob Hawke: A long time friend of the owner of Ansett. As a Labour politician he should firmly have been in favour of an airline which bought cheap travel to the masses. Instead he was instrumental in shutting that airline down. Why? Purely to help a mate? Was greater personal interest a factor? Was it his hatred for the professional pilots who had caused him angst?

Dick Smith: The then head of the CASA (the body which pulled the Compass AOC). Was he just a lap-dog of Hawke?

Blake Dawson Waldron, the architects of Operation Sewn Up. Within this organisation was a gentelman now often refered to by aviation journalists for his 'unbiased' opinions of issues within the industry. He is paid by the airlines for his 'services' so I cannot understand how he can then be used by these journalists as an observer. He is in reality a walking advertisement for the airlines who pay him. I am happy to be corrected on this one but why is this not clear to people such as Geoffrey Thomas who unquestioningly revere this individual?

I really hate conspiracy theories as they usually indicate somebody is paranoid or has far too much spare time. However I saw all this first hand and it still shocks me that this sort of thing can occur in this country. Romania or Uganda yes but Oz - unbelievable!

An elected politician purposely killing an airline because it was too successful and he was mates with the owner of the other airline - is this acceptable? Protecting Ansett, an airline charging exhorbitant fees (to prop up its inefficiency) for use by a privileged few at the expense of an airline which would have helped open up the country and povided cheaper airfares for the individuals that politician allegedly represented - unbelievable.

Hopefully this cannot ever occur again but there are a few individuals who should still be made to squirm publicly for this and I would like to see it start with the Prime Minister (and please don't use the excuse he was protecting the jobs of the Ansett employees).

[CitizenXX]

Mr Al,

Few would doubt that AN was a poorly run airline, and had been for many years.

Also, few would doubt that Anderson played a pivotal role in bringing it down. I'm not talking about not granting subsidies etc., but blocking SQ from buying it so that the tragic Air NZ could take control, thereby ensuring it would collapse. It was only a matter of time.

It was very sad for many people, just as it is sad for many people when any large employer goes out of business, but it has created opportunities for many to do things they would not have otherwise contemplated, just as the 89 situation did.

It's not the end of the world, just the beginning of new opportunities, and those who see it that way will prosper.

[Torres]

It's easy to get passionate and theorise about "conspiracies" that brought about the demise of Compass Mk 1, when indeed circumstances at the time may have been the major culprit.

It is not appropriate to comment on unsubstantiated suspicions other than to suggest the facts were:

1 $60 million capitalisation of Compass Mk 1 was way, way to low, considering the combined capitalisation of TN and AN was probably in the billions of dollars. Liability in Compass off balance sheet leases alone must have been horrenduous.

2 Compass Mk 1 seriously underestimated the commercial reaction of the incumbent duopoly (TN and AN)

3 What eventually grounded Compass Mk 1 (non payment of either en route or FAC terminal charges – I don’t recall now) was a valid liability which Compass could not meet.

As subsequently evolved, Compass Mk 1 was insolvent to the tune of $140 million I seem to recall and had it not collapsed when it did, may well have collapsed shortly after.

That a political decision may have been made which sections of the community deem “unsavoury” had no real bearing upon the fact that a due legal process occurred and an insolvent company ceased trading.

The principals of Compass Mk 1 should have known better. They were not new kids on the block – most of them had a life time in aviation management, including previous ownership of East West Airlines and many years with various carriers, including Air Niugini and Ansett.

There is also no doubt their achievements in getting Compass Mk 1 up and running was nothing short of brilliant. Unfortunately, like many before them and no doubt many more to come in aviation, they tried to achieve what they did with the fatal flaw of being grossly undercapitalised.

[Al E. Vator]

Yes Torres you raised some really good points there.

However your points:

2 Compass Mk 1 seriously underestimated the commercial reaction of the incumbent duopoly (TN and AN) The points I detailed above were not commercial but criminal. From the gluing of conveyor belts to the jamming of res systems. Whilst not criminal, an elected representative abusing his powers at the expense of the travelling public is at the very least unethical and certainly not 'commercial'.

3 What eventually grounded Compass Mk 1 (non payment of either en route or FAC terminal charges – I don’t recall now) was a valid liability which Compass could not meet The alleged non-payment was certainly NOT valid and as I mentioned the subject of numerous court cases and appeals by the liquidators. Not sure how it ended up (in 1999 I believe) but given this protracted legal action and its questionable basis in law, this was clearly NOT sufficient grounds to terminate an airline - just a convenient excuse for an alternative agenda.

1 $60 million capitalisation of Compass Mk 1 was way, way to low, considering the combined capitalisation of TN and AN was probably in the billions of dollars. Liability in Compass off balance sheet leases alone must have been horrenduous. Yes I believe you're correct about the undercapitalisation. Nonetheless, Virgin Blue did it successfully with less. However the capitalisation of AN was not what you suggest. As others have mentioned AN was within a week of collapsing and that alone is disgracefully why the pin was pulled on Compass. The net result was for the next 10 years, travellers were forced to pay outrageous airfares to prop-up an inefficient system supporting two dinosaurs.

Of course this is all history now, we have all got on with our lives and in many cases those lives are far better than had the status-quo remained. However we should never have been foced into that situation in the first place. It was innocent employees and hundreds of thousands of members of the travelling public who suffered and for what. The self-interest of a few egotistical individuals masquerading behind the feeble excuse that it was better for AN employees to keep their jobs and thus use Compass as a sacrifical lamb.

[Torres]

Al. Surprising as it may seem, I agree with you totally. I am simply looking at the situation more objectively.

What Bryan and his team achieved was nothing short of exceptional and rightfully deserves an honoured place in Australian aviation history.

Regarding Virgin's success under what may appear similar circumstances (of capitalisation etc), I also used the phrase "...circumstances at the time..." in relation to Compass Mk 1. The scenario for Virgin bears no relationship to the scenario that existed when Compass was formed. Virgin possibly used a more appropriate aircraft type, acquired used from a sympathic related airline, versus larger, new aircraft.

Criminal acts may have occurred, which should have rightfully been investigated, however Compass was taken out by due legal process, sanctioned by legislation. It's hard to beat that! That whispers may have occurred behind closed doors, does not change the legality of what occurred.

I am not denigrating what the Compass team achieved. Indeed, their success against almost insurmountable odds was nothing short of brilliant. Mistakes were made, upon which others capitalised.

No one knows better than I how bloody hard it is to form a new Australian airline operation, and no one is more aware than I of the Aussie tall poppy syndrome to catch the unwary.

[airsupport]

The MAIN difference between the environment that Compass 1 had to operate in, and the environment that Virgin Blue now operates in, is that those two mon**els Abeles and Hawke are now gone......... :mad:

Even worse in some ways with Southern Cross (Compass 2), the ONLY reason they stopped was that someone stole $10M. The Queensland Government refused to bail them out with $10M and save all those Queensland jobs, yet wasted more than that at the time on the Indy Races, and now pour heaps more money into Virgin Blue. :(

[Torres]

[airsupport[/b] Did someone steal $10 megabucks? I seem to recall they traded in their own shares to around that value, which is a cardinal sin under the Companies Act, but I don't recall anyone actually walking away with the brass.:confused:

[elektra]

The then Deputy Chairman did a lot morethan just trade in his own shares. He (I think) has only just been released from jail for a number of Very Serious offences. An accomplice of sorts from Westpac was convicted too I think. And the figure was more than $10 million too. A real pity. Compass 2 were just getting in the black with aircraft 6 and 7 painted ready for delivery. But there's no doubt the two majors had battle plans A,B, C and D ready....fact is that then then Labor government did NOTHING AT ALL to help competition ond stopped the sale of Compass 2 to ANZ who at that time had the money to simply let it run properly.

What might have been....those MD-80s were beautiful aircraft

[airsupport]

You can twist my words all you like, the fact is someone (D.R.) "removed" $10M (or more) from the kitty. :mad:

He was recently released from jail on appeal, to give him time to plan his retirement, poor fellow, they should have thrown the key away. :mad:

Because of him, a lot of people now have no retirement to plan. :(

Yes MD80s 6 and 7, VH-LMM and VH-LMN were almost ready for delivery in Santa Barbara, the Crew were actually over there for VH-LMM, and ALL 7 were completely booked out for all of that coming Easter period. :(