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Wednesday, 30 April 1980
Page: 1992

Senator COLLARD (Queensland) -We are discussing cognately the Qantas Airways Ltd (Loan Guarantee) Bill and the Airline Equipment (Loan Guarantee) Bill. The first is to enable Qantas Airways Ltd to buy some further 747 aircraft. The other Bill is to enable Ansett Transport Industries Ltd to buy a 200-series 727 aircraft.

Senator O'Byrne - Why shouldn't you subsidise it?

Senator COLLARD - I did not say that we are subsidising those purchases. I said that we are discussing legislation to enable the purchase of those aircraft. Senator Sibraa said that Senator MacGibbon thought it was a good idea that Qantas had been nationalised. I did not read that into Senator MacGibbon 's speech. Knowing Senator MacGibbon as I do, I do not think that he meant that. One of the reasons why some of our statutory authorities are successful is probably that we have tried to make them run on a private enterprise basis. We have established boards to be in charge of them. I instance TransAustralia Airlines, Qantas, Australia Post and Telecom Australia. Those authorities have on their boards businessmen who know a little about the commercial world. I favour loosening the strings a little more. I understand that when the annual report of Qantas comes out a large part of its anticipated loss will be attributed to the restrictions which the Treasury put on it when it sought to borrow money on previous occasions.

Senator Sibraaalso said that some of the airlines from one-airline countries operate from one port only. That imposes some economies but I put it to the Senate that some of the countries to which he referred would not be as large as two or three fair sized cattle stations in western Queensland. We are looking at a far different kettle offish.

The Qantas Airways Ltd (Loan Guarantee) Bill enables Qantas to buy four 747 aircraft. It will actually purchase five of these aircraft. The purchase of one of the aircraft will be financed internally by the sale of some of the older Qantas aircraft. Qantas will be buying three 200-series Boeing 747s, one Combi and one special performance Boeing 747. The new aircraft will come equipped with the RB2 1 1 B2 engine. Its specific fuel consumption is a 7 per cent improvement on the existing JT 9D 7A and 7F models. Part of the deal is that when the Rolls Royce D4 engine is available- I believe the first one will come into service in March 1982- the existing 747s equipped with Rolls Royce engines will be re-equipped. That engine will have a 53,000 lb thrust compared with the existing 50,000 lb thrust. It will have a further 4.8 per cent improvement in specific fuel consumption. Qantas has not been hung up on the commonality of buying one engine. I chastised it on this matter in a similar speech some time ago. It is good to see that it is breaking out of the mould that it was in.

The SP aircraft which Qantas is buying, to which Senator MacGibbon alluded, will enable it to fly into Wellington which has an airport with particular problems. It is situated on a peninsula with some high ground around it. It has many problems with wind currents and down draughts. It has 6,550 feet of runway available for take-off and 5,950 feet available for landings. In wet conditions there is a 15 per cent reduction in the distance for landings. Qantas will operate the SP at a maximum certificated take-off rate of 610,0001b. This means that it will be able to uplift from Wellington 16 first class passengers, 320 economy class passengers as well as 6,800 kilograms of cargo and mail. It will be able to fly to Sydney with statutory reserves. (Quorum formed). The purchase of the SP aircraft will enable Qantas to replace a chartered Air New Zealand DC8 aircraft at no increase in cost and will allow for a 50 per cent increase in traffic growth. This is important when one recognises that one-third of Australia's international tourists come from New Zealand.

Obviously, when new aircraft are bought and new routes are planned decisions are not made overnight. It is obvious that Qantas has been planning to make some alteration to its route structure for some time because of the purchase of the SP aircraft. One of those changes which has been announced is a flight which will go from Auckland to Brisbane then to Townsville and Honolulu and return. That is significant, particularly for north Queensland. The Townsville runway and tarmac do not need any modification for this aircraft. The runway is 9,310 feet long. The SP aircraft will be able to take off with a full load and sufficient fuel, with statutory reserves, to fly to Honolulu. That has to be a plus for Qantas and Australia, but more particularly for Queensland and north Queenslanders. Having an SP aircraft in the fleet also has strategic advantages for Australia in that we will have an aircraft with such a range that if necessary we can fly to anywhere even if we have to overfly a lot of countries because of political considerations.

One topic which has been running hot and which has been alluded to in some speeches is the recent one-off charter flight by the Ansett organisation from Townsville to Singapore and return. Unfortunately, neither Qantas nor TAA has entree into the media. Because of the Murdoch interests in the media one would have thought that Utopia had arrived with this one-off flight. I spoke on a television program, and I suppose the harshest thing I said about it was that it was a con. The nicest thing I could say is that it is rather mischievous. I say that because people in Queensland are, rightly, very parochial. We think rightly that we have been hard done by by the international airlines, not only Qantas, that we have some great tourist attractions, and that those attractions have been bypassed. Unfortunately, this one-off charter certainly was no answer to the problem, but people thoughtindeed, anticipated- that this was the start of a weekly service, without realising the full implications.

The first implication is that if we wanted to start a weekly 727 service to Singapore, Singapore would demand another 747 flight into Sydney. Immediately load factors are reduced, fare structures will have to be looked at once again. Indonesia would want to buy into the argument because we would be overflying them. On top of that, there are capacity arrangements with all the member countries of the Association of South East Asian Nations. The ASEAN countries will not sit back and watch Singapore pick up what they think will be a bit of cream. Negotiation for extra flights in and out of a country is a veritable can of worms. It does not matter what Sir Lenox Hewitt, Sir Peter Abeles or Mr Lyn McKenzie of TAA say, one just does not say that these are the fares we charge on an international route. It has nothing to do with the domestic fare structure. The whole international fare structure is calculated through negotiation, whether we like it or not. It is of no use saying that we could fly this or we could fly that. It is just not on. Unfortunately, a great head of steam has been built up over this whole matter and it will not be too easy to dissipate it. As I have said, a lot of people think that Utopia has arrived.

It is unfortunate that Australia is at the end of every shipping and air route. That means that we have to compete and work hard for every bit of international trade we can gain. It is the same with tourism. If we think there are tens of thousands of people overseas clamouring at the gates of airports to come into Australia, we are deluded. It is only when one travels overseas that one realises what an insignificant place Australia really is, desirable though it is to live in. I would not want to live in any other place. (Quorum formed). If we want to encourage tourists to Australia we have to work hard at it. It is interesting to look at visitor arrival statistics for travellers resident in Singapore, because that is the destination that has built up a head of steam. That survey of international visitors by the Australian Tourist Commission shows that the number of visitors who came into Australia from Singapore in 1978 was 9,306. If one takes out those visiting friends and relatives, which is 17.18 per cent, or 1,599; those on business, which is 26.6 per cent or 2,475; and people attending conventions, which is 2.93 per cent, or 273- every one of those categories would have a dedicated destination- one has left the holiday category which involves 26.95 per cent and the general term of others, which involves 26.33 per cent or a total of 4,958 to be distributed around Australia's tourist resorts, if that is what those in the 'holiday' and 'other' categories are coming for.

There is not a massive market waiting to come in. That does not mean to say that there could not be if we worked hard at it. The figures for those going out of Queensland to Singapore show that there are 139 passengers per week distributed over five flights, or 29 passengers per flight. That adds up to a total of 7,228 passengers per year. Of those passengers, 30 per cent, or 2, 1 69, join other flights out of Singapore to other destinations. So, there are really only 5,060 passengers per year flying out of Queensland to Singapore as a destination, or 98 per week or 20 per flight. It will be a massive marketing job to build up our overseas tourist trade, particularly with Singapore. As I have said, it is unfortunate that, because of the publicity given to the matter lately, a lot of people think the market is waiting there for us to open up the floodgates and tourists will come rushing into Australia.

Another factor to be taken into consideration if this were true would be the lack of accommodation. This has been demonstrated many times. I am sure that as members of Parliament travel around, not even in the height of the tourist season, they find that at times it is very hard to get accommodation in Sydney or Brisbane. At times throughout the high season accommodation gets to be at a premium along the north Queensland coast. The tourist industry has to get its act into gear also and provide a lot more accommodation of good standard so that people can be encouraged to come into Australia.

It is quite ironic that the two Government airlines have been entrepreneurial enough to put together, using existing schedules, a package which can service north Queensland. The package does not require any further international or fare negotiations. The Qantas-TAA deal which starts on 29 May will use existing flights across the Top into Darwin which will then pick up existing Qantas flights. The same applies on the return voyage. Without committing ourselves to any more negotiation, this package will enable us to put our toe in the water to see how deep the tourism bucket is for north Queensland. I commend the deal. I hope it is successful. There is nothing to stop the Ansett organisation's doing the same sort of deal.

Mention has also been made of the fact that there are not many international flights through Darwin. In a previous speech today, I stated that Darwin could become one of the great tourist gateways to Australia. After the devastation of Cyclone Tracy, all international airlines ceased operating into and out of Darwin. I understand that Qantas is the only international airline that has resumed flights through Darwin. That says something for Qantas. I hope that it can put more flights through Darwin and that other international operators will use Darwin as a gateway to Australia. If markets that demand medium sized aircraft with intercontinental capability can be developed, and Qantas is not prepared to look at such aircraft, bearing in mind all the problems associated with negotiations concerning South East Asia, either TAA or Ansett or both should be allowed to develop such routes provided domestic traffic is not called on to subsidise it. That then would open up the other can of worms. It would only be fair to say that Qantas should be allowed to top up its across Australia flights with domestic passengers. That would open up another can of worms because we know that international flights returning to

Australia are notorious for being extremely late. It would be unfair, if such a proposal were allowed, to expect our own domestic trunk operators to fly empty across to Perth or up to Darwin for the sake of running a timetable return flight. The proposal is not all as easy as it looks.

I turn now to the domestic problem. Quite a bit has been said in the debate up until now about the domestic fare structure. Australia has a massive problem with its transport whether air, rail or motor vehicle, because it has a very small population. The population, I think, is onefourteenth the population of the United States, yet Australia has a land area equal to the size of the United States, less Alaska and Hawaii. To make it worse, Australia's population is concentrated mainly on the eastern coast. This creates a problem in supplying a good air transport service to the Australian population. On top of that, the airlines have to contend with the fact that Australian airline staff" have probably the best working conditions in the world. The conditions are far superior to those in America with which we are often compared. Australia has the best safety record in the world. That does not come cheaply. Our fleet size is not large. We cannot capitalise on economies of scale.

Let me explain. United Airlines, a United States company, has 18 Boeing 747s, 70 DC8s, 37 DC 104 164 Boeing 727s and 59 Boeing 737s. Braniff International has 3 Boeing 747s, 16 DC8s and 88 Boeing 727s. Republic Airlines, which is recognised as a regional operator, has 35 DC9s and 25 Convairs. TAA has 11 Boeing 727s, 12 DC9s, 1 1 F27s and 4 Otters. We certainly cannot capitalise on economies of scale. From my reading of the situation we compete very well on a fare basis. Let me quote our current fare formula. The economy fare has a flagfall of $19.80 and a charge of 7.227c per kilometre. The standard class fare, which is the fare for Fokker Friendship aircraft routes, has a flagfall of $ 1 9.80 and a charge of 9.034c per kilometre. First class travel has a flagfall of $24.75 and a charge of 9.034c per kilometre. Additionally, over 2,200 kilometres, on the routes to Perth and Darwin, a rate of 6.143c per kilometre for economy class and 7.679 per kilometre for first class applies. The situation is as simple as that. The rates are not greater the further the distance travelled or anything like that. As a matter of fact, as I have just stated, fares per kilometre are less for passengers travelling over 2200 kilometres to Perth or Darwin.

The United Kingdom has no fixed fare formula. The Civil Aviation Authority's approach to the regulation of domestic air fares is one of approving fare levels which can reasonably be demonstrated to bear a close relationship to the costs incurred by the traffic carried at those fares. The United States Civil Aeronautics Board sets what is known as a standard industry fare level. The fare level effective at 1 March 1980, in American dollars and cents, is, for the terminal charge, which is equal to our flagfall, $23.86 plus 13.05c a mile up to 500 miles, plus 9.95c a mile from 501 to 1,500 miles, and plus 9.57c a mile over 1 ,500 miles.

Let us look at the comparison between costs from Heathrow Airport in London to Belfast. In Australian terms, the British fare is $77.20; the United States fare is $64.64; and the Australian fare would be $57.60. Our fare rate on the short haul is good. Let me now look at the long haul rates which we have always been concerned about and relate them to travel from Sydney to Perth. I cannot quote the British fare as there is no similar long haul stage. The Australian fare, in economy class, is $245.50. Working a figure out from the fare levels that I gave earlier, I believe that the American fare, in Australian dollars, would be $236.10. That includes the statutory 8 per cent tax that the Americans add but does not include whatever else the Americans might wish to add. The Civil Aeronautics Board allows airlines to charge between 105 per cent and 130 per cent of the standard industry fare.

We know that passengers on long haul flights have been discriminated against. That was pointed up in the domestic air transport review. Long before the 'Fair International Air Fares' campaign started in Western Australia, my colleagues from Western Australia were telling people, quite rightly, that they were being hard done by. It is interesting to note that their protestations have borne fruit and the last three air fare increases have taken that aspect into consideration. The long haul passengers are now being treated better than they were before.

Another factor that helps the Australian airlines is utilisation. We get probably better or at least equal utilisation of our aircraft compared with levels of utilisation in other airlines. That says something for the way our domestic airlines control their industry and the way they arrange their servicing. This means that we are able to keep our fare levels down to a reasonable amount. I think that our international and domestic operations, in an area where there is always room for improvement, have nothing to be ashamed of. I hope that they can work together to make more use of Australia as a tourist destination and that their fare structures can be kept as low as possible to encourage people to travel around and so that people coming into Australia can get to the destinations they want- I think, particularly north Queensland- without any excess cost and without having to backtrack. I commend the Bills to the Senate.

Senator MacGIBBON( Queensland )-I seek leave, under Standing Order 408, to make a personal explanation.

Leave granted.

Senator MacGIBBON - I thought I heard Senator Sibraa say something to the effect that I had approved of or praised the nationalisation of Qantas Airways Ltd. Senator Collard, who has just spoken, confirmed my belief. I would like to put the record straight. I made no comment at all on the nationalisation of Qantas in my brief resume of the history of the company. All I said was that in 1945 the company was nationalised. It has not been my practice, in the 22 months that I have been a member of this chamber, to indulge in point scoring of that nature. Had I made any comments about nationalisation they certainly would not have been supportive.

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