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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 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 six leased
Airbus A300 and
A310 aircraft. It 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 II was conceived as Southern Cross Airlines originally but chose to trade under the Compass brand, which seemed to have popular support. It commenced operations in
1992 with
McDonnell Douglas MD82 aircraft. It collapsed less than a year later in
1993. 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.
