Guy Norris/GUAM
Below the warm, crystal-clear waters of Bikini Atoll lagoon lies the mammoth Second World War aircraft carrier USS Saratoga. Almost 270m long, she is bigger than the Titanic and is the world's largest diveable underwater wreck. Resting upright on the bottom, her bridge is a mere 12m below the surface and, for the more daring, there is the chance of visiting the Curtiss SB2C Helldivers that still sit lashed to the hangar deck a few metres further down.
The Saratoga is a rarity by any standard, but to Continental Micronesia, the wholly owned Guam-based subsidiary of Continental Airlines, she could be a gold mine. Unlike many other inaccessible Pacific wrecks of her era, the Saratoga is not an official war grave. The carrier met her end as part of a fleet of target ships anchored in the lagoon at "ground zero" when the US Government conducted its test detonation of the "Baker" atom bomb in 1946.
After 50 years, the wrecks, including the nearby Japanese flagship Nagato, become legitimate diving sites and a target for tourists the world over. Continental Micronesia, or "Air Mike" as it is better known throughout the Pacific, has seized this new opportunity to grow traffic on its "island hopper" route. This 16h flight links Guam with Honolulu via Chuuk (also known as Truk), Pohnpei, Kosrae, Kwajalein, Majuro (jumping-off point for Bikini) and Johnston Atoll. It is well used by visitors to the diver's paradise of Chuuk, where more than 50 Japanese wartime wrecks lie within the enclosing arms of the 2,130km² (23,000ft²) lagoon, the largest in the world.
The exploitation of unusual niche markets like this is typical of Continental Micronesia's equally unusual character. Part essential service provider, part international flag carrier, part trunk route tourist airline, the carrier has become a fixture on the western Pacific travel scene since its inaugural flight in 1968. Formed by Continental founder Robert Six, the airline has not survived simply by being well known. As it celebrates its 30th anniversary, it is facing one of its toughest ever periods as it contends with the collapse of the Asia-Pacific economies on which so much of its traffic depends.
"Asia is on its knees and we've tried to respond aggressively," says Continental Micronesia president Jim Ream. "Instead of doing things slowly, every quarter we've tried to look further ahead." The result is a multi-pronged initiative that embraces restructuring of the fleet and the routes it serves, as well as a determined attack on new markets - a deliberate attempt to establish Guam as the centre of a true hub-and-spoke operation - and a crackdown on costs.
Underpinning the strategy are two main goals: the strengthening of links to Japan - traditionally the airline's bread-and-butter revenue earner - and fostering US-originating traffic through its own Houston-based parent carrier and Continental's recently established relationship with Northwest Airlines.
The airline's link with Continental has been of enormous help during the recent difficulties, says Ream. "We've had a chance to flow some of our capacity back Stateside where the demand has been needed and where the economy is working well. For us, the beauty is that this arrangement reduces our fixed costs while we are recovering. We can also pull them back when we need them."
Air Mike's fleet has therefore waxed, but mostly waned, over recent months as aircraft have come and gone. Three McDonnell Douglas DC-10-10s returned to the mainland by the end of March, for example, along with the last of five Boeing 727-200s that were sent to bolster Continental's US-based fleet.
The move left Air Mike with nine 727-200s, three DC-10-30s, four 747-200s and five new Boeing 757-200s. The first of the new 757s arrived in Guam on 2 March and all five had been delivered by last month and were operating on the Micronesia network.
'TIMELY' 757
The advent of the more efficient 757 is "very timely", says Ream, who is using the twinjet to replace DC-10-10s on some routes and to build up frequencies on others. "For the sort of operation we have, with many miles of ocean in between far-flung destinations, it is even more important for us to have an efficient, reliable aircraft," he adds.
Customer service and sales senior vice-president Curt Bourg says the airline's analysis overwhelmingly supported the $200 million investment in the 757 fleet. "We've always known it would be the right aircraft because it is the right size and has the right economics. For example, Osaka has been a struggling market and we've been able to go from DC-10s to 757s and show a profit."
The DC-10-30s continue to provide the essential air bridge on the trunk route between Guam and Honolulu, while the 747s ply a triangular route linking Honolulu, Narita and Guam. Although no decisions have yet been made on future widebody needs, Ream says Continental's decision to buy the 777 means that the appearance of the big twin on the western Pacific network is a distinct "possibility".
Like many carriers, Continental Micronesia will replace its venerable 727s with the Next Generation 737 from the first quarter of 2000. An unspecified number of aircraft will be based in Micronesia from the batch ordered by the parent company. Initial aircraft to enter service will be -800s, although -700s and -900s are also expected to be introduced eventually, says Bourg, who adds that the last 727 will leave by the end of 2000.
The final departure will mark the end of an era for Continental Micronesia as a 727-100, nicknamed "Ju-Ju" (fitted with a Teflon protective belly coating and carrying a special spares pack and engineer), was used to inaugurate jet services in 1968.
As well as offering lower operating costs, the 737s and 757s will provide more operational flexibility, allowing the airline to penetrate new markets. New potential destinations now within "long, thin route" range include resorts in Fiji, Indonesia and Tahiti, as well as gateways such as Singapore and Bangkok.
On existing routes, such as the island hopper service, the added range of the new 737s means that a fuel stop for westbound flights at the remote US military base at Johnston Atoll could be eliminated. Similar benefits on eastbound flights are expected. Following the raising by the US Federal Aviation Administration in 1996 of fuel reserve limits for the Majuro to Honolulu sector - from 2,270kg to 3,630kg (5,000lb to 8,000lb) - this created potential problems for the 153-seat 727-200s.
"If the winds are bad, we might only be able to carry 85 people, " says vice-president of sales and promotion Wally Dias. "That leaves a lot of empty seats and a lot passengers upset that they can't get on the flight."
HUB IDEA
In the meantime, Continental Micronesia has devised a way around the problem by using Guam as a real hub. "With our new bridge schedule and hub connections, we could connect passengers from Pohnpei or Chuuk to the Honolulu flight from Guam rather than putting them on the hopper," says Dias. "For Chuuk people, it actually shaves 1h off the trip. For Pohnpei people, it adds 30min, but passengers are travelling on widebody aircraft and you're not taking off and landing three or four times."
The crucial benefit of the revised hub system is higher load factors on more flights. "Although we are based here, Guam has never really been a hub because the east-west flow was timed to coincide with Honolulu-Los Angeles/ Houston, rather than Guam," says Dias. "So we've worked with Continental to tweak the schedule, and it's working well. Some 70% of our business comes from Japan and we have east-west traffic that comes from Honolulu.
Bourg sees the adoption of the hub strategy as key to the survival of Continental Micronesia. "We are riding out the Asian economic storm and, when the battle is over, we may be the last standing," he says. "As the currencies began to devaluate and people began to travel less, we needed a way to add more traffic to each aircraft and that seemed to be one of the best solutions."
New services springing out of the hub include extra flights to Japan. The addition in mid-1998 of routes to Okayama and Niigata brings total Japanese destinations to nine. Despite a fall-off in traffic throughout the recession, the Japanese market is "holding up", says Dias. "Although Japanese outbound traffic has dropped in total [Guam has seen a 7% drop so far this year], it seems Guam itself has seen a slight increase as a destination. It definitely isn't diving down, mostly because of traffic from Narita, although there's been a fall-off from Sapporo and Fukuoka." Bourg comments: "We're retreating a bit on our strengths when it comes to Japan. Hauling Japanese tourists to beaches is what we're good at."
While Japan has held up, traffic from formerly busy South Korea has vanished. Although much of this was inevitable with the plunging economy, the final straw came with the August 1997 crash of a Korean Air 747 on Guam in which 228 people were killed. After cutting loss-making routes to Seoul, Continental Micronesia says it may never return. "We don't expect to see a turnaround in that market for two to three years," says Dias.
The airline is striking south in search of new custom. Earlier this month it opened new routes to Cairns in Australia, and Noumea in the French-governed islands of New Caledonia. The Cairns route is served three times a week with a 727, while Noumea is flown with 757s at the same frequency.
The 757 is used also to fly the Bali route, which Continental Micronesia remains optimistic will flourish despite the unrest in Indonesia. Part of this is down to the withdrawal of Garuda from the US market and the strengthening of the Guam hub.
With all the changes under way, the management hopes it will be strong enough not only to survive the dreaded "Asian flu", but to prosper in the interim. The link with Northwest, for example, is expected to help bolster traffic levels that, even a few months ago, looked set to plunge dramatically from 1997's 2.5 million passengers.
The airline can at least be sure of one thing - if an Asian recovery comes, it seems poised for growth on a scale undreamed of, even by the standards of its far-sighted creator, Bob Six.
GUAM INTO THE 21ST CENTURY
Surrounded by competition from some of the most ambitious airport development schemes in the world, the Government of Guam embarked on a major expansion plan of its own which it completed this month. The resulting A B Won Pat Guam International Airport has a state-of-the-art terminal capable of handling up to 5,000 passengers an hour at peak periods.
Situated on the southernmost tip of the Mariana archipelago, Guam is just 13í north of the equator, in the warm tropical waters between the Philippine Sea and the Pacific Ocean. It is roughly 3h flying time from most of the major Asia-Pacific cities and a natural magnet for millions of Asians who represent almost 95% of its passenger traffic. Despite the region's current economic turmoil, the traffic continues to hold up, as do passenger expectations .
"We have a population of only about 150,000, but the number of visitors is nearly 10 times that amount, so that's why the airport is vital to the island's economy," says Guam International Airport Authority (GIAA) expansion programme consultant Frank Santos. By July, work was expected to be complete on the last part of a three-phase project designed to keep capacity in line with demand to at least 2005.
Beginning with Terminal Package One, which was completed in 1994, the existing airport building was rebuilt and expanded with the start of construction in 1995 of an all-new terminal under Package Two. This coincided with the handing over of the airport from the US military in April of that year and the formation of the GIAA.
Construction Package Three saw the area of the terminal more than double to 51,000m² (550,000ft²), and the number of gates increased to 12. Advanced baggage systems, multi-user flight and baggage information display systems were added during the first phase of Package Three.
The second phase, dealing with the west concourse, created five more gates and an extra 18,500m² of terminal area and was completed this month. Construction was based on methods and codes learned from the 1995 earthquake in Northridge, California. Guam is subject to earthquakes , although it is better known for tropical storms, such as the Super Typhoon Paka.
Paka hit the new airport in December 1997 with sustained winds of more than 130kt (240km/h). Although some damage was done, the building survived intact. Paka's fury peaked with phenomenal gusts measured at 200kt, the highest winds ever recorded on the surface of the Earth.
Changes are also planned for the airfield, which is dominated by two parallel runways, 06L and 06R. Runway 06R, now used as a secondary runway, is being "rehabilitated" with new asphalt, concrete and lights, and is being extended to 3,000m (10,000ft). The parallel runway will also be extended to 3,600m, making it capable of handling the proposed Airbus Industrie A3XX and Boeing 777-200X.
This month also sees the addition of a DME navigation aid on the airfield. It will be located beside the instrument landing system. By July, the FAA expects to have the area surveillance radar back running after it was damaged by Paka. The new radar had just been installed when the typhoon struck.
"We're using the original long-range radar until we get the new one back," says FAA resident director for Micronesia, Tony Manibusan. Paka also destroyed the VOR beacon on Nimitz Hill, but this has been replaced. For the immediate future, Manibusan says the FAA is "-talking about differential global positioning system [GPS] - the islands already have GPS approaches marked out on the maps for en route procedures".
Source: Flight International
