Manufacturing Industry

Australian travellers buy remaining discount tickets as Ansett's situation worsens

Airline Industry Information, Sept 18, 2001

Airline customers in Australia have reacted quickly to the demise of Ansett Australia, with discount tickets selling out on Monday (17 September) in a panic buying spree.

Customers are expecting to pay premium prices for fares in the near future, especially people wanting to travel on popular trunk routes, such as between Sydney and Brisbane or Melbourne. Both remaining Australian carriers, Qantas Airways and Virgin Blue, have pledged to remain competitive, with Virgin Blue indicating that it intends to remain a discount carrier. Qantas has said it will still offer competitive prices, as well as discounts.

In further bad news, travellers will have to pay an extra AUD10 levy on all air tickets to fund the payment of about AUD500m worth of entitlements owed to Ansett employees. The levy has been implemented by the Australian federal government, with Workplace Relations Minister Tony Abbot stating on 16 September, "It's not going to be cheap, but unfortunately, protecting workers' entitlements doesn't come without a cost. The Government has decided that, in all the circumstances, the fairest way to do it is through a modest levy on tickets," according to The Sunday Telegraph online.

Some 17,000 Ansett employees lost their jobs when the airline ceased operations on 14 September. Other firms associated with Ansett, such as caterers, are also expected to suffer large job cuts of up to 10,000.

In related news, the Australian Securities and Investments Commission has launched a probe into whether Ansett was trading while insolvent and whether its directors violated the Corporations Act. Further, Ansett's administrator, PricewaterhouseCoopers, announced on 18 September that it was resigning from the position. The resignation was apparently forced by unions following a 40% slump in the share price of Air New Zealand, according to The Sydney Morning Herald. The resignation may have dashed any hopes that Ansett could have made a comeback. Ansett's operations are now being overseen by accountants, Arthur Andersen.

Ansett's situation has also brought into question the future of Air New Zealand, the Australian carrier's parent company.

New Zealand Finance Minister Michael Cullen suggested on 17 September that the airline could be placed into statutory management. Cullen indicated though that the appointment of an administrator was a decision to be made by the Air New Zealand board of directors.

Singapore Airlines (SIA) meanwhile has said that it is still intending to inject NZD150m into Air New Zealand "once a range of specified conditions [are] met." The New Zealand government has agreed to allow SIA to increase its stake in Air New Zealand by 10% to 35%. Any deal between Air New Zealand and SIA still has between four and six weeks before completion.

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