Ansett Airlines: The Rise and Tragic Fall of an Aussie Aviation Giant
- The Antique Airshow
- Mar 30
- 13 min read
The Story of Ansett Airways:
The story of Ansett Airways starts with its creator, Reginald Ansett. Born on February 13, 1909, as the fourth of five children to cycle engineer Charles Ansett and his wife, Mary Ann (née Phillips), he spent his early life in rural Victoria before the family moved to Melbourne in 1916. Reginald, often known as Reg, became a qualified knitting-machine and sewing-machine mechanic before, in 1929, taking a gamble by cashing in his life insurance policy for flying lessons. He completed his training and was awarded Australian pilot’s license number 419.
Following this, Reg moved to the Northern Territory for a year before returning to Victoria. Upon his return, he put all of his £70 savings toward purchasing a second-hand 1927 Studebaker car, using it to earn money carrying freight and passengers between Maryborough and Ballarat. However, the service was not profitable and was, in fact, losing money. As a result, Reg moved the business to Hamilton, operating between Hamilton and Ballarat. Interestingly, in one article, Reg reflected that he had always wanted to operate out of Hamilton; however, since a service was already running there, he initially chose Maryborough to avoid competition. When the original provider in Hamilton was unable to operate anymore, Reg seized the opportunity and moved his business there. This proved to be a much more successful operation, allowing him to hire a workforce, acquire extra cars, and offer more routes throughout the Western District of Victoria. The company, known as Ansett Roadways, started to boom and soon posed a serious threat to the Victorian railway’s profitability. This did not go unnoticed by the state government, and in 1932, the Victorian government introduced legislation to protect the railways from any competition. When Ansett Roadways’ license came up for renewal in 1934, it was denied.
The beginning of an airline:
This, however, did not deter Reg. Instead, he attempted to circumvent the new legislation. If the roads were closed to him, he had another idea: he would take to the skies. After all, aviation was the domain of the federal government, and as such, the state government could not do anything about it. In 1935, Reg established Ansett Airways Pty Ltd, purchasing a six-seater Fokker Universal monoplane. Pilot Vern Cerche and engineer John Davies were hired, and in February 1936, the company launched its first route between Hamilton and Melbourne. Initially, the service was not overly profitable, with Reg having to offer people joyrides, flying lessons, and aerobatic displays in a de Havilland Gipsy Moth to make ends meet and keep the airline afloat.
Despite this, in August 1936, the company, backed by local graziers, expanded. It acquired an eight-seater Airspeed Envoy, allowing the airline to operate a service between Hamilton and Sydney. Before long, Ansett had a network that connected Melbourne, Mildura, Adelaide, Sydney, Broken Hill, and Narrandera. In 1937, the headquarters were moved from Hamilton to Melbourne’s Essendon Airport, and three modern, ten-seat Lockheed Electra were purchased. Additionally, that same year, the company was floated on the Melbourne Stock Exchange.
The late 1930s were challenging. As the share price slumped in 1938, the company was met with a takeover bid from Australian National Airways (ANA). Going against his own chairman, Reg Ansett managed to resist. Then, in February 1939, a hangar fire at Essendon destroyed several Ansett machines, including one of the new Electra.
Ansett Airways soldiered on, aided significantly by government subsidies. With the outbreak of war in the Pacific in 1942, the airline stopped services on all but the Hamilton-Melbourne route, instead redirecting its efforts to fulfill contracts to transport the American armed forces. Ansett aircraft also played a key role in evacuating people following the bombings of both Darwin and Broome. Government aid during this time allowed Ansett to double its hangar capacity, and a manufacturing division was also developed to produce aircraft parts and overhaul and repair aircraft. In 1944, the Ansett workforce peaked at an impressive 2,000 employees.
When the war ended in 1945, Ansett Airways upgraded its fleet by purchasing three Douglas C-47s from U.S. disposal stock and converting them to DC-3s. Additionally, in 1945, the manufacturing division of the company was rebranded as Ansair Pty Ltd and started transitioning from aircraft components to manufacturing coaches for the growing operations of Pioneer Tourist Coaches. However, the airline was dealt a blow when it lost its prewar routes, with the Department of Civil Aviation handing them to ANA.
In 1946, a major year for Ansett Airways, a new holding company, Ansett Transport Industries Limited (ATI), was set up to control Ansett’s growing collection of divisions and businesses. These included Ansett Airways Pty Ltd, Tourist Coaches Pty Ltd, Pioneer Tourist Hotels Pty Ltd, Ansair Pty Ltd, and Air Express Pty Ltd. In the same year, Ansett Hotels was launched, and at the end of the year, Ansett Airways began flying between Melbourne and Hobart.However, 1946 also saw a major shake-up in the Australian aviation market with the introduction of the government-owned and backed Trans Australia Airlines (TAA). Being government-backed, TAA enjoyed significant advantages over other airlines, such as free access to government facilities at airports, while also taking away all government business from ANA and Ansett. By 1948, ATI had become the largest operator of hotels in Australia, but for the airline, it was difficult to compete against TAA. The same was true for ANA. To stay competitive in the market, Ansett Airways had to begin offering discounted seats and operating two classes of seating.
Ansett was dealt a significant blow in 1952 when the federal government introduced a new Two-Airline Policy. This policy stipulated that only two airlines could operate flights on trunk routes between major cities in Australia while allowing both airlines equal access to government business and equipment. The two airlines to benefit from this arrangement were TAA and ANA, while Ansett Airways was shut out. Ansett tried to work around the policy by adding intermediate stops on some major routes. In 1954, the Ansett fleet was updated with the introduction of its first pressurized aircraft, the Convair 340.
A major merger:
Even though the Two-Airline Policy was meant to help keep ANA afloat and had allowed ANA to purchase new aircraft, by 1957, the company was on the verge of bankruptcy. In early 1957, when its chairman, Sir Ivan Holyman, passed away, ANA’s shareholders offered to sell out to the Australian government and merge with TAA. When this was rejected, Ansett seized the opportunity. Despite ANA’s board’s reluctance, ATI bought ANA for just over £3.3 million on October 4, 1957, and the two airlines—Ansett Airways and ANA—became Ansett-ANA. This was a major development not only in Ansett’s history but also in Australian aviation history. The purchase meant that Ansett also gained access to ANA’s rights and benefits under the Two-Airline Policy. Furthermore, Ansett-ANA took over ANA’s position as a major shareholder in both Butler Air Transport and Queensland Airlines, purchasing the remaining shares in both companies the following year.
In 1958, the federal government revised its Two-Airline Policy, granting Ansett-ANA and TAA exclusive rights to routes between major cities throughout Australia. However, it also stipulated that the airlines had to operate the same aircraft, charge the same fares, and operate the same routes. As a result, the two airlines offered very similar operations. Both airlines decided to buy the Lockheed L-188 Electra, which Ansett-ANA introduced early the following year. This airline duopoly would last for several decades.
Introducing jets:
In October 1964, TAA and Ansett-ANA introduced Australia’s first jet aircraft, the Boeing 727. The Boeing 727 entered service with both airlines the following month, and Ansett operated them all the way into the late ’90s. TAA had attempted in the late ’50s to acquire SUD Caravelle jets, but Ansett-ANA successfully lobbied the government to block the order, claiming that they were not in a position to introduce jet aircraft as they still operated an all-piston engine fleet. It is interesting to note that the acquisition of American aircraft was not viewed favorably by the British, who believed that there were comparable jets available from Britain. As a result, the Australian government imposed a 7.5% duty on all Boeing 727s entering the country. Ansett-ANA was renamed Ansett Airlines of Australia in 1969.
Perhaps now is a good time to pause and look at how big ATI had become by the 1960s. In the late ’40s, they had opened a retail division known as Ansett Travel Service, and in the late ’50s and early ’60s, they had taken control of numerous smaller airlines in Australia. These included Guinea Airways (renaming it Ansett Airlines of South Australia) and MacRobertson Miller Airlines. They also entered the PNG market by buying Mandated Airlines of New Guinea and renaming it Ansett-MAL, later changing it to Ansett Airlines of Papua New Guinea. In 1964, ATI began operating a television station, ATV Channel O, which made Australia’s first colorized television broadcast in 1967. By 1969, Ansett had become the largest domestic airline in Australia, and in 1970, Ansett Road Express had become the biggest national road freight haulage operator in the country.
Fight for Control:
The airline maintained its status as a leading airline in Australia throughout the ’70s. In 1973, they introduced the more modern and efficient Boeing 727-200s into service, and in 1976, Ansett became the first Australian airline to introduce computerized ticketing. However, the decade also brought turbulence. In March 1972, TNT bought a 23.5% stake in ATI and the following month, sought to take over the rest of the company. Sir Reg Ansett, who had been knighted in 1969, was strongly opposed to the takeover and looked to the Victorian government to stop it. As a result, the government passed legislation stating that a Victorian public company could not be taken over by an interstate company, and since TNT was incorporated in NSW, the takeover was blocked. However, TNT did secure two seats on the ATI board.
By 1979, ATI faced financial strain due to its involvement in the collapsed finance company Associated Securities Ltd. This opened the door for new ownership battles involving Robert Holmes à Court’s Bell Group, TNT, and Rupert Murdoch’s News Corporation. By year’s end, TNT and News Corp controlled ATI, installing Murdoch and Sir Peter Abeles as joint managing directors. Though Sir Reginald Ansett was convinced to stay on as chairman, he had lost control of his empire. Sir Reginald Ansett would pass away on December 23, 1981, at the age of 72.
Deregulation:
As Ansett moved into the ’80s, there was a refresh of the brand and an increasing focus on expanding operations outside of Australia. In 1980, they opened their new headquarters on Swanston Street, Melbourne. Additionally, Ansett Air Freight, an integrated road and air freight service, began operations, and the Ansett International Travel division was launched. The following year, five Boeing 767s, twelve long-range Boeing 737-200s, and four Boeing 727-200s were ordered, while a new livery and logo were introduced. Airport terminals and lounges were refreshed, and in-flight service was improved with the introduction of hot meals in economy class.
Ansett New Zealand launched in 1987, while Ansett Airlines of Australia rebranded as Ansett Australia in 1990. That same year, the Australian airline industry was deregulated, allowing new airlines to enter the market and carriers to determine their own aircraft, routes, capacity, and airfares. This was a major change in airline operations in Australia and opened up TAA (now operating as Australian Airlines) and Ansett to new competition.
In 1992, further major changes came to the aviation industry in Australia. In February, the federal government announced that Qantas could fly domestically, and that Qantas did not have to be the sole Australian operator on international flights. Then, in September, Australian Airlines was bought by Qantas, and the two airlines merged. This was significant, as it gave Qantas an already established domestic route system from which to begin their new domestic services.
Determined to expand internationally, Ansett applied for routes to Malaysia, Indonesia, Singapore, and Hong Kong. On September 11, 1993, Ansett Australia launched its first international service, with its inaugural flight to Bali. This was followed by flights to Osaka and Hong Kong in 1994, Jakarta in 1996, and Shanghai in 1997. In 1994, the company welcomed the first of its Boeing 747-300s into service, utilizing them on these long-haul routes. Seoul, Taipei, and Kuala Lumpur were later added to the network. However, by 1998, services to Seoul, Kuala Lumpur, and Jakarta had come to an end.
The Beginning of the End:
It seemed the future was bright for the company when they celebrated their 60th anniversary in February 1996. Throughout the early part of the decade, the government had looked at creating a single aviation market with New Zealand, which would have allowed Air New Zealand access to the Australian domestic market. This was met with significant pushback from both Qantas and Ansett. As a result, the government reneged on the policy, instead granting Air New Zealand permission to buy into an Australian airline. In October 1996, it was announced that TNT would sell its 50% share of Ansett Australia to Air New Zealand for A$475 million.
Ansett Australia became an early member of the Star Alliance and was the official carrier for the 2000 Sydney Olympic Games. Around this time, News Corporation was ready to sell its 50% share of the company. Singapore Airlines showed significant interest, but due to the terms of Air New Zealand’s takeover of TNT’s share, it had first rights to purchase the remaining share of Ansett. Air New Zealand’s financial position was shaky, and many believed they were not in a position to buy the other 50% of Ansett. However, in February 2000, against expectations, Air New Zealand managed to outbid Singapore Airlines, paying A$680 million, to take full ownership of the airline. Singapore Airlines had to settle for taking a slice of Air New Zealand. Ansett Transport Industries was now entirely owned by Air New Zealand.
As the new millennium dawned, trouble was brewing for Ansett. New low-cost airlines such as Impulse Airlines and Virgin Blue were cutting deeply into Ansett’s market share, while a number of key executives either left or were dismissed. Losses began to mount, and the airline’s outdated, mixed fleet—comprising eight different aircraft types across 69 planes—became an operational headache.
Over the 2000 Christmas holiday period, Ansett had to ground a number of its Boeing 767s due to overdue maintenance issues. Then, the entire fleet of Boeing 767s was grounded by the Civil Aviation Safety Authority for several weeks over Easter in 2001. Industry insiders believed Ansett needed approximately A$4 billion to undertake a significant and rapid fleet replacement program—money it simply did not have. Additionally, cost-cutting measures were failing to improve the company’s financial situation. By mid-2001, losses were running at A$1.3 million per day. The financial records showed a loss of A$400 million for the year ending June 30, 2000, with a further loss of A$700 million predicted for the following year.
Ansett's Collapse:
With the walls closing in, management, led by CEO Gary Toomey, attempted a bold move: purchasing Virgin Blue and folding it into Ansett. Supposedly, there was an initial agreement with Virgin Blue founder Richard Branson on the deal, but the offer was ultimately rejected, with Branson sensationally ripping up a fake check for A$250 million on camera. The very next day, Ansett was offered to Qantas for a single Australian dollar. The offer was rejected.
With no rescue in sight, on September 12, 2001, Ansett was finally cut loose by Air New Zealand and placed into administration. More than 16,000 employees suddenly found themselves jobless in what became one of the largest mass layoffs in Australian history.
Two days later, on September 14, the airline, along with its subsidiaries Hazelton Airlines, Kendell, SkyWest, and Aeropelican, was grounded. Limited service, known as Ansett Mk. II, resumed on October 1 with a reduced fleet of Airbus A320s. Ansett Mk. II was a much-scaled-down operation with limited and tight budgets. There was only single-class seating, no catering, no interlining baggage service, and no frequent flyer points. Meanwhile, administrators scrambled to find a buyer. During this time, accusations arose that Air New Zealand had stripped Ansett of cash and assets and had charged fuel used by Air New Zealand to Ansett’s account. However, administrators later admitted that no evidence was ever found to support these claims.
On November 8, an agreement was reached between the administrators and the Solomon Lew–Lindsay Fox consortium, Tesna Holdings Ltd. Tesna Holdings would purchase Ansett’s mainline operations and other assets for approximately A$3.6 billion.
At first, the future looked promising. At the beginning of 2002, a chief executive and a chief financial officer were hired, and early the following month, an order was announced for 30 Airbus A320 aircraft. However, less than a month later, without warning, the deal collapsed. Tesna Holdings cited their withdrawal from the deal as being due to the government offering no financial support. This was the final nail in the coffin for Ansett. With no other buyers presenting themselves, on March 4, 2002, at exactly 11:59 p.m., all of Ansett’s operations ceased. Ansett’s final flight, AN152 from Perth to Sydney, touched down at 6:53 a.m. the following morning, marking the end of Ansett.
In the years that followed, administrators worked to recover whatever funds they could. The Australian Securities and Investments Commission (ASIC) briefly investigated whether Ansett had been trading while insolvent but dropped the case in July 2002, citing high costs and legal complexities. Ansett owed unsecured creditors over A$3 billion, but they received nothing.
For Ansett employees, most eventually received their entitlements. This was partly due to Air New Zealand offering a A$150 million compensation package in exchange for ASIC dropping its investigation into their role in Ansett’s collapse.Over the next decade, various aircraft were sold or scrapped, and the terminals were taken over by other airlines. Virgin Blue notably benefited from Ansett’s collapse, stepping up to fill the void left in the Australian domestic airline industry.
Why did Ansett Collapse?
The collapse of Ansett remains a topic of debate. Some point the finger at TNT and News Corp’s management of the company throughout the ’80s and ’90s, particularly Sir Peter Abeles and his taste for lavish expenditure, which receives heavy criticism. Furthermore, instead of sticking to a few aircraft types, Sir Abeles had acquired many different models—sometimes without a business plan—resulting in redundant aircraft that fulfilled the same role (e.g., purchasing both Boeing 737s and Airbus A320s). As one news article following Ansett’s demise stated, “Sir Peter had bought so many types of aircraft, when three or four would have done, because he couldn’t resist the lure of a shiny new toy.”
But mismanagement was just one factor. By the late ’90s, Ansett’s fleet was aging and in desperate need of replacement. Maintenance issues were mounting, and it was becoming costly to maintain and operate the fleet. Ansett’s operational costs were also high and a burden on the company. In 2001, Ansett’s cost per available seat kilometer (CASK) was $0.16, compared to Qantas’s $0.12 and Virgin Blue’s $0.08. Additionally, in 2004, Virgin Blue’s chief executive, Brett Godfrey, claimed that his airline was flying more passengers than Ansett did in its last year of service—with only 3,300 staff compared to Ansett’s nearly 10,000. This demonstrates the inefficiency of the company. Ansett employees also enjoyed above-average entitlements and wages, and when the airline needed to cut costs, the unions refused to budge.
Others fault Air New Zealand for failing to inject the desperately needed cash into the failing airline or argue that the company had been mismanaged for years before its collapse. As Sir Rod Eddington summarized after taking the helm of Ansett Australia in 1997, “Great airline, lousy business.”
In the end, a perfect storm of mismanagement, outdated infrastructure, financial instability, and a rapidly changing airline industry proved too much for Ansett to weather. And so, one of Australia’s most iconic airlines faded into history, leaving only memories—and a cautionary tale for the aviation world.
Sources:
Books:
Ansett Milestone booklet
Websites:
AirlineRatings.com: https://www.airlineratings.com/articles/ansett-australia-20-years-great-airline-lousy-business
Aussie Airliners: https://www.aussieairliners.org/Ansett%20Airways/ansett.html
Australian Aviaton: https://australianaviation.com.au/2019/09/from-the-archives-the-ansett-collapse/
Australian Dictionary of Biography: https://adb.anu.edu.au/biography/ansett-sir-reginald-myles-reg-12142
Australian Financial Review: https://www.afr.com/companies/whatever-happened-to-20021031-ka43e
Britannica: https://www.britannica.com/money/Ansett-Transport-Industries-Limited
Simple Flying: https://simpleflying.com/ansett-australia-history/ TAA Museum: http://www.taamuseum.com.au/TwoAirlinePolicy/Ansett.html
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