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Speaker 1: I want to talk aviation because aviation and commercial flights

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Speaker 1: remain in the spotlight and with a shakeup to Quantus

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Speaker 1: management following a Senate inquiry revealing I guess what some

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Speaker 1: would say, we're pretty shocking practices within the industry or

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Speaker 1: some pretty shocking revelations within the industry and the impact

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Speaker 1: on passengers with those flight cancelations we know as well

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Speaker 1: at the Darwin Airport while the runway works get underway,

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Speaker 1: as well as the Northern Territory Government's aviation attraction scheme.

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Speaker 1: There has been a lot on the agenda in this space,

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Speaker 1: there is no doubt about it. And joining me in

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Speaker 1: the studio to talk more about some of what is

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Speaker 1: happening in the aviation industry is aviation expert Bruce Dale.

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Speaker 2: Good morning to you, Good morning Katy, Good morning listeners.

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Speaker 3: Now it's lovely to have you in the studio.

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Speaker 1: You have got quite extensive experience across the board when

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Speaker 1: it comes to aviation. I know that you've worked with

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Speaker 1: the likes of Jetstar. You've worked here in the Territory

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Speaker 1: and right around the nation in the airline industry, haven't you.

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Speaker 2: Yes, I have. I think the key thing where it

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Speaker 2: all started is. I actually did my master's degree looking

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Speaker 2: at the way remote and regional destinations are reliant on

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Speaker 2: aviation and what needs to happen to drive it forward.

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Speaker 2: So you know, the Northern Territory remote destinations have always

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Speaker 2: been true to what I'm interested in. Hopefully we can

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Speaker 2: make a positive change moving forward.

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Speaker 1: Yeah, and it's something that I suppose around Australia we

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Speaker 1: talk a lot about those flight prices as well when

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Speaker 1: you come to regional and remote Australia, particularly Northern Australia.

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Speaker 3: So how do you reckon?

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Speaker 1: Over the last couple of weeks we've seen Quantus has

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Speaker 1: well and truly been in the spotlight, there's no doubt

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Speaker 1: about that. And we know that we've got a new

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Speaker 1: CEO coming into Quantus and I guess plenty of people

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Speaker 1: hoping that there's going to be a bit of a

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Speaker 1: refresh to the company. What are your thoughts on the

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Speaker 1: whole situation with Quantus at this point.

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Speaker 2: Certainly Quantus it's a brand many of us have felt

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Speaker 2: attached to. It is very sad to actually see them

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Speaker 2: in the position they are in now, but they are

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Speaker 2: going to have to work too to restore the trust

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Speaker 2: in the customers, and I think the new CEO, she's

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Speaker 2: going to be working through her own style what she

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Speaker 2: needs to do to make that happen. I think, first

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Speaker 2: of all, what is wonderful is the fact we've actually

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Speaker 2: got a female CEO that is so rare in the

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Speaker 2: aviation industry. They can bring different skill sets to a

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Speaker 2: problem and the way of looking at things, so we

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Speaker 2: will potentially get a fresh thinking and thresh thoughts from

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Speaker 2: that basis alone.

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Speaker 3: Yeah, I think everyone's hoping so, aren't they.

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Speaker 1: And I'm hoping that they might have a bit more

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Speaker 1: of a focus on places like Northern Australia or Regional

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Speaker 1: Australia more generally.

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Speaker 3: Do you think we may see a bit of a

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Speaker 3: focus on Regional Australia.

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Speaker 1: Oh?

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Speaker 3: Absolutely.

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Speaker 2: Origional Australia is very much part of Quantuses Group's business practices.

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Speaker 2: I mean they've got the Quantus Link brand, they started

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Speaker 2: in Remote Australia. Of course, long Reach and Darwin as well.

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Speaker 2: What we need to understand though, is what we want

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Speaker 2: needs to be balanced against the commercial realities of running

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Speaker 2: a business which is actually virtually the same size as

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Speaker 2: the Northern Territory economy. It is huge. I looked at

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Speaker 2: the Quantus Annuel report last night, and people don't realize

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Speaker 2: that Quantus actually burns cash at the rate of five

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Speaker 2: hundred dollars a second course of this interview they're going

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Speaker 2: to they would have burned through three hundred thousand dollars cash.

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Speaker 2: So they have really got to focus on making sure

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Speaker 2: that they actually don't burn cash. Because airlines, as I've

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Speaker 2: told my other path, the best way to make a

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Speaker 2: small fortune in the airline industry is to start with

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Speaker 2: a large one yeah yo percent, go bust. So it's

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Speaker 2: getting those balances right between what is a commercial reality

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Speaker 2: as well as the absolute importance of serving remote regions,

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Speaker 2: because there's so many other factors such as keeping family

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Speaker 2: connected medical services which need to come into the equation

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Speaker 2: as well, which is beyond just an economic transaction.

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Speaker 1: Bru's one of the biggest things that we get asked

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Speaker 1: on this show is, you know, people sort of saying,

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Speaker 1: why is it so expensive to fly from Darwin or

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Speaker 1: from the Northern Territory to anywhere else in Australia. I mean,

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Speaker 1: can you talk us through some of the factors at

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Speaker 1: play when it comes to those flight costs.

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Speaker 2: Certainly I'll talk about the probably the the three key ones.

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Speaker 2: First of all, we are a long way from most ports.

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Speaker 2: This is a stat most people will not realize, but

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Speaker 2: ninety three percent of all the flights operated in the

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Speaker 2: world are shorter than Darwin to Sydney. Wow, So we're

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Speaker 2: actually punching above our weight in terms of distance. Float

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Speaker 2: a return trip from Darwin to Sydney, you're covering a

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Speaker 2: distance nearly one fifth way around the world. So it

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Speaker 2: is a long way. So we've got to reflect that

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Speaker 2: we are a long way. Secondly, i'd say is the seasonality.

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Speaker 2: So what seasonality is is you have peak periods and

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Speaker 2: slow periods. I'm sure we've all experienced that on tiger

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Speaker 2: Burn and drive driving in morning, it's busy going in

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Speaker 2: and then there's other times it's quiet a day. But

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Speaker 2: if we think about what happens in Darwin, everybody wants

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Speaker 2: to come here during the dry season. Then it drops

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Speaker 2: off in the wet season, and because airlines need to

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Speaker 2: keep flying year round, it puts such a strain when

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Speaker 2: there's so few passengers in the wet season. It actually

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Speaker 2: strains their economic performance. That also flows through tourism businesses

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Speaker 2: as well, like hotels. They experience exactly the same problem.

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Speaker 2: So those are the two key ones which actually driving

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Speaker 2: the prices, and the other one then is because we're

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Speaker 2: seasonal and we might not be able to fill the

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Speaker 2: seats as effectively as other parts of Australia. What we

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Speaker 2: need to remember is you've got to think how many

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Speaker 2: empty seats am I paying for? Yeah, not just your seat,

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Speaker 2: but how many empty seats we're paying for?

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Speaker 1: And so does that That's obviously a factor at play

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Speaker 1: when you go to book your flights. If there is

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Speaker 1: only I suppose if there's a certain number of seats

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Speaker 1: on that flight and it's not a busy flight, then

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Speaker 1: you are actually paying extra because the flight.

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Speaker 2: Is not full potentially, So this is the other question

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Speaker 2: often get asked in the industry is why affairs or

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Speaker 2: when do I need to book for the best fares?

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Speaker 2: So what's happened since COVID is a lot of people

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Speaker 2: have delayed booking their travels, so they're often booking within

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Speaker 2: a week, month or maybe a few weeks, and airfares

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Speaker 2: work on the basis you've got quite a lot of

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Speaker 2: passengers who are paying less than cost, and then there's

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Speaker 2: a few passengers at the other extreme who are paying

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Speaker 2: above cost. So if you're leaving your travel booking to

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Speaker 2: the last minute, you're going to be in the fairbucke

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Speaker 2: who are playing well above the cost of operation, and

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Speaker 2: you're actually subsidizing everybody else who've got themselves organized and

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Speaker 2: booked to cheap fair. Yeah.

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Speaker 3: Right, so it does actually pay to book early.

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Speaker 2: Yes, we need to get back into booking early to

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Speaker 2: do that.

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Speaker 1: Now, tell me what opportunities do you see for new

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Speaker 1: airlines in the Northern Territory, Because obviously the Northern Territory

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Speaker 1: government had announced their aviation attraction scheme a couple I

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Speaker 1: guess probably six weeks ago, we'd interviewed the CEO of

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Speaker 1: Bonza Airlines.

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Speaker 3: I mean, you worked for Jetstar.

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Speaker 1: When it was when they were coming into the Northern

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Speaker 1: Territory and looking at the different the different routes that

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Speaker 1: they may introduce. So do you think that there is

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Speaker 1: capacity for us to have more airlines in the Northern

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Speaker 1: Territory and.

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Speaker 3: That opportunity absolutely.

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Speaker 2: The number of seats are available in the territory pre

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Speaker 2: COVID compared now, we've actually lost about a million seats,

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Speaker 2: So there's plenty of opportunity for new carriers to come

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Speaker 2: in and recapture some of what was lost. Also, new

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Speaker 2: carriers with different business models, different ways of service would

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Speaker 2: be well appreciated. Just with Bonza, I know one of

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Speaker 2: the senior execs there, Carlie Povey. She actually helped set

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Speaker 2: up an airline in the UK, or Jet Too, and

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Speaker 2: that consistently wins the best customer service of any airline

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Speaker 2: and it's often rated in the top ten for overall

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Speaker 2: customer service of any company in the UK. So bringing

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Speaker 2: that mindset, shaking things up, doing things different, that's what's

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Speaker 2: going to encourage new services and hopefully make people fly

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Speaker 2: over them and bring on competitions.

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Speaker 1: Oh we're all hoping, so are We were all waiting

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Speaker 1: and wondering if there are going to be any new

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Speaker 1: airlines into the market, and I know that the government's

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Speaker 1: sort of been They have been negotiating by the sounds

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Speaker 1: of things, with those airlines to see whether they can

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Speaker 1: get others into the territory. Do you think there's capacity

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Speaker 1: though not just for sort of around Australia but international flights,

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Speaker 1: additional international flights. Oh?

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Speaker 2: Absolutely. At the moment. The amount of seats are available

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Speaker 2: to places like Barley and Singapore well below pre COVID level.

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Speaker 2: The government data shows that those flights are going out

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Speaker 2: full and it's one reason why the prices are high.

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Speaker 2: I think because airlines know that they potentially can make

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Speaker 2: a little more money when demand is high supply demand,

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Speaker 2: basic economics which we might remember from school. The other

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Speaker 2: key opportunity is I think also for having better connectivity

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Speaker 2: to the north of Australia will make a significant impact

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Speaker 2: on the amount of time and distance that people travel

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Speaker 2: to get to Darwin. And the past year, offlown twice

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Speaker 2: to the UK for family reasons. Unfortunately, first time was

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Speaker 2: on the NonStop flight from Darwin to London and that

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Speaker 2: was actually distance of about thirteen thy eight hundred. The

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Speaker 2: next time was on an Amirates flight via Sydney in Dubai.

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Speaker 2: Wonderful service. But when I added up the amount of

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Speaker 2: distance I spent flying over the wonderfully beautiful Australian landscapes,

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Speaker 2: that came to thirteen thousand, four hundred kilometers. I spent

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Speaker 2: as long flying over as Australia as I could have

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Speaker 2: done flying to London. So if we don't have that

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Speaker 2: direct northbound connectivity, we're putting such a huge barrier to

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Speaker 2: our customers in terms of distance, price and also environmental

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Speaker 2: impact as well. We've got to get those international flights back.

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Speaker 1: Now, you said that we've lost around a million seats

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Speaker 1: since pre COVID.

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Speaker 3: How do we get them back?

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Speaker 2: The first thing I would say is we've got to

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Speaker 2: embrace the wet season. It's a wonderful time of year

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Speaker 2: to visit. People don't realize what it is that's up here.

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Speaker 2: I know last Christmas it was really brought home to me.

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Speaker 2: I was in the week before Christmas. I was looking

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Speaker 2: at airfares as if I was living in Sydney. In

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Speaker 2: the week before Christmas, Darwin was half the price of

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Speaker 2: flying to Melbourne. They had frequent flyer seats available on

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Speaker 2: every single flight going to Darwin. What that's saying to

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Speaker 2: me is it's Christmas time, the peak time, and airlines

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Speaker 2: are struggling to give away seats. What is going on there?

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Speaker 2: So we as a region need to actually sell the

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Speaker 2: benefits of coming to the territory in the wet season.

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Speaker 1: Now tell me, because we have spoken again, we've spoken

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Speaker 1: a lot with Tourism Central Australia and some of the

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Speaker 1: some of the loss of flights that they've seen as well,

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Speaker 1: but just how expensive it is in a lot of

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Speaker 1: ways to fly not only into other places from Alice

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Speaker 1: Springs or from Central Australia, but within the Northern territory.

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Speaker 1: Why is it so expensive to fly within the territory.

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Speaker 2: Two main reasons. First of all, we are a small

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Speaker 2: population and we've also used smaller aircraft, which by their

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Speaker 2: nature aviation is a business based on economies of scale.

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Speaker 2: So the bigger the aircraft, the cheaper the unit cost.

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Speaker 2: The smaller aircraft do come as a cost disadvantage, but

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Speaker 2: they are the right size aircraft for the market. Otherwise

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Speaker 2: again you pay too high affairs. The other reason, which

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Speaker 2: might be applicable for the territory is potentially the airport charges.

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Speaker 2: I know that if you actually go online you look

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Speaker 2: at the collective airport charges that would apply between a

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Speaker 2: flight between Darwin and our springs and that would actually

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Speaker 2: come to about one hundred and fifty dollars per person.

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Speaker 3: Wow.

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Speaker 2: Yeah, there are factors. Airports are also very expensive businesses

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Speaker 2: to operate, and just like the airlines, if they don't

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Speaker 2: get the volumes of business coming through, those charges have

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Speaker 2: to go up on a per passenger basis as well.

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Speaker 2: So by getting those passengers through. That will create a

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Speaker 2: win win situation for everyone coming through the territory and

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Speaker 2: reliant on the territory business. Sorry, every business in the

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Speaker 2: territory is relied on the visitor economy.

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Speaker 1: I guess the way I hear that though, is that

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Speaker 1: there's potentially capacity for some for the possibility of changes

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Speaker 1: if it comes sort of to having more passengers coming

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Speaker 1: into the Northern Territory. If we are able to get

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Speaker 1: more flights into the territory and get more airlines operating,

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Speaker 1: could we potentially see a reduction in those charges. I

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Speaker 1: know you don't work the at the airport, but could

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Speaker 1: you potentially see some changes to those charges.

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Speaker 2: Certainly, the base structure that airport charges are worked at

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Speaker 2: is very much dependent on the threepoot of the passengers.

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Speaker 2: So airports and airlines both recognize the more passengers that

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Speaker 2: are put through, the lower the charges become for both

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Speaker 2: the airlines and the airports. So we've really got to

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Speaker 2: start pumping those passengers through, particularly in the wet season,

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Speaker 2: so that it starts leading to lower airfares, potentially lower

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Speaker 2: airport charges, and also benefiting the economy so people have

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Speaker 2: jobs and we're not as reliant on say, full time

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Speaker 2: jobs here.

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Speaker 1: So, by the sounds of it, if we could work

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Speaker 1: on that seasonality because I know that last week the

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Speaker 1: Northern Territory Tourism Minister did release the government's ambitions for

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Speaker 1: tourism by twenty thirty, so they've really set themselves what

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Speaker 1: I would describe as a very ambitious target of up

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Speaker 1: to two point eight million visitors accounting for an associated

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Speaker 1: spend of five point three billion dollars by twenty thirty.

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Speaker 3: But they've said that three.

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Speaker 1: Additional priorities have been identified in that strategy, those being

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Speaker 1: resolving aviation access, reducing that seasonality, and their commitment to

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Speaker 1: sustainable practices. I mean, when you look at it, sounds

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Speaker 1: as though when you're looking at resolving some of the

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Speaker 1: aviation access issues, the seasonality actually has quite a big

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Speaker 1: part to play in that as well.

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Speaker 2: Yes, seasonality will be critical because we've got to be

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Speaker 2: able to give the airlines the confidence that we can

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Speaker 2: as a community can fill the seats in the wet

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Speaker 2: season and give people a reason to come here, because

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Speaker 2: the core thing you need to remember about aviation is

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Speaker 2: that the demand for seats is actually driven by what's

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Speaker 2: happening in the destination. We've seen that down in our springs.

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Speaker 2: Unfortunately with the crime issues that impacts demand up here.

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Speaker 2: The wet season impacts demand here in Darwen. So if

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Speaker 2: you can find new ways of framing what's going on

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Speaker 2: here to give the customers the message that the NTI

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Speaker 2: is a fabulous place to come to the holiday regardless

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Speaker 2: of the time of year, that's going to help then

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Speaker 2: unlock that growth and investment decisions, whether it's airlines, hotels

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Speaker 2: or anything else like that.

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Speaker 1: Hey, before I let you go, we have spoken as

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Speaker 1: well over recent weeks about the major runway works that

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Speaker 1: are underway, obviously at the Darwin Airport, which did see

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Speaker 1: Jetstar cancel those services for a month from October on

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Speaker 1: its Darwin to Temps route. Do you reckon that we're

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Speaker 1: potentially going to see other disruptions to different routes or

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Speaker 1: is that a situation where it is just because it's

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Speaker 1: an international flight and they have to fly at a

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Speaker 1: certain time and you know there are other factors at play.

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Speaker 2: It's a long program the runway works. But what I

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Speaker 2: will will how I frame this is places like Sydney Airport,

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Speaker 2: Gold Coast Adelaide, they all work with eight hour curfews

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Speaker 2: every single day of the year, so airlines are quite

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Speaker 2: used to actually working at airports where it might not

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Speaker 2: be able to use the runways. So the key thing

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Speaker 2: is once act you know what's happened, which has been released,

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Speaker 2: they're going to be in a position to be able

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Speaker 2: to plan and respond accordingly. So it's very easy to

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Speaker 2: retime flights to the other eighteen hours of the day

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Speaker 2: when the runway's open or something like that. So the

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Speaker 2: three week cancelation to Barli was very specific. It's just

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Speaker 2: because of international slots in Bali. But the response was

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Speaker 2: is once they had the surgergy on the runway, they

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Speaker 2: actually came back and increased their flights over the wet

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Speaker 2: season by twenty percent to help meet that demand because

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Speaker 2: they knew what they were going on and they're able

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Speaker 2: to negotiate with the Balinese authorities say we need these

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Speaker 2: slots so we can keep flying to Bali.

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Speaker 3: Well, Bruce, it's great to speak with you this morning.

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Speaker 1: We really appreciate your time aviation expert, and good to

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Speaker 1: actually have a chat with somebody who's based locally as

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Speaker 1: well so we can get a better understanding, particularly when

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Speaker 1: you talk about regional Australia, which I know is a

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Speaker 1: big passion for you.

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Speaker 3: So thank you very much for your time this morning.

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Speaker 2: Thank you, Katy appreciate it.

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Speaker 3: Thank you