As late as 1969, Western Australia’s ‘major’ internal airline MacRoberston Miller Airlines (MMA) had a tiny fleet of just six prop jet aircraft and eight DC-3s to serve the entire State.
As late as 1969, Western Australia’s ‘major’ internal airline MacRoberston Miller Airlines (MMA) had a tiny fleet of just six prop jet aircraft and eight DC-3s to serve the entire State.
Thirty five years on, WA has one of the most vibrant airline/charter air services in the world for its population size, which has been built on the back of the resources boom.
There are now 19 jets such as 180-seat 737s and 65-seat BAe146s and countless smaller turbo-prop aircraft serving the State.
And from July, eight 106-seat Boeing 717s will be based in Perth to operate for Qantaslink.
However, while the industry is vibrant, it is under enormous cost pressure as the highly competitive resources industry seeks to keep costs down.
Additionally, airlines such as Skywest Airlines battle to win leisure traffic to tourist destinations like Albany against such airfares in the market as Perth-Sydney for just $230 or Perth-Adelaide for $149.
A simple solution would appear to be to combine resource charter flights with regular airline flights.
But like virtually everything in aviation the reality is the opposite of what it seems.
According to Boeing’s figures, up to 75 per cent of the cost of an airline ticket is a combination of having the aircraft sitting on the ground waiting for passengers – the infrastructure cost – and the taxes and charges related to taking off and landing.
To go back to a milk run-styled operation of multi-stops would send fares sky-high and be a major deterrent to tourism.
And it is the huge airline infrastructure that the resource industry indirectly uses that underpins the entire airline system in Western Australia.
Without the resource industry’s business, intra-state services would quickly revert back to the 1960s level of activity with milk-run type operations to most centres with only Broome justifying daily non-stop jet services and a level of competition.
Criticism of the resources industry’s fly-in/fly-out (FIFO) operations – where workers commute to the site on a one or two weekly basis – tends to gloss over the impact that this operation has on lowering the airline industry’s costs.
FIFO increases the number of passengers carried thus lowering airline operating costs by spreading direct operating costs through better utilisation and optimum crew time.
This in turn leads to lower fares in the market place which are generally better comparatively than other regional operations around Australia.
FIFO is a more recent development in the industry which has come about for economic and social reasons.
Well established centres such as Karratha, Port Hedland and Newman, which evolved in the 1960s and 1970s under then Federal Government policies, are served by Regular Passenger Transport (RPT) flights, while FIFO operations evolved to address isolation issues and to offset Fringe Benefits Tax.
While much is made of FIFO operations, according to a 2000 study Mining and Regional Australia: Some Implications of Long Distance Commuting by Lindsay Hogan and Peter Berry, only 47 per cent of the mining industry was employed on a FIFO basis. Understandably, 77.7 per cent of subcontractors are FIFO.
Opponents of FIFO raise concerns about the impact on regional communities, with a loss of economic and social value to regional areas.
But this totally ignores that right across Australia there has been a move from regional areas to the coast, regardless of the resources industry.
Australians today are far more demanding in their social needs. Families look at overall quality of life issues in their decisions about where to live, particularly when education, family development, entertainment and social interaction are high on the agenda.
The resource sector attracts workers from all over Australia and overseas who are prepared to commute, whilst many Western Australians commute much further to an increasing number of destinations in Africa and the North Sea.
It is truly a global industry and skilled workers are demanding high salaries and are prepared to travel further but they also demand a stable and comfortable home environment.
Some blame FIFO for breaking up marriages but that outcome may be even more likely in cases where resources employees are forced to uproot their families to remote outposts, like Leonora.
Another significant factor is the high number of joint income families, where moving to a remote town could cause loss of an income.
A 1991 survey by the Department of Mines of 26 FIFO mines indicated the major reasons for adoption of FIFO was isolation (44%) and the short mine life (31%).
According to a report Fly In/Fly Out: A Sustainability Perspective produced for The Chamber of Minerals and Energy, Professor Keith Storey, an internationally recognised expert in long distance commuting, maintains that there is lower turnover of staff and lower rates of absenteeism at FIFO sites, compared with resources towns. This indicates a happier workforce – a key indicator of happy families.
With serious problems relating to skills shortages, the continuation of FIFO is critical, say resources industry analysts.
The Chamber of Minerals and Energy argues that: “FIFO is a key attraction to recruit and retain personnel for many remote and regional assignments.”
There have been calls from some regional councils for FIFO operations to be combined into RPT operations to bring more services to regional communities, while some airlines in the past, after losing a FIFO contract, have lobbied for the combination of the FIFO contract with its RPT operation.
This lobbying is ill-founded and ignores the fundamentals of why FIFO exists and the basics of airline economics. In many cases, FIFO operations are for the exploration and construction phase, where large numbers of workers are required for a short time and no long term continuity can be guaranteed.
Airline economic efficiency is all about flying non-stop to destinations, as evidenced in the US, where Southwest Airlines, which operates mostly non-stop operations, is consistently profitable.
In contrast, all other US airlines operating hub-and-spoke operations, based on multi-stops, are losing millions.
It is the same story in Europe, where Ryan Air and Easyjet are flying high by offering passengers non-stops.
Turning some of WA’s resource FIFO operations into milk-runs would send costs and fares soaring.
However, airline and charter operators are working closely with communities to make the FIFO flights available to passengers.
The new NJS BAe146 Perth-Ravensthorpe operation is a classic example. NJS sells seats to the public while the operation is under pinned by BHP Billiton, which is developing the Ravensthorpe nickel project.
Skywest Airlines and Argyle Diamonds recently reworked the FIFO contract for Argyle to extend the contract and include the nearby town of Kununurra. This will support tourism in the Kimberley region and provide a valuable link for the community of the area.
WA’s aviation sector is now regarded as industry best practice and extremely responsive to market needs. The success of the aviation sector is a fine balance between sustained economic demand and operational realities.
The government is taking a responsible role in seeking tenders for tourism or light demand routes where only one operator can be sustained but the realities of the market must dictate solutions for the rest of the State.
Geoffrey Thomas is the senior editor of industry trade journal Air Transport World and worked in north-west WA with MMA from 1970-72.
