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Gladstone terminal opens for more competition & Strategic's first flight

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Strategic A320.jpgGladstone airport today opened its new $7m terminal that features expanded arrival and departure areas, security screening, and new facilities for passengers--and it could not come soon enough.

Passenger numbers have doubled at Gladstone in the last seven years, according to Minister for Infrastructure and Transport The Hon Anthony Albanese MP. Passenger numbers will further grow with Strategic Airlines' launch today of double daily weekday flights from Brisbane, made possible by recent runway expansions to accommodate larger aircraft.

The route is part of Strategic's domestic network approach to serve mining routes, head of commercial Damien Vasta says. (Internationally the carrier is looking at leisure routes not serviced or under-serviced.)

In opening the route, Strategic is taking the only other airline currently on the route, QantasLink, head on. Strategic knows that all too well, and the route is perhaps a personal calling for founder and chief executive Michael James.

"I grew up in Bundaberg and I know what it's all about to have one operator and trying to get back for a family wedding and being hit in the hip pocket," James said earlier this year.

Dash8nose.JPGAlthough Strategic's two daily flights cannot match the frequency of QantasLink, which has up to eight round-trips a day (1184 seats compared to Strategic's 608), Strategic hopes its jet Airbus A320 service, with business class and lower fares, will win passengers over QantasLink's Dash 8 aircraft. Even with lower fares, Strategic is being careful "not to enter price wars", Vasta says.

"I think there's an expectation with regional communities when they grow to a certain size that they shall be entitled to receive an aircraft that's more befitting to their growing stature," Vasta says. Gladstone's population is expected to grow 80% in the next two decades, according to Albanese.

There were reports Virgin Blue was looking to making Gladstone one of its initial routes for its turboprop fleet. The regional competition to Gladstone also picked up when Qantas said it would construct a Qantas Lounge at the airport after serving it for 29 years.

This competition underscores the financial significance of regional air transport to Australian carriers. As Qantas chief executive said earlier this year of the group's regional subsidiary, "QantasLink is the quiet achiever in the portfolio."

Gladstone's terminal has been named the the Creed-Kanofski Terminal in honour of the city's late mayor George Creed, and the Council's outgoing CEO Graeme Kanofski.

Meet Sydney's gate 40, future boarding point for Virgin A330 flights

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SYD T2 gates 39 and 40.jpg
SYD_gate40.JPGWhile Virgin Blue is preparing for the A330-200 to join its fleet--the first aircraft arrived in Melbourne last Saturday--with announcements about the new business class seat (or "chair" as it was labeled in a press kit), preparations are also underway at Sydney airport's terminal two, where the aircraft will operate from on runs to Perth.

The A330 will initially park at T2's gate 40, which sports new tarmac parking markings (right), and later gate 39, an airport spokesman says. "There are some relatively minor works required to make Bay 39 available for A330s and this will be done as needed."

Gates 40 and 39 are located at the very end of Virgin Blue's main pier at T2 and, based on one writer's visit, won't seat a full A330's passenger load. Perhaps Virgin Blue is banking on most passengers waiting in its newly-announced lounge. For those finding themselves waiting in the area, there is a cafe/bar area with powerpoints but few powerpoints elsewhere in the area.

Additional gates could be utilised pending Virgin Blue's request, the spokesman says.
"Depending on demand, there are other options but for now expect to see the A330s in T2 on Bays 40 and 39."

In the long term, the airport's 2009 master plan
"envisages the facilitation of Code E (such as A330) operation on the proposed T2 Pier C and additional operations on a further Pier A extension," the spokesman says.

For another view of gate 40, see Google Maps below. The 737 pictured is at gate 40.



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Avalon to launch rail-bus link to airport

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Fox and Rix.JPGFox and Rix at Tuesday's Avalon airport event. Photo: Will Horton

In a bid to become a more formidable opponent to rival Melbourne Tullamarine airport, Avalon airport plans to introduce a connecting rail-bus service to the airport.

Under the plan, CBD passengers will be able to take the V Line regional train to Lara station and then a connecting shuttle bus to Avalon airport. The service will cost less than $10 one-way, says David Fox, the Executive Chairman for Linfox Airports, which owns Avalon.

"Within the next two months there's going to be some announcements," Fox says at Tuesday's celebration marking the start of flights from Tiger Airways, a major boost for the airport. (You can read more about Avalon and Tiger's plans on our Air Transport Intelligence newswire.)

The only existing public transport option is a limited frequency bus that costs $20 one-way, or $36 return, for the approximately 40 minute trip to the CBD. There are currently no buses between Lara station and Avalon airport, although taxis make the trip for $15-20 one-way.

Rival Tullamarine airport offers one-way fares to the CBD for as low as $12 for the 20 minute bus ride. The shorter trip and lower fee has been in Tullamarine's favour, which Avalon is aware of.

"We're going through the process of identifying the differences between Tullamarine and ourselves here at Avalon. At the end of the day it's ten minutes," Fox says.

Drivers are already benefiting from Avalon's lower parking charges, Fox says. Avalon charges $49 for a week's parking where as Tullamarine charges $77 in a distant long-term lot. Fox also points out that unlike at Tullamarine, there are no road tolls to Avalon.

"There are huge cost savings to the punter who's flying," Fox says.

Avalon positions itself as Melbourne's--and Australia's--only low-cost airport. But airlines are not currently realising the airport's full cost benefit due to lacking fuel infrastructure.

Airlines pay a seven to eight cent per litre premium on fuel trucked in to the airport, Avalon CEO Justin Giddings says. The airport is lobbying the state and federal government to fund an $8m project to extend a pipeline one kilometre to the airport and build two fuel tanks for on-site fuel access.

Man Pounces on Tiger Terminal

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Had Tiger chosen to write a press release regarding the overnight incident of a man breaking into its Gold Coast terminal and proceeding to break windows and upend furniture, one suspects they would have given in to their tendency to use the pun "pounce".

Alas, there was no press release, so I'll make the Tiger-rific quip for them in this installment of quirky news.

To see the damage caused by the eye of the tiger, head over to the Gold Coast Carrier's 22-picture slide show. The terminal was shut down for the day and flights operated out of the main terminal. Tiger expects its terminal to open again tomorrow. Police are still investigating.

On the positive side, being an ultra-low-cost carrier, Tiger designed an ultra-low-cost terminal where there wasn't much to damage to begin with. But still, next time you read their in-flight magazine Tiger Tales, don't expect to see this Tiger tale.

A Week of Resurrected Airline Rumours

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Perhaps fitting since Sunday was Easter, this week saw two resurrected airline rumours.

TIGER TO AVALON?
First was that Tiger Airways would start flights out of Melbourne's Avalon airport, which the carrier refused to confirm or deny. Presently only Jetstar serves Avalon, 55 km from Melbourne's CBD, where transport options from the CBD are to drive or to take the one bus that departs for each flight. All other carriers use Tullamarine airport, which is 17 km from the CBD and well-linked by a bus shuttle that runs as frequently as every 10 minutes. (Jetstar also has flights from Tullamarine.)

Reportedly, Tiger would move 5-7 leisure flights a day to Avalon to presumably take advantage of lower landing fees, believed to be about $5 cheaper per passenger. Business flights, such as MEL-SYD, would remain at Tullamarine so Tiger could continue to compete head-on with Virgin Blue and Qantas. (This is much more credible than an earlier report indicating Tiger would move all of its Melbourne operations to Avalon.) There are also questions if Tiger is getting too big for Tullamarine. During its launch in early 2008, a spokesman told me it preferred each of its bases to have no more than five aircraft. According to Flightglobal's ACAS database, Tiger has 9 A320s in Australia. The majority are at Tullamarine.

Likelihood? Likely.

V AUSTRALIA TO HONG KONG?
Second was a report (PDF) V Australia might start flights to Hong Kong in October. Virgin Blue denied it. This rumour started last June when V Australia filed for the following slots at Hong Kong:

VAU17 YBBN VHHH 0400Z-1250Z 1234567 361B77W
VAU16 VHHH YBBN 1530Z-0000Z 1234567 361B77W

The daily Brisbane-Hong Kong flight was well-timed to connect with Virgin's HKG-LHR-HKG flight (200/201). The reckoning on this move is that the route would help V further expand beyond the competitive US trans-Pacific market. The BNE-HKG flight could beef up the Virgin Group's Europe-Australia presence; Virgin Atlantic has a daily LHR-HKG-SYD return, but passengers in the Brisbane area wouldn't want to fly south to Sydney in order to fly north to Hong Kong. Only Qantas and Cathay fly BNE-HKG, but neither has a daily non-stop.

"We've applied for slots to a lot of places but we won't fly to all of them," a source at Virgin Blue (V's parent company) said to me shortly after the filing for slot. "We don't have planes to fly imminently to Hong Kong," the source said at the time, but the statement still holds some truth.

V's fifth B777-300ER joins the fleet later this year, but will so far be used for the following frequency increases:
  • 1x weekly MEL-HKT for 2x weekly
  • 1x weekly MEL-JNB for 3x weekly
  • 1x weekly MEL-LAX for 3x weekly
  • 1x weekly SYD-LAX for 7x weekly
Those increases equate to 106 hours block time out of 168 hours in a week. If V was able to achieve some efficiencies and really wanted to push its fleet, it might be possible to squeeze in a twice-weekly BNE-HKG flight, but certainly not a daily operation with the current schedule.

According to Australia's International Air Services Commission, there are currently 39 frequencies per week available from BNE, MEL, PER, and SYD to HKG but V has not applied for capacity.

Likelihood? Possible.

Stay tuned.

Winners and Losers in the Jetstar, Tiger and Hobart Airport Fee Battle

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Tiger A320 TO MEL.jpg
Will Horton

South and detached (physically, although some might argue in other ways too) from mainland Australia, Tasmania is frequently forgotten. Ditto for the island state's Hobart Airport, which sees approximately 22 passenger flights a day, primarily on narrow-bodies.

But now the airport is in a fight with LCCs over fees. The airport announced last month its intention to increase from 1 July its $8 passenger fee by 50%, making the new fee $12. Hobart issued a fact sheet saying what passenger fees are used for in general, but hasn't specified why the fee is going up. It only says the last increase was three years ago (but inflation wouldn't add $4).

That increase a drop in the bucket compared to other airports (I'm looking at you, Heathrow) but enough to get Jetstar and Tiger threatening to reduce services to Hobart.

From Jetstar CEO Bruce Buchanan:

That is probably the most extreme price increase we have seen across any of the Australian airports...It is one of the extreme examples of bad behaviour by airports...We will look at all options to maintain capacity into Tassie, and if it did go through we would look at potentially shifting some of the capacity into Launceston.

From Tiger Australia's commercial director Steve Burns:
If Hobart Airport, or any airport for that matter, tries to impose higher charges, we will take immediate steps to reduce or remove Tiger Airways services and redeploy our aircraft to one of the many airports and regions who would love to see more passengers and more tourists.
To frame the discussion, Jetstar has 87 weekly flights to Tasmania, 52 of them to Hobart (the rest are to Launceston in the northern part of the state). Tiger has 25, 21 to Hobart. Hobart has a population of 206,000 and Launceston 100,000.

While Jetstar and Tiger said they might pull out entirely, the worst they would do is reduce frequency. Neither can abandon Hobart entirely. They are each secretly hoping they will stay and the other will reduce capacity. Why? If Jetstar reduces capacity Tiger will move in to pick up the loss. Buchanan says the increased fee could cause a 5-10% drop in passenger numbers. But after planning to spend hundreds of dollars between accommodation, food, and car rental will visitors suddenly be turned off from Tasmania because of an extra $4?

The cynics have asked why the airlines don't swallow the fee and pass it on to passengers, as is the norm. Here's where marketing comes in. Jetstar and Tiger are both attached to their price structure, which gives the total price inclusive of taxes and fees. Jetstar's fares end in 9 ($29, $39, etc.) and Tiger's end in 8 ($28, $38, etc.)

Jetstar:
Jetstar Hobart.jpgTiger:
Tiger Hobart.jpgAs a result, Jetstar and Tiger can't add $4. They could either keep the fare and dip into profit (or more likely, make a loss) or add $10 to the fare. If one carrier added $10, the other would have a greater competitive edge.

On one hand Jetstar and Tiger are using this situation as an opportunity to snap up market share if the other reduces its schedule. On the other hand Hobart fits the stereotype of airports wanting more money.

On the third hand (a result of the inbreeding in Tasmania), Qantas and Virgin haven't squeaked and will likely and gladly pass the fee onto passengers.

Keep on fighting, Jetstar and Tiger.