[Peetwo]

Alphabet issues in the spotlight -  

ALAEA Steve, One Nation and Qantas management feature in the Oz today:

Qantas pressured on jobs flight

12:00am

In January, two senior ministers officiated over a ceremony that may involve moving more highly skilled jobs offshore.

In January this year, two of the Turnbull government’s most senior ministers officiated over a ceremony in Los Angeles that may involve moving more highly skilled Australian jobs offshore.

Foreign Minister Julie Bishop and Trade Minister Steve Ciobo flew to Los Angeles airport and cut the ribbon on a sprawling maintenance hangar designed to service Qantas’s big aeroplanes.

After shutting down its heavy maintenance in Sydney, Melbourne and Avalon over the past decade, Qantas will have the ­capacity to service A380s, 747s and the incoming 787 Dreamliner at the $US30 million ($40m) state-of-the-art facility.

While Qantas has been doing heavy maintenance in LAX since 2005, the new facility is 50 per cent larger than the previous hangar and can service four of these big planes at the same time.

Qantas has said the new facility would allow it to bid for work on other carriers’ aircraft, but it is hard to escape the conclusion that this investment means moving more maintenance offshore.

While Qantas does more of its maintenance in Australia than its competitors, the intense cost pressures in the industry are driving the pursuit of low servicing costs.

But the engineers’ association warned that the strategy was compromising Qantas’s unique selling point as the world’s safest airline. It claimed staff at LAX were less quali­fied than in Australia and they were signing off on maintenance work that was far greater than the hours they work.

Qantas would not say exactly how much maintenance was still done at facilities in Brisbane and Tamworth, but it said the “vast majority” was still done here.

A Virgin Australia spokesman said while the airline employed hundreds of engineers to maintain its aircraft in Australia, “heavy airframe maintenance and overhaul works (are) carried out at specialist facilities overseas”.

A Regional Express spokeswoman said all engines and gearboxes, including propeller shafts, were maintained and overhauled by General Electric-approved ­facilities in Britain. Rex employs 175 ­engineers and 15 apprentices to maintain its Saab 340 fleet.

One Nation leader Pauline Hanson, who flies extensively in a light plane with her chief of staff James Ashby, who is a qualified pilot, has taken an interest in what the ­industry is doing for jobs in Australia.

Senator Hanson has been speaking at length with leading ­industry bodies and key figures such as Dick Smith about the ­issues affecting Australian jobs.

A spokesman for Senator Hanson said Australia had the skills to service big planes like the A380 and he questioned why Qantas had moved these jobs offshore.

Senator Hanson is also concerned about the declining number of pilots and the impact of Civil Aviation Safety Authority red tape on the industry.

The spokesman cited the case of how a tear in the ­upholstery of a plane would have to be repaired by a CASA-certified business.

He confirmed that One Nation was working on an aviation policy that would be released soon.

“We expect to release a policy in the next four weeks,” he said.

Steve Purvinas, federal secretary of the Australian ­Licensed Aircraft Engineers’ ­Association, said Qantas’s drive offshore, and Virgin’s decision to carry out all heavy maintenance overseas, had had a massive impact on the jobs of Australian engineers and other technicians.

He said Qantas’s decision to close the three facilities had cost 2500 jobs, while another 500 jobs had gone in line maintenance. He claimed the airline was gambling with its envious safety record.

“Qantas no longer wants Australia to be its home and instead sees the airline’s first class safety record as a commodity they can gamble with to increase executive bonuses,” he said. He claimed planes came back from overseas servicing with faults that needed to be rectified. He said there was as example of this in January involving a 747-400.
He also produced documents that showed how two engineers at the Qantas LAX operation logged 50 hours of work over a 10-hour shift, and another one did 170 hours over a 13-hour shift.

“The LAX workforce runs on a shoestring budget where aircraft safety is not even taken into ­account. The LAX engineers regularly lodge reports for excessive workloads and insufficient labour but nothing is ever done to fix the problem,” Mr Purvinas said.
He also warned of “latent faults” that only emerge when the planes are in the air.
But a Qantas spokesman said the work at LAX was carried out to the highest standard and was ­approved by CASA.

“All maintenance is done to the highest Qantas standards no matter where the work is carried out,” the spokesman said. “We have had arrangements in place for many years for certain maintenance to be completed overseas. Los Angeles is a major hub for Qantas and maintenance work on Qantas airplanes in Los Angeles is carried out in a Qantas facility ­approved by CASA.”

Mr Purvinas said he was ­appalled when the two ministers opened the LAX hangar as it followed a serious act of bad faith by Qantas management in negotiations over the servicing of the 787 Dreamliner.

Qantas invited ALAEA last year to join talks over the 787 on the premise that the maintenance could be based in Australia in order to seek concessions.

“After several months we found out that the decision to base this work in their new LAX hangar had been made 12 months earlier, making their phony consultation process nothing more than a box-ticking exercise,” Mr Purvinas said.

He warned that the decision to base 787 maintenance at LAX was “shortsighted and risky”. He said the LAX workforce had 80 engineers and only one in five of them held a licence to work on aircraft.

“Half of the remaining 60 would have less experience than the average Australian apprentice. A similar workforce in Australia would have two-thirds of the engineers licensed and the others with an average 20 years’ experience.”

A Qantas spokesman initially said the “majority” of maintenance and engineering was undertaken in Australia, and then corrected this to “vast majority” when asked what this meant. While he declined to provide a specific percentage, he said “there are no plans to change this”.

“We are the only Australian airline to conduct heavy maintenance in the country and (we) ­employ more than 3000 people in our ­engineering and maintenance division,” he said in a written ­response. “Our replacement hangar in Los Angeles provides us with a fit for purpose space to complete tasks on our A380 and 747 fleet. The facility’s more efficient design means we’re able to reduce the time it takes to complete tasks by giving engineers easier access to aircraft.”

Qantas has argued that the LAX hangar made the airline more ­efficient because its flying schedule meant Qantas could have up to four aircraft on the ground in LA for up to 10 hours at a time, so it made sense for some ­engineering tasks to be completed at LAX. Qantas operates 40 flights each week to LAX.

The previous hangar, which was built at the start of the jet era in 1958, was not big enough to ­accommodate an A380 under cover. This meant that in the event of bad weather, some tasks on the plane’s tail could not be carried out, which affected the schedule.

A spokeswoman for Ms Bishop said she was in Los Angeles for the G’Day USA program and this was why she officiated at the hangar launch. She said Qantas’s commercial decisions were a matter for the airline.

“Qantas has a global presence and its commercial operational decisions are a matter for Qantas,” the spokeswoman said.

“Qantas is a founding member of the G’Day USA program and the minister attended the event at the invitation of Qantas. The launch coincided with the minister’s attendance at the annual G’Day USA program.”

Mr Ciobo said “Qantas has ­advised there are no job losses as a ­result of the hangar. In fact, it is generating services exports for Qantas.”

This is interesting... : ...One Nation leader Pauline Hanson, who flies extensively in a light plane with her chief of staff James Ashby, who is a qualified pilot, has taken an interest in what the ­industry is doing for jobs in Australia.

Senator Hanson has been speaking at length with leading ­industry bodies and key figures such as Dick Smith about the ­issues affecting Australian jobs.

A spokesman for Senator Hanson said Australia had the skills to service big planes like the A380 and he questioned why Qantas had moved these jobs offshore.

Senator Hanson is also concerned about the declining number of pilots and the impact of Civil Aviation Safety Authority red tape on the industry.

The spokesman cited the case of how a tear in the ­upholstery of a plane would have to be repaired by a CASA-certified business.

He confirmed that One Nation was working on an aviation policy that would be released soon.

“We expect to release a policy in the next four weeks,” he said...

A "policy"?? I find it somewhat ironic that the ON party will have an aviation policy and yet the Coalition has none...

Hopefully the ON policy will mirror much of TAAAF policy 2016 (ref: AMROBA post #32 ) as representative of the majority of industry Alphabet groups...

Next a bit more pressure on regional aviation issues, in particular the woes of regional airports and airlines...

 Via the Oz:

Regional airports facing a ‘crisis’
12:00amANNABEL HEPWORTH
Dozens of small regional aerodromes face a ‘perfect storm’ that includes a funding shortfall for runway maintenance.

Dozens of small regional airports face a “perfect storm” with a funding “crisis” at the same time they need to upgrade infrastructure.

Ahead of the May budget, a survey by the Australian Airports Association found almost one-third of 74 small regional aerodromes said that raising money was their No 1 concern in 2017.

Association chief executive Caro­line Wilkie said the funding crisis had become more pressing than concerns about regulation and compliance.

“Along with the need for new investment in aerodrome infrastructure and the declining condition of assets, the challenge of raising revenue is creating a perfect storm for regional aerodromes during 2017,” Ms Wilkie said.

For Peter Scott, Mayor of Cook Shire — Queensland’s largest geographical shire and the gateway to Cape York Peninsula — the small population and rate base of less than 3000 people has left the shire stretched when it comes to raising its own revenues.

The Cooktown Airport airstrip, taxiway and apron need resealing and the aerodrome is crucial to staff flying to the Cape Flattery silica mine and for the Royal Flying Doctor Services, but “we’re financially strapped for cash,” Mr Scott said.

As well, the shire wants to upgrade the airport and expand the industrial area in the precinct over the longer term to drive jobs and ­investment.

“We’re always looking for opportunity for business, for employment,” Mr Scott said.
State government money has been directed to the airport and its associated aviation park, but the shire is hopeful of also tapping the Turnbull government’s Building Better Regions Fund.

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Putting wind beneath their wings
12:00amRICO MERKERT
The essential role of regional airlines should be recognised.

Profitability is a major issue for regional airports.

Although Rex has recently reported a slight improvement in outlook, Virgin Australia and Qantas are still seeing tough trading conditions in the regional and domestic Australian aviation markets. With continued volatility in the resources sector and tourism being inherently seasonal, soft demand from regional and business communities has unsurprisingly resulted in lower profit margins for regional airlines.

Profitability is an even greater issue for regional airports, with their number having dropped by 46 per cent over the past 20 years. Additionally the Australian Airports Association reported in 2016 that 60 per cent of Australian regional airports are still operating at a loss with many of them struggling to fund infrastructure maintenance and ongoing operation. Being largely council run, they suffer from restricted access to capital markets, and lack management and incentive structures to grow profitability.

Consolidation appears to be the name of the game.

It therefore seems to be timely to ask what policymakers can do to improve commercial viability of regional aviation in Australia?

Before answering this question one needs to evaluate whether it is worth having regional air services at all. For the regions themselves this is a no-brainer because the economic impact of regional aviation is substantial and also because, quite frankly, many regional and remote communities would not exist without regular scheduled air services. In Europe and the US they are often referred to as essential or lifeline services. However, what value do such services present to people and businesses residing in cities?

Our recently published research* provides evidence for such willingness to pay. Our findings suggest that, compared with other modes of travel to regional areas, Sydney residents are willing to pay a premium for regional air services of on average $126 ($99 leisure; $153 business) for one hour of travel time savings. Regional airlines, for example QantasLink, could charge a premium of $189 as part of the ticket price from say Sydney to Port Macquarie, where the saved travel time is 1.5 hours compared with driving a car.

This has important implications on regulation and public support of such services. The high premiums on time savings resulting from regional aviation services suggest that some form of industry support may be warranted, at the least through ensuring a business friendly institutional environment. Industry subsidies may not be required if the regional air services’ essential role is otherwise recognised as part of the future development of the regions. In the context of regulating Sydney Airport our findings provide justification for the mandated level of peak hour slots for regional carriers. Our findings also suggest that there is value in considering a further scheme to provide “medium” and “large” regional airports with guaranteed access to slots at Sydney Airport.

This would include a minimum of two slots in both the morning and evening peak-hours (ideally six) which in turn would generate the potential for some true competition between regional carriers. Allowing multiple operators to compete for the ­lucrative business travel market, which demands morning departures and an evening return, would make regional air services more competitive and therefore attractive to the travelling public.

This may prove more difficult in the regional context than at metropolitan airports and certainly won’t be the panacea to solve low passenger numbers.

Attracting non-aeronautical revenues such as through car parking, adjacent business parks or freight is another option that some airports are exploring, for example Wellcamp, Dubbo and Tamworth. Opportunities around jointly developing routes with all stakeholders (including tourism agencies) which could include federal or local government route development funds is also an option that should be explored.

The potential game change is however something else, namely better integration of regional aviation.

First, the better integration of federal, state and council plans, policies, initiatives and legislation would not only result in a better product but also in improved cost effectiveness. For example, reconsidering the need for federal “red tape” security regulation at all airports may yield regional benefits, as clearly one size does not fit all in the airport context.

Second, and perhaps more importantly, there could be greater integration of aviation within the transport sector. Presently, aviation is not recognised as a form of public transport. However, given that people use scheduled, publicly supported and/or regulated regional air services for a range of purposes, it could be said that regional air services have given the name Airbus a more literal meaning, and that aviation could be a mode of public transport which would benefit from greater integration with road and rail public transport.

Our latest study findings suggest that while the business traveller prefers the current air service and taxi model, the leisure market is more open to integrated land shuttle services from the airport to their destination. Through 11,280 choice experiment observations we determined that metropolitan leisure travellers are willing to pay a premium of $45.88 for a plane and integrated shuttle at the regional destination and an additional premium of $23.97 where the shuttle can be booked at the same time as the airfare. This combined willingness to pay ($69.85) for just those two integration features (there are many more to explore) represents potentially attractive opportunities to regional airlines and airports that look at mobility as a service that requires management across modes to get people to their destination. The ability to charge this premium may lead to improvements in the profitability of the aviation value chain. If they charge fares below that premium, the competitiveness and attractiveness of regional air services may be enhanced which may ultimately result in higher patronage and boost commercial viability of services, and the economic performance of the regions.

Integrated timetabling, transport service offering, ticketing and marketing are all normal in cities. Who would doubt the benefits of the Opal card in Sydney? Why don’t we have something similar for regional aviation and regional transport in general? FlyPelican is now applying elements of this concept as it offers customers an integrated fare of $135 “Pelican Sydney Connex” that includes in addition to the air service (from Newcastle) all transfer and ground transportation to/from Sydney airport. With new technologies and apps becoming available on a daily basis, it is only a matter of time until fully integrated regional air service solutions will become the norm and force policymakers to rethink their strategies.

* Journal of Transportation Research Part A: Policy and Practice.

Rico Merkert is professor and chair in transport and supply chain management at the University of Sydney, and editor-in-chief of the Journal of Air Transport Management

MTF...P2