The Rise and Spectacular Collapse of Ansett Australia

between the 1950s and the 1990s and set following its gradual rise from a short-haul bush airline stood as the largest carrier in australia as it dominated the market share for passenger operations across the vast nation giving even the nationalised giants and their state support a run for their money thanks to aggressive expansion only for critically flawed financial and corporate decisions to result in a spectacular collapse that was decades in the making the anset firm takes its name from company founder reginald reg anset a businessman from inglewood victoria who had previously dabbled in several industries throughout the 1920s and 30s in order to try and seek his fortune including the prospect of buying land in the northern territory to grow peanuts followed by the formation of his own service car operation between ballarat and maryborough carrying passengers and small items of freight which through much trial and error culminated in the anset motors company of western victoria and by 1935 he employed a small fleet of additional service cars that plied their trade across the state so successful was ansett motors that its influence was starting to threaten the freight and passenger revenue of victorian railways and thus the state government implemented legislation that attempted to put private road transport operators out of business and set responding by establishing his own airline on february 17 1936 called anset airways the operation of which fell under the auspices of the federal government and thus could not be sanctioned by the victorious state government operating its first route between hamilton and melbourne using a fokker universal monoplane due to the vast distances between australian regional centres especially in the outback fledgling airlines were extremely popular alternatives to sluggish railways and road transport and by april 1937 ansett was able to float the company on the melbourne stock exchange offering 250 000 shares at one pound each while also establishing a base that included a flying school at melbourne's essendon airport although ansett's lack of experience when it came to selling shares meant he wasn't able to reap an optimal profit from this venture combined with a general loss of enthusiasm for airline investments by australians following a series of crashes within the wider industry most notably the loss of an airlines of australia stinson model a in the mcpherson range on february 19th of that year killing five of the seven people aboard while the two survivors were left out in the mountainous rainforests of the lamington national park for nine days until they were eventually discovered on february 28th despite these many setbacks compounded further by underwriters refusing to handle the float and the loss of two aircraft during a hangar fire at melbourne in february 1939 ansett was able to find several wealthy investors from his previous stomping grounds of western victoria and soon money was flowing steadily back in meaning that by the time of japan's entry end in world war ii in december 1941 regan set's airline had opened up dozens of routes across southeastern australia although as part of the war effort he voluntarily chose to suspend services on all but the hamilton to melbourne route offering his new fleet of american-built lockheed l-10 electors under a charter contract with the us army air force come the end of the war in 1945 regin sets noble efforts to assist the allies on the front line meant he had a long and turbulent uphill battle ahead of him the two main carriers within australia being australian national airlines or a a a tasmania-based conglomerate owned by british and australian shipping interests which had a virtual monopoly on the major trunk routes and received 85 of all government air transport subsidies and trans australia airlines or taa which was newly founded in 1946 by the commonwealth government and worked out of melbourne this carrier having been established as a direct result of the australian national airways bill of august 1945 which set up the australian national airways commission or anac and charged it with the task of reconstructing the nation's air transport industry with a great emphasis made by parliament that it should seek to eliminate monopolies wherever possible ansett however chose to avoid directly fighting it out with his two biggest rivals in a battle he had not the resources to win and instead opted to fly in their shadows focusing on rural destinations and interstate routes not served by a a or taa while utilizing ex-wartime douglas dakotas and conveyor cv340s leading to a slow growth during the latter half of the 1940s and into the early 1950s after a gradual rise over the course of the decade the company's moment to shine came in 1957 where as a result of the airline industry overhaul undertaken by anac during the late 1940s a a under the management of sir ivan holliman was suffering financially on the domestic market as taa rapidly rose to meet it on competitive terms while attempts by holliman to expand onto international routes were stymied by the commonwealth government who held an effective monopoly on services outside australia through their state-owned airline qantas the enacting of the two airline agreement in 1952 by the federal government being made to ensure that both ana and taa could maintain a viable business on domestic routes while blocking third parties such as anset airlines from operating on inter-capital air services however on january 18 1957 hollyman died while on holiday in honolulu at the age of 61 and without his steely determination keeping a a moving forward in spite of its many setbacks the company's shareholders which comprised five british shipping companies offered to sell out to the government in order that the airline might merge with taa and some smaller carriers to reinforce the nationalised domestic firm but the state declined this offer due to their unreasonable asking price and set seeing his opportunity to rise up into the higher echelons of the australian airline market stepping in with a 3.3 million pound offer that was initially rejected by the a a company board based on a lack of confidence as to how ansett would be able to fund this takeover rumors circulating that he had the backing of two major oil companies to provide the financing a a ultimately accepting the original offer on august 23rd merging the carrier into andset transportation industries to create a new national airline called anset ana acquiring a a's fleet of douglas dc sixes and vicar's vikons ansett faced stiff competition from the national giant taa which through the support of state funding was allowed to buy larger numbers of top-of-the-range airliner models and be managed in a more streamlined way ansett now sitting in a a's former seat within the two airline policy strongly supporting the policy which had previously kept his carrier subdued the restrictive nature of the australian airline market increasing substantially following the passage of the airline's equipment act of 1958 which prescribed what aircraft each airline could buy and set backing the act in order to stop taa from being allowed to purchase the french sodavision carvel jet airliner which would have made them the first airline in the country to operate a jet-powered commercial aircraft with performance that far outstripped andset's own fleet of propeller-driven models with taa's jet aspirations curtailed for the time being ansett went on an aggressive expansion across the domestic airline market purchasing a number of regional carriers which included mcrobertson miller airlines guinea airways and butler air transport while also offering to start services to new guinea the company eventually entering the jet age from 1964 when it took possession of its first boeing 727 beating out taa's purchase of the type and set a a being renamed to anset airlines of australia in 1968 by which time it had become australia's leading domestic airline with a market share of 55 reaping immense profits ansit expanded his business interests into television during the 1960s starting in april 1963 when his ostroama television company was granted a television license to operate melbourne's third commercial television station atv 0 which undertook its first official broadcast on august 1 1964 from a specially constructed tv studio in the nunawading suburb of melbourne while also becoming a major shareholder in 1965 of universal telecasters licensees of tvq brisbane before buying out the station entirely in 1970 regen sets many contributions to business and commerce being acknowledged through an appointment as a night commander of the order of the british empire in 1969 now being the managing director of australia's biggest airline the biggest transport company in the southern hemisphere and the biggest single operator of the highly successful fokker friendship regional turboprop airliner the 1970s however brought about a new series of challenges for ansett primarily in the form of a takeover bid by hungarian australian business magnate sir peter abelers who was the owner of the logistics firm thomas nationwide transport or tnt but this bid was thwarted with the assistance of victorian premier sir henry bolt due to his long-standing friendship with ansett and because he didn't wish to see one of victoria's most significant corporations be taken over by a firm from the neighboring new south wales bolt eventually becoming a director of anset transport industries after his retirement from the victoria government ansett was truly at its peak reflected in the lavish lifestyle maintained by reg ansett himself who owned an opulent estate in the mount eliza suburb of melbourne and would travel to and from his office in the city center every day by helicopter a huge statement for an australian businessman in a time when most ceos even of the nation's largest corporations didn't even have chauffeur-driven cars while his entrepreneurial edge was inherited largely by his son robert ansett who had been estranged from reg handset after the divorce from his first wife grace in 1941 robert who returned to australia during the 1970s after living with his mother and brother in the usa introducing branches of the budget rent-a-car company within the nation eventually leading to a bitter rivalry with his father when ansett transportation industries purchased the rival avis company which at the time held a monopoly on higher car services at australian airports unfortunately while ansett was booming a change in attitudes towards the place of women in the aviation industry would leave a bitter mark on his legacy rajan said being notoriously sexist when it came to the roles female employees held within his airline often using derogatory terms to describe stewardesses over the age of 30 while also barring them from obtaining the role of pilots due to their menstrual cycles this mindset coming to a head in 1978 when debra wardly a qualified charter pilot took the company to the victorian equal opportunity board for discrimination claiming that she had been overlooked for the role of a pilot within the ranks of anset due to her gender while the carrier had argued that they had turned down her application because of her potential to fall pregnant regardless of the airline's argument on june 29 1979 the equal opportunity board ruled in favor of wardly and required that the company recruit her ansett choosing to delay its training intake so as to lodge an ultimately dismissed appeal to the supreme court of victoria and later an appeal to the high court of australia in october of the same year this appeal eventually being dismissed as well in march 1980 and wardley being allowed to fly with the company while the equal opportunities case was ongoing during late 1979 sir peter abelas with the backing of media tycoon rupert murdoch and his news corporation company successfully purchased ancient transport industries with the ownership of the company split 50 50 between murdoch and ablers who would both sit as joint managing directors with rajan set positioned as chairman murdoch taking on management of the atv 0 tv station and later merging it with his own 1010 station in sydney creating what is now known as the ten network and abel is managing the freight operations with tnt and running the airline regen set not remaining in his position for long as on december 23 1981 he passed away following a protracted illness leaving abel is fully in charge of the anset group as murdoch was more interested in developing his own expansive media empire in the united states the corporate direction of anset was left fully in the hands of the highly ambitious sir peter abelers who demanded that the company become the greatest domestic airline in the world going into the 1980s outlining a grand scheme which regardless of its lack of financial sense would place the company in a class of its own when providing onboard luxury travel for the discerning business passenger one of his more outlandish proposals in a manner similar to a scheme devised by howard hughes for his fleet of twa convair 880 jet airliners being to fit the first class sections of anset's airbus a320 fleet with gold anodizing and gold-plated ashtrays and although this was dropped following the intervention of airbus itself the decor that abel is ultimately settled upon was nothing short of magnificent with deep button plush royal blue velvet and wood grain paneling the fundamental problem with abel's aspiration for a grand airline was that he had no solid business plan in order to justify the decisions being made this being illustrated with his choice to purchase a fleet of 20 brand new airbus a3200 alongside his pre-existing fleet of 23 boeing 737-300 without any intention of the former replacing the latter the two airliner models being of similar size range and performance to one another but having absolutely no parts or operational compatibility meaning all support teams spares and crew training had to be duplicated at a needless additional cost this unwarranted waste of money famously infuriating murdoch whose own news corporation was helping to foot the ever-increasing bill while ansett could maintain such wasteful spending under the two airline policy this came to an abrupt end in late 1990 when the australian parliament voted to deregulate the airline industry bringing about a turbulent period for domestic carriers as a slew of low-cost companies began to make their mark although following the high-profile failure of compass airlines as the country's first low-cost carrier after only a year of operation in december 1991 due to the interference of the federal government parliament enacted the one nation single aviation market commitment which included the right for air new zealand to operate domestically within australia with the need to tighten the financial belts at handset and with abel is revealed to have spent much of the airline's profits financially supporting 37 different businesses and firms he had a controlling share in most of which had no relation to the aviation industry such as companies that built golf carts and lecterns as well as placing a 40 million dollar bid and fighting a lengthy legal battle with qantas to be the main sponsor airline for the 2000 sydney summer olympics in 1993 thus seeing him ousted from his position as company director in 1994 the same year that australian airlines a rebranding of what was formerly trans-australia airlines was merged by the government into qantas allowing the international carrier which had previously been barred from operating within its home nation immediate access to a fully developed domestic system while ansett proposals to expand onto the international stage had to be done from scratch on november 7th 1993 air new zealand under the single aviation market commitment began running flights between auckland taipei and bangkok via brisbane but the australian government under pressure from its own domestic and international carriers reneged on this agreement to allow air new zealand to fly domestic routes in australia in october 1994 but gave the airline the right to buy into an australian airline the intention of air new zealand being in a largely pioneering move for the australian market to create a wholly owned low-cost carrier called pacific star which would be used to undercut the legacy carriers of anset and qantas which were completely out of touch with the challenges of a deregulated airline market as per the ruling of the australian government air new zealand announced in november 1994 that it would seek a stake in anset as a means of establishing an essential beachhead in australia while back in new zealand itself the firm acquired the balance of the 50 share it didn't own in air new zealand link operator air nelson and launched freedom air international a mount cook group subsidiary which operated low-cost charter flights between new zealand and australia using a boeing 757 eventually entering a formal agreement to purchase 50 of the anset holdings limited group from tnt at a cost of 475 million dollars on september 2nd 1996 providing air new zealand a stake in the australian aviation market however rather than air new zealand's more experienced management in the airline industry operating and set the purchase deal stipulated that news corporation which still owned the remaining 50 share in the company was allowed to continue managing the airline's corporate direction and day-to-day operations a task for which it had not the competency to do so while the australian government as part of the approval of the sale to air new zealand imposed three main conditions those being that air new zealand could not relocate any head office functions to new zealand they couldn't review the anset route structure and drop any of anset's many unprofitable services and they had to maintain the anset workforce numbers at pre-takeover levels a handicap which meant air new zealand couldn't administer downsizing or other austerity measures to try and stem the massive overhead at the same time air new zealand increased its asset base by raising approximately 240 million dollars through a pro rata offer of ordinary shares while the new zealand government agreed to raise the proportion of b shares which could be held overseas from 35 to 49 of total issued capital followed in january 1997 by news limited a subsidiary of news corporation appointing sir rod eddington then chief executive of cathay pacific airways as chairman and chief executive of the newly rebranded anset australia eddington's arrival and the purchase by air new zealand leading qantas to remove its own stake in air new zealand from may 1997. followed a month later by air new zealand and australia ansett international and singapore airlines signing a memorandum that created a commercial alliance between the carriers while air new zealand secured a 50 share in the melbourne based jet set travel on may 15 1998 air new zealand ansett australia and ansett international announced they would join star alliance from march 1999 but although things looked rosy on the surface eddington had strong reservations about the airline he had inherited his proposal to convert andset operations into a low-cost carrier being stifled by the airline unions as had previously been the case during the 1980s and 90s following the purchase of carriers such as skywest in 1983 and east-west airlines in 1993 tapping into what was known as the fly-in fly-out or fifo market where on the more remote routes to destinations such as mining regions in western australia workers would be flown to the mine work for several days and then be flown back out rather than having to establish towns and communities in areas which are otherwise inhospitable amidst the prospect of anset's aging fleet eddington placed an order for seven boeing 767 300s in 1998 although his commitment was opposed by air new zealand due in large part to the financial problems being experienced by their own controlling shareholder bryony investments while further conflict came following a proposal by eddington and air new zealand managing director jim mccree to integrate the two airlines which resulted in an unwelcome response from staff at both companies due to both the industrial rivalry of the two carriers but also a general competitiveness between australians and new zealanders leading to an overall distrust between the employees of either nation this led rapidly to clashes between the two chief executives as they strove for operational and marketing efficiencies examples including air new zealand blocking eddington's push for anset international to replace the airline on the sydney to los angeles run despite the fact that ansett domestic passengers were flying qantas internationally their squabbling even coming down to whose name would head the new star alliance lounge at sydney airport the result being that planned cost savings from synergies were way behind although eddington had managed within two years as ceo to get anset back into profit and thanks to an alliance with singapore airlines was able to allow the company to develop an international presence more trouble brood though when news corp opted to abandon its 50 share in the anset company with air new zealand having received a right of first refusal on the news corporation's stake upon its buyout of tnt share in 1996 although eddington was of the belief that air new zealand's main stakeholder briley investments based on its financial protestations as to the boeing 767 order had not the capital to buy anset outright and thus turned to singapore airlines as a corporate partner to buy the vacant 50 share singapore airlines aware of the deep cultural mistrust between air new zealand and ansett seeking advice from its banker abn amro on air new zealand's ability to exercise the preemptive right to news corporations holding the airline being told that air new zealand would never attempt to buy these shares and thus singapore airlines opted to purchase news corporation's share in early 1999 with eddington committed to remain as ceo for a minimum of at least two further years backed by singapore airlines huge resources including the lease of two boeing 747-400s dubbed spaceships to operate international routes and set international was able to rapidly expand its network so as to directly combat qantas although this potentially prosperous future for the company didn't last long as briley which had a 57 share in air new zealand and controlled the company board was eager to reduce its own presence in the airline industry turning to singapore airlines to purchase part of its own share in the firm which was taken to be a conspiracy by ansett and singapore airlines to divide air new zealand up between themselves in response air new zealand made its own bid for the 50 share of anset previously controlled by news corporation blocking singapore airlines the australian foreign investment review board which could have intervened by considering the purchase of ansett wholly by air new zealand as going against national interest doing nothing to prevent the full takeover and the singapore airlines was pushed out of the picture although with air new zealand having placed an exuberant bid on the purchase of anset in order to spite singapore airlines it was now in desperate need of investment the company having no choice but to allow singapore airlines to purchase a large portion of briley's stake in the company so as to drum up financial support with air new zealand having nearly put themselves on the rocks to purchase anset mccree was removed as director of the company allegedly at the assistant of singapore airlines and 13 andset executives while eddington amid the chaotic takeover of his company left to become the new ceo of british airways replacing bob ayling after he was ousted following the disastrous project utopia tailfin scheme and putting himself at odds with the airlines unions during the establishment of a new british airways low-cost subsidiary called go a new zealand chairman sulein cushing an accountant and friend of briley founder sir ron briley taking on the chief executive position a move which was widely condemned by aviation observers due to his lack of experience when it came to operating an airline with the legacy carriers and set australia and air new zealand tearing each other to pieces richard branson was given the perfect opportunity to launch a virgin blue on august 29 2000 and with the fledgling uncertainty and government interference of the early 1990s for low-cost airlines having largely abated the strength of this new company was immediately apparent as it took a significant chunk of the passenger market on the australian domestic routes while ansett's financial situation was far more vulnerable than it was when it had faced off against the short-lived compass airlines back in 1991 with the airlines unions remaining totally inflexible as to any downsizing or streamlining as ansep began to lose out in its australian homeland and new zealand despite having nearly bankrupted itself trying to buy the firm could do little to support it with briley unwilling and largely unable to provide any funding while support from singapore airlines failed to materialize due to the atmosphere of distrust created following the battle for anset that had occurred the previous year desiring instead more of a share in air new zealand and partial ownership of anset australia this prospect stymied by new zealand law as no foreign airline was allowed to own more than a 25 share in air new zealand combined with the wrangling of local politics including an unwillingness of labour prime minister helen clark to support a company managed by sulein cushing a major financial supporter of the opposing new zealand national party clark was however unaware of the magnitude of the problems being presented due to air new zealand's significant financial investment in the severely lost making anset australia which was made apparent in november 2000 when the true fiscal situation of the new zealand national carrier broke on the stock exchange cushing being forced to appoint former qantas deputy chief executive gary toomey to run the combined air new zealand asset group from december 2000 due to his comprehensive experience of the airline industry and despite this move being opposed by singapore airlines it was more than clear that ansett australia was teetering on total collapse made worse when over the christmas peak period a series of operational and maintenance breakdowns led to the forced grounding of nine anset boeing 767s a public relations disaster that called into question the competency of anset staff in maintaining the airline's operation safely with toomey taking charge from january 2001 he first began shoring up and sets few remaining significant corporate accounts which were threatening to abandon the carrier and move over to qantas while over the easter holiday period the airline's boeing 767 fleet was grounded yet again due to a service bulletin oversight leading to the civil aviation safety authority or casa forcing them to remain out of service as reports from anset's pilots made public during the late spring of 2001 highlighted the carrier's complete breakdown of even basic operations in may 2001 impulse airlines which previously had an association with anset and ran high-density low-cost flights up and down australia's east coast was facing losses of around five hundred thousand dollars a week due to mismanagement and therefore came to an agreement with qantas to what lease all their services to the national carrier followed by their eventual absorption into qantas link in november while singapore airlines continued to make bids for the new zealand government to embrace a lift in its ownership of air new zealand which ultimately came to naught qantas emboldened by their recent agreement with impulse airlines making a surprise bid for singapore's stake in air new zealand in exchange for anset to be sold to singapore in its entirety thereby creating two equal airline alliances qantas air new zealand and singapore answered though singapore seeing anset's ever deteriorating situation opted instead to offer an increased stake in air new zealand and underwrite additional capital raising so the parent could fund badly needed aircraft for anset by june 2001 andset australia was losing 18 million dollars per week had experienced a 16 drop in revenues and a 400 million dollar loss for the 2000 to 2001 fiscal year figures which were being leaked from within the anset executive team while financial prospects considered a loss of 700 million dollars for the 2001 fiscal year that would require a host of route cuts and staff layoffs the leadership of toomey being blamed squarely for the airline's dire situation qantas in air new zealand negotiating directly from the following month which required cushing to leave his position as director due to a conflict of interest with acting chairman jim farmer endorsing singapore airlines proposal weeks of deliberation among the various company boards continuing to see anset's shares fall further and further into dismay in august 2001 proposals were made to purchase virgin blue and transfer 40 of ansett's domestic routes to that company with branson initially entertaining the offer until he was made aware of ancestors finances while singapore airlines were hesitant to negotiate with branson due to their own experience when purchasing a 49 share of virgin atlantic in 1999 during which branson had significantly overvalued the shares of the airline and thus cost them 600 million pounds to procure branson rejecting air new zealand's offer by famously tearing up a fake check for 125 million dollars while farmer had put ansett up for sale to qantas for a derivary sum of just one dollar virgin blue remaining to secure its place on the australian airline market and ansett's last saviour having abandoned it to its fate on september 12 2001 regardless of the attacks on the world trade center and the pentagon a day earlier air new zealand washed its hands of anset australia and the company collapsed into administration leaving 16 000 staff facing redundancy and dozens of regional centers and tourist destinations which relied on anset's thorough network of domestic services cut off from the air while air new zealand was renationalized on october 4th and given a cash injection of 885 million new zealand dollars the airline having lost 1.425 billion new zealand dollars throughout the entire anset debacle and sparking a wave of anti-new zealand sentiment in australia which accused them of having orchestrated the carrier's collapse through stripping its more valuable assets and charging air new zealand's fuel costs to anset's corporate account with protests cropping up in nearly every major australian city while prime minister clarke's personal 727 was barred from landing at melbourne during a state visit by disgruntled air traffic controllers however the story for ansett wasn't completely over as despite the carrier having been grounded on september 14th with a debt of two billion dollars hope did exist that with government assistance anset could return to the sky from september 27th with five airbus a320s and 1500 staff followed by discussions with singapore airlines as to their potential investment in the revived and set mark ii enthusiasm for the carrier's resumption of operations being reflected in that by october 17th over 100 000 passengers had booked seats on anset's 5 a320s flying major trunk routes the ansett administrators reaching an agreement on november 8th with the solomon lu lindsey fox consortium and tesna holdings limited to purchase the company's mainline operations and other assets in a deal valued at 3.6 billion dollars with james hogan later the president and ceo of etihad airways being appointed as chief executive from january 2002. sadly amid all this promise with anset having announced an order for 30 brand new airbus a320s and its intention to rejoin star alliance the deal to relaunch the firm collapsed on february 26 2002 literally days before the restarted airline was to recommence flights the administrators stating that fox and lou had withdrawn their bid due to an inability to complete the transaction on legal advice the two backers declaring that they had received no support from the government for their bid and thus for withdrawing their proposal as such all plans to keep the revived asset going in the long run were dropped and on march 4th 2002 the last service to fly under the anset name took to the skies that being flight 152 from perth to sydney operated by airbus a320 211 victor hotel hotel yankee india arriving in the early hours of the following day and thus bringing an end to 66 years of anset in the australian airline market former members of the anset fleet becoming common sites at aircraft boneyards and storage areas primarily in the western united states as due to the fallout of the post-911 market crash second-hand airliner values had plummeted from 300 million australian dollars to a mere 70 million australian dollars and thus it would take years for units to find new homes with different carriers while older members of the fleet were broken up for scrap in the end the collapse of anset australia was one not solely rooted in the interference of air new zealand and its own turbulent financial troubles but was instead a culmination of many factors that had stretched back decades including the wasteful management of sir peter abeles during the 1980s the deregulation and subsequent rise of low-cost carriers during the 1990s an air of distrust between the australian and new zealand workforces stemming from wider cultural skepticism and an indecisiveness between the various airlines that attempted to buy shares within the anset company a dangerous corporate mixture that in turn resulted in its inevitable collapse you

Channel: Ruairidh MacVeigh

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Keywords: Airbus, Boeing, Air, Aircraft, Airplane, Aeroplane, Airliner, Commercial Airliner, Airline, Airlines, Airways, International Airline, International, International Airport, Departure, Arrival, Take-off, Landing, Flight, Flying, Plane, Runway, Approach, Terminal, Ansett, Ansett Australia, Reginald Ansett, Reg Ansett, Qantas, Australia, Australian, Air New Zealand, Virgin Blue, Singapore Airlines, New Zealand, September 11th Attacks, 9/11, Oceania, Sydney Olympics, Boeing 747, Airbus A320, Boeing 767, Virgin

Id: yuU4mq2-B5s

Length: 31min 17sec (1877 seconds)

Published: Sat Aug 06 2022