WA Govt seeks to protect Skywest

[topend3]

13/3/03

The Western Australian Government will regulate air services to protect vulnerable intrastate air routes and work with the resource industry to convert mining charter flights into public passenger services.

Planning and Infrastructure Minister Alannah MacTiernan today announced details of the State Government's strategy for ensuring the stability and continuity of regional air services.

"The central principle is that the Government is prepared to use its regulatory powers, but only to the extent necessary to guarantee a sustainable network," Ms MacTiernan said.

An independent report commissioned by the State Government made it clear that routes of fewer than 50,000 passengers could not cope with competition.

Ms MacTiernan said the State Government would:

offer Skywest Airlines a two-year exclusive licence to operate services from Perth to Carnarvon, Exmouth, Albany and Esperance, subject to providing ongoing services for Leinster and Leonora and acceptable service standards and fare structures;
open the Perth-Geraldton route to staged competition, as it has reached the threshold point of 55,000-60,000 passengers; and
call tenders for an airline to provide a service between Perth, Kalbarri and Shark Bay through Geraldton.
The Skywest route protection will be subject to the company making suitable arrangements for leasing aircraft.

Ms MacTiernan said jet route services between Perth and Kalgoorlie, Port Hedland, Karratha and Broome would not be subject to any competition restraint.

"We will monitor the impact and effectiveness of regulation and - at the completion of the two-year period - will either deregulate some or all of these routes, or proceed with an open and competitive tender to operate exclusive services," the Minister said.

Resource Industry Charters.

Ms MacTiernan said the Government also wanted to harness the vast fly-in/fly-out network of mining air charter services for the benefit of regional communities.

"We will work with the resources sector to improve services into regional towns to encourage the conversion of fly-in/fly-out charter services across to regular passenger transport (RPT) services," she said.

"We are confident the resources sector will bring an open mind to discussions on this issue and work to deliver a better outcome for the regional communities where the Government can use its capacity to regulate charters to encourage a positive result."

Ms MacTiernan said the Government was confident that its policy was compatible with National Competition Principles.

"We believe that this policy strikes a proper balance between sustainability and competition and will ensure a good spread of air services throughout Western Australia," she said.

Minister's office: 9213 6400

[kickstart]

How can the govt tell the mining companies who and where they place their work ?

Firstly they want to protect an operator and then ask the others for help! come on this will not work, onlt govt could come up with this one.

Political stunt eh!

Just keeping the masses happy with a short term solution.

[the wizard of auz]

How the hell is this going to be a balance between sustainable and competitive, if they take the only routes that are worth a knob of goats poop, and close em to competition? what do they leave for the next bloke to have a shot at? Hmmmm, lets see, well theres the Wiluna to Kalgoolie via Meeka run or the Cue to Newman run or we could have a bash at he Robourne to Tom price run........ I think not. Wake up you wallys!!!!!!. If they cant do it within budget and make a profit, they shouldnt be there. simple really. Aint it part of the AOC conditions that they have to be a sustainable company to retain the AOC?. competition is what works out the bugs and blokes that can't do it for the right sum of dollars. If you cant make a profit, you aint charging enough......bloody simple. If you can't run it coz no one wants to pay that much, get out and let billy blowfly have a shot. If he cant do it well bloody well let em drive. I hate the fact that I pay the wages of these idiots to keep me out of the competition. :mad: :mad:
And while I'm on me soap box, FIFO is killing the country towns and it shouldnt be allowed, but it is..... Double standard????. They take the resources from the district but hire from the city, use our infastructure but wont hire locals for labour or hire the local contractors. I have seen them hire cranes, trucks, earthmoving machinery for more $$$$ from the city than what they could get local, all because of the mentality instilled in them from the managment.

AAAH BOLLOCKS. I feel better now.

[YBRM]

Wake up folks, the state gov. is out to protect the interest of one thing and one thing only, and that's its own butt. One thing that keeps them keen is the fact they've had to lay down public money just to keep Skywest in the air.........but that commitment will not hold. Its really up to the airline to become a viable business in its own right............you can only throw so much coal into the engine before it all runs out.

Good luck ;)

[Stick Pusher]

What people fail to realise is that to support and provide a service one must cover a broard area. there are many routes out there that lose or would lose money, but they are complimented and supplemented by the better ones. You can't just come in and run on the good ones chery pick and forget the rest. Either you run the network with the best aricraft for the job with fair prices, or you split it with competition and end up with say two operators with smaller less appealing aircraft, and sacrifice the service and standard and cut out the poorer routes. The government have realised this. It is not a matter of competition, but a matter of providing a network for the state, a quality service that is safe and professional and reliable. It is a unique area WA with long routes, small populations centres. You either have one good operator or two poorer ones to the detrement of the travelling pax... simple, logical maths....

[topend3]

wiz,

there is nothing to presently stop you from flying tom price - roebourne or wiluna - meeka - kalgoorlie.

these routes don't attract an RPT serivce as nobody could possibly make a profit by flying them, there simply wouldn't be the demand.

It is in the WA Government's best interests to ensure the survival of Skywest as opening up to another operator would almost certainly result in a lower level of service for the consumers of many communities who rely on an airline as their vital link to the outside world.

Skywest was travelling quite nicely until the collapse of Ansett, there is every chance that with the new agreement with QF, and some sound management and financial nous that Skywest will find it's feet and return to profitability.

If it doesn't work out then it will be to the detriment of all concerned, the WA govt included as it has money in this and naturally wants to see them succeed

[the wizard of auz]

Topend, that was my point mate, the only ones that are going to be unprotected routes are the ones no one wants.... read not profitable.... so they get to keep the $$$ makers and dont service the rest. leaving nothing for anyone else to try. they have just dropped Laverton.. not enough$$$... every one going to Murrin or Granny smith and getting cheap fares from the mines ( I thought that was illegal) and now they keep the Leonora Leinster, Kalgoorlie run. If that gets denied to every one else, how are Laverton ever going to get a service again?. no one is going to do a RPT from Perth to Laverton as it aint profitable, but could be subsidised by the more profitable Perth to Kalgoorlie to Leonora to Leinster return perth route. But they are to be protected = no service to Laverton. Another case of FIFO wrecking it for the locals as well as the government. some one wanna remind me why I pay tax and them fatcats get $100,000 a year to piss me around?.

[jetpipe]

the wizard of auz
Why are all the routes you state unprotected. The reason is that nobody wants to fly on them. So if you want to try them, then go ahead. Maybe Nullagine to Port hedland or Kal to Menzies might once more be an RPT route.
I think you'll find that Skywest is not your enemy here but the FIFO operation. You have stated thet the cranes come from Perth, well what about the people for the mines?
I bet more people work on the mines around laverton or leonora than live in the towns.
The last cencus said that 1124 people lived in the Laverton district,how many work at the mines near there??????
:p

[Apollo 4]

What mining company in their right mind would want to engage in upgrading their charter flights to accommodate RPT pax and ops.

The whole idea of charter by the mining companies is flexibility, efficiency and cost effective transport. Mining companies are prone to addition, amended schedules & routes as well as cancellation at the drop of a hat. How does the minister propose to balance the regidity of RPT and the flexibillity of charter.

Like skywest there isn't anyone at the top that knows 1 thing about the aviation industry. Blind leading the Blind an absolute joke.

:( :rolleyes:

[the wizard of auz]

Jetpipe, I think your missing my point. If the bleeding heart government protect the routes that are worth having,it would be to the detriment of the places that aint on the $$$$ making routes, a there is no leeway to include these on a RPT run that isnt on the protected routes. why would anyone in their right minds start a nullagine to hedland run, if you cant include Karratha or exmouth. If you pick the eyes out of the good runs and close them to competition, no one is going to pick up the ****ty runs along the way. if you had a good $$$ making run, it doesn't cost naff all extra to stop in at them places that are on the way...... thus providing a service, that is in effect being subsidised by the $$$ making runs.
As for the people that work on the mines or are supported by them....... less than 3%.
they aint upgrading to RPT they are selling seats on the charter flights (which I still believe to be illegal...... just happens that some one who knows someone who works for a contractor who works for the mine is bloody hard to prove.)

[flyboy6876]

Wiz, what you say makes a lot of sense. If Skywest are given protection on a specific route, part of the protection should include the requirement to fly the not so profitable segments.

Does not seem right to protect someone like Skywest, when there is little support in other industries by the Gov. They should either make it on their own two feet or get out of it.

[Aussierotor]

Looking back Ansett had the monopoly in the Nth west .May be wrong but Qantas only did Karratha/pt Hedland and Broome.
Then Hammersley Iron got a contract with Qantas which was great as we had Paraburdoo to Perth flights direct instead of flying all over the Nth West.Most flights i went on hardly had any passengers.
BHP--Newman and Hedland still dealt through Ansett ,and Qantas wasnt getting much bussiness in Pt Hedland ,so pulled out.
Then Ansett went belly up so Qantas had to service all the places.
As far as the Nth west is concerned,i think one airline is enough,maybe with the exception of karratha.
Thers still plenty of opportunities down south--Exmouth ,Carnarvon,Geraldton,Perth run a good possibility for a large plane.
The rest of the state is up for grabs and if Skywest mapped some good route plans i cant see why they cant make a $.
As far as fly in/fly out goes,well,thats up to who can get a contract

[Torres]

OK. I'll swim against the tide.

Over the last 30 to 40 years, two thirds of Australian rural communities have lost their essential air services. The reasons have been many, including:

Diminished rural population (due to "urban drift");
An upgrade in aircraft size due to economics and opportunities created by regulatory change (ANR 203 to CAR 206);
Improved arterial and trunk road structures.

In the 60's and 70's larger rural communities received milk run DC3 and F-27 services and smaller communities received C402, PA31 and EMB110 services. Indeed, a number of these services were incidental to the protection provided by the Two Airline Policy - TAA and Ansett providing the majority of DC3 and F-27 rural services, cross subsidised from the relatively high trunk route air fares.

In the 80's and 90's, rural air services upgraded to significantly higher capital cost equipment and the C402 to EMB110 operators were simply priced out of business - or in a number of cases, regulated out of business. The Two Airline Policy was revoked, creating competition on trunk routes. Airlines could no longer afford to cross subsidise loss making rural air services.

In recognition of the economic significance of Australia's rural and agricultural industries, State and Federal Governments provided significant rural air route subsidies - e.g. the RASS (Rural Air Services Scheme).

The rural economy took a dive, Governments started belt tightening and two thirds of Australia's rural communities lost their air services.

There is both subsidies and protection on many rural air routes, in most states. For example, in Queensland certain air routes are "regulated", whilst others are subsidised.

Obviously, the West Australia Government is endeavouring to retain viable air services to a number of rural communities, using "regulated routes" as the lowest cost option.

And that Gents, has to be good news for many rural communities.

[flyboy6876]

Skywest are running a fleet composed of F50's and F100's. Given that they are losing money, is there not a more economical aircraft that could be brought into their fleet for servicing the rural communities? If they need to have protected routes, does this mean that someone using a more economical fleet could succeed in opposition to them on these routes?

I may be off bat here, but these factors must surely come into the fact that they are losing money?

[Stick Pusher]

Flyboy,

The F-100 is running on charter to Argle and is not used on the RPT network.

Skywest does fly to alot of ports to service the rural comunity that have poor profitability, but other routes make up for the losses. It's what airlines do. Charter is whole different kettlle of fish. The protection is to keep coverage, and not for people to come in and cherry pick the good runs. let them see how they go if they were told you had to cover the whole network not just the good ones, i'd bet they would back off. But when Laverton people are getting to Perth via other air means, then is their own fault if they lose the service if they choose not to fly it. Karratha was only after Ansett, and is too far to fly in a non-jet a/c. Maybe a differnt story might happen in the future with the 100, but who knows in this game. And as I've said before, WA is a unique market, long sectors small populations, rural people struggling cash wise. XR provide a quality service with service and ammenaties that pax want and keeps the fare fair all things concidered there is no profiteering here. can't just run when you want and depending on the load etc. Regular Shedule Service, not Randon, Selective Service!

There is more to runnig a quality airline compared to a two bit airline that meets the eye. FAR 25 not 23 a/c, High capacity RPT Licence, Agents, reservations, ground support, training, Admin, Engineering, Tooling, Computer systems, Oncarrage (arrangement with QF starts 15th April), etc the list goes on and on. Skywest has had to purchase and re setup alot of things post Ansett, who provided all these things. It costs big bucks, and Skywest is still in recovery and restructure mode, which I would have thought would take to the end of this year. (Which is what I said when Ansett went down)
Give them some more time and they will be better than ever

[skywest_xr]

Stick Pusher,

Well said, well said indeed. Im sure Scott will send us on the right track and sooner rather than later we will be announcing profits rather than losses.

I love the anomity of PPrune, you talk to the people you work with, but yet, you have no idea who they are.

[topend3]

ahh, skywest_xr, making up for your efforts on the SAMB, good to see!! ha ha

i think skywest will turn things around too, they have a good setup i believe, and lets face it, im not sure anyone could make a profit flying to laverton anyway, as for wiz's idea of linking it up with leonora, leinster and kal, not sure that would work.

unfortunately in todays climate it all comes down to demand, and there simply isn't the demand for many rural communities to receive a regular air service, deregulate completely and you run the risk of some centres having a good service provided by skywest replaced by a poorer quality service or no service at all.

the aim by the govt here is to find a balance somewhere in between, so they have opened the gel route up to limited competition while protecting the incumbent carrier on the other marginal routes (esperance, carnarvon, albany etc.)

[the wizard of auz]

I would have thought that twice a week in a braz or metro would have been better than no service at all, and just coz its smaller dont make it a mickey mouse or second grade operation........ Does it?