Frontline’s prices under attack

ON March 4 I sent a request through to Frontline to find out who sets prices, why the increased price range (5 cents through to $1) and what was the justification for recent price rises.

To date I have received no answers back as to my questions. Does this mean as a Defence customer I have no relevance or is Frontline, as I have suggested, a monopoly that does not have to justify itself to its customers?

Frontline enjoys a monopoly on RAAF bases, therefore Frontline has a captive audience when it comes to students on long courses or persons who have been attached with no mobility. Due to Frontline’s monopoly, competition is not permitted or tolerated even from social clubs on-selling hot foods or confectionary items to staff or students, which are able to be sourced from other food outlets and on-sold at cheaper prices.

Furthermore, by their nature, RAAF bases are not close to other food outlets. Hence, personnel employed on Defence establishments are at the mercy of Frontline and whatever price increase it might wish to impose.

I am also aware of the disbursement process for all royalties and dividends at base level at the discretion of base command, however I also believe that you don’t “rob Peter to pay Paul”.

I would still like an answer to my questions about who sets prices, why the increased price range and what was the justification for recent price rises?
FSGT T.W. Devine
Course Director
PSSTF RAAFSFS

Official response

LET me thank FSGT Devine for writing to us with his concerns as they are important. I would also like to apologise for having not responded to date. This is an administration oversight which should not have happened.

Frontline has not had a national price increase since August 2002. The market factors affecting the price increases are indicated below: if products have increased above the increases indicated then the old price was not correct. We would require detailed product comparisons to investigate your claim of a $1 increase.

National wage increase August 2002 3.8%

Supplier increases:

Food and convenience – Jan 03 2% to 5%

Alcoholic beverages – Jan 03 4.2%

Non-alcoholic beverages – Jan 03 4.7%

Frontline price Increase effective Feb-March 02

Food and convenience 6%-8%

Alcoholic beverages 4.2%

Non-Alcoholic Beverages 4.7%

Frontline is financially independent and as such must recover its costs from the market place. We are also cognisant of what the customers can pay. To that end we always attempt to price under the prevailing market of the convenience sector, wherever possible, to give our customers a fair price. To assist Frontline to meet these criteria we have contracted the services of an independent market research company, Informed Services that regularly researches a sample of competitive off-base locations (same market sector) with a basket (28 product lines) of products (common industry key value items).

This enables Frontline to cross-reference its national pricing against competitive offers and, where necessary, the ability to tailor our prices to meet the market. Our policy is to offer our goods and services on a consistent basis at a price cheaper than the average competition providing we are able to recover our legitimate costs for providing the service.

Our survey results in March after price rises indicated the following variance relative to like competitors:

Ready to eat – food, sandwiches etc 4.4% lower

Grocery – milk etc 3.3% lower

Convenience – beverages, snacks etc 0.9% higher

Regarding the perceived “monopoly” enjoyed by Frontline, the reality is that populations vary from base to base and on many smaller bases around Australia we operate at a loss. This cross subsidisation amounted to $840,000 last financial year. As such, we “cross subsidise” the operations of many of the smaller bases from the earnings achieved at the larger bases. Unlike our “off-base” competitors we do not enjoy their economies of scale. Also we ensure the service offer is on all bases, not just those with the critical mass to support a profitable operation.

On most bases, in addition to operating a store, Frontline also operates mobile food vans for our customers.

Regarding the disbursement process, under our regulations distributions are made from the overall profits of the operation. Our capacity to pay distributions is not complex: if we achieve an overall profit then distributions can be made, or if no profit then no dividend will be made.

It is essential to look at the totality of our operations and take into account the total utility and value of the service, which is summarised below, taking into account the results from the financial year July 2001 to June 2002.

• Pay plan: $5m interest free loans to airmen and soldiers.
  Value: $0.625m in hire purchase interest avoided cost
• Disbursements: Royalties and dividends to bases and units
  Value: $0.740m to amenities and units
• Subsidies: Services in non profitable locations
  Value: $0.830m losses
• Services: 72 stores in 25 locations providing C Stores, Mobile Food Vans, Taverns and other retail offers to a customer base of little over 34,000 customers.
  Operational support: Provision of class 6 support to operations and exercises.
  Total value: $2.195m plus utility of service.
  Michael Hume
  Managing Director
  Frontline Defence Service
  
  
  Great leap forward
  

I WAS encouraged to see the article reporting the fruition of the C-130J-30 paratrooping trials (Air Force News, April 24).

The testing reported, involving No. 37 Squadron and 3 and 4 Battalion Royal Australian Regiment, was the final stage of over two years of effort to provide the ADF with this important capability.

In addition to the aforementioned units I suggest that recognition is also due to other units who made major contributions to this capability. In particular, Air Movements Training and Development Unit, Parachute Training School at Nowra, Royal Australian Engineers Surveyors, No. 176 Aerial Delivery Squadron, Nos 92 and 86 Wing photographic, and my fellow members at the Aircraft Research and Development Unit (ARDU), without whose efforts the paratroop capability of the C-130J would not exist.

You might not be aware that the testing conducted to provide this capability was planned and managed by ARDU personnel under ARDU’s in-house technical and operational airworthiness systems.
FLTLT Mark Washusen
Flight Test Engineer
Aerospace Test Squadron
ARDU

Flag not respected

IN regard to a photo that appeared on page 10 of the May 8 issue of Air Force News, while I fully appreciate the need to set up certain items for PR-type images, I think the image of the Australian National Flag with the medals lying on the sand at Gallipoli with sand and pebbles thrown across the flag does not show our flag, or the medals for that matter, the respect that they deserve.

I am sure the photographer would not even have dared do such a thing if he were at Bondi Beach instead. Put simply, our national flag should not be displayed in this manner.

Chapter 11 of the RAAF Ceremonial Manual (Chapter 22 of the Army Ceremonial Manual & Chapter 2 of the Navy Ceremonial Manual) states, “The ANF is not to be allowed to fall to the ground, placed or left lying on the ground.”
Numerous civilian/government web sites relative to our national flag also reflect this information.
While many personnel have voiced concern about errors with certain military images appearing in the Air Force News in the past, I believe that the majority of Australians would see a problem with this image, not just military personnel.
SGT Chris Stephens
SNCOIC Training Cell
Australia’s Federation Guard

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