Ansett Airways 1936-1946
By 1935, Ansett Motors and other operators was proving a thorn in the side of Victorian Railways, taking both passenger and freight revenue. The Victorian Transport Minister and Attorney General Robert Menzies pushed a bill through the state parliament prohibiting service cars from competing with Victorian Railways, slashing Ansett Motors' revenue overnight. Looking around for an alternative, Ansett decided to try an air service. What made this attractive was that air services were controlled by the Commonwealth government, so the state could not intervene.
On 16 February 1936 Ansett Airways Pty Limited inaugurated its first service, from Hamilton to Melbourne using a diminutive six-seater Fokker F.XI Universal. The flights operated daily each way, Monday to Friday. The service was a modest success and the Fokker was joined by an Airspeed A.6 Envoy. To help boost his funds, Ansett entered and won the Brisbane to Adelaide air race in 1936. On weekends he took the Universal on barnstorming tours of Victoria giving joyflights to paying customers.
To fund its expansion, Ansett listed the company on the Melbourne Stock Exchange on 14 April 1937, offering 250 000 shares at £1 ($2) each. A base, including a flying school, was established in a hangar at Melbourne's Essendon Airport. Ansett found selling the shares hard going. A number of aircraft crashes, notably the loss of Airlines of Australia's Stinson in southern Queensland in 1937, had dampened public enthusiasm for airline investments. Underwriters refused to handle the float so Ansett had to find investors himself. It was a difficult time but he eventually interested enough wealthy individuals in the western district.
Needing new aircraft, Ansett ordered three Lockheed L.10A Electras. Under the Empire Preference Scheme, aircraft from Britain could be imported duty free; Aircraft from anywhere else paid import duties. Ansett Airways Limited had posted a £30 000 ($60 000) loss in its first year and its shares had halved in value. Ansett's bankers refused to advance the money to pay Lockheed £50 000 ($100 000) for the Electras which were being held in bond awaiting payment of £14 000 ($28 000) in duty. Ansett's first priority was to get the aircraft released, so he lobbied T W White, Minister for Customs in the Lyons government. He argued there was no British equivalent aircraft available and that British airlines had ordered them for their own fleets. White accepted the argument and the duty was waived.
To pay Lockheed, Ansett went back to the banks who agreed to finance the purchase providing Ansett's wealthy grazier investors guaranteed the loan. The investors backed him, but at the price of Ansett handing over most of his personal shares in Ansett Airways.
Australian National Airways (ANA), the major Australian airline at the time, headed by Ivan Holyman and backed by five British shipping companies, made a takeover bid for Ansett in 1938. While Holyman did not take Ansett Airways seriously, he was attempting to create a major airline monopoly in Australia. Ansett was one more opponent to be eliminated by takeover. At this stage Ansett Airways shares had dropped to 8s (80 cents). The Ansett chairman Ernest O'Sullivan was a banker with no experience in the airline business. When Holyman offered 9s (90 cents) per share for Ansett Airways, he and the board of directors jumped at it. Determined not to lose his fledgling business, Ansett called an extraordinary meeting of shareholders. In the heated confrontation he convinced enough shareholders to back him and the bid failed. O'Sullivan resigned on the spot.
No sooner was this battle won that Ansett Airways came close to disaster. On 22 February 1939 a fire broke out in the Essendon hangar. The Fokker Universal and one of the Electras were destroyed. Surveying the wreckage in the light of day, Ansett told his staff he was determined to continue. By the end of 1939 Ansett Airways was flying from Melbourne to Adelaide via Mildura and Renmark; from Sydney to Adelaide via Mildura and Broken Hill and Melbourne to Sydney via Narrandera. The company also continued with the original Melbourne-Hamilton service. Ansett Airways receiving subsidy payment of £16 000 ($32 000) per annum from the Commonwealth government.
World War II was a time of boundless opportunities for Ansett. In 1942 he abandoned all his airline routes except Melbourne-Hamilton and concentrated on performing engineering work and charter flights for the US Army Air Corps. The Essendon hangar was expanded and by war's end the tiny Ansett organisation was employing around 2000 people. The Ansett organization finished the war flush with cash but facing trouble trying to regain its airline routes which had been taken over by ANA.
In 1943, the Commonwealth Department of Civil Aviation released a discussion paper Post-war Reorganization: Proposal Outline of a Plan for Civil Aviation. The Curtin Labor government was developing plans for various nationalized industries when the war ended. One industry in their sights was the airlines. Apart from the USA, most countries had adopted a policy of state ownership of airlines. On 22 December 1944, acting prime minister Frank Forde announced the government would legislate to nationalize all interstate airlines. Their prime target was Australian National Airways (ANA). Following the passage of the Australian National Airlines Acton 16 August 1945 the private enterprise airlines mounted a challenge in the High Court. When this was successful the government changed its strategy and formed the Australian National Airlines Commission which was to operate as Trans Australia Airlines, competing directly with ANA.
Reg Ansett married twice. From his first marriage, to Grace, he had two sons, John and Robert (Bob). After their divorce Grace took the boys to live in the USA. He married Joan Adams in 1944 and they adopted three daughters, Jane Janet and Jill. The new family lived on the Ansett estate at Mount Eliza. From the early 1960s Ansett travelled to and from the office by helicopter each day, a remarkable thing to do in the days when few Australian CEOs even had chauffeured cars. Bob Ansett returned from the USA in the 1970s to establish Budget Rent a Car, however Reg Ansett never acknowledged his son's presence in Australia. In later years they were to become bitter business rivals when Ansett Transport Industries purchased Avis Rent-a-Car.
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