THE PRESS MONDAY, NOVEMBER 23, 1981. Skybus can blame itself

Press, 23 November 1981, Page 16

THE PRESS MONDAY, NOVEMBER 23, 1981. Skybus can blame itself

Accusations that the Government has deliberately frustrated the Aqua Avia Society in its attempts to get its Skybus scheme off the ground do not stand up to scrutiny. Nor does criticism that the Government has failed to warn the public that the society’s manoeuvre in trying to fly a commercial airline as an aero club operation might not, under existing law, be legal. • ..

Had the Government wanted to stop Skybus it could have done so many months ago simply by amending the regulations. It chose not to, but at the same time made it clear through a number of Ministerial statements that the public should be wary about joining the society. Since November last year the Prime Minister, and Ministers of Transport, Justice, Tourism, and Immigration have all expressed concern about the scheme, particularly its widely advertised range of cut-rate domestic fares, discounts for overseas travel, numerous false starting dates, and timetables offering cities several flights a day.

The society seems not to have done its homework before embarking on its promotional campaign. Some of its fares have proved not to be feasible while others, such as discounts for overseas flights, would have infringed the International Air Tariff Regulations. It would also have been impossible for the society to have provided, with its originally planned fleet of three aircraft, all of the domestic and overseas flights that were advertised during its initial campaign for members a year ago. In recent months Skybus was reduced to a more modest one-Viscount service. This meant that it was forced to offer fewer flights and fares that were on a par with the discounted rates already available on Air New Zealand and the Mount Cook line.

The public has understandably become thoroughly confused by the whole venture which, since the beginning of the year, has been punctuated by in-fighting and 10 resignations at a senior managerial level within the society. The public’s confusion has been compounded by the announcement of at least 20 starting dates since the scheme was launched.

The society now hopes to begin the first of its scheduled commercial services today,-but the legality of the scheme will remain in doubt until the High Court issues a declaratory judgment next month. This ruling will in fact seal the fate of Skybus — whether it can use Section 14 of the Air Services. Licensing Act which grants aero clubs an exemption to fly their members, and accept money from them, without a licence. The exemption was designed to allow club members to use their small aircraft for commercial flights without being bound by all the administrative and technical requirements of the act;

Through, its. attachment to. the Piako Aero Club, the society believes that it can use this exemption to offer its 40,000 members daily scheduled flights on a 76seat Viscount between the four main cities. The declaratory judgment will determine whether the relationship of its members to

the aero club meets the “full membership” requirement of Section 14. It was a legal opinion on this particular issue which led the Minister of Immigration (Mr Malcolm) to refuse, initially, the granting of work permits for the Viscount’s British crew. The fact that he later granted temporary permits should not be interpreted that the Government has given Skybus the green light to proceed as a scheduled commercial airline. The* crux of the matter remains the interpretation of Section 14. ; r -

It is unfortunate that this point of law could not have been settled earlier, but the details of the relationship of the 40,000 members of the society to the Piako Aero Club were finalised and submitted by the society to the Ministry of Transport only last week. The Government needed that information before it could seek an opinion from its legal advisers which, quite rightly, is now to be tested in the High Court.

Mr Malcolm, as Associate Minister of Aviation, warned the public more than three months ago that there was doubt, even then, whether the proposed service would be exempt from the licensing requirements of the act. This and earlier Ministerial warnings make nonsense of Labour and Social Credit accusations last week that the Government has failed to keep the public informed.

The avenue has always been open for the promoters of Skybus to apply, like all other would-be commercial airlines, to the Air Services Licensing Authority for a licence. Had it done so, rather than trying to launch itself as a pseudo aero club, the case would have been decided on merit and after consideration of any objections. These, very likely, would have been lodged by airlines already established such as Air New Zealand, the Mount Cook Line, and the much smaller “third-level”, carriers that now indirectly link the major cities. This might have been more prudent than the society’s ploy of trying to camouflage its air service as an aero club operation. It certainly would have been a far less expensive venture and club members would have at least known where they stood.

The chartered Viscount has been costing the society $BOOO a day since it arrived in New Zealand early last month. On that basis more than $400,000 of the reported $1 million in members’ funds available in September has already been consumed by charter fees. To this must be added other costs such as salaries, promotion, and fuel — burdens which the society must budget to recover if its venture is to become financially viable. This undoubtedly will lead- to higher fares, which even at their existing level, offer society members minimal advantages over the established airlines.

The society has only itself to blame for the delays in getting Skybus airborne. For reasons best known to itself it chose to bypass the authority. The Government has not changed the rules, but the society can hardly complain if the path through the back door is not smooth.

Sensitive textile trade

The world trade in textiles is as sensitive as any trade. For the developing countries textile manufacturing is one of the early steps towards industrialisation; it has the capacity to employ large numbers of people and, because these people are paid less than similar workers in developed countries, these textiles are cheaper and in demand throughout the world. However much this suits consumers, importers, and even retailers in developed countries it hurts the textile manufacturers and their employees. Jobs are at stake and . governments, seeking to protect their workforces (and indirectly themselves) have sought .controls over imports of textiles from developing countries. Because of the sensitivity of the trade to both developing and industrialised countries, a special agreement, called the Multi-fibre - Arrangement, has been established under the General Agreement on Tariffs and Trade. The arrangement came into force at the end of 1977 and f under it all Third World countries may increase their exports of . textiles to industrialised countries by 6 per cent a year. This was rather more restrictive than an earlier arrangement, which ran from 1973 till 1977. The second arrangement will expire on December 31. Talks are now being held inf Geneva to see whether a third arrangement can be concluded. This ' may be difficult because in most developed countries a powerfill sentiment prevails in favour of trade protectionism. The

developing' countries will consider that they have been fortunate indeed if the present permitted growth rate of 6 per cent is maintained.

About 50 countries are signatories to the Multi-fibre Arrangement; New Zealand is not one of them because it is not sufficiently large as an exporter or as an importer. The two biggest industrialised markets are the European Economic Community and the United States. Trade protectionism on textiles, advocated most strongly by Britain and France, seems likely to carry the day within the E.E.C. A conflict has developed within the Community between the liberal-minded European Commission and the Council of Ministers. Within the Community the textile industry, is in poor shape, even though it still accounts for 7 per cent of the manufacturing turnover and 9.6 per cent of the jobs. Since the coming into force of the first arrangement 900,000 job's have been lost and a fall of 7 per cent in production has occurred. One matter likely to be explored in the present negotiations is how to distinguish between the poorer, developing countries such as Bangladesh and Indonesia, which may be treated more generously, and the more advanced developing countries such as Taiwan, South Korea, and Hong Kong. The Geneva talks seem unlikely to reach a conclusion soon. Either the second arrangement will be extended, or attempts to conclude a third one abandoned altogether.