Airline strike threat to remote areas

A report in The Australian says that the threat of a strike by National Jet Systems pilots who operate charter aircraft for mining operations and QantasLink’s 717s has underscored the vital role aviation plays in Western Australia’s booming resource industry.

Adelaide-based NJS holds the dominate position in Western Australia, estimated to be approximately 45 per cent of the major resource contracts by passenger uplift using 11 Avro RJ70 and BAe146s and one Dash 8, as well as providing crews and support for QantasLink’s 11 717s, most of which are based in Perth.

The potential disruption also highlights the various arguments for and against the controversial fly in/ fly out (FIFO) operations that underpin many resource operations.

At 6am on a weekday, there are only a handful of “suits” in the Qantas Club, instead, there are jeans, mining boots and khaki shirts as literally thousands of mine workers commute to sites across Western Australia.

In 1969, when the state’s mineral boom was just getting a head of steam, the main intrastate airline was MacRoberston Miller Airlines (MMA), which had a tiny fleet of just six Fokker F-27s and eight 21-seat DC-3s.

Thirty eight years on, the state has the most vibrant airline/charter air service in the world — for its population size — with 28jets such as 180-seat 737s and65-seat BAe146s and 58 smaller turbo-prop and commuter aircraft.

In the 90 minutes from 5.30am, about 70 flights take off from Perth airport, with more than 50 destined for the state’s northwest.

Perth-based Skywest Airlines, which has firstly risen from the ashes of Ansett and then survived bitter ownership battles, is now flying high.

Skywest managing director and former NJS MD Hugh Davin told The Australian that the airline would more than double its jet fleet capacity by November, with five 96-seat Fokker 100s fully utilised.

A sixth arrives in March and the first 189-seat A320 will be introduced in November 2008. The airline also has seven Fokker 50 turbo-props. “The level of opportunity (for resource contacts) is increasing significantly with both renewal and new developments,” Mr Davin said. “With a global shortage of qualified resource workers, the relationship between a mining company and its employees is critical and integrity of the air service is a vital part of that delivery.”

But while the airline industry is vibrant, it is under enormous cost pressures as the resource industry plays off up to nine players: Qantas, QantasLink, Skywest, NJS, Alliance Airlines, OZ-jet, Virgin Blue, Network Aviation and Skippers Aviation.

In the past year, Alliance Airlines has started operations in Western Australia with two Fokker F-100s, while OZ-jet started earlier this year with one 737-200.

Virgin Blue is also eyeing more flights within the state, possibly using its new EMB170 and 190s, while Darwin based Air North has launched an EMB170 service from Darwin to Broome via Kununurra and from September 1 starts a weekly Kununurra-Perth service.

Complicating the resource contracts bidding process is a state government push to integrate resource charters with regular passenger transport services to otherwise isolated destinations.

Criticism of the resource industry’s critical FIFO operations from state government and regional authorities tends to gloss over the impact that this operation has on lowering the airline industry’s costs. FIFO is a more recent development in the industry, which has come about for economic and social reasons.

Well-established centres such as Karratha, Port Hedland, Kalgoorlie, Paraburdoo and Newman, which evolved in the 1960s and 1970s under then federal government policies, are served by RPT flights, while FIFO operations evolved to address isolation issues, speed travel times and offset fringe benefits tax.

While much is made of FIFO operations, according to a 2000 study, “Mining and Regional Australia: Some Implications of Long Distance Commuting”, only 47 per cent of the mining industry is employed on a FIFO basis. Understandably, 77.7 per cent of subcontractors are FIFO.

FIFO opponents raise concerns about the impact on regional communities, with a loss of economic and social elements to regional areas.

But this ignores the fact that right across Australia there has been a move from regional areas to the coast, regardless of the resource industry.

Some blame FIFO for breaking up marriages, but that outcome may be even more likely in cases where resource employees are forced to uproot their families to remote outposts such as Leonora, resource industry officials says.

Another significant factor is the high number of joint-income families, where moving to a remote town would cause loss of one income.

A 1991 survey by the Department of Mines of 26 FIFO mines indicated the main reasons for adoption of FIFO was isolation (44 per cent) and the short mine life (31 per cent).

According to another report, “Fly In/Fly Out: A Sustainability Perspective”, produced for the Chamber of Minerals and Energy, by Professor Keith Storey, an internationally recognised expert in long-distance commuting, there is lower turnover of staff and lower rates of absenteeism at FIFO sites, compared with live-in mining towns.

With serious problems relating to skills shortages, the continuation of FIFO is critical, resource industry analysts say.

The Chamber of Minerals and Energy argues that “FIFO is a key attraction to recruit and retain personnel for many remote and regional assignments”.

In many cases, FIFO operations are for the exploration and construction phase, where large numbers of workers are required for a short time and no long-term continuity can be guaranteed.

But airline and charter operators are working closely with communities to make the FIFO flights available to passengers.

NJS’s BAe146 Perth-Ravensthorpe operation is a classic example. NJS sells seats to the public while the operation is underpinned by BHP.

Skywest Airlines and Argyle recently reworked the FIFO contract for Argyle Diamonds to extend the contract and include Kununurra. This supports tourism in the Kimberley region and provides a valuable link for the area’s community.

The massive disruption of a potential pilots strike has sent shudders through mine sites. With the FIFO aircraft as important as Christmas at home and with a raft of contracts up for renewal in the next 12 months, industrial harmony will take precedence over price..

Report by The Mole