A Chronology of Ansett Australia’s History

Ansett Australia or Ansett was a major Australian domestic and international airline, flying passengers around Australia and to destinations in Asia at its height in 1996.[1] The airline failed financially in 2001. The majority of its assets have since been liquidated. Ansett operated for 66 years and 11 days after its first take off from Hamilton in Western Victoria.

History – Beginnings

The company was started by Sir Reginald Miles Ansett in 1935 as Ansett Airways Pty. Ltd. This was an offshoot of his road transport business which had become so successful it was threatening the freight and passenger revenue of Victorian Railways. This led the state government to legislate to put private road transport operators out of business. RegAnsett countered by establishing an airline as aviation was under control of the national government and beyond the reach of the state government. Ansett’s first route was between Hamilton, in western Victoria, and Melbourne, the state capital, operated with a Fokker Universal monoplane. The rapid success of the airline led Ansett to float the business in 1937. As the route network expanded, Ansett Airways imported Lockheed Electra aircraft. During World War II RegAnsett opted to suspend all scheduled services in favour of more lucrative work for the USAAF. After the war Ansett battled to re-establish his domestic routes using war-surplus Douglas DC-3s, converted from C-47s and a motley collection of smaller airliners. At this time, the Australian domestic airline travel sector was dominated by Australian National Airways (ANA), established in 1936 by a consortium of British-financed Australian shipowners. The Chifley Labor government was determined to establish a state-owned airline to operate all domestic and international services. It was eventually thwarted in this aim by the High Court of Australia, and so it established Trans Australia Airlines (TAA) to operate in competition with ANA.

1940s to 1990s

Ansett Airways remained a bit player as TAA and ANA battled for supremacy in the 1940s and 1950s. TAA, being better managed and having better aircraft, had driven ANA to the verge of bankruptcy by 1957. Ansett operated around the big two, maintaining budget fare interstate operations with DC-3s and later Convair CV-340s. The airline was backed up by extensive road transport operations, including Ansett Freight Express and Ansett-Pioneer Coaches, as well as the Ansair coach-building operation. The Menzies Liberal government, while supporting TAA because of the excellent dividends it paid to the government, wanted to avoid TAA having a monopoly on domestic services if ANA collapsed, as seemed likely. The only alternative, as it transpired, was for Ansett to buy out the ANA operation. The ANA directors fiercely resisted this initially, but eventually succumbed to Ansett’s offer of 3.3 million pounds for their airline. Ansett’s bid had a number of financial supporters, most prominent of these being the Shell Company. Douglas Aircraft was also concerned about ANA’s demise, as TAA had ceased to be a customer for their aircraft. The new entity was called Ansett-ANA, the name it retained until 1968. Ansett-ANA’s excellent profit record was largely courtesy of the Menzies government’s ‘Two Airlines Policy’ which propped up Ansett-ANA and clipped TAA’s superior marketing efforts. The policy effectively blocked any other domestic interstate operators by way of a ban on importation of aircraft without a government licence. From 1957 until the 1980s Ansett and TAA operated as virtual carbon copies of each other, operating the same aircraft at the same times, to the same destinations, with – by present standards – grossly inflated fares, which were identical. RegAnsett then set out to ensure no other competitors could rise up to challenge his airline, as he had done with ANA. He took control of Adelaide-based Guinea Airways (renamed Airlines of South Australia) and Sydney-based Butler Air Transport (renamed Airlines of New South Wales). The takeover of Butler was achieved with covert support from the Menzies government and by Ansett engineering his employees’ purchases of Butler shares. He then flew the employees to a general meeting in Sydney and forced a vote in favour of selling out to Ansett. Ansett-ANA was profitable courtesy of government support, but also because of RegAnsett’s parsimonious ways. Ansett-ANA operated from terminals around the country that were best described as spartan. Following the takeover of ANA, RegAnsett lobbied the government to block TAA’s purchase of SudCaravelle jet aircraft. He was concerned about his airline’s ability to finance equivalent jet aircraft, and the major engineering leap required to go from an all-piston fleet direct to pure jet aircraft, TAA had been operating prop-jet Vickers Viscounts since 1954, and so had expertise in jet technology.Ansett was successful in convincing the government to authorize the importation of more Viscounts and the new Lockheed L.188 Electra. This action delayed the introduction of pure jet aircraft to Australian skies until 1964, when the Boeing 727-100 began flying. The post-war years were marked with numerous acquisitions, including Australian National Airways (1957). The airline prospered during the second half of the 20th century, especially in the 1980s. However a number of substantial investments performed badly, including a share in the US airline America West Airlines (which filed for bankruptcy, but survived) and its Hamilton Island resort (which went into receivership). Ansett also paid millions of dollars for the right to be official airline of the Sydney 2000 Olympics, an investment generally regarded as unwise. This destabilised the financial position of the company considerably. One of the most unusual aircraft that was operated by Ansett was the DC-4 / C-54 outsized freighter conversion ATL-98 Carvair. Three of the airlines own DC-4s were delivered to the United Kingdom for conversion by Aviation Traders Limited, the company run by Sir Freddie Laker as Managing Director. Ansett commenced international service on 11 September 1993 to Bali, Indonesia. In 1994, it commenced service to Osaka and Hong Kong. Ansett commenced Jakarta Service on the 12 January 1996. On the 8th June, 1997, Ansett commenced flights to Shanghai. Later, Seoul, Taipei and Kuala Lumpur flights were suspended.

2000 Onwards

Demise

Ansett aircraft at Melbourne Airport after the airline's collapse in 2001

Air New Zealand, previously a 50% shareholder, acquired full ownership of Ansett in February 2000, buying out News Corporation’s stake. This was widely viewed as a mistake, as Ansett became more of a drain than an asset (mostly because Ansett had more employees, more aircraft, and more financial overhead). Competition from Qantas and a succession of start-up airlines, top-heavy and overpaid staff, an aging fleet and grounding of the Boeing 767 fleet due to maintenance irregularities left Ansett seriously short of cash (losing $1.3 million a day[1]). Air New Zealand attempted to cut the costs of Ansett whilst maintain a constant level of revenue. This did not work, as the cost cutting hurt Ansett, with the notable incidents being the grounding of planes in Christmas 2000 and Easter 2001. Air New Zealand was thus unable to compete with the low costs carriers and Qantas, who were able to run at a loss on some routes, as they could not maintain revenue while cutting their costs, which included laying off staff. Ansett’s main issue was the costs it incurred at running each leg; for every $1 of revenue, 10 cents was profit compared to Qantas’ 60 cents for the same amount . The government of New Zealand eventually bailed out Air New Zealand with 1 billion dollars, but would not fund Ansett at all.

A former Ansett 767-204 being scrapped at the Mojave Spaceport

Air New Zealand placed the Ansett group of companies into voluntary administration with PricewaterhouseCoopers on 13 September2001. A day later, the administrator decided that Ansett was not viable and grounded the fleets of Ansett and its subsidiaries Hazelton Airlines, Kendell, Skywest and Aeropelican. Customers and employees had no warning of the stoppage in operations. Everyone was being told in the days leading up to 14 September that flights would continue on schedule. Ansett employees did not find out until they showed up for work that day, and thousands of passengers were left stranded. More than 16,000 people found themselves out of a job, making this the largest mass job loss event in Australian history.[1] It was alleged by the then administrators that Air New Zealand had engaged in asset stripping of the airline as well as charging of its fuel costs due to AirNZ failing to hedge its fuel costs thus leaving it susceptible to major fluctuations in fuel charges during 2000 [2][3]. This claim was angrily denied by then AirNZ Chief Executive Officer Ralph Norris[4] who noted his company intended to mount a vigorous defence against the allegations. After receiving a federal government guarantee, Ansett resumed limited services between major cities on 1 October2001. This was referred to as ‘Ansett Mark II’. In November 2001 Ansett creditors voted in favour of the Tesna consortium led by Melbourne businessmen Solomon Lew and Lindsay Fox, to purchase Ansett. The plan included very reduced staff numbers and new aircraft. Fox and Lew said they had received no support from the government for their bid, thus withdrawing their proposal. This agreement, although well advanced, collapsed in February 2002. With no other saviours, Ansett ceased operations permanently on 4 March2002 by which point the administration of the company had transferred to newly formed insolvency firm KordaMentha. The Australian Securities and Investment Commission (ASIC) began an investigation of whether Ansett had gone on trading while insolvent, and eventually determined in July 2002 that it would be too expensive and difficult to proceed with an action which would, in any case, need to be many separate actions on behalf of individual creditors rather than just one. Laid-off Ansett workers were eventually paid most of their entitlements, partly from an $A150 million compensation package offered by Air New Zealand in return for having the ASIC enquiry dropped, but mostly by an $A10-per-seat levy imposed by John Howard’s government on Australian airline passengers.[5]

Administration

The Ansett Australia administration is being conducted in Melbourne, Victoria, Australia by KordaMentha Pty Ltd. The process of administration of the companies’ assets continues to this day with employees receiving $A667.7 million out of entitlements estimated at $A766.4 million (or about 90c in the dollar)[6] and it is expected that another $A85.1 million will be raised. Ansett’s administrators, KordaMentha, told creditors that it was unlikely that much more money would be realised, due to the depression of the global aviation industry after September 11 reducing the value of aircraft from $A300 million to $A70 million. Some aircraft in heavy maintenance were broken up as it was not cost-effective to restore them to an airworthy state. Most of the Boeing 767 fleet remained parked at Melbourne until late 2004, when they were sold and flown to the United States to be broken up into spare parts. More recently, employees of the former airline have received an additional $AUD 16.4 Million in entitlement payments after the sale of over $AUD 22 Million of assets, including an aircraft and aircraft parts[7]. According to media reports, there are still in excess of 217,000 items and two properties belonging to the airline remaining for sale.

Services

Ansett Australia offered travellers a range of services.

Fleet

The Ansett Australia fleet as of 1999 was made up of the following aircraft:

  • Airbus A320 x20
  • BAe-146 x18
  • Boeing 737-300 x23
  • Boeing 747-400 x2
  • Boeing 767-200 x9
  • Boeing 767-300 x4
  • BombardierCRJ-200 x12 (Operated by Kendell)
  • DeHavilland Twin Otter x4 (Operated by Aeropelican)
  • Fokker 50 x9 (Operated by Skywest)
  • Fokker F27 x1
  • Fokker F28 x4
  • Saab 340 x16 (Operated by Kendell and Hazelton)
  • FairchildMetro 23 x7 (Operated by Kendell and Hazelton)

Golden Wing Club

Golden Wing Club was the airport lounge service owned and operated by Ansett. Members received a bi-monthly magazine called “Travelling Life”, as well as many other features. Golden Wing Club Lounges were located throughout Australia and New Zealand, with members being able to access all Star Alliance Lounges as well.

Global Rewards

Global Rewards, the Ansett Australia Frequent Flyer Program. Points could be used for services from Ansett Australia and their Airline and Program Partners including:

  • flights
  • upgrades
  • holidays
  • hotel stays
  • car rentals

Points held at the time of the airline’s collapse lost their value as no other airline took over the program as had taken place with the collapse of some other airlines. [8]

Capital Shuttle

Ansett’s Capital Shuttle operated between Sydney and Canberra. This service mainly used Saab 340 and Bombardier CRJ-200 aircraft, with small use of A320 and 737 aircraft mostly in peak periods. The Capital Shuttle service was also given a dedicated gate lounge for its services at Sydney Airport.

Ansett Aircraft Spares & Services

The Ansett name lives on in Ansett Aircraft Spares & Services (AASS), which was established in 1958 to procure parts for the Australian operation. In the 1980′s AASS began to sell Ansett’s excess, or no longer required inventories of spare parts. In 2003, management of AASS purchased the operations from Ansett’s Administrators and currently sells Ansett’s and other airlines’ consigned spares. AASS is also a distributor for Aircraft Braking Systems, Nasco Aircraft Brake, Inc., PTI Technologies, 3M, Bill Thomas Associates, General Electric, Telex Corporation, DukaneSeacom Division, LPS Laboratories, Essex PB&R, and EDO Corporation. AASS maintains facilities and sales offices in Los Angeles, London and Melbourne.

Sponsorship

Ansett Australia was one of the major sponsors of the AFL, holding the naming rights to the AFL pre-season competition, the Ansett Australia Cup. It was also a major sponsor of Waverley Park/VFL Park. The logo was visible around the stadium. Ansett was also a Major Sponsor of Australian Cricket, with the Ansett Australia Test Series a prominent fixture of the Australian summer. Ansett’s logo (called the StarMark) appeared on all players’ training and game shirts, as well as around the boundary and on the field during Test Series. It was also the sleeve/major sponsor of the Brisbane BroncosNational Rugby League team from 1996-2001. It also sponsored soap opera Neighbours in the late 1980s and early 1990s.

References

1        Cook, Terry. “Australia’s second biggest airline collapses”, World Socialist Web Site, 2001-09-15. Retrieved on 2007-10-16.

2        Westfield, Mark. “Absolutely – Going … Going … Gone.”, The Australian, 2001-09-15, p. 35.

3        Easdown, Geoff. “Stripped of its cash.”, The Sydney Morning Herald, 2001-09-15, p. 9.

4        “Ansett stripping charges refuted”, TV New Zealand, 2002-03-19. Retrieved on 2007-10-16.

5        Air New Zealand

6        John, Danny. “Making a success of corporate distress”, The Sydney Morning Herald, 2006-12-28. Retrieved on 2007-10-16.

7        Australian Associated Press. “Ansett employees get $27m dividend”, The Daily Telegraph, 2006-12-14. Retrieved on 2007-10-16.

8        “Ansett frequent flyer members continue fight for lost points”, Find Articles, 2002-02-20. Retrieved on 2007-10-16.

Article by Paul Fanning