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Air Australia's Failure: Where is the Rescue Plan for a Nation's Reputation?
By Alan Morison Friday, February 17, 2012
About 4000 passengers have been left stranded in Hawaii, Phuket, Bali and Australia, said a spokesman for the administrator, who told CNN that the airline had sold 100,000 tickets that could end up worthless.
PHUKET: The Air Australia failure calls into question the capacity of Australian regulators to make sound judgements about airlines and leaves Phuket with a hole where much of its Aussie tourism should be.
It was evident last year, before Strategic Airlines relaunched as Air Australia, that its backers were disinclined to tell passengers the truth.
Strandings of hundreds of Strategic passengers on Phuket and in Bali should have shocked the Aussie regulators into demanding answers.
Keeping quiet when things go wrong appears to be a trait of both Air Australia and Australia's regulators.
Now there are hundreds and possibly thousands of passengers who have booked on Air Australia who will be wondering whether they will see their money again.
Australian Prime Minister Julia Gillard's call for other airlines to help stranded passengers fly off Phuket is a limp response to a situation that calls for an aircraft or two to be sent to rescue the stranded passengers - and save Australia's reputation.
The passengers waiting on Phuket last night for a flight home were never told the truth until there was no denying it. The airline couldn't pay for the fuel for their plane ride home.
It was the same last year during the notorious Strategic strandings when the immature airline brand did not release information to passengers.
Phuketwan only discovered that the strandings had taken place on Phuket when an irate passenger called. How much of a grilling did Strategic ever get about those strandings?
What questions were asked when it was revealed that the airline was to relaunch in November as Air Australia?
Because the marque carries the national name, you'd think there would be some attempt to make sure it could keep flying.
November to February . . . three months in the air, and then into voluntary administration. A short-haul trip.
Australia is supposed to be prospering while much of the world faces recession, yet its airline officials let a brand carrying the nation's name slide to an abrupt halt inside three months.
Hundreds of people - perhaps thousands - now appear to be out of pocket and unlikely to be refunded the cash they have invested in trusting a name, Air Australia.
The Air Australia failure is a sign that perhaps the country is not as full of promise as it seems if the trust invested in the nation's own name by its own citizens proves, in the end, to be worthless.
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Comments
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Hope everybody gets home safely our pm's name is Julia not Julie!!!
Posted by
dave47
on
February 17, 2012 12:37
Editor Comment:
Yes, ' course it is. Thanks.
It is pretty shocking. Reports are that it is now up to passengers to book and pay for alternative flights home. Credit card payers should eventually get a refund on the Air Australia ticket, but could still be significantly out of pocket.
There are reports of Quantas gouging stranded passengers and charging top dollar for flights home. The Aussie government should do the decent thing and charter a couple of planes to fly folk home. In the fullness of time, the government needs to critically look at the way airlines are insuring their passengers in the event of insolvency.
Posted by
Mr Man
on
February 17, 2012 12:37
Maybe you can explain to me why a government should make provisions to bail out a private business simply because that business chose to use a nations name in its title.
The Australian government has no obligation to bail this obviousely troubled business out. After there last disaster under the Strategic name I would have thought that anyone flying on this airline would have researched alternatives or made sure they had travel insurance.
On top off that Australian airline regulators have a responsibility to maintain safety standards, they are not tasked to investigate the financial well being of private companies nor should they be.
The failure by regulators here in Australi may be in the area of financial probility however this company has gone into receivership as soon as the administrators realised that the company was not financially viable. Which complies with Australian Law.
Posted by
Arthur
on
February 17, 2012 12:57
Editor Comment:
Unfortunately, Arthur, the law doesn't fly. Any government that lets its citizens down by failing to properly safeguard them or their money will face problems at the ballot box. The name is an additional source of national embarrassment.
To state somehow that the use of Australia in a company name implies a government endorsement of that company is ludicrous. I own a small corporation in Canada that has Canada in the name as well. The company is 30 years old and while never showing any huge profits, it remains solvent. However, if tomorrow I was unable to pay my creditors or provide (already paid for) services to my customers, it would hardly be considered a reflection on the reputation of Canada.
While it might be noble of the govt.of Australia to charter flights for stranded passengers, it is hardly their obligation to do so - nor would a lot of taxpayers deem it appropriate. What usually happens in these cases is other competitor airlines offer seats at a reduced fare and even free sometimes. This is usually done as a gesture of good will, but it is also a marketing strategy designed at attracting customers who might be disposed to showing loyalty to the rescuing airline in the future.
It's just plain silly to suggest that because a company has its country's name in the title, somehow the country is obligated to meet that company's obligations if it fails. The only corcumstance where that idea might hold water is if the government is an actual shareholder in the company.
Posted by
bob in canada
on
February 17, 2012 13:43
Editor Comment:
Nobody said that, bob in canada. But the use of the words 'air australia' certainly heaps on the national and international embarrassment. Is you company seeking to carry passengers under canada's name to Bali, Phuket and Honolulu? I thought not. Why change the brand from Strategic to Air Australia except to cash in on national pride? People outside Australia will all note the name, and the sad ending. And I am willing to bet the cartoonists in Australia will have a field day. The government would have been well advised to be seen to react. As most people now agree, capitalism's market forces are no longer cool.
A bit ruthless Arthur. Sure, the Aussie government probably doesn't legally have to fly these guys home, but morally and compassionately, it would be a nice gesture. It would be a cheap and popular solution. At this moment, I'd bet most of the stranded would happily accept a flight in the cargo hold of a Royal Australian Air Force plane ! Sometimes Arthur, karma bites those who take the legal high ground.
Posted by
Mr Man
on
February 17, 2012 14:07
A simple search of Strategic airlines will reveal that one reason for there name change was that the original airline was under investigation for fiddling the books when they were under contract to the Defence Department.
I cannot see why the government has to bail out every aussie who gets into trouble overseas. First evacuating Australians of Lebanese extraction who thought going back to a war zone was a good idea. Then all the crap over the bar mat lady, Corby, the Bali nine, the Bali teen and so on.
Having said all that the government will probably give in and waste money on another evacuation of people who thought price equalled quality.
I hope they all get home safe but whats wrong with travel insurance and making sure you can cover the costs of majors problems when you travel. In other words whats wrong with planning and being responsible.
And yes I expect to be pillored for this post
Posted by
Arthur
on
February 17, 2012 16:33
Editor Comment:
If it's so simple to reveal what Strategic's problems were, it's a pity the government regulators didn't make your search, Arthur. I assume most of these people are taxpayers - in the mistaken belief their government will support and assist them in times of trouble. Fat lot of help, I must say.
I was most surprised to read this article. It is only a short time back we were reading of Russian firms going bankrupt with passengers stranded. That you might expect from a country that is fairly unregulated. But for a country of the stature of Australia, both surprising & shocking. I don't agree with one reader's comment of passengers insuring against airline failure. That simply increases the cost of the holiday & anyway, insurers are world renowned for wriggling out of making payouts under the flimsiest of excuses.
Posted by
Surprised
on
February 17, 2012 17:00
All fine and dandy Arthur, but when you book with a company accredited and licensed by a developed nation, you kinda expect developed nation levels of service and assurances. They didn't book with banana republic airlines did they? Let's hope you never become the victim of unfortunate circumstance, only to have the 'could have, should have' brigade lambaste you. Reports are now suggesting that Qantas and Jetstar are rallying to the cause to help these distressed VICTIMS of circumstance.
Posted by
Mr Man
on
February 17, 2012 17:05
I am an Australian and I am not embarrassed in the slightest about the airline name including "Australian". People here seem to have short memories.. East West, Ansett, Compass, Southern Cross? as some examples... I fly all over Asia (except Phuket now due to the problems there)with Air Asia, never any problems at all and I take cheap insurance and pay with credit card.
Posted by
Ian G
on
February 17, 2012 19:14
Editor Comment:
East West, Ansett, Compass, Southern Cross, don't have the word 'Australia' in their brand, or if they did, it was secondary and - correct me if I am wrong - were not noted for international routes, either. Once you put 'Australia' on an internationally marketed product, strange as it may seem, people associate it with the country. For any prosperous nation to have an international airline fold within three months is hugely embarrassing - even if you are not easily embarrassed.
All this talk about the government sending RAAF planes is great until you remember there are 4000 passengers from around the pacific and SE Asia to bring home.
The numbers in Phuket are a very small part of the problem.
Posted by
Arthur
on
February 18, 2012 05:13
Editor Comment:
I certainly haven't suggested sending RAAF planes. Of the 4000 passengers stranded in Bali, Honolulu and Phuket, I reckon probably 2000 are on Phuket. This is because most Air Australia flights come to Phuket and it's Bali's low season. The problem is that because it's high season on Phuket, the backlog will be difficult to overcome on heavily-booked existing flights. One or two charter flights would ease the congestion comfortably and win the Australian government the hearts and minds of many taxpayers. Many more questions are bound to be asked about ''the man who flew too much.'' Defence contracts in the past appear to have relied on charter flights anyway. RAAF flights would probably be more expensive in terms of real costs than a couple of charters. Where do you get your information, Arthur?
Well, I guess that it was the owners of Air Australia who named their airline.. so blame them, as I am sure the steranded travellers will. Apart from here I have not seen any attempts to associate this company failure with Australia, as in people, country or government. As for the airline itself, the brand was about 3 months old with a prior history under the Strategic name... buy from a shoddy source and you get shoddy goods.
Posted by
Ian G
on
February 18, 2012 09:19
Editor Comment:
A shoddy Australian source, Ian G. Let's not dodge that point. Travellers around the world will be associating the brand with the country. No point in trying to hide it. Perhaps it's time the Australian government actually protected its ''brand.'' Advance Australia Air?
Yep, sure was a shoddy Australian brand, as you so insist. So what? Caveat Emptor - let the buyer beware and all the warning bells were plain to see. It has been well known for some time here and in other countries that airlines, especially fledgling ones can fail, stranding passengers etc and that recovery of payments is unlikely. Australia has its dodgy practitioners, so does everywhere else for that matter... look at Phuket as a very good example. Do we blame Thailand for the problems there? or Phuket? Frankly,from reports and communications inside Australia, with Australians, there does not seem to be any feeling of being in anyway responsible for this debacle, only sympathy for the stranded travellers. The owners will be investigated of course, and some creditors may recover some small part of their money... but as is also well known, most will get nothing. Get the passengers home, learn from it and get over it.
Posted by
Ian G
on
February 19, 2012 08:13
Editor Comment:
My point would be a little different: Get the passengers home, learn from it, and make sure the government acts to prevent people being ripped off again.
The industry knew it was coming yet let the mug fliers, who weren't in on what was happening, pay the price. That's an appalling reflection on the industry, Australia and its government.
From the (Australian) Age newspaper today: Air Australia failure victim Victor Manusov, 23, who flew to Melbourne on Singapore Airlines, described chaotic scenes at Phuket airport: ''There were people crying saying they had no money to book new flights.'' Thousands remain stranded overseas.
So, just because the airline had the word "Australia" in it's name, the government of Australia should fly the stranded customers home? But had the name been FLY123 for example they'd have to fend and provide for themselves? Sounds logical..NOT.
Posted by
christian
on
February 19, 2012 09:44
Editor Comment:
That's not the argument I'm making. Any government has an obligation to make sure its citizens get home safely no matter what the name of the airline, but the embarrassment of having the national ''brand'' disgraced internationally should ensure a reaction.
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Hope everybody gets home safely our pm's name is Julia not Julie!!!
Posted by dave47 on February 17, 2012 12:37
Editor Comment:
Yes, ' course it is. Thanks.