Australia, New Zealand & the Pacific Airline and RPT Rumours & News in Australia, enZed and the Pacific

Virgin puts brakes on VARA

Old 14th Jan 2014, 15:41
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Virgin puts brakes on VARA

extract from todays Fin Review, for interest.....................

Virgin puts brakes on regional arm

Virgin Australia Holdings has placed an ambitious expansion of its regional division on hold as it works to improve safety and compliance procedures at the former Skywest.

The airline has deferred the planned delivery of six ATR-72 turboprops to a period of between March 2014 and August 2015 rather than the previously planned time frame of November 2013 and December 2014 and has voluntarily kept one new ATR-72, delivered in September, on the ground.

"In 2013 we made a decision to slow the airline's growth to allow time to complete the integration of new resources and to embed the new systems and processes," a Virgin spokeswoman said. "This included deferring the introduction of new aircraft and destinations to the regional network. This is only temporary while we complete the integration process and we anticipate this will be complete by the middle of this year."

The airline has been in talks with the Civil Aviation Safety Authority for months about improving procedures at Perth-based Virgin Australia Regional Airlines, formerly known as Skywest. Aviation industry sources said CASA had not taken any administrative action against VARA because Virgin volunteered to fix any perceived issues.

At its results briefing in August, Virgin flagged rapid expansion plans for VARA, including boosting the size of its ATR-72 fleet to 19 by June 2016, up from 11 at the time. The airline now has 13 ATR-72s, but one that was delivered in September has been parked in Townsville and is not operating as a result of the decision to slow growth.

VARA, which holds a separate Air Operator's Certificate (AOC) from its parent, has come under scrutiny from the Australian Transport Safety Bureau for three incidents since the Skywest acquisition was completed last April. One investigation involved a warning of flaps being too low for an A320 upon landing at Newman Airport in July, another related to an ATR-72 runway excursion at Moranbah in July and an third involved an ATR-72 receiving a terrain warning alert upon landing at Moranbah in May. None of the incidents resulted in any injuries to passengers or crew and the Virgin spokeswoman said they were not related to the decision to slow growth.

VARA in September announced new services between Perth and Karratha and Brisbane and Cloncurry but has not unveiled any additional routes since. "We have been working over the past eight months to manage the complexities associated with an integration of this size and have taken a range of proactive measures including building up the management team, appointing a CEO and working with CASA to overhaul the systems and processes supporting the airline," the Virgin spokeswoman said.

VARA, which is a major contractor to Rio Tinto, remains confident in its ability to pitch for new tenders in the resources industry where it competes against other fly-in/fly-out operators like QantasLink and Alliance Aviation. Virgin bought Skywest and a majority stake in budget carrier Tigerair Australia last year to help better compete against Qantas in the corporate, regional and leisure ends of the market.

Virgin reported a $10.2 million pre-tax loss from Skywest last financial year based on revenue of $54.8 million after it took ownership of the airline in April but hopes to return the regional operations to profitability as soon as practicable. VARA is run by Merren McArthur, who is responsible for the airline's AOC and had previously oversaw Virgin's alliances, network and yield functions.

VARA head of flight operations Warren Wilkinson, the chief pilot on the AOC who had served at Skywest for 18 years, resigned in August after Virgin told him the scope of his role would be changing. It has put in place a temporary head of flight operations until Mark Davey, the chief operating officer at Qantas Airways-owned Network Aviation, starts as the new chief pilot on February 15.

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Old 14th Jan 2014, 20:11
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More like CASA puts the brakes on VARA.

Months ago they were told no more planes until mid this year.

They couldn't expect to almost double the size of the fleet, add a new type and set up new bases in such a tight timeframe without running into problems somewhere.
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Old 14th Jan 2014, 22:34
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The problems, from reading the Fin Review and the Plane Talking blog, would appear to be more to do with operating standards in the former SkyWest operation than that of integration of processes, despite the quote in the Fin Review article. For example, Moranbah, appears to be a particular problem.
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Old 15th Jan 2014, 03:37
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A very disappointing integration

Warren had to go because of his poor performance: End of Story !!!
VARA has blead heaps of $ with alot of poor recruiting + the 457 disasters.
V have recognised / reacting to this & are trying to keep CASA at bay.
Yes, the model will work & Q are very rattled / worried by this.
They have many good staff / crews which will do very well for their very impressive V boss.
Recent poaching to Tiger has began, the GEN Y's can't help it...
MD coming on board ???
I can ONLY hope it's for his Q knows: That's it: then kick him out !!!
Very interesting post below why Warren was pushed...

Virgin flight triggered terrain alerts, ATSB investigating | Plane Talking
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Old 15th Jan 2014, 04:47
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Warren had to go because of his poor performance: End of Story !!!
VARA has blead heaps of $ with alot of poor recruiting + the 457 disasters.
V have recognised / reacting to this & are trying to keep CASA at bay.
Ummmm.... Yeah, I don't think so. While SkyWest weren't exactly the smartest operator on the airfield, I don't think you could have 18 years of poor performance as a CP and then suddenly get found out. I don't know the guy, but I don't think 'poor performance' is the entire story. 18 years though? 'bout time for a new face anyway.

And you make it sound as if VA suddenly realised things were getting out of hand and wanted to do things by the book - and tell CASA just for the sake of it. That'd be a first! An AOC self-referring without an NCN! (or whatever they're called this week). Now THAT'S crazy talk!
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Old 15th Jan 2014, 06:32
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Wazza took over from Eric Rose as Chief Pilot about 3 or 4 years ago.
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Old 15th Jan 2014, 06:37
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MD will do to VARA what he did to Eastern.

God help you all!
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Old 15th Jan 2014, 07:33
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What was the issue at Eastern with MD?
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Old 15th Jan 2014, 07:42
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CASA possibly needs to be considered a contributing factor to the Moranbah incident. Why? Well, why did it take them so long to issue RNAV approvals, then make VARA go through the process all over again, taking a further 12 months, just because there was basically a name change to RNP.

If the crew that fateful day had an RNAV option, instead of having to do a filthy GPS arrival then attempt to circle, then it is highly likely the incident would never had happened. Not condoning the crew's actions in anyway though.

Only in recent months have VARA finally been able to conduct RNAVs instead of NDBs etc. into places like Moranbah, Emerald and Port Macquarie? How can CASA consider such instrument approaches to be more safe than RNAV? Where was the effort to fast track approvals? Do you think this will be discussed in the final ATSB report (yeah right!).

Happy to be corrected about any of the above.
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Old 15th Jan 2014, 09:56
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FTS is right, CASA dragging their feet is a major contributing factor. VARA are not the only operator plagued by this reality.....
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Old 16th Jan 2014, 09:43
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Unhappy delayed approvals as a contributing factor?

I think we can all agree that there is an approval process. CASA issued the approvals when they were satisfied that all of the requirements had been met, presumably not only for now but for the foreseeable future. All operations before the approval date were conducted in the full knowledge that the approval had yet to be granted.

OK, so now the allegation is made that the purported delay in issuing the approvals by CASA contributed to the crew's decision-making and TEM when faced with the situation at Moranbah.

Now, I do not have a preferred antagonist in this debate, so I'll just challenge the hypotheses a bit:

+ Is the approval process unreasonably different from similar processes here and elsewhere?

+ Was the applicant fully compliant and prepared when seeking approval?

+ Were there any unforeseen technical difficulties with the aircraft equipage?

+ Were the CASA personnel properly qualified and authorised to conduct the approval process?

+ What is the benchmark approval time for this approval?

+ Were there any internal issues at CASA that unreasonably delayed the process?

+ Was the approval time significantly outside the range of times that constitute the benchmark?

+ Have CASA and the Applicant conducted a post-approval review to identify any relevant lessons for either party?

+ Did the applicant have a CASA-approved HF training system in place?

+ Did the applicant's HF training system include TEM and CRM training related to situations such as eventuated at Moranbah?

+ Did the applicant's SOPs provide relevant guidance on situations such as eventuated at Moranbah?

+ Were the crew's actions at Moranbah consistent with the applicant's SOPs and TEM/CRM training?

Hang on, I can't quite think of how to join the dots to make the delayed approval a causal or contributing factor. Maybe it goes like this:

+ Does the applicant's aircraft have Cat IIIc ILS capability?

+ Was the lack of a Cat IIIc ILS at Moranbah also a contributing factor to the event?

Ooops, nearly forgot:

+ How long should an approval take in order to avoid being a contributing factor to any event subsequent to the filing of the application for approval?

and to be truly Machiavellian:

+ Should there be an approval process at all (because applicants, their flight ops and training personnel and pilots always get everything right)?
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Old 16th Jan 2014, 10:28
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Hear hear
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Old 16th Jan 2014, 10:40
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What was the issue at Eastern with MD?
Without going into too much detail...

IMHO, MD was way out of his depth managing what Eastern had become.

This was compounded by him refusing to acknowledge same, and surrounding himself with his "magic circle" of lieutenants and advisors who were either out of their depth, incompetent, or both (ST and WW spring to mind).

Having said that, he MAY have learned a thing or two at Network, and AFAIK was poached by VARA in order to "sort them out" (whatever that may mean).

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Old 28th Feb 2014, 22:47
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From what I can see the VARA model, thankfully, was changed from it's original intent. You need to look no further than the US to see what was on the minds of the creators of this scheme.
  • Continental airlines need to divest itself of loss making thin routes, either by re-equipping or liquidating the routes altogether.
  • Continental approach several small Regional carriers with a deal. They gift these thin routes to the Regionals, who then embark on an aggressive re-equipment, and expansion plan.
  • As a result 50% of all US Domestic flying is now performed by the Regionals.
  • Continental however retain the profits from these routes, and pay the Regionals a fee for every sector flown. It is sold to the Regional concerned as constant and continuous cash flow. (can anyone say Bank-Run!)
  • The reality is that the Regional airline loses control of passenger revenue.
  • Training, maintenance, the sheer expense of the new aircraft all lead to the Regional falling into financial difficulty.
  • Appeals to the parent results in nothing more than advice. "You will just have to reduce costs". Meanwhile Continental continue to take the cream for what amounts to no real financial risk
  • The regionals cut. Wages, conditions, staff numbers, training...... What did they end up with?
Fortunately this "American" plan didn't get to that stage. SkyWest went broke within 6 months. A $100 million loan from VA only provided a stay of execution for a further 6 months!

VA now had a decision to make. Cut SkyWest loose (that's what the Americans would have done), or spend more money and take them over. In reality there were no other real contenders for this now Hi-Profile little venture considering such a small market, and we now have what we have today.

I sincerely hope that VA and VARA make a go of it. The last thing any of us want are pilots out of work. Considering the ongoing loses of both VARA and TT, these entities are an anchor around the Mainline neck! Hundreds of Millions, if not more than a Billion dollars will need to be spent to bring them up to the capacity were they become profitable.

Are the genius's who thought up these schemes still employed?
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Old 1st Mar 2014, 06:03
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So Krusty,

How is this different from the Eastern/Sunnies/Cobham approach?
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Old 1st Mar 2014, 06:35
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Colgan, Republic Airways et al of that ilk aren't owned by the majors. In Qantas' case if Sunstate/Eastern start loosing money, the parent wears it too (including the risk because they are wholly owned subsidiaries).

What Krusty was doing was drawing parallels with Virigin and Skywest and the then Continental and Colgan. Virgin asks Skywest to do the flying, with not as much financial risk compared to the Qantas/Sunnies/Eastern situation. Then Virgin buys Skywest and the old school two airline arrangement appears like Groundhog Day.

I guess the only thing that comes close to the way the US is now is the arrangement between QF and Cobham. Only difference is Cobham fly QF owned metal compared to the regional carriers over there who fly their own aircraft for the majors they are contracted to.

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Old 1st Mar 2014, 13:15
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Krusty, you used to make a lot of sense but these days I just have to laugh at your posts. For one you cant even get the capital letters of Skywest right! (little w!)

Skywest was not losing money when it was bought, it was just running on the smell of an oily rag. It was certainly not equipped to go from 20 airframes to over 30 in the space of 18 months. That investment (anchor on Virgin as you call it) will enable the company to expand SAFELY.

Why would Virgin have been so interested in Skywest if the model and business wasnt making money? The ATRs basically print money.

Id be worried about Rex losing out on some routes if VARA heads south of Albury in a big way
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Old 1st Mar 2014, 20:55
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Sorry about the Skywest spelling Chadzat, damn ipad spell check. KRUSTY too lazy to edit.

All new start ups require time and expense, but the ATR'S aren't printing money, and will not do so until the net is cast wider. The challenge for VA is just how much cash they will burn in the meantime. VA have a history of sticking by their decisions though, just look at how much money was thrown at VOZ in the first 4 years! The decisions however are becoming more complex considering the diverse nature we now see in ownership. But I diverge.

The crux of my post was to highlight the changeing nature of the VA/SkyWest (there's that spellcheck again) "partnership". If Skywest didn't bite off more than they could chew, then why was VA forced to loan the carrier $100 mil? If the loan, and the subsequent takerover didn't happen, would Skywest still be operating in their own right today?

As for REX losing out? If the planned expansion of both the ATR and TT operations go ahead with hopefully a move towards profitability, REX will certainly lose out, but probably not in the way you have suggested!

Last edited by KRUSTY 34; 2nd Mar 2014 at 11:07.
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Old 2nd Mar 2014, 23:45
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Would the brakes on VARA direct entry recruitment have anything to do with Virgin's cadet pilot program? How many cadets are there to start on the ATR72 after graduating?
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Old 3rd Mar 2014, 00:15
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I doubt it smiling monkey. The cadet programme is only about 8 per year and is nothing more than a marketing exercise in reality. The last course had 3 go to ATR, four to F50
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