May 5th 2001

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Articles from this issue:

Cover Story: The facts behind the rural revolt

Editorial: Rescuing the airline industry

Canberra Observed: What a Beazley Government means

Agriculture: Dried fruit industry savaged by deregulation

Text: Straws in the Wind: Our new cultural assimiladoes

The Media: A tale of two murders

National Affairs: Behind Costello's veto of Woodside takeover

Defence: Labor's new Maginot Line

Letter: Defence priority

Comment: Why Australia needs a strong manufacturing base

Globalism: Are trade treaties a Bill of Rights for Big Business?

History: Death in Life

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Editorial: Rescuing the airline industry

by Peter Westmore

News Weekly, May 5, 2001
The grounding of Ansett's fleet of 10 Boeing 767s over Easter, following the grounding of seven of Ansett's 767s at Christmas over maintenance deficiencies, and threats that the company's licence to fly aircraft would be reviewed, have been widely viewed as a failure of Ansett's maintenance program, confusion over who is responsible for compliance with aircraft maintenance, and a consequence of the company's use of ageing aircraft.

However, Qantas, the other major Australian airline, has itself been involved in a number of recent incidents. In September 1999 a Qantas 747 was involved in a minor landing incident in Perth, and in the same month, another 747 crashed on landing at Bangkok airport, causing major damage to the aircraft but, fortunately no casualties. In April last year, a Qantas 747, with over 300 passengers on board, suffered major damage when its landing gear broke while taxiing for takeoff from Rome.

Last year, thousands of small aircraft around Australia were grounded in a major fuel contamination scare, indicating that the problem extends beyond a single airline, to the Australian aviation industry which, until recent years, enjoyed an unrivalled reputation for safety and reliability.

Disaster looming

All these incidents suggest that unless urgent remedial action is taken, it is only a question of time before Australia suffers a major airline disaster. But the appropriate remedies require an understanding of the nature of the problem.

While many changes have taken place in Australian aviation in recent years, the culture shift was the deregulation of the industry in October 1990, a move which followed the deregulation of the American aviation industry in the late 1970s.

This followed a decision by the Hawke Labor Government in the late 1980s to remove controls on airfares and airline operations. As senior officials in the Department of Transport and Communications said at the time, "Deregulation of the industry was a key plank of the Government's policy on micro-economic reform." Sound familiar?

Since deregulation, there have been a number of new entrants into the previously lucrative domestic airline industry, initially Compass, and later Impulse and the British-owned Virgin Blue. These have set up high-quality but low-cost operations, forcing down airfares on the eastern seaboard, to the delight of the airline traveller.

All these factors have undoubtedly increased pressure on the major companies in the industry.

In the years following deregulation, the formerly government-owned Qantas was privatised, while Ansett Airlines, after years of cost-cutting (including maintenance), eventually was sold to Air New Zealand, a company of limited financial resources.

At the same time that the industry was being deregulated, responsibility for air safety was divided between two competing bodies, CASA, the Civil Aviation Safety Authority, and the Australian Transport Safety Bureau (ATSB).

The Bureau launched an investigation of Ansett's maintenance processes in January this year, following the discovery last December that recommended maintenance had not been carried out.

In the recent grounding over Ansett's fleet of Boeing 767s, it emerged that neither CASA nor the Transport Safety Bureau was aware, a year after Boeing had issued a service bulletin recommending that airline companies inspect all engine mountings, that this had not been done. When the checks were eventually done, hairline cracks were discovered which could have endangered the lives of passengers and crew, damaging the reputation of the Australian aviation industry.

This indicates a failure not only of Ansett's maintenance program, but equally importantly, of the regulatory system designed to guarantee the safety of air travel. Effectively, the airlines have been self-regulating.

A solution

While the threat to withdraw Ansett's flying licence may well be sufficient to get the company to comply with maintenance requirements - at least in the short term - it is equally important that the Federal Government review the regulatory processes which have allowed these events to occur.

Last July, the Senate Rural and Regional Affairs and Transport Legislation Committee held an inquiry into CASA's administration, following the Qantas incidents, and also examined the level of outsourcing of maintenance by Australian airline operators.

Despite the fact that Qantas, Ansett and CASA were invited to make submissions to the inquiry, nothing has been done.

What is needed is an air safety regulator, with the powers of the US Federal Aviation Administration (FAA), which among other things is responsible for airline compliance with maintenance processes, and has sufficient personnel to perform this function.

The FAA routinely issues enforcement orders against individuals and airline companies, imposes financial penalties on companies which breach regulations, and has power to suspends or revokes airlines' flying certificates. It shows that a deregulated aviation industry is compatible with tough enforcement of safety standards, in the interests of the travelling public.

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