Ms CARNEY - 2001-10-23
In light of the Ansett collapse and the devastating effects on tourism, why does your government continue to ignore the requests to indemnify the liquidator of Flight West in respect of an innovative proposal by tourist operators to launch daily flight services from Brisbane to a number of key locations in the Territory, including your own electorate?
ANSWER
Madam Speaker, I thank the member for her question. It is quite true, it has been a difficult situation for the Cairns/Gove/Darwin route in the absence of Ansett, after their collapse on 14 September.
There have been a number of proposals mooted in relation to how this flight service might be reinstated. Very early, we went to the federal government on the basis of the Rapid Route Recovery Scheme, that there might be funding from the Commonwealth government to, in fact, help get a form of Flight West or a service back on the route. In those very early days, under that scheme, the Commonwealth did, in fact, move quite quickly so that Air North were able to re-establish the Groote connection which was lost as a result of the Ansett collapse. That was up and running within 48 hours.
There did not seem, in those initial stages, that there were any guidelines or any criteria to which the Commonwealth government was referring, when they were dipping into this bucket entitled the Rapid Route Recovery Scheme. Given that, we went, again, very early to the Commonwealth government to say: ‘What is available to get something back on the route?’ We were told then, very early, that a set of rules had appeared. Apparently, they had a look and thought they needed some sort of criteria by which to issue this money.
If I refer to the rules, it said - and I notice it was revised guidelines, presumably on the pretext that there were a set of guidelines in the first instance, although we never got to see these. We were told very clearly that it was provided as a one-off grant, limited to the continuation of services to communities which would otherwise be without air services. It was an impossible ask under the Rapid Route Recovery Scheme because, of course, Qantas was still swinging through south, in the morning, and again back through in the evening. So you could apply it, and apply for money out of the Rapid Route Recovery Scheme, only on those services and those routes which had lost their service altogether. Faced with that advice, there did not seem to be any assistance forthcoming from the federal government.
We wrote then, on 2 October, to the Flight West liquidator, requesting urgent information on any proposals before them in relation to getting this route back up and running, and we never heard back. In the meantime, we were still mindful of the fact that 54% of the capacity on that route had gone with the Ansett collapse. It was tight with a BAE 146 tracking through with Qantas, and we needed to alleviate that pressure. I mentioned the other day that it is impossible to go back to September, October, November last year figures and say: ‘This is the ask, this is the need’. The figures simply are not there, in view of the uncertainty around scheduling around Australia at the moment, and people are not travelling.
That does not mean to say that we did not need something back. That is where - and I spoke about it in the House last week - the Air North proposal, which we thought was a better configuration, was more likely to be sustainable in terms of profit returns to the company, rather than the $85 000 ask that the government was being asked, for a return trip Cairns/Gove/Darwin and back. $85 000 we were being asked to underwrite. We could not get the money out of the Rapid Route Recovery Scheme. We could not get it from the federal government. We are certainly not in a possible to sink $0.5m a week into a service when we have no idea what capacity was going to be on it.
There was then a view that - people were making comments that: ‘It is sustainable, it will make a profit of 40%’. Well, that is an absolute untruth. No aircraft company, no aircraft in the world on any route in the world, breaks even until they are about 65% of capacity, minimum. We are told now, given the situation, some of these companies on the routes want 70%, 75%, 80% before they will even enter the market.
On 19 October, we have had Flight West Administrator, Ian Hall, from Price Waterhouse Coopers, come back seeking financial support for a proposed Brisbane/Cairns/Gove/Darwin service.
Mr Reed: You just said you hadn’t heard from them.
Mr STIRLING: Exactly, up until the 19th. We wrote on the 2nd. When we had no response, on the 10th we moved to the Air North proposal which, of course, gives us that certainty. It is a Territory company looking to become a major player on regional routes. I would have thought the opposition would be right behind Air North. They are a great Territory company and this establishes them on a route between Cairns/Gove/Darwin/Kununurra, four times a week initially from 28 October, and moving - and I would think with every confidence - to a daily service once they are well established on that route.
Even now, there is no clear information as to whether Flight West have money out of the Rapid Route Recovery Scheme. Some are saying yes, they do, although no one has seen the colour of the money. Others are saying, well they cannot, because it breaches the guidelines that I talked about which could only be applied on routes to which no service at all applied.
This proposal has no detail, no detail at all in relation to fares, in relation to demand that they would need to make it work, the operating arrangements, whether there is federal government support or other support, in order to get it up. In the absence of that sort of detail, it is impossible for government, or myself as minister, to even have a view as to whether, and what form of support we could offer that operation, given our commitment to Air North to get back on that route and provide the capacity that we think is lacking. It is a nerve-racking game, aviation. Unless there is certainty there, they simply do not want to come on to the route. We can see room for Air North, a Territory company, to grow their business, and we look forward with confidence that that route will work.
If there are other games being played out that we are unaware of, in terms of hundreds of thousands of dollars being sunk in against the Commonwealth’s own guidelines, we need to be advised. The other point in relation to that is that, in the caretaker mode of government, the federal minister responsible for this ought to be talking to his shadow ministerial counterpart because of the bipartisan nature required for these sorts of agreements. Our advice is there has been absolutely no contact, no contact at all, with the opposition.
We are out there in the breeze a bit in relation to this proposal. Very, very scarce on detail - no confirmation of whether there is money into it at all or not. We wait for further information. In the meantime, we acted to get Air North up and running, and we expect that route to commence on 28 October.
ANSWER
Madam Speaker, I thank the member for her question. It is quite true, it has been a difficult situation for the Cairns/Gove/Darwin route in the absence of Ansett, after their collapse on 14 September.
There have been a number of proposals mooted in relation to how this flight service might be reinstated. Very early, we went to the federal government on the basis of the Rapid Route Recovery Scheme, that there might be funding from the Commonwealth government to, in fact, help get a form of Flight West or a service back on the route. In those very early days, under that scheme, the Commonwealth did, in fact, move quite quickly so that Air North were able to re-establish the Groote connection which was lost as a result of the Ansett collapse. That was up and running within 48 hours.
There did not seem, in those initial stages, that there were any guidelines or any criteria to which the Commonwealth government was referring, when they were dipping into this bucket entitled the Rapid Route Recovery Scheme. Given that, we went, again, very early to the Commonwealth government to say: ‘What is available to get something back on the route?’ We were told then, very early, that a set of rules had appeared. Apparently, they had a look and thought they needed some sort of criteria by which to issue this money.
If I refer to the rules, it said - and I notice it was revised guidelines, presumably on the pretext that there were a set of guidelines in the first instance, although we never got to see these. We were told very clearly that it was provided as a one-off grant, limited to the continuation of services to communities which would otherwise be without air services. It was an impossible ask under the Rapid Route Recovery Scheme because, of course, Qantas was still swinging through south, in the morning, and again back through in the evening. So you could apply it, and apply for money out of the Rapid Route Recovery Scheme, only on those services and those routes which had lost their service altogether. Faced with that advice, there did not seem to be any assistance forthcoming from the federal government.
We wrote then, on 2 October, to the Flight West liquidator, requesting urgent information on any proposals before them in relation to getting this route back up and running, and we never heard back. In the meantime, we were still mindful of the fact that 54% of the capacity on that route had gone with the Ansett collapse. It was tight with a BAE 146 tracking through with Qantas, and we needed to alleviate that pressure. I mentioned the other day that it is impossible to go back to September, October, November last year figures and say: ‘This is the ask, this is the need’. The figures simply are not there, in view of the uncertainty around scheduling around Australia at the moment, and people are not travelling.
That does not mean to say that we did not need something back. That is where - and I spoke about it in the House last week - the Air North proposal, which we thought was a better configuration, was more likely to be sustainable in terms of profit returns to the company, rather than the $85 000 ask that the government was being asked, for a return trip Cairns/Gove/Darwin and back. $85 000 we were being asked to underwrite. We could not get the money out of the Rapid Route Recovery Scheme. We could not get it from the federal government. We are certainly not in a possible to sink $0.5m a week into a service when we have no idea what capacity was going to be on it.
There was then a view that - people were making comments that: ‘It is sustainable, it will make a profit of 40%’. Well, that is an absolute untruth. No aircraft company, no aircraft in the world on any route in the world, breaks even until they are about 65% of capacity, minimum. We are told now, given the situation, some of these companies on the routes want 70%, 75%, 80% before they will even enter the market.
On 19 October, we have had Flight West Administrator, Ian Hall, from Price Waterhouse Coopers, come back seeking financial support for a proposed Brisbane/Cairns/Gove/Darwin service.
Mr Reed: You just said you hadn’t heard from them.
Mr STIRLING: Exactly, up until the 19th. We wrote on the 2nd. When we had no response, on the 10th we moved to the Air North proposal which, of course, gives us that certainty. It is a Territory company looking to become a major player on regional routes. I would have thought the opposition would be right behind Air North. They are a great Territory company and this establishes them on a route between Cairns/Gove/Darwin/Kununurra, four times a week initially from 28 October, and moving - and I would think with every confidence - to a daily service once they are well established on that route.
Even now, there is no clear information as to whether Flight West have money out of the Rapid Route Recovery Scheme. Some are saying yes, they do, although no one has seen the colour of the money. Others are saying, well they cannot, because it breaches the guidelines that I talked about which could only be applied on routes to which no service at all applied.
This proposal has no detail, no detail at all in relation to fares, in relation to demand that they would need to make it work, the operating arrangements, whether there is federal government support or other support, in order to get it up. In the absence of that sort of detail, it is impossible for government, or myself as minister, to even have a view as to whether, and what form of support we could offer that operation, given our commitment to Air North to get back on that route and provide the capacity that we think is lacking. It is a nerve-racking game, aviation. Unless there is certainty there, they simply do not want to come on to the route. We can see room for Air North, a Territory company, to grow their business, and we look forward with confidence that that route will work.
If there are other games being played out that we are unaware of, in terms of hundreds of thousands of dollars being sunk in against the Commonwealth’s own guidelines, we need to be advised. The other point in relation to that is that, in the caretaker mode of government, the federal minister responsible for this ought to be talking to his shadow ministerial counterpart because of the bipartisan nature required for these sorts of agreements. Our advice is there has been absolutely no contact, no contact at all, with the opposition.
We are out there in the breeze a bit in relation to this proposal. Very, very scarce on detail - no confirmation of whether there is money into it at all or not. We wait for further information. In the meantime, we acted to get Air North up and running, and we expect that route to commence on 28 October.
Last updated: 09 Aug 2016