Compass Airlines (Australia)
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Compass Airlines operated in Australia for two brief periods in the early 1990s. The two incarnations of the airline were quite separate with different management and aircraft. Compass I was Australia's first low cost airline. It was established following deregulation of the Australian airline industry in 1990. Previously Ansett and the government owned Australian Airlines had operated under the 'Two Airline agreement', which was in fact a legal barrier to new entrants to the Australian aviation market. It restricted intercapital sevices to the two majors. This anti-competitive arrangement ensured that they carried approximately the same number of passengers, charged the same fares and had similar fleet sizes and equipment.
Compass Mk I, as it became known, was established by Bryan Grey, who had previously run regional airline East-West Airlines. East-West had earlier attempted to break the duopoly of Ansett and Australian Airlines by offering cheap fares but in the regulated environment of the time was not allowed to operate directly between major cities so was forced to detour via regional centres. East-West was ultimately acquired by Ansett. At its peak Compass Mark I operated four leased Airbus A300 (VH-YMA, VH-YMB, VH-YMJ, VH-YMK) and a single A310 aircraft (VH-YMI). Three further Airbus A300 aircraft on order in 1990 (VH-YMC, VH-YMD, VH-YME) were not taken up as a result of the failure of finance negotiations. As a result VH-YMJ and VH-YMK were leased from British charter airline, Monarch. Compass Mk I collapsed little more than a year after its first flight. The collapse was caused by undercapitalisation and sustained fare discounting by the three airlines.
Compass Mk II was conceived as Southern Cross Airlines originally but chose to trade under the Compass brand, which seemed to have popular support. This may have been a commercial error as many suppliers insisted that Compass Mk II purchased items and paid up front, rather thatn lease the same items as would normally be the case. It commenced operations in 1992 with 3 McDonnell Douglas MD82 (VH-LNJ, VH-LNK, VH-LNL) and 2 McDonnell Douglas MD83 (VH-LNH, VH-LNI) aircraft. It collapsed less than a year later in 1993. Two further McDonnell Douglas MD83 aircraft on order (VH-LNM, VH-LNN) were not taken up following the final demise of the Compass brand. Southern Cross chairman Douglas Reid was convicted in 1997 of theft and false accounting amounting to $10 million in relation to the collapse. He received a record 10 year jail sentence.
