Skytrans of Australia shuts down today

Skytrans Airline (Cairns) officially ceased operations today (January 2) after 25 years of service. The airline operated scheduled passenger flights from Cairns and Brisbane to 25 destinations in Queensland with Bombardier (de Havilland Canada) DHC-8-100s and DHC-8-300s.

Skytrans issued this statement:

Skytrans logo-1

Skytrans Pty Ltd, the Cairns based, family owned and commercially operated airline which celebrated its 25th year of serving the people and communities of North Queensland, carried its last passenger this afternoon, Friday January 2, 2015.

Skytrans Pty Ltd has made the decision to cease trading, effective immediately. As the Managing Director, I will seek legal and financial advice over the next few days regarding options for the business moving forward, but to be clear, it does not include the recommencement of flights in the short to medium term.

As Managing Director I have a lawful responsibility to notify regulators and other significant stakeholders when there are key impacts on the business. This has been one of those times.

This is not only a sad day for the business, but more importantly for our staff and indeed the passengers and communities of North Queensland.

All staff have been made redundant. Everyone has already been paid their entitlements. Over $4 million dollars paid out in staff entitlements – $2M to 121 staff made redundant late November and early December, due to the loss of a large contract, and the remaining 67 staff were paid $2M in entitlements today.

We are all well aware that the aviation market has been tough and we knew that it would get tougher with Skytrans in 2015. We have been closely monitoring the performance of the business and worked to develop a 2015 business model and associated strategies.

Since the loss of a large government contract we had been working on a business model that included focused services on the Cape routes utilising three aircraft. This included a reduction of operating costs and a workforce restructure. This 2015 business model indicated a small profit and whilst a reduced version of our current business, it was projected to be a viable albeit smaller business.

Our initial model for 2015 was based on an exchange rate with the US$0.91. As many of you will know the majority of our costs are actually in US$, so fluctuations in exchange rates have a material impact on our business. Within the last few weeks we have seen the Australian dollar fall as low as US$0.81. Unfortunately a drop below US$0.88 means our revised Skytrans model would not be a viable long term proposition. In the past few weeks we have been monitoring the exchange rate to see if the dip was only temporary, but unfortunately this appears to be a longer term adjustment with even predictions the AU$ could fall as low as US$0.75.

In addition to the currency challenge it now appears likely that we will have competition on our Cape routes with an inevitable price war – a war where the only winner would be the airline with the deepest pockets. It would be a war I would not be prepared to enter as it would have jeopardised staff entitlements.

Copyright Photo: Peter Gates/ Skytran Airline Bombardier DHC-8-102 VH-QQH (msn 380) sits on the ramp at Brisbane.

Skytrans aircraft slide show: