Air Australia chief reportedly overseas as fallout spreads
Air Australia director Michael James is believed to be overseas as fallout from the collapse of the airline spreads.
Reporters from TV and news channels are keen to contact James. Fairfax Media reported it had not been able to do so, “despite extensive efforts”.
Melbourne’s Age newspaper reported that hours before Air Australia was grounded last Friday, James urged staff
to “ignore speculation” and concentrate on “business as usual”.
“Please ensure that you and your colleagues understand that the only correct information regarding our company’s performance or group strategic developments will come from me,” James wrote in an email sent the day before the collapse and subsequently obtained by Fairfax. The email advised staff to ignore “distracting speculation raised by those without our best interests at heart”.
In retrospect, much of the speculation was correct.
Brisbane’s Courier-Mail reported that James is also a part-owner of an airline in Luxembourg. That paper also reported that Air Australia’s chief commercial officer, Damien Vasta, had an unorthodox background for a senior airline executive, having worked as a delivery driver and waiter at his family’s small Italian restaurant. The Courier Mail said Vasta had also operated two now-closed family leisure centre amusement arcades.
Consumer watchdog Choice said: “The stranding of Air Australia passengers is just the latest example of the need for a built-in passenger safety net in the airline industry and a travel industry ombudsman to make sure it works – something Choice called for in a submission to [Federal] government in April last year.
“Few experiences in the consumer marketplace are less pleasant that showing up at the airport and finding out you’re going nowhere.
“And it’s one that has become more common and more disruptive, as Qantas passengers around the world discovered last year.”
Choice is calling for a compensation scheme including insolvency protection.
“Airlines in the UK, for example, charge a small levy on airline tickets to be used to help travellers stranded by airline failures. Australia’s take on this, the Travel Compensation Fund, only covers travel agent collapses, not airlines.”
Lawyers specialising in travel stress that most travel insurance policies don’t cover consumers when an airline folds. Air Australia is reported to have sold about 100,000 tickets for future flights. Its queue of creditors now includes passengers, airports, caterers and refuellers.
A creditors meeting will be held on 29 February 2012. A statement issued by the voluntary administrators of Air Australia, Kordamentha, reminded the public that rights had also been granted for Air Australia to operate services between Australia and China and Australia and the US. The fledgling airline never got as far as operating any. Just as well, many people might think.
Questions are being asked about how James, reportedly a former Ansett flight attendant, could not have known about the airline’s financial predicament. Media are finding it hard to track him down for comment.
Air Australia was the new name for Strategic Airlines. As long ago as March 2011, the Sydney Morning Herald reported that Strategic, which lost money in the previous financial year, had received a loan of more than AUD6 million from the charter business. The paper cited accounts filed with the corporate regulator.
The report at the time said the airline’s charter arm, Strategic Aviation, lost its prime contract with the Australian Defence Force to fly troops and military cargo to Kuwait and the United Arab Emirates.
The report said Australian Federal Police (AFP) had confirmed that an investigation was under way into whether criminal offences occurred in the awarding of the Defence tender to Strategic Aviation in 2005. The paper quoted James as saying the airline hadn’t been contacted by the AFP but was happy to answer any questions “because we believe there is no wrongdoing whatsoever”.
The Air Australia fleet, about to be seized by creditors, consists of five Airbus A330-200 and A320-200 aircraft. The company was headquartered in Hendra, Queensland. Regular routes included Bali, Phuket and Honolulu as well as Australian domestic destinations like Melbourne, Brisbane, Perth, Port Hedland and Derby.
Written by : Peter Needham
Haven’t we learnt yet that Australia does not have the population to support all of these smaller airlines. How many have to collapse before the lesson is learned. What about consulting the International Air Transport Association for comment and are they able to assist stranded passengers. What really is their roll when an airline collapses? What is their roll in cases like this to the consumer regarding duty of care?
Absolutely spot on YET AGAIN!
We should also tighten the disclosure obligation of travel insurance coverage to public (whoever is selling it) as part of the Trade Practice regulatory reform. The public must be made aware of their inherent risks and their insurance coverage when buying a travel product..particularly a travel insurance policy. This also questions the validity of Travel Insurance Fund as it current stands..as we are clearly seeing time and again over many years that the major fall outs are not as a result of travel agents’ failure to keep their part of the bargain. Its the suppliers such as this one and yet, it seems travel agents are regulated with all sorts of controls yet they are not the usual culprits. Perhaps, its time for a TCF Mark II or..?
I have no doubt that Michael James, if he is overseas as claimed, will NOT be travelling on a Air Australia “E Ticket”.
What a shame people like him cannot face the music, seen it all before. !!!
From what I understand, it seems the travel industry (agents) were aware last decemebr that the airline was shakey, yet continued to sell tickets.
Agencies who do not accept responsibility for things een when they have made clients sign waivers ,when they go wrong with airlines should be held accountable.
Similary agencies who book packages and something goes wrong should be made to reemburse the client and then negotiate with their supplier the airlne or hotel or both.
It all seems too one sided