DECISION NO. CABINET MINUTE '$ .. v ( / c BRISBANE, Department of Transport - Air Queensland Se rvice s. SUBJECT:--~~---~~---~~---------------=~-------------=-~~---~------------------- J1;, ;oples Received at o-t.::> -a-;-m. v p.m. Copies Made CIRCULATION DETAILS GOVERNOR ; Decision F ile 1 21 MR. AHERN d 2 22 ~--1'~ y '( I 3 23 MR. GUNN LI~ hrnic-ci ~ - , 4 MR. GIBBS ·1 24 ,A_.___ Cf , _~,_ .... lk!l..-.:£ [r\~-- ( -- 6~ - ~~~-~ ,,,,_ 11~ MR.. GLASSO~ L t 5 25 G--,.____ \~ ---- --- MR. AUSTIN 6 f 26 MR. LESTER ' 7 2 7 lo MR. Tt;NNI 8 "" 28 - g MR. HARPER 29 10 MR. MUNTZ 30 1 1 MR. MCKECH ~IE 31 12 MR. KATTER q' 32 13 MR. NEAL 3 3 14 MR. CLAUSOJ l 34 MR. BORBIDI ;E 15 35 16 MR. RANDEL u 36 17 MR. COOP ER 3 7 18 MR. HARVEY 38 MR. LITTLE i>ROUD 19 39 Mast er F il~11o 20 40 . 1 J. : ' " I ( I . ',1 .J I ' Copy Noo 2 Q C 0 N F I D E N T I A L C A B I N E T f'l I N U T E Brisbane, 26th April, 1988 Decision Noo 54116 Submission No. 48810 TITLE~ Department of Transport - Air Queensland Serviceso CABINET decided:- 1. That the exemption of the Cairns-tJeipa and Cairns-Thursday Island (Horn Island) air routes in respect of air passenger travel ~om the "open skies" policy be continued until 31st December, 1990. 2. That in keeping with the exemption mentioned above, exclusive licensing rights be given to Australian Airlines trading as ~ir Queensland to operate the abovementioned services until 3ls December, 1990. 3. That in late 1990 the Commissioner for Transport prepare a report for Cabinet's consideration regarding the continuance or otherwise of the exemption of the Cairns-\Jeipa and Cairns-Thursday Island air routes from the "open skies" policyo CIRCULATION: Department of Transport a nd copy to Minister. Premier's Department and copy to Premier and Treasurero Treasury Department and copy to Minister. Department of Community Services and Ethnic Affairs and copy to Minister. All other Ministers for perusal and return. (l~ Certified True Copy Secre tary to Cabinet. SECURITY CLASSIFICATION "C" - CONFIDENTIAL 488!0 Submission No. Copy No. 21 F 0 R C A B I N E T DEPARTMENT OF TRANSPORT AIR QUEENSLAND SERVICES 1. During the past 10 months Air Queensland has ceased its services in Southern Queensland (1st June, 1987) and the Western Cape and Lower Gulf areas (5th October, 1987). 2 . In August 1987 Air Queensland's owner , Australian Airlines, announced its intention to cease all Air Queensland services at the close of business on 30th April, 1988. 3. Air Queensland's current air service routes are: (a) Services with Fokker Friendship F27 Aircraft ex Cairns to Lockhart Riv e r, Weipa, Bamaga and Thursday Island (Horn Island); ... I - 2 - (b) Services with De Havilland DHC-6 Twin Otter Aircraft ex Cairns to Cooktown, Lizard Island and Dunk Island; and ex Townsvj lle to Dunk Island, Proserpine, Mackay, Brampton Island and Rockhampton. 4. A map of these routes is attached - Attachment 1 . 5. On 7th September, 1987 Cabinet decided (Decision Numb e r 52437) that among other things, a submission be prepared for its consideration r egarding: (a) replacement services for the rema1n1ng Air Queensland services to be vacated on 30th April, 1988; and (b) future polic y in respect of the current exemptions of the Cairns - We ip a and Cairns­ Thursday Island (Horn I sland) air routes from the " open skies" po licy . 6 . The exempt i on s refer red t o above we re i n t rod u c e d i n conjunction with the State ' s "op e n sk i es" policy establish ed by Cabinet o n 11th May , 1987 (Decision Number 51397) under which the avai l abi lity of licenses is not limited by number but rather by the capacity of air service app licants to meet certain qualitative criteria, namely: safety and reliability , adequate insurance, operational capacity, fi nancial capacity and good repute and character . - 3 - Expressions of Interest Sought 7. On 10th and 13th February, 1988 the Commissioner for Transport advertised publicly for expressions of interest from airlines interested in providing replacement services to all centres serviced by Air Queensland (with the exception of Lizard, Dunk and Brampton Islands which are all owned by Australian Airlines) . 8. Bidding airlines were asked to provide financial justification for any proposals contingent upon exclusive licensing rights. 9. The responses received fall into two distinct categories: (i) Services with large aircraft (36-44 seats) conditional upon protection through exclusive licensing rights; and (ii) Services with smaller aircraft without exclusive rights. 10. The larger aircraft proposals , which were made in respect of the Cairns-Weipa and Cairns-Thursday Island air routes, are shown below: ... I - 4 - ATR42 (36 seat) Lloyd Aviation BAE HS 748 (44 s~at) Flight West Airlines FOKKER FRIENDSHIP F27 - Anset t Airlines (40 seat) Air Rambler and Charter Cruise Air . SHORTS 360 and DASH 8 - Sunstate Airlines (both 36 seat) 11 . In respect of the Cairns-Weipa and Cairns-Thursday Island air routes, all of the above airlines , with the exceptions of Flight West and Sunstate Airlines, proposed fares lower than the current Air Queensland fares, with Ansett offering the lowest fares (14% off Cairns-Weipa and 20% off Cairns - Thursday Island) and 25% discounted through fares from Weip a to Brisbane. How e v e r, the weekly se rvice frequency proposed by An sett for Weipa a nd Thursday I s l a nd was l ess than that proposed by the ot h er airlines and currently offered by Air Que e n s l a nd. Revised Proposals by Australian Airlines/Air Quee nsland to retain most services 1 2 . On 3rd March, 1988 the Ge neral Manager of Austra lian Airlines Mr. J. Strong a dvi se d th e Commis s ioner for Tra n s port that Au st r a lia n Airlines inte nd s to retain Air Qu eensl a nd' s F27 se rvi ces b e tw e n Cairn s a nd We ipa , Ba maga and Thur s d ay I s l a nd after 30th April, 1988 provided the c urre nt exc lus ive licen s ing rights in respect of Cairns - We ipa a nd Ca irns - Thursday I s land services remain. - 5 - 13 . Moreover on 24th March , 1988 Mr. Strong advised the Commissioner that Australian Airlines intends to retain all other remaining Air Queensland services (for which no exclusive licensing rights apply) with the exceptions of Lockhart River and Cooktown. 14 . Australian Airlines has a lso given an undertaking to the Commissioner for Transp o rt that with exclusive licensing rights Air Queensland's operation of the Cairns-Weipa and Cairns-Thursday Island services would: be until at least 31st December, 1990 ; . use its current two Fokker Friendship F27 aircraft; . hold current sector f a res fro ze n until 1990 and introduce lower through f a r e s to southern centres; . c ontinu e to s upp or t t h e Ca irn s eco nomy by b as in g flight crew in Cairns; i ntroduce improve d tim e t a bl es (tw o servi ces eac h week day) ; and . a t conside r able c ap ita l cost, insta ll compute rise d r ese rv a tion a nd c h ec k i n s y s t e ms a t We ip a a nd Thur s da y I s l and. 15 . Becau se of th e a dv a nce d s t ag s of Air Qu ee n s l a nd' s dim i nution of s t aff a nd d evo lution of c ontrol to Au st r a li a n Airlines , th e l a tt e r h as a ppli e d t o th e Co mmi ss i o n e r fo r Tr a n spor t t o tr a n sfe r Ai r Qu een s l a nd ' s lice n se to Au st r a l ian Airlines s o that Austr a lian Airline s can c arry on t he a bove me ntioned services . .. I - 6 - 16. On the Weipa, Thursday Island and Bamaga F27 services, Australian Airlines will use Air Queensland as its trading name and retain the Air Queensland name and colours on its aircraft. 17. In regard to the other services to be retained (i.e. all of the Twin Otter services listed in paragraph 3(b) with the exception of Cook town), Australian Airlines intends to operate these under a new wholly owned subsidiary - Australian Regional Airlines (Qld) Ltd - with the same Twin Otter aircraft currently used on those services by Air Queensland. 18. Licensing approval for the new company can be effected by the Commissioner for Transport approving under Section 30(4) of the State Transport Act 1960-1985, a transfer of the relevant parts of the Air Queensland license. Air Services for Lockhart River and Cooktown 19. On 31st March, 1988, the Commissioner for Transport approved an application from Sunbird Airlines to operate regular services to Cooktown and Lockhart River, thus ensuring continued air services after th Air Queensland withdrawal from these two ports on 30th April, 1988. .. I - 7 - 20. The Commissioner is currently considering other expressions of interest submissions from Norfolk Airlines and Flight West Airlines pertaining to further air services for Cooktown, Lockhart River and other "open skies" ports serviced by Air Queensland.