Skytrans Cease Operations

[Zac M]

Another small airline gone...
Dear valued passengers, suppliers, staff, key stakeholder and friends of Skytrans,

Skytrans Pty Ltd, the Cairns based, family owned and commercially operated airline which celebrated its 25th year of serving the people and communities of North Queensland, carried its last passenger this afternoon, Friday 2nd January 2015.

Skytrans Pty Ltd has made the decision to cease trading, effective immediately. As the Managing Director, I will seek legal and financial advice over the next few days regarding options for the business moving forward, but to be clear, it does not include the recommencement of flights in the short to medium term.

As Managing Director I have a lawful responsibility to notify regulators and other significant stakeholders when there are key impacts on the business. This has been one of those times.

This is not only a sad day for the business, but more importantly for our staff and indeed the passengers and communities of North Queensland. Yesterday, the 1st of January 2015 marked our 25th anniversary of serving the people of Queensland, particularly outback and regional Queensland, the Gulf country and Cape York.

Today there is no celebration, beyond the pride everyone in Skytrans shares in having delivered a safe reliable passenger and freight service to communities as diverse as Birdsville and Boulia, Bamaga and Brisbane. We will miss them all, for they have all been relationships built over a lifetime of trust and mutual support, collaboration and shared endeavour, and good old fashioned friendships forged easily between good people.

More details available on the Skytrans Website (http://www.skytrans.com.au)

[Rowan McKeever]

Sad news, thoughts are with the staff & their families

[Ryan Hothersall]

Shame to see another regional airline go.

Glad I got my flight on the Dasg8-100 when I did.

[Michael R]

Sad to see another regional airline fall hopefully Rex may pick up some extra staff especially from the remote ares.

[Rowan McKeever]

Rex already has the ex-Skytrans contracts to remote Qld, that's part of the reason they ended up closing

[Mick F]

Exactly. Another Australian company failing because of contracts going to overseas owned companies.

Thanks Qld government.

Mick

[Paul F]

Exactly. Another Australian company failing because of contracts going to overseas owned companies.

Thanks Qld government.

MickREX isn't an overseas owned company, its main shareholder maybe overseas based but the majority are Australian based.

[Rowan McKeever]

I think given their majority shareholder is also their Executive Chairman (i.e. has a role in the day-to-day management as opposed to just being the chairperson) that qualifies them as a foreign-controlled company which is essentially the point of Mick's comment, as I read it.

[Mick F]

As Rowan said.

The main crux of it all, is how the current QLD Government has been crapping on the entire time about how they're for supporting QLD jobs, yet they give a contract to a company who has next to nothing to do with QLD and let the QLD based company fall over as a result of losing such a big contract.

I have friends at Skytrans, so it's very sad to see it go like this.

Mick

[Paul F]

As Rowan said.

The main crux of it all, is how the current QLD Government has been crapping on the entire time about how they're for supporting QLD jobs, yet they give a contract to a company who has next to nothing to do with QLD and let the QLD based company fall over as a result of losing such a big contract.

I have friends at Skytrans, so it's very sad to see it go like this.

MickYes it is sad to see ANY airline go under, but at the end of the day REX was able to offer a better service.

[Max C]

Better how? Looks to be the exact same timetable as per the contract.

No doubt you'll see Rex expand up North as the resources work in SEQ contracts. They have plenty of spare capacity to deploy.

The remaining work in the Gulf isn't commercially viable on its own and really needs to be under a similar scheme to the TMR work.

[Paul F]

Better how? Looks to be the exact same timetable as per the contract.

No doubt you'll see Rex expand up North as the resources work in SEQ contracts. They have plenty of spare capacity to deploy.

You have just answered your own question;)

[Rowan McKeever]

Presumably Rex was cheaper due to economy of scale. I've never had any dealings with Skytrans so can't comment on what they were like but, from my experience with Rex, I can't imagine there was anything but price in this decision.

[Rob R]

As Rowan said.

The main crux of it all, is how the current QLD Government has been crapping on the entire time about how they're for supporting QLD jobs, yet they give a contract to a company who has next to nothing to do with QLD and let the QLD based company fall over as a result of losing such a big contract.

I have friends at Skytrans, so it's very sad to see it go like this.

Mick

REX, through it's subsidiary Pelair have been operating in QLD for years. Originally with Metro's and 1 E120 freighter operating night freight services along the coast. In recent years, the a Metros and E120 have been replaced by Saabs and they have expanded into FIFO.

Yes it is sad to seem they go, but I fear we will see more operators go the same way as the AUD keeps falling and the FIFO market starts to dry up.

The collapse of both Skytrans and Brindabella (last year) shows it's almost impossible for regional airlines to operate large (29 seat +) aircraft in Australia unless they have government contracts, long term FIFO contract, or have backing from one of the majors.

Regarding the QLD government contracts and the far north QLD communities (that now have no services). The local councils and the communities need to have a look in the mirror as they are partly to blame. They all want a 30 seat aircraft, however most (if not all) do not have the numbers to support a large aircraft.

If you look back at the history of these routes, up until the early 80's they were operated by F27's (DC3 before this) with the airlines making on loss on these routes. TAA (Australian Airlines) then decided to replace the F27's with the smaller J31. Although the size (18 seats) was better suited the performance of the J31 in western QLD required a chaser aircraft to bring the bags. TAA (Australian Airlines) advised the QLD government they intended to pull out of the routes and from this the government elected to put the routes out to tender.

A new company called Flight West, formed by the owner of Talair (PNG) won the tender and elected to use the B200 and within a few years E110 (Bandits) on the far north QLD routes. They operated these two types on these routes for around 10 years, even after adding the E120 and Dash 8 to coastal QLD routes. In the late 90's they decided to replace the B200's and E110's with the J32EP. The J32EP's operated the subsidised routes right up until the collapse of Flight West in 2001.
Following the introduction of the J32EPs the E110's operating out of CS on the Far North QLD routes were sold to a new company called Transtate Airlines and they operated the Bandits on these routes for around 5 years, when Transtate airlines was purchased by Macair and the Bandits were replaced with Metros.
Meanwhile following the collapse of Flight West, Macair was awarded the western routes and operated them with a Metros.
Macair operated the western routes and far north QLD routes with the Metro until they collapsed in 2007.
Following Macair's collapse, the communities approached the QLD government and demanded the next tender must include larger aircraft as they were not happy with the service they received with Macair's Metro's. The Metro was clearly the wrong type due to it's reliability issues and very small hot cabin.
The QLD government issued a tender with the requirement for larger aircraft and in late 2007/early 2008 Skytrans was awarded the contract using Dash 8's
The Dash 8 was really to big for the routes, however Skytrans were already operating it and didn't want to introduce another type. They had already sold off their smaller piston fleets.
All went well until the last few years, with increased competition in the mining (FIFO) sector, led to the lose of some large mining contracts and in recent months with the fall in the AUD has led to increased lease/ownership costs of such a large aircraft on routes that it's to big for.
Even the Saab is to big for most of these routes! If you look at the EAS routes in the USA they are all operated by smaller (19 seats or less) aircraft and these communities are happy with to have a service and don't demand larger aircraft.
So to summarise looking back at what worked in the past, all these routes in order to remain profitably for those operating need to be operated by smaller (19 seat or less) reliable aircraft, such at the B1900, B200, E110 and C208. These aircraft ate reliable (although the Bandit is a bit old) and can carry a good load of passengers and bags in hot conditions. Plus the need minimum ground support, thereby reducing costs further.

[Max C]

Paul, not a better service, but a cheaper one. Price was the primary objective in awarding the TMR contracts. Having spare capacity to deploy to the Gulf means nothing in regards to the TMR contracts as they are separate services.

Whether the Saab is a better suited aircraft than the Dash will remain to be seen but without an APU, it'll be interesting to see how they cope with the use of ground cooling equipment.

[Daniel M]

Paul, not a better service, but a cheaper one. Price was the primary objective in awarding the TMR contracts. Having spare capacity to deploy to the Gulf means nothing in regards to the TMR contracts as they are separate services.

Whether the Saab is a better suited aircraft than the Dash will remain to be seen but without an APU, it'll be interesting to see how they cope with the use of ground cooling equipment.

The old race to the bottom. I'm sure some new airline will come by in a few years, somehow operating with an Asian based crew being paid $4 an hour and they will win this contract by providing the cheapest price.

Gotta love this country !

[Rowan McKeever]

Well, when all else fails, there're a few more Dashies coming available this year...

[Rob R]

Paul, not a better service, but a cheaper one. Price was the primary objective in awarding the TMR contracts. Having spare capacity to deploy to the Gulf means nothing in regards to the TMR contracts as they are separate services.

Whether the Saab is a better suited aircraft than the Dash will remain to be seen but without an APU, it'll be interesting to see how they cope with the use of ground cooling equipment.

Why does this keep coming up? The F27 operated these routes for 30 odd years without an APU. APU equipped aircraft (Skytrans Dash-8's) were only on the routes for 5 years and where an overkill. The Dash-8 was far to big for the routes, if there was money to be made operating Dash-8's then Qantaslink would have tendered for the routes.

As I said earlier these routes are similar to the EAS routes in the USA and they are all serviced by 19 seat or less aircraft. For a 30 seat aircraft you can't go past the Saab, it's fuel burn is around 100 kg ore hour less than the Dash 8, it's a lighter aircraft and due to this, it falls into the pilot pay group below the Dash 8. But it's still to big for 80% of the routes it will be flying in QLD and my guess is next time round they (REX) will ask for more money or offer up the B1900D currently used by the subsidiary Airlink.

In other news, WestWing Aviation has stepped up to fill the void in North QLD;
http://www.brisbanetimes.com.au/queensland/cape-york-air-services-to-continue-despite-skytrans-closure-20150104-12hpkk.html
These guys have the correct mix of aircraft (6-19 seat) to actually service these communities.

[Max C]

QLink had no interest as their cost base is far higher and they have downsized the fleet of Q200's to that required to service LHI. QLink wouldn't see anywhere near the profits from the TMR routes needed to justify the amount of resources needed to service the contract.

Air-link only have 1 B1900 which wouldn't be enough to service the contract.

A fleet of B1900D's would almost be the perfect aircraft for the routes given the loads, stand up cabin, Toilet, etc but downsizing from a Dash 8 would be a hard sell.

[Rob R]

QLink had no interest as their cost base is far higher and they have downsized the fleet of Q200's to that required to service LHI. QLink wouldn't see anywhere near the profits from the TMR routes needed to justify the amount of resources needed to service the contract.

Air-link only have 1 B1900 which wouldn't be enough to service the contract.

A fleet of B1900D's would almost be the perfect aircraft for the routes given the loads, stand up cabin, Toilet, etc but downsizing from a Dash 8 would be a hard sell.

They only gave 1 at the moment, but in the past they had 2, so they can add more as required.

Agree the B1900D is the perfect aircraft for the routes, but as you said it would be hard to see the downgrade. Although they've only had a larger aircraft on the routes for 5 years out of the last 28 years. The western local governments want what their coastal towns get, big aircraft, even though the western towns don't have the numbers to support them.

If the local councils and the QLD Government actually looked at the number of passengers on these routes they would see the routes can only support a 19 seat aircraft. The only airline to survive long term on these routes was Flight West, they operated the routes the routes for 12 years and the largest aircraft they had on the routes was the J32EP (18 seats).

[Chris W]

The Queensland Government awarded these contracts based heavily on the financial stability of the company. You have to remember that these tenders came up in May of this year, hot on the heels of the Brindabella collapse. The government were very public in saying that they did not want a similar situation to arise as seen in NSW with Narrabri, Cobar and Moree.

Rex has operated subsidised routes in Queensland now for 5 years with success. It remains to be seen if they have bitten off more than they can chew. If something does have to give though, it will not be in Queensland.

[David Knudsen]

Exactly. Another Australian company failing because of contracts going to overseas owned companies.

Thanks Qld government.

Mick


And I wonder what would have been said by the opposition and media had the government awarded it to a more expensive bidder? Blaming the government is just convenient face-saving, the tender process is in place for a reason.

I assume REX must employ a few people locally and they don't fly them all in from overseas? REX have claimed (http://www.smh.com.au/business/aviation/rex-soars-in-queensland-as-skytrans-falters-20141015-116eno.html) that they've grown pax numbers on the Northern 1 and Northern 2 routes since they started them in 2011, perhaps they'll be able to achieve the same on Western 1/2 and the Gulf routes and eventually employ more people than Skytrans in communities they serve.

At the end of the day if Skytrans' business model didn't adapt fast enough after the loss of FIFO work and the TWB-SYD route (at the hands of QF Link) and their survival was based solely on 3 subsidised routes that they knew were up for renewal, one could assume that they were probably starting to get a bit wobbly anyway, so perhaps these communities are getting a more secure service into the future.

Good on Skytrans for recognising the writing on the wall and winding things up while they still had money to pay staff out, there's not too many times in our local aviation history where that has been the case.

[Mick F]

Rob,
I believe part the reason for requiring aircraft like the SAAB and Dash, was disabled passenger access.

When Macair fell over years ago, West Wing took up the TVL-HUG-RIC-JLC-ISA run as an interim with the B1900D. When the tender came out, one of the reasons West Wing missed out was because of the lack of wheelchair access.

Mick

[Rob R]

When I flew 1900D's and Bandits we loaded wheelchair passengers all the time, it just takes a little longer. Flight West operated the route for 12 years with Kingair's and Jetstreams without any problems.

The wheelchair argument is just another excuse the local governments to demand larger aircraft, when there is no need for one.

[Mick F]

Only regurgitating what was in the media at the time...

[Rob R]

I know and the media believe what the governments tells them.

[Rob R]

Looks like REX have changed their minds.

http://australianaviation.com.au/2015/01/rex-postpones-proposed-new-cape-york-routes/

Hinterland and Westwing with the 12-19 seat aircraft seem to be in the box seat.

[Rowan McKeever]

Typical Rex. Such a joke that any state / territory government would give them CSO work... go the mighty $ [emoji17]

[Nigel C]

There's life in the old dog yet....

It looks like Skytrans will fly again, with Johnathan Thurston being named as one of the investors, in partnership with West Wing Aviation owner, Colling Aviation.

http://www.smh.com.au/business/aviation/skytrans-flies-again-in-far-north-queensland-20150331-1mc7nd.html

http://www.cairnspost.com.au/news/cairns/nrl-star-johnathan-thurston-announces-investment-in-skytrans-in-partnership-with-west-wing-aviation-owner-collings-aviation/story-fnjpusyw-1227286814087