Airline collapse hits universities

October 19, 2001

The collapse of Australia's second biggest airline, Ansett, has not only put 17,000 of its employees out of work but is expected to cost the nation's universities at least A$25 million a year (£8.8 million).

Under a deal negotiated through the Australian Vice-Chancellors' Committee, institutions had discount arrangements with Ansett.

The company offered universities reductions of up to 25 per cent on domestic and international travel.

An AVCC spokesman estimated total spending on airline travel by the nation's universities to be about A$100 million a year. He said the large volume had enabled the committee to negotiate the substantial discounts with Ansett.

The spokesman said he did not know how many universities had lost money as a result of pre-purchasing tickets before the collapse.

Hundreds of students who had hoped to compete in the Australian University Games in Sydney last month had their travel plans disrupted by the collapse.

The games were expected to involve 6,000 competitors in 24 sports.

Many universities had booked accommodation and on-ground travel through one of Ansett's subsidiaries and had to cancel their journeys because they did not have the money for alternative means of travel.

Sir Richard Branson has established a branch of his Virgin airline, Virgin Blue, in Australia. But so far it only operates routes along the eastern seaboard.

Virgin Blue accounts for less than 5 per cent of air travel within Australia.

Many academics were among thousands of travellers who were stranded or whose trips were disrupted when Ansett announced it did not have the financial resources to keep flying.

Australia's largest airline, Qantas, stepped in and provided seats at reduced cost.

Ansett had been partly owned by Rupert Murdoch's News Corporation, but he sold the stake to Air New Zealand, which later bought the entire company.

The New Zealand airline shocked the Australian government when it abandoned Ansett saying it was facing a financial crisis and could not meet the company's debts, that are estimated to be more than A$2 billion.

Both the New Zealand and Australian governments have been attacked by unions who are representing the Ansett workers for failing to take action to prevent the collapse.

Apart from the cost to universities, Australian tourism faces losing hundreds of millions of dollars as a result of the airline's closure.

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