Ansett faces uphill fight to contain fallout

By DANIEL RIORDAN aviation writer

Australian regulators have turned the blowtorch on Ansett Australia's maintenance and reporting procedures following the airline's grounding of seven planes with engine-mount cracks.

And there are more than technical worries for the Air NZ subsidiary.

Crisis management experts predict the airline will struggle to contain the damage to its brand name and reputation, not only in the highly competitive Australian market but also internationally and among its airline alliance partners.

Although only one of the 767-200s is expected to be out of action over Easter, the fallout from the temporary groundings is growing.

The Australian Transport Safety Bureau is expanding its investigation into Ansett's maintenance regime while the Australian Civil Aviation Safety Authority (CASA) is reopening an audit of Ansett maintenance.

The moves come after CASA and the planes' manufacturer, Boeing, confirmed they had circulated a service bulletin in March last year urging airlines to inspect wing spars for cracks.

They recommended inspection and repairs be completed within 180 days.

Somehow the bulletin got lost inside Ansett and was rediscovered only after Christmas when some of the same planes were grounded because of a missed service order to inspect for tail-fin cracks.

Boeing then granted Ansett an extension to the end of April for inspections. The first inspections last Saturday uncovered the engine-mount cracks.

Ansett spokesman Geoff Lynch said the company had launched its own investigation into what had happened and why.

He said safety had not been compromised as the airline had ultimately followed Boeing's recommendations.

While investigations into Ansett's handling of its technical problems gather pace, the company is looking to curb the damage to its standing in the market, particularly in high-value business travel.

Ross Campbell, head of Melbourne-based Campbell Crisis Management and Recovery, and a lecturer at Monash University on crisis management, said Ansett enjoyed a solid reputation built up over its 65-year history, but this was now at risk.

"It's all about perception and the big issue will be how the business market reacts," he said.

Air NZ chief executive Gary Toomey has made recapturing corporate market share one of Ansett's priorities and the airline has been winning back some clients with competitive prices.

But with reliability also a key issue for the business traveller, the latest groundings would pull back some of the gains made, said Mr Campbell. He believed Ansett had responded well so far.

Ansett will need to keep working closely with Boeing and the regulators, and share a "response message" together.

"There will be a series of challenges here about cost-cutting, and cost-cutting and airlines don't go well together when it gets to safety issues.

"There are a lot of agenda runners in this - the unions, CASA and other regulators - and Ansett is going to have a battle on its hands in terms of issues and managing each of them."

Longer term, Ansett needs to overcome any public perception that one large airline [Qantas] was safe and the other one was not.

"That's going to take time and it's not going to be easy."

Mr Campbell said it was not just Ansett's reputation in the Australian domestic market under pressure.

Ansett International (owned 49 per cent by Air NZ) could also suffer some of the fallout from the latest safety flap at its near-namesake.

"They are one part of a broad international alliance and if one member is weak or threatened with safety problems, the whole alliance has a problem."

The Star Alliance includes Singapore Airlines, Lufthansa and Air Canada.