LIFE AFTER SQ006 - Orient Aviation

C o m m e n tThe news that the finances ofAustralasia’s new Air New ZealandAnsett Group have sunk close to thered ink line, largely because of a dreadfulperformance by Ansett Australia, shouldcome as a serious reminder that no one is immunefrom fiscal drama in this cyclical airlineindustry of ours.Putting the recent Asian economic recessionaside, not to mention rising fuel prices,no one in this region can afford to take theireye off the ball for one second.Losing concentration on the big pictureas well as the critical individual elements thatmake an airline successful is precisely whathappened at Ansett. There may have beenextenuating circumstances, but that is noexcuse. Staff at Ansett have undergone morethan four years of torture. They thought theirproblems were over when Rod Eddingtonarrived from Hong Kong to steady things andinstigate a restructure for the carrier.But he headed off to London before thejob was finished, leaving a void that tooknearly nine months to fill. Gary Toomey,former deputy chief executive and financialguru at Qantas, finally grabbed the tiller inJanuary, but before he arrived no one wasreally minding the ship.Loyal Australian staff finally discoveredin June their future lay in New Zealand hands(with more than a little influence from 25% AirNew Zealand stakeholder Singapore Airlines)and their worries turned to whether theirjobs would disappear across the Tasman asrationalisation measures continued.Worse still, 20 or 30 managers, manyof them after years of service, suddenlydisappeared as the executive restructure gotunderway. Little wonder morale plummeted.And maintenance slip-ups, virtually unheardof in a major airline did not help the cause.Boeing B767s had to be grounded during thebusy Christmas period and, later, a wrong partwas installed on a B767.Ansett is no slouch when it comes tocustomer service. Its international inflightservice is a regular award winner. Yet staffworried about their future might not be quiteas enthusiastic as they might otherwise be.The result? Ansett is being decimated byrival Qantas Airways and hit by Australiannewcomers Impulse and Virgin Blue. Itsmarket share has stagnated at the sametime as overall domestic traffic has risen 7%annually.Gary Toomey has to reverse that trendwhile combining two airline operations. It is amammoth task. And if he needs any reminderof what is ahead then he only has to thinkTortured Ansettcaught withits guard downof how long it took Qantas and domesticAustralian Airlines to join forces. That processwas traumatic and during this period Ansettthrashed Qantas in the market place, stealinga big lead in traffic share while Qantas mindswere on other things. The reverse has beenhappening over the past year. The point is noairline can afford to drop its guard.Air New Zealand Ansett is not the onlyAsia-Pacific airline flirting with trouble.Everyone knows Malaysia Airlines has deepfinancial problems. Yet at a time the airlineindustry is driving further and further downthe road towards truly commercial managementand privatised operations, Kuala Lumpurhas decided to place government bureaucratsat the head of its national flag carrier.Competent as they may be in their chosenfield, they are not airline people. And they donot have decades of experience in runningairlines which have to compete in the viciousworld of international aviation.Perhaps they will have the vision andpersistence to achieve a turnaround, as nonairlineexecutives like Robby Djohan andAbdulgani, both bankers, appear to have hadat Garuda Indonesia. But, on average, historytells us their chances are not good.British Airways shareholders did not haveany qualms or thoughts of nationalism, unlikesome countries in Asia, when it hit bad times.It looked around for the best and broughtin Australian Eddington. Nine months later,financial results have improved. SingaporeAirlines chief, Dr Cheong Choong Kong, hasTURBULENCEBy Tom Ballantynesaid there is no glass ceiling placed over non-Singaporeans aiming for the top of SIA. Anddespite the national pride inherent in beingeither a New Zealander or an Australian, AirNew Zealand brought in Australian Toomeyto turn its troubling financial tide.Meanwhile, the Thai Government isthreatening to do a U-turn and keep its nationalcarrier, Thai Airways International, firmlyin local hands after three years of preparingfor partial privatisation. Several internationalairlines have been patiently waiting in thewings to make bids. It smacks of ongoinggovernment interference and that usuallyworks to the detriment of the airline.For a start, such interference slows downthe decision-making process and stifles properforward planning. Incumbent managers (ashappened in the Ansett case) do not makedecisions on their merits because they do notknow what their new owner(s) want.The AirNZ Ansett figures indicate theunderlying message for the region’s airlinesis that this is no time to relax. Already thereis some evidence global economies, includingthe U.S., are slowing down, with Japan possiblyheading back into recession. If that happensother Asian nations will likely follow.The Middle East is more of a powder kegthan it has been since those dreadful days ofthe Gulf War and that does not bode well foran end to volatility in jet fuel prices. This is aperiod when airlines need strong leadershipby professional managers who are firmlyfocussed on their business.54 | Orient Aviation | March 01