First Domestic Widebodies in Oz: TAA's Airbus Indigestion

Contrary to expectations the nationalised Trans-Australia Airlines was always the pacesetter, compared to Ansett, in the government managed duopoly of Australian domestic routes. Ansett itself tended to be more content with the status quo. This was again the case with widebodies, though in this case being on the bleeding edge caused TAA some major problems.

By the end of the 1970s the cosy two-airline policy, which had far from serving to protect the nationalised airline from free-wheeling private enterprise had in fact served more to protect Ansett from aggressive and progressive policies of the state owned Trans Australia, was beginning to show cracks. Trans Australia was keen to order widebodies yet Ansett was not only against the whole idea of them but also angered by TAA's lack of interest in colluding with them on the topic. Nonetheless TAA pressed onwards and unusually found backing from the Australian government, which had almost always previously backed Ansett at the expense of its own carrier. By October 1979, TAA had paid a holding deposit on its widebody of choice - the Airbus A300B4. Airbus had itself jumped at the opportunity and offered TAA delivery slots as early as October 1981 for the first pair with the third in June 1982 and the last in May 1983.

TAA preferred the A300 over the 767 as it saw the former's greater size (272 vs 229 seats) as providing greater scope for growth over the lifetime of the aircraft and making it more economical too. The A300's larger cargo capacity was also a factor. Additionally the A300 had been in service since May 1974 whilst the 767 would have only been in service for a few months by mid-1982. For the first time in nearly twenty years the government decided that the two airlines did not need to operate the same equipment - which it even saw as a benefit if it led to beneficial effects on the parallel scheduling arrangement the airlines undertook. TAA gained approval for its A300 purchase on December 5, 1979 which at a cost of $200 million was the largest Australian aircraft purchase by a domestic airline.

Despite this initiative the Australian government was always prone to throw a spanner in the works and prompty did so in August 1980 when as part of a threat to the European Community over primary industry imports the Airbus purchase was blocked. By this time TAA was heavily marketing the Airbus and the threat had little impact on Airbus by this stage as it was now freely selling its aircraft. Further TAA had made progress payments of $25 million already, would be liable for damages to Airbus if the order was cancelled and would lose its lead if it was retrospectively forced to order Boeings (as Ansett had done). Fortunately the crisis passed and on September 29 the Deputy Prime Minister announced the deal could move forward.

TAA continued to prepare for its new A300s including $36 million in capital works including a new maintenance hangar at Melbourne. Tools had cost $11 million, spares $32 million, spare engines $12.5 million plus new ground service equipment and a simulator. In the end the aircraft purchase cost amounted to only 60% of the total expense.

TAA also introduced a new identity in the lead up to its A300 introduction. The Trans-Australia Airlines name lost the hyphen and a new livery was created. Gone was the T jet and kangaroo combination in favour of Royal blue and gold stripes. TAA's first A300 actually arrived on July 13, 1981 when the appropriately registered VH-TAA 'James Cook' was delivered becoming the first domestic Australian widebody aircraft. It started scheduled operations on July 22 on the trunk Melbourne-Sydney route. By then permission had been granted for a 5th Airbus for TAA. The second A300 would arrive in August with the third in October. A300 services to Perth were able to start on September 5 and to Brisbane on September 7.

Unfortunately for TAA the timing of its A300 deliveries proved unfortunate. Accelerating fuel prices and an economic recession hit profitability and passenger numbers. The expected 7% traffic growth to support the 3 A300s in service failed to materialise and contraction was expected in 1981-82. The forthcoming arrival of Ansett's 767s in December 1982 (see my blog entry about Ansett's 767s here) and aggressive discounting to fill the widebodies were ominous signs. The arrival of the fourth A300 in July 1982 only made things worse.

A nearly $8 million operating loss was reported by TAA for the year up till July 1982 and the airline was already undercapitalised after various government decisions and an engineering strike had negatively impacted it earlier in the year. By October TAA's finances were at crisis point. Ansett was able to defer its 767s and had been able to use higher frequency (due to its larger fleet size) to offset the prestige of the A300s. TAA ideally would have liked to revert to a narrowbody fleet but could not do so. The government provided some cash, though far from enough, and TAA was able to delay delivery of its 5th A300 by a year (VH-TAE arrived finally in December 1983). By December 1982 TAA was looking to sell one of the A300s on receipt of 'any reasonable offer'. The government even canvassed for the dissolution of the entire carrier.

This sorry state of affairs came about primarily because of the constraints that existed upon TAA's operations - it did not have access to the revenue and flexibility that the many intra-state routes Ansett offered or the international services that Qantas had. The timing of the A300s was merely bad luck. TAA fought back by introducing business class on its Airbus services in October 1982, which helped it regain marketshare. Fortunately a new government in Australia produced renewed backing for TAA which received a further $90 million capital injection before June 1983. TAA was gradually able to claw its way back as Ansett finally introduced its 767s and the economic situation improved. TAA was also able to lease out two A300s which in early 1984 operated a six month lease with Condor. VH-TAA returned from that lease and promptly went out on lease again to Air Niugini as P2-ANG (see my blog post on this aircraft here). By the time she returned TAA had been Australian Airlines for several years.

The A300s proved themselves capable aircraft in the TAA/Australian Airlines and eventually Qantas fleets and it was certainly not their fault that their introduction caused TAA such trouble. Regardless of this they are symbolic of a rapidly changing era in Australian aviation where the old duopoly between TAA and Ansett began to show its first cracks which would eventually lead to full deregulation of the industry.