It is too soon to confirm that laptop computers caused the Qantas jet to plunge on a flight from Singapore to Perth, according to air safety investigators.

The Airbus A300-300 jet, with 303 passengers and 10 crew on board, “pitched nose-down” on Tuesday, the Australian Transport Safety Bureau (ATSB) said.

ATSB director of aviation safety regulation Julian Walsh said the mid-air accident was in response to "irregularity" in its elevator control system.

While it has been reported passenger laptops may have caused the irregularity, the investigators said it was too early to make that call.

“It is obviously very early in the investigation and too soon to draw any conclusions as to the specific cause of this accident,” a spokesperson told reporters.

The accident hurt 74 people, who were treated by hospitals in Perth for fractures, concussions and suspected spinal injuries.

Qantas CEO Geoff Dixon said the aircraft’s flight data and cockpit voice recorders had been removed and would undergo further assessment.

“As always we will cooperate fully with the ATSB, as well as conducting our own investigation into the incident.

“Our primary concern remains the welfare of our passengers and crew on board the flight, and we are focused on doing everything possible to assist them,” Mr Dixon said.

Qantas cuts fuel surcharges

Meanwhile, Qantas has announced it would cut its international fuel surcharges by up to $20 in response to recent falls in oil and jet fuel prices.

According to the airline’s executive general manager John Borghetti, Qantas’ UK and Europe surcharges will be cut to $190 and the levies on USA, Canada, South America, South Africa and India fares will also drop from $165 to $150. Asia Pacific and New Zealand levies will fall by $10 and $5 respectively. 

In addition, Qantas domestic and regional fares across a range of routes will be reduced by 2-3 per cent.

While the oil price has currently fallen below USD 100 per barrel, Mr Borghetti said it remained very volatile and a major challenge for the aviation sector.

“At current oil prices, and even after hedging and fuel saving measures, the Qantas Group’s fuel bill this year will still be $1.3 billion higher than in 2007/08,” he said.

Virgin said it would continue to monitor oil prices, but would not follow Qantas’ move as its surcharges were already about $20 lower than those of Qantas.

Qantas did not indicate when surcharges on freight may be reviewed.

Qantas to slash international services

Following adjustments in its domestic services, Qantas has announced changes to its international services to manage the impact of soaring oil prices.

The airline’s chief executive officer Geoff Dixon said the cost of fuel had forced the company to restructure its business over the next two years.

“We have to look closely at each individual market, including the number of frequencies we operate and which of our flying businesses is better suited to serve those destinations,” Mr Dixon said.

The changes will most affect its services to Japan and South East Asia, with the withdrawal of its thrice-weekly Melbourne-Tokyo return services and a reduction in Sydney-Tokyo return services from this September, and the replacement of its 14 weekly Cairns-Tokyo services with a daily Jetstar non-stop service from this December.

To supplement the schedule changes, Jetstar would exit its Sydney-Kuala Lumpur operation to make an A330 aircraft available, and replace Qantas on the Perth-Denpasar and Perth-Jakarta routes.

Mr Dixon said the airline’s pilot base in Cairns would close, with around 40 pilots returning to Sydney or other bases, but maintain its existing cabin crew base in the location.

As a result of the international schedule changes, he said there would be a small number of job losses in Cairns and Japan, in addition to those flagged in last week’s announcement, and would also be managed initially on a voluntary basis.

Mr Dixon said : “Qantas had done everything possible to mitigate the effects of the schedule changes we have been forced to make.

“We will continue to work with individual markets and look for opportunities as conditions improve to address capacity issues and reinstate services where and when we can.”

Qantas-BA merger hits turbulence even before takeoff


Qantas is likely to continue the merger talks despite an overwhelming amount of scepticism.

Proudly-Australian airline Qantas’ merger talks with British Airways (BA) have generated hostile reactions, signalling a bumpy road ahead.

The merger speculation surfaced as BA revealed talks were underway to explore a potential merger via a dual-listed company structure, following Federal Transport Minister Anthony Albanese’s revelation that he’d allow foreign investors, including airlines, to take a stake of up to 49 per cent in Qantas.

Qantas, the world’s 10th biggest airline, also confirmed the negotiation, but said “there is no guarantee that any transaction will be forthcoming and a further announcement will be made in due course, if appropriate.”

Fuelled by the news, Qantas shares experienced a short-lived increase of nearly 10 per cent to $2.46.

The deal is expected to create a company worth more than $8 billion. While Qantas’ market value is somewhat higher than that of BA, it is understood the companies are considering taking a half each in holdings.

BA, which was forced to sell its considerable shareholding in Qantas when faced with choking debt, is also reportedly continuing merger talks with Spanish airline Iberia. The consolidation of the three carriers will create the world’s biggest airline, comfortably beating American Airlines.

The move is in line with the argument put forward by Qantas former chief executive Geoff Dixon, who has been making headlines regurgitating the need for consolidation as a survival option for the beleaguered airline industry.

It is also speculated the merger would encompass Qantas’ budget offshoot Jetstar and the freight division.

Australian, it is and will be

The foremost impediment to the merger process would be Qantas’ obligations under Australia’s international Air Services Agreements and the Qantas Sale Act, which stipulates a cap on foreign ownership at 49 per cent and total foreign airline ownership at 35 per cent.

The Act also demands the carrier’s main operational base and headquarters must remain in Australia, and it must be Australia-incorporated, with at least two-thirds of the Qantas board and the board chairman to be Australian citizens.

The Government was quick to denounce the deal, saying it would not stand by the proposal. 

“The Australian Government believes in an Australian-based and majority Australian-owned Qantas.

“At no stage as the Government indicated support for any proposal – in principle or otherwise,” Mr Albanese said in a statement.

The government went further, pre-emptively indicating it would not support any foreign mergers of other Australian airlines including Jetstar, V Australia and Pacific Blue, as well as all Australian international freight operators such as Heavy Lift Cargo, Tasman Cargo and Express Freighters.

Mr Albanese reaffirmed the Qantas Sale Act would remain unchanged except for the review of the additional ownership restriction, and stressed retaining national airlines was imperative for economic growth and national security.

“The Government is committed to growing a strong Australian-based aviation industry and Qantas is a key part of Australia’s aviation future,” he said. 

Dogged pursuit of consolidation

Despite facing a massive backlash, Qantas is likely to remain firm on its stance favouring consolidation with an aim to create a transcontinental airline.

Qantas made an attempt to merge with Malaysia Airlines earlier this year but the move was muddied by disagreement over management issues. 

According to media reports, the Australian airline also wants to join forces with Hong Kong carrier Cathay Pacific, a starter in the emerging Chinese market with a 20 per cent stake in Air China.

Australian airlines shift to survival mode


Australia’s major airlines are clipping their wings.

Capacity cuts and consolidation will be the overriding themes for major Australian airlines next year, as they struggle to stave off worse impacts of a global recession.

At the Qantas annual general meeting in Brisbane, Qantas chairman Leigh Clifford said while the company was better positioned than its rivals, the future business conditions remained extremely uncertain.

“It is impossible to predict how long the crisis will last or what specific implications it will have for economies around the world, for the Australian economy, and for the Qantas Group in particular,” Mr Clifford said.

“What we do know is that the Qantas Group must deal with high degrees of volatility in both the fuel price and in foreign exchange values.

“But few airlines can be better placed than Qantas to manage through this volatile era,” he said.

In the last fiscal year Qantas achieved a record profit before tax of $1.4 billion, a 46 per cent increase on the preceding year, but it recently slashed its forecast pre-tax profit for 2008/09 to $500 million.

In addition to 1,500 redundancies made in July, the carrier announced further capacity cuts last week, flatlining capacity growth.

Dixon wins big upon his departure

Headline-making Qantas CEO Geoff Dixon officially stepped down at the meeting, delegating impending challenges to Alan Joyce.

“The future of Qantas is certainly in very safe hands,” Mr Dixon said.

“Nevertheless, Alan takes over at yet another challenging time. I wish it were otherwise.”

He said while there was a real need for discipline in the short term, the long-term investment in new routes, fleet, product and service should continue, and reiterated the importance of consolidation in securing the carrier’s future position.

“I leave Qantas very confident indeed of its soundness as a business, the depth of talent in its management and people, and the scale and quality of its operations.

“The next step forward for Qantas will be to participate in consolidation of the aviation industry. The goal will be to position Qantas for the full modernisation of the industry, and enable this great Australian company to succeed as a great global enterprise,” he said.

Meanwhile, Mr Dixon’s exit was met with investors’ revolt over his final paycheque of $12.2 million. 

The company’s remuneration report also faced a considerable 40 per cent protest votes.

Qantas remuneration committee chairman James Strong attempted to play down the figure, saying it involved shares calculated at about $5 but the values now almost halved.

Virgin Blue expects the most difficult time ahead

Another Australian carrier Virgin Blue has tightened its belt as it expects the most challenging time to date.

”We expect the operating environment for the 2009 financial year to be the most difficult Virgin Blue has yet experienced,” chairman Neil Chatfield said at the annual general meeting.

The company over the last few months completed a strategic review of the business and accelerated a fuel mitigation program including commencement of a $50 million group-wide cost-savings program.

It would cut its capital spending by 12 per cent in the second half of the 2008-09 financial year, and curb its planned capacity growth, deferring aircraft deliveries. A freeze on all executive salaries has also been agreed.

In the 2007-08 fiscal year, the airline posted underlying net profit after tax of $140 million and revenue of 2.3 billion, up 8.4 per cent on the preceding year. 

V Australia, consolidation

Despite the immense challenges in the near future, the airline has high hopes for its new long-haul offshoot V Australia, set to be launched on 28 February 2009. The subsidiary will enable the company to offer flights on the less competitive Sydney-Los Angeles lane.

“Looking forward, we remain enthusiastic about the launch of V Australia.

“Despite launching in less than optimal circumstances, the fact remains that the Australia to US market has limited competition and we remain convinced of the potential of V Australia in the medium to long term,” he said.

In line with Mr Dixon’s view, Mr Chatfield said the current market conditions would fuel the industry’s move towards mergers.

“During the past few months, industry rationalisation on a regional and global scale has gained momentum.

“We expect this to continue and believe that economic conditions will driver further need for consolidation, including merger activity, across the industry,” he said.

Qantas still safe: Dixon

Qantas mid-air explosion.

The Qantas mid-air explosion in July left a hole on the jet’s fuselage.

The lately accident-prone Qantas has said it would work closely with safety authorities to implement corrective actions, but Federal Infrastructure Minister Anthony Albanese has warned the carrier could experience another incident.

A preliminary investigation report into the mid-air explosion in July found while the fuselage and some flight system sustained damage, the aircraft “continued to operate safely”.

The report released by the Australian Transport Safety Bureau (ATSB) said one of the B747-400’s oxygen system cylinders failed but safe operation enabled the aircraft to land in Manila without further incident.

The carrier’s chief executive Geoff Dixon said the ATSB’s preliminary conclusions were in line with its own investigation.

“We will continue to assist the ATSB to ensure the factors that may have contributed to the incident are understood and that any corrective actions ultimately identified are implemented,” he said.

He said the jet involved in the Manila accident would be repaired at a cost of less than $10 million to be back in service in this November.

He added the company would also collaborate with the Civil Aviation Safety Authority (CASA) to implement the recommendations included in its review of the airline’s engineering and maintenance operations. 

Deputy chief executive of CASA operations Mick Quinn said the authority has identified “emerging problems”.

“CASA has looked carefully at the Qantas maintenance systems and performance and uncovered signs of emerging problems,” he said in a statement.

“The review found maintenance performance with Qantas is showing some adverse trends and is now below the airline’s own benchmarks.”

Mr Dixon said these difficulties, while improving, would continue for a few weeks.

“These issues are not about safety or compliance and we are working to bring our network performance back to the standards which have earned us a reputation as one of the best and most reliable airlines in the world,” he said. 

The company underwent over the past 12 month more than 100 external audits, including 14 by CASA and on by the International Air Transport Association (IATA).

Commenting on air safety and the Qantas incident in Manila, Federal Infrastructure Minister Anthony Albanese said this type of accident could happen again.

Mr Albanese said the government could step in to ensure any recommendations made by the ATSB are implemented.

“We need to put in place any measures from the report and recommendations that the ATSB make will be implemented in full by the government,” he told the Nine Network.

While “issues of concern” still remain, he said Qantas had coped with the accident extraordinarily well.   

“One of the things that must be not forgotten about this is the extraordinary response from the Qantas pilot and crew,” he said.

Meanwhile, the carrier faced yet another maintenance glitch early this week, when a Qantas flight from Singapore to London was diverted to Germany after vibration prompted one of its engines to be shut down. A company spokesperson said the Boeing 747-400 carrying 350 passengers landed in Frankfurt without incident.

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