For far too long the Canberra Sydney traveler has had to endure exhorbitant prices offered under the Qantas monopoly. I have been told that Qantas' Canberra - Sydney route is its most profitable anywhere, either domestic or international.

Which is why VirginBlue's announcment that it will be offering services on this route from next year is welcome news. So too is the Government announcement today that public servants must spend 25% of their travel budgets on airlines other than Qantas.

Bring on the competition and fairer prices!

How arch rivals colluded to hike up cost of air travel
Whistle blown on illicit contacts which led to soaring fuel levy
Dan Milmo, transport correspondent
Thursday August 2, 2007
The Guardian

It was a phone call that cost British Airways £270m and untold damage to its reputation among passengers worldwide.

On August 9 2004 the airline's then head of communications, Iain Burns, contacted his opposite numbers at Virgin Atlantic and said BA was minded to increase the levy it puts on tickets to cover the rising cost of oil - otherwise known as its fuel surcharge.

Simultaneous announcements of price hikes followed, establishing an illicit relationship that saw six further conversations and announcements by January 2006, while the surcharge climbed from £2.50 to £30 for a one-way ticket.

Though BA yesterday distanced itself from former employees implicated in the scandal as the regulatory verdicts increased the likelihood of charges, the fines on the company are far from the end of the story.

The criminal investigation on both sides of the Atlantic, by the Office of Fair Trading and the Department of Justice, is expected to focus on who initiated the discussions at BA.

At its centre is Mr Burns and his immediate boss, former BA commercial director Martin George. Both resigned last year and, according to people with knowledge of the situation, the cases against them come down to "one person's word against the other's". BA's avuncular former PR chief was popular with journalists due to his eagerness to brief off-the-record on sensitive stories. His superior had been at BA for nearly two decades and was a powerful, driven figure who narrowly missed out on succeeding Sir Rod Eddington as chief executive. Their positions in the hierarchy were summed up by their pay-offs: the PR man got "next to nothing" while Mr George received up to £1.6m.

Mr George said in his resignation letter that his department might have discussed surcharges with a competitor, but "I was not involved in such conversations". He added that the BA board had found that he had not behaved "in a dishonest way".

An alternative version of events would suggest the company's senior PR professional was instructed to call his counterparts at Virgin Atlantic to discuss surcharge increases. The calls were made at a time when the airline industry, battered by the fallout from September 11, was eager to shore up strained balance sheets as the market recovered slowly.

Both executives are attempting to reconstruct their careers but the shadow of criminal charges hangs over them. They face jail terms of up to five years in the UK if they are found guilty of price fixing. BA declined to comment on speculation that two other executives, including an employee of its cargo division, have been suspended pending the outcome of the criminal investigations, which are also looking at collusion over fuel surcharges on cargo flights.

Virgin Atlantic admitted "regret" that illegal contact had been made between the companies but would not reveal who took the calls from BA. Mr Burns's former opposite number and alleged recipient of the calls, Paul Moore, left the company about a month before Virgin Atlantic blew the whistle.

Mr Moore, a respected PR professional and now the head of communications at FirstGroup, declined to comment. His former employer closed ranks yesterday as BA's chief executive, Willie Walsh, was forced to tour the broadcast studios apologising for a scandal that started more than a year before he took the post.

The criminal inquiries to come will examine whether PR departments could by themselves coordinate the setting of fuel surcharges - a major commercial responsibility in such a competitive industry.

Virgin Atlantic said it went to the authorities as soon as its legal team discovered details of the conversations in early 2006, about a month after Mr Moore's departure. It is understood that the calls were unearthed as lawyers responded to requests for information from the OFT on alleged collusion over surcharges on cargo flights. The airline declined to comment on speculation that it had deliberately reported BA in order to gain a competitive advantage over its rival. Mr Walsh said yesterday he would have reported the illegal conversations immediately had he known about them.

Friends of Mr Burns said BA had treated him "appallingly and unfairly" by releasing him with a minimal payoff whereas his former boss walked away from the company with payments that could total more than £1.6m. Mr George left with £467,000 in salary and benefits, with a "termination fee" of £263,000. He was also given £356,000 towards his legal fees, plus a £555,397 payout from a BA incentive plan. He will receive a further £263,000 if he does not find another job over the next six months.

Mr George narrowly lost out to Mr Walsh in the contest to succeed Sir Rod Eddington, who was chief executive when the calls between BA and Virgin began.

Mr Burns was forced to move away from his family in search of work. He now lives and works in the United Arab Emirates as head of communications at Etihad Airways.

Mr Burns declined to comment yesterday as did Mr George's lawyers.
Explainer: Fuel surcharges
Fuel surcharges were the airline industry's response to rising oil prices, which have led to a sharp rise in recent years in the price of aviation fuel. For much of the 90s the world oil price fluctuated either side of $20 a barrel but it began to rise in the new millennium.

At the beginning of 2004, for example, the oil price reached $30 a barrel but yesterday it stood at an all-time peak of just below $78. Figures from the Air Transport Association show, that in the US, the average price paid for aviation fuel in 2003 was 84 cents a gallon. By last year that had more than doubled to $1.96.

British Airways first introduced a fuel surcharge in May 2004 when it added £2.50 to the price of long haul and short haul ticket prices. It was not alone. Most airlines responded to increasing fuel costs with surcharges.

As oil prices continued to rise, so did the surcharges. BA, for instance, increased its surcharges twice in 2004, three times for long haul in 2005, and again for long haul last year. At the beginning of this year, the airline cuts its fuel surcharge on long haul but increased it again in May and June.

Long haul passengers now pay a surcharge of £43 on flights of more than nine hours and £33 on shorter long haul flights.

BA, along with other airlines, argued that the increases in fuel costs were too severe to be absorbed by the airline and had to be passed on, at least in part, to passengers. It estimates its fuel bill will top £2bn this year and argues surcharges are the best way to show passengers the extent to which rising fuel prices are affecting its costs.

But not everyone has the same approach. Ryanair has criticised surcharges and has made much of its determination not to introduce them. 

The cast

The chief exec, the PR, the marketing man and the tycoon

Willie Walsh
Chief executive, BA. Joined Aer Lingus in 1979 as a cadet and became a pilot. Subsequently appointed chief operating officer and then chief executive at the troubled airline. Instituted a heavy cost-cutting programme, including the loss of 2,000 jobs. Took over as British Airways chief executive in October 2005 after six months shadowing his predecessor, Sir Rod Eddington.

Iain Burns
Appointed head of corporate communications at BA in the autumn of 2001. He rejoined British Airways from PR firm Bell Pottinger, having previously been head of the airline's news desk. Before his first spell at BA he was public relations manager for American Airlines and had held similar roles at BAA Heathrow and Manchester airport. He resigned in October 2006.

Martin George
Joined British Airways in 1987 from Cadbury and became commercial director, and in effect second in command, in 2002. He was appointed marketing director in 1997, having previously been the airline's general manager, telephone and retail sales. He resigned in October 2006 with a pay-off totalling £1.6m, including salary, benefits and termination fee.

Sir Richard Branson
Founder and chairman of the Virgin Group. Began selling music in the 1970s through mail order, then expanded into record stores and launched a record label in 1972. Has since moved into airlines through Virgin Atlantic and phone services through Virgin Mobile. Ranked 245th in last year's Forbes global rich list.

The former head of PM&C, Max Moore Wilton, continues to rally against the poor showing by our Customs, Immigration and AQIS bureaucrats at Sydney and Australian airports. Long lines, big delays, overly simplistic screening concepts ("why is everyone treated as a terrorist - aren't we smarter than that" says Max). He even suggests we consider deeper passenger profiling in order to make the airport arrival process easier and smarter.

And he's right. First impressions count. As any Australian tourist or business person can attest - LAX is one of the world's worst airports and a dump in need of a bulldozer. Their Immigration/Homeland Security/Who Cares Departments are third world standard. They have an attitude only Slobodan Milosevic could love. [Qantas Chair] Margaret Jackson's story of being investigated at LAX because she had aircraft plans in her bag is laughable if it wasn't so alarming and sexist (the officer didn't believe she as a woman would an airline Chairman).

So consider J'Berg in South Africa. Hour long plus queues for 'foreign nationals' are the norm with only a few staff in attendance who don't give a damn. They were on stike for a month recently. This from a country that relies on international visitors and tourism.

So here's an idea. IATA (body representing international airlines) and the international airlines directly should start up a global campaign to name and shame airports and countries that don't treat passengers well. We need a website rating the worst, global polls on customer experiences and email addresses of Immigration Ministers to complain to. Enough is enough.

Send me your worst airport arrival stories and countries.

And shouldn't businesspeople for starters get a faster process in international cities than a backpacker?

By Andrew Parker

This blog entry appeared in Crikey.com.au recently and is in response to false claims about the airline industry.

I work as a consultant for the aviation sector, including airlines, airports and related businesses, so I state my perspective up front.

Thomas Hunter is yet another author devoting wasted column inches to the aviation sector and its impact on global warming. In doing so he promotes a problem that is the equivalent of the corner store in a Wal Mart world. Aviation accounts for 1.7% of global greenhouse gas emissions. This is confirmed by governments, NGOs and industry. Even if its growth causes a doubling of emissions in the next 20 years, as some claim it will, aviation still won't equal the flatulence of Europe's cows (at 4%).

The focus on airlines is one of the great greenhouse furphies. Transport in total equals 14% of emissions, compared to agriculture at 18% and stationary energy at 53%. Just repeating, aviation is 1.7%.

So why is so much time wasted on aircraft? For starters it's an easy target for the intellectually weak to demonise. And TV networks have plenty of file footage of aircraft taxiing at crowded airports.

Of course climate change is a real problem. And airlines - even at 1.7% - are part of this issue and solution. But it is a matter of perspective, reality and priorities.

The aviation industry is one of the world's great innovators. Modern airlines like those in Australia, Asia, the Middle East and parts of Europe, operate new, more fuel-efficient aircraft. Aircraft and engine manufacturers are achieving amazing breakthroughs in technology. The 787 Dreamliner and A350 XWB with new GE and Rolls Royce engines will be some of the most advanced and efficient machines the world has seen.

The industry is also working with governments for smarter, shorter routes and improved air traffic control procedures. Weight is being taken out of aircraft in the pursuit of market efficiencies, particularly as aviation fuel becomes increasingly more expensive.

All evidence points to air travel being 25% more fuel-efficient by 2020. This will help limit the 1.7% of CO2 emissions attributed to air transport even further.

As you reported in Crikey yesterday, Emirates has bought 55 of the A380 - arguably one of the greenest forms of public transport in the world. This 500 seater will carry more people, using less fuel, more quietly and producing less CO2 . If only the average government bus could promise the same.

You ask for a solution. Thomas should head to China and take a look at its industrial energy use. Focusing instead on 1.7% of the problem is an otherwise dubious distraction.

Andrew Parker is the Managing Director of Parker & Partners Public Affairs and Partner at Ogilvy PR Worldwide. He also manages that firms transport and aviation practice