Adjust font size:

Annual Report

Annual Report 2008-2009

Review by Chairman

I am pleased to provide an overview of the Commission’s work for 2008–09. The Commission’s activities during much of this year were set against the background of the weak world economic environment. The fortunes of the airline industry are closely linked to the strength of economic activity, so it was no surprise that the economic downturn has had serious adverse financial effects on airlines around the world.

 

Australia’s airlines have not been immune from this situation. They have endeavoured in various ways to manage the effects of declining demand and falling revenue yields. Unfortunately, some smaller Australian carriers such as Sky Air World exited international markets during the year.

 

Despite the economic downturn there was considerable work for the Commission. There were surprisingly many applications to expand capacity, considerably outweighing requests to reduce capacity on some routes. Proposals by airlines to code share continued to be an important aspect of the Commission’s work. Several of these arrangements raised significant public benefit issues, requiring substantial analysis by the Commission before arriving at its decisions.

 

A highlight of the year was the entry of V Australia into international markets. This is the first new long-haul Australian airline outside of the Qantas Group since the collapse of Ansett in 2001. V Australia operated its inaugural B777-300 service between Sydney and Los Angeles on 27 February 2009, taking advantage of capacity allocated by the Commission last financial year. The airline began operating three times per week, expanding quickly to a daily service. In April 2009, V Australia added direct services between Brisbane and Los Angeles three times per week. Air fares on the US route have fallen sharply from the levels prior to V Australia’s entry, bringing benefits to consumers and helping to stimulate this market in difficult economic times.

 

The Commission facilitated expansion of V Australia’s network by allocating the airline five frequencies per week for services to South Africa. V Australia planned to start flying between Sydney and Johannesburg in October 2009, but subsequently has advised that services will now commence in early 2010. The Commission also granted Qantas two new weekly frequencies on the South Africa route, bringing that airline’s total entitlement to seven services per week.

 

V Australia’s entry and new services by Qantas should mean a more competitive environment on the South Africa route, which has for some years seen high fares and load factors. These issues were highlighted in the Commission’s in-depth assessment during the year of Qantas’ proposal to continue code sharing with South African Airways (SAA). This code sharing has been kept under close scrutiny by the Commission because of its concerns that the arrangement was doing little to foster competition on the route. The prospective entry of V Australia and the additional capacity available to Qantas were important factors in the Commission’s decision to allow the Qantas-SAA code share arrangement to continue to the end of 2010.

 

The Indonesia route saw substantial allocations of capacity by the Commission to both Qantas and Pacific Blue Australia, V Australia’s sister airline. Over 4,300 seats per week were allocated to Pacific Blue Australia for services to or beyond Indonesia. More than 1,400 seats per week were allocated to Qantas.

 

Another important allocation to Pacific Blue Australia was made on the Papua New Guinea route. The 900 seats per week granted to the airline enable it to operate up to five B737-800 aircraft services weekly. Pacific Blue Australia’s entry onto the Papua New Guinea route has brought substantial competition for Qantas and Air Niugini, the major established operators in this market. After appropriate assessment, the Commission also authorised Pacific Blue Australia to code share with Airlines of PNG. The Commission made several other determinations in favour of Pacific Blue Australia, to enable it to continue expanding services to island nations in the south-west Pacific region.

 

In the area of pure cargo services, the Commission allocated to Qantas cargo capacity on the Thailand and Vietnam routes.

 

The Commission approved applications from several airlines to reduce capacity on a number of routes, in response to the effects of the global economic slowdown. Some determinations were revoked, and others varied to hand back some of the capacity allocated originally.

 

The economic environment of recent times is one of the most challenging in the history of world aviation. The profitability of the Australian aviation industry has declined accordingly and there have been some failures of smaller airlines. However, our industry has demonstrated on many occasions its ability to recover from difficult operating circumstances. We are optimistic this will again be the case, and the Commission undertakes to continue responding quickly and flexibly to applications from airlines as they manage their way through an evolving situation.

 

On the administrative front, the Commission revised and updated its client service charter. The new charter covers the period 2009–2011 and is reproduced at Appendix 8. The Commission takes seriously the quality of its decision-making and the related services it provides to its stakeholders and interested parties. An important contributor to the achievement of high quality outcomes is the ongoing independence of the Commission in carrying out its role.

 

In concluding, together with Commissioners Philippa Stone and Ian Smith, I thank the members of the Commission’s small secretariat for their efficient and professional analysis, advice and practical assistance throughout the year. We again look forward to challenging times in the year ahead.  

John Martin

Chairman

PDF Version

The Commission’s Annual Report is available in PDF format for easy download and printing, the Annual Report is also avaliable in hard copy by contacting office, the details are listed below. The document reflects the information in the hardcopy of the annual report tabled in Parliament on the 13 October 2008.

• IASC annual report 2008-2009 [PDF: 1192 KB]

Previous IASC Annual Reports

• IASC annual report 2007-2008 [PDF: 2742 KB]
• IASC annual report 2006-2007 [PDF: 4642 KB]
• IASC annual report 2005-2006 [PDF: 10218 KB]
• IASC annual report 2004-2005 [PDF: 3365 KB]
• IASC annual report 2003-2004 [PDF: 5689 KB]
• IASC annual report 2002-2003 [PDF: 5867 KB]
• IASC annual report 2001-2002 [PDF: 2368 KB]

^ Top of Page