Compass Airlines (Australia)

Compass Airlines (Australia)
Compass Airlines
Founded 1990
Commenced operations 1990 (Compass MK I)
Ceased operations 1993 (Compass MK II)
Company slogan "Stretch your wings, Australia"
Key people Bryan Grey

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 Airlines Policy', which was in fact a legal barrier to new entrants to the Australian aviation market. It restricted intercapital services to the two major domestic carriers. 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

Compass Mk I, as it later 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. Alternatively VH-YMJ and VH-YMK aircraft were leased from British charter carrier Monarch Airlines.

Compass Mk I collapsed little more than a year after its first flight, with the reasons being portrayed as undercapitalisation and sustained fare discounting by the three competitors.

However as the attached documents detail, there was clearly more to the collapse than undercapitalisation. The Federal Government had made it extremely difficult for the new airline to succeed, as evidenced by the lack of suitable facilities provided to Compass.[1] In the major cities, the fledgling carrier was forced to accept what were the least accessible aircraft parking bays inside the terminal of one of their competitors, an impediment to successful trade also noted by the governments' own subsequent ACCC study.[2]

Compass Airlines initial operations were also significantly disrupted by what appeared to be a computer attack on their reservations system.[3]

It is also important to assess the method by which the airline was shut down. As the official findings of the Australian Tax Office detail,[4] the Federal Government set in place legal proceedings that inevitably led to the repossession of the leased aircraft and the effective grounding of the airline, with the subsequent direct and indirect loss of thousands of jobs.

The Government and Compass had been in dispute for many months over the amount paid for the provision of Civil Aviation services provided by a governmental authority. Although this dispute had been ongoing, the Government chose to act just before the peak 1991 Christmas traveling period. At 9 pm on 20 December 1991, Compass 1 was grounded. Such were the complexities of this case that the matter remained unresolved until a final High Court of Australia hearing in 1999. Certainly, had the airline have been allowed to continue trading over the Christmas period it would have had more chance of meeting its disputed financial obligations than being shut down on 20 December.[1]

Compass Mk II

Compass Mk II was originally conceived as Southern Cross Airlines 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 than lease the same items as would normally be the case.

It commenced operations in 1992 with three McDonnell Douglas MD82 and two McDonnell Douglas MD83 aircraft. It collapsed less than a year later in 1993. Two further MD83 aircraft on order were not delivered 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.

Historical Fleet


  1. ^ a b "Aussie Airlines' dog fight - By John Quiggin". University of Queensland . Retrieved 29 March 2008. 
  2. ^ "Infrastructure industries: aviation". Australian Competition and Consumer Commission. Retrieved 19 March 2008. 
  3. ^ "Compass Airlines disrupted by possible computer attack". The Risks Digest Forum on Risks to the Public in Computers and Related Systems Volume 10: Issue 71. Retrieved 29 March 2008. 
  4. ^ "Extract from judgement in Airservices Australia v Canadian Airlines International Ltd [1999] HCA 62 (12 September 2003)". Australian Tax Office. Retrieved 22 March 2008. 

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