Background Information.

The company was founded by Reginald ‘Reg’ Ansett in 1935 as Ansett Airways Pty Ltd. This was an offshoot of his road transport business, which had become so successful it was threatening the freight and passenger revenue of Victorian Railways. This led the Victorian State Government to legislate to put private road transport operators out of business. Reg Ansett countered by establishing an airline, as aviation was under control of the federal government and beyond the reach of the state government.

Ansett's first route, between Hamilton and Melbourne, was operated by a Fokker Universal monoplane commenced on February 17, 1936. The rapid success of the airline led Ansett to float the business in 1937. As the route network expanded, Ansett Airways imported Lockheed 10 Electra aircraft. During World War II Ansett opted to suspend his scheduled airline services, except the Hamilton service, in favour of more lucrative work for the United States Army Air Force. After the war, Ansett battled to re-establish his domestic routes using war-surplus Douglas DC-3s that were converted from Douglas C-47s, and the remaining Lockheed 10s.

At that time, the Australian domestic airline travel sector was dominated by Australian National Airways (A.N.A.), which was established in 1936 by a consortium of British-financed Australian shipowners. The Chifley federal government was determined to establish a state-owned airline to operate all domestic and international services. It was eventually thwarted in this aim by the High Court of Australia, so it established its own airline Trans-Australia Airlines (T.A.A.) to operate in competition with A.N.A.

Ansett Airways remained a big player as A.N.A. and T.A.A. battled for supremacy in the 1940s and 1950s. Ansett operated around these two airlines by maintaining budget-fare interstate operations with Douglas DC-3s and later Convair 340 aircraft previously operated by Braniff Airways in the United States. The airline was backed up by extensive road transport operations, including Ansett Freight Express and  Ansett Pioneer Coaches, as well as the Ansair coach-building operation.

The Menzies government, while supporting T.A.A. because of the excellent dividends it returned to the government, wanted to avoid T.A.A. having a monopoly on domestic services if A.N.A. collapsed, as seemed likely. The only alternative, as it transpired, was for Ansett to buy the A.N.A. operation.

Ansett's bid had a number of financial supporters, most prominent of these being the Shell Oil Company. The Douglas Aircraft Company was also concerned about A.N.A.s pending demise, as T.A.A. had ceased to be a customer for their aircraft. The A.N.A. directors fiercely resisted Ansett’s initial proposal, but in October 1957, the embattled A.N.A. Board succumbed to Ansett's offer of £3.3 million for their airline. The new entity was called ANSETT-ANA, the name it retained until November 01, 1968, when it became Ansett Airlines of Australia.

ANSETT-ANA's excellent profit record was, at least in part, courtesy of the Menzies government's Two Airlines Policy. This policy effectively blocked any other domestic interstate operator by way of a ban on the importation of aircraft without a government licence. From 1957 until the 1980s, under the strict rules set down by the Two Airline Policy, Ansett and TAA operated as virtual carbon copies of each other, usually operating the same aircraft at the same times, to the same destinations, at fares, which were identical (under strict federal government rules). If either airline wished to change its fares, schedules or equipment they had to obtain federal government approval.

Reg Ansett then set out to ensure no other competitors could rise up to challenge his airline. He took control of Adelaide-based Guinea Airways, which was renamed Airlines of South Australia, and the Sydney-based Butler Air Transport, which was renamed Airlines of New South Wales. The takeover of Butler was achieved with covert support from the Menzies government and by Ansett engineering his employees' purchases of Butler shares (in a similar way as had just been attempted by Butler). He then flew the employees to a general meeting in Sydney and forced a vote in favour of selling out to Ansett.

Following the takeover of A.N.A., Reg Ansett lobbied the government to block TAA's purchase of Sud Aviation SE-210 Caravelle jet aircraft. He was concerned about his airline's ability to finance equivalent jet aircraft, and the major engineering leap required to go from an all-piston fleet direct to pure jet aircraft. TAA had been operating prop-jet Vickers Viscount airliners since 1954, so had expertise in jet technology. Ansett was successful in convincing the government to authorise the importation of more Viscounts and the new Lockheed 188 Electra which they marketed as the ‘Golden Jet’, as with their other turboprop airliners of the day. This action delayed the introduction of pure-jet aircraft to Australian domestic airlines until 1964, when the Boeing 727 series 100 ‘Fan Jet’ began flying.

An unusual feature of Ansett's operations was the flying-boat service from Rose Bay in Sydney to Lord Howe Island. This was operated by Ansett Flying Boat Services, using Short S.25 Sandringham four-engined aircraft. This service depended on the tidal conditions at the island, requiring flights to arrive at the high-tide mark, which in turn dictated the departure time from Sydney. The flying boat services ceased in 1974 when a sealed runway was completed on the island, thus allowing services to be operated by ordinary airliners.

Reg Ansett lost control of Ansett Transport Industries to Peter Abeles’ T.N.T. and Rupert Murdoch’s News Corporation in 1979, with Abeles taking operational control of the airline. The airline prospered in the 1980s, but a number of substantial investments performed badly, including a share in the U.S. based airline America West Airlines, which filed for bankruptcy but survived, and its Hamilton Island resort, which went into receivership. Ansett also paid millions of dollars for the right to be official airline of the Sydney 2000 Olympic Games, an investment generally regarded as unwise. This destabilised the financial position of the company considerably. In 1984, Ansett was embroiled in controversy after it banned HIV-positive individuals from travelling on their planes to protect their staff. The Australian Flight Attendants Association ultimately rejected the bans.

Ansett expanded into New Zealand in 1987 through its subsidiary Ansett New Zealand, after the New Zealand government opened its skies to the airline. After the Australian Government reneged on an agreement to reciprocate, Air New Zealand tried to acquire a share of Qantas Airways when it was floated in 1995, but was not allowed. Instead, it bought TNT's 50% stake in Ansett Australia for A$475 million in 1996, though managerial control remained in the hands of News Corporation. Ansett Australia then had to divest itself of Ansett New Zealand to avoid creating a monopoly.

Ansett commenced international service on September 11, 1993 to Bali, followed by Osaka and Hong Kong in 1994, with Jakarta being added on January 12, 1996 and Shanghai on June 08, 1997. Later, Seoul, Taipei and Kuala Lumpur were added to the international network but were soon suspended.

In February 2000 Air New Zealand acquired full ownership of Ansett Transport Industries, buying out News Corporation's stake for A$680 million, surpassing the bid of A$500 million from rival Singapore Airlines. Competition from Qantas Airways and a succession of low-cost airlines, namely Impulse Airlines and Virgin Blue, an aging aircraft fleet and the grounding of the airline’s Boeing 767 fleet due to maintenance irregularities, left Ansett seriously short of cash, losing around $1.3 million a day.

Air New Zealand attempted to cut Ansett's costs while expecting to maintain the same level of revenue. This did not work, as the cost cutting hurt Ansett. Additionally, Ansett's fleet had been allowed to deteriorate, a situation that came to a head with a partial grounding of its Boeing 767 fleet during the Christmas 2000 season and a full grounding at the busy Easter travel period of 2001. Ansett was thus unable to compete with the low-cost carriers and Qantas, which were able to run at a loss on some routes, as they could not maintain revenue while cutting their costs, which included laying off staff.

A deal made in April 2001 for Ansett to purchase Virgin Blue was repudiated by Virgin chief Richard Branson in August. Singapore Airlines, which was initially blocked from buying Ansett, was also prevented from investing further in Air New Zealand / Ansett by the New Zealand government. It then declined to take up an earlier proposed deal to inject over $500 million into Air New Zealand and Ansett after talks collapsed.

In early September 2001, as the trouble worsened, the New Zealand government prepared to rescue Air New Zealand. It eventually bought 83% of the company for NZ$885 million, but cut Ansett adrift. Despite public pleas, the Australian government refused to bail out Ansett. At this point in time the Australian Government was trying to sell its stake in Qantas Airways and presumably saw Ansett's situation as helping the Qantas sale price. Quickly running out of both lines of credit and options, Air New Zealand on September 12, 2001 placed the Ansett group of companies into voluntary administration with PriceWaterhouseCoopers.

On September 14, the administrator determined that Ansett was not viable to continue operations, primarily due to the apparent lack of any funds to cover fuel, catering or employee wages. The administrators grounded the fleets of Ansett and its subsidiaries Hazelton Airlines, Kendell, Skywest and Aeropelican. Flights already in the air at the time the decision was made continued on to their destinations. Customers and almost all employees had no warning of the stoppage in operations. An Ansett Boeing 767-200 operating on behalf of Ansett Airfreight, due to depart Melbourne for Launceston, Tasmania, was the first aircraft to be stopped from flying. It was unable to be unloaded until midday the next day as no paid staff were on duty.

Everyone had been told in the days leading up to September 14, that flights would continue on schedule and most Ansett employees did not find out until they showed up for work at dawn that day. Thousands of passengers were left stranded and more than 16,000 people found themselves out of a job, making it the largest mass job-loss event in Australian history. Widespread protests were held by workers, including the blockade of an Air New Zealand plane about to carry New Zealand's Prime Minister Helen Clark home from Melbourne.

The then Ansett administrators alleged that Air New Zealand had engaged in asset stripping of Ansett, and had sustained excessive fuel costs for Ansett due to Air New Zealand's failure to hedge them, leaving Ansett susceptible to major fluctuations in fuel charges during 2000. These claims were denied by Air New Zealand, noting it had funded Ansett's loss of A$180 million in the last year. Ansett's administrators later admitted no evidence of any asset stripping was found. Ansett engineers working on Ansett aircraft alleged that Air New Zealand had orchestrated a large number of equipment replacements, such as engine and avionics modules.

Ansett Mark II and Tesna

After receiving a federal government guarantee, Ansett resumed limited services between major cities on October 01,  2001, using only the Airbus A320 fleet. This was referred to as Ansett Mark II, an operation run and financed by Ansett Australia under administration. The purpose of getting Ansett back into the air was to attract a buyer for the business and to generate positive cash flow. Attempts by Ansett's Voluntary Administrators to re-engage Singapore Airlines to consider a role in resurrecting Ansett through a meeting on October 06, 2001, resulted in SIA agreeing to play a consultancy role in this effort.

The revived and scaled-back operation ran on a tight budget, and its service reflected that. It consisted of single-class seating with no catering, interlining baggage, valet parking or frequent flyer points. After a month back in the air, the Golden Wing Club Lounges reopened, but like the scaled-back flying operation, provided no refreshments or other amenities apart from coffee and water. Ansett was essentially in ‘lock down’ mode, while the administrators tried to source buyers in a very challenging market. Ansett Mark II traded only as ‘Ansett’ in a different font, to separate it from the former operation. It traded from Ansett terminals, with Ansett ground staff, crew and baggage handlers working around the clock to make it a success with limited resources. Designated gates at each of Ansett's terminals were used for the operation, while aircraft not being used were moved away to more distant gates, with the disused concourses being sealed off.

In November 2001, Ansett creditors voted to allow the Tesna consortium, led by Melbourne businessmen Solomon Lew and Lindsay Fox, to purchase Ansett's mainline assets. The plan involved creating a whole ‘new’ Ansett out of the ashes of the old, but with the trademark font and ‘Starmark’ logo reinstated. It would be a full-service, two-class, single fleet-type domestic airline. It included very reduced staff numbers and an all-new Airbus A320 fleet. The new Ansett would operate out of the old Ansett terminals, and temporarily lease the former Ansett's A320 fleet until newer replacements arrived. Loyalty products such as the Golden Wing Club and Global Rewards frequent-flyer program would be relaunched.

Those members of Golden Wing Club at the time of the collapse would have their memberships reinstated for a six-month period, if they used the new Ansett. A new CEO was sourced and hired, and began to put together a new management team. A new head office was planned, and Airbus Industries showcased a new A320 to the consortium. A new catering company was selected, with new Business and Economy Class in-flight meals trialled on passengers on select Mark II services, in readiness for the new operation.

The agreement with Ansett's administrators, although well-advanced, collapsed in late February 2002. Without any prior warning, the administrators announced on February 27, that Fox and Lew had withdrawn their bid, citing ‘inability to complete the transaction on legal advice’. At a press conference the same day, Fox and Lew announced that they had received no financial support from the government for their bid, and were therefore withdrawing.

With no other saviours, and no realistic chance for Ansett to be revived as a viable concern, the administrators had no choice but to cease all flying operations at 23:59 on March 04,  2002, with the last commercial flight, AN152 from Perth to Sydney operated by the Airbus A320-211 VH-HYI, touching down at 06:53 on March 05. Staff filled Golden Wing Lounges across the country for mass wakes, as the final flights came in to land.

Entitlements

By this point, the administration of the company had transferred to newly-formed insolvency firm Korda-Mentha. The Australian Securities and Investment Commission began an investigation into whether Ansett had traded while insolvent. It eventually determined in July 2002 that it would be too expensive and difficult to proceed with an action which would, in any case, need to be many separate actions on behalf of individual creditors rather than just one.

With Ansett now grounded again, the administrators began selling off Ansett's assets. This included its regional subsidiary airlines, which still continued to trade despite Ansett being grounded. A creditors' meeting post-March 2002 voted in favour of an organised wind-up of the operation, under a deed of company arrangement, as opposed to an immediate liquidation. It was felt that a deed of arrangement would give creditors a greater return than liquidation would provide.
Laid-off Ansett workers were eventually paid most of their entitlements, partly from an A$150 million compensation package offered by Air New Zealand in return for having the ASIC inquiry dropped, but mostly through asset sales and leasing revenue. The Federal Government did provide an A$350 million loan, which was being repaid by the Administrators at the same time as the staff were being repaid however, to ensure that there is no exposure to taxpayers, a $10 per seat levy was imposed by the Federal Government on Australian airline passengers. Employees ended up receiving 96% of their entitlements.

Administration and asset sales

Ansett's administrators, Korda-Mentha, initially advised creditors that it was unlikely that much more money would be realised, due to the depression of the global aviation industry after the September 11, 2001 attacks in New York city and Washington, DC, had the effect of reducing the value of aircraft from A$300 million to A$70 million. In the months following the final flight, the administrators negotiated the sale of the terminal leases back to the airport owners, recouping millions. Auctions were held to sell Ansett's airport furniture and equipment. Its headquarters at 465/489 and 501Swanston Street, Melbourne were sold to the PDG Corporation. Some aircraft stored in heavy maintenance were broken up, as it was not cost-effective to restore them to an airworthy state.

The disposal of the former fleet did not progress quickly, given the depressed aviation market and the subsequent lack of demand by other carriers around the world, whose operations had been crippled by the 9/11 attacks only months before. Following the final flight, nearly all of the Airbus A320 fleet was ferried back empty to Melbourne, where they sat at abandoned gates in storage. The Airbus and Boeing 737 fleets ultimately found new owners first, and departed Australia between March 2002 and December 2006, as the banks finally reclaimed them, or as new owners were found.

The two Boeing 747s that were leased from Singapore Airlines were reclaimed within weeks of the collapse and quickly repainted and returned to service with SIA. They subsequently found new lives and were leased to Fiji’s national carrier Fiji Airways. The more modern Boeing 767-300s, of which Ansett had two, were reclaimed by the lessors in the following months, while two new Boeing 767-300 aircraft which arrived too late to enter service with Ansett, departed soon after. One aircraft was wet-leased to Qantas Airways on a short-term basis, to add additional capacity to cover the loss of Ansett, but the aircraft retained its Ansett registration while under lease. Another new Boeing 767-300, which was halfway through its ferry flight from Canada, never made it to Australia and returned to Canada. The Kendell CRJ-200 jets returned to Canada within twelve months of the initial collapse.

With the newer aircraft gone, most of the older Boeing 767-200 fleet were moved from the Melbourne terminal gates, as Virgin Blue moved into the former Ansett Terminal, and were placed into long-term storage at the Ansett Engineering Base until late-2004, when most were sold off to Aeroturbine and flown to the United States to be broken up into spare parts. Many of the British Aerospace 146 aircraft were also stored, but broken up at Melbourne.

As of 2008, the remains of one BAe 146 sat derelict at Brisbane Airport and another aircraft remained at Perth Airpor,t although neither of them were still owned by Ansett or were expected to fly again. A lone Boeing 767-200 survived the scrappers cull, was sold and continues to fly in the United States as a charter aircraft.