New Zealand News

Pushing the Qantas barrow was the Prime Minister, Mr Lange and the Minister of Transport, Bill Jeffries. Arguments in favour of Qantas: the importance of closer economic ties between the two countries and the benefits of co-operation on the rapidly growing South East Asian markets.

The difference between the ministers reflected a wider pattern of disagreement developing in the Labor Government Cabinet. The Government’s Opposition soon swung into attack claiming Air New Zealand could become an appendage of the Australian aviation industry and pointing out that despite attempts, Air New Zealand was still banned from Australian domestic services.

The question remaining is when and how much more of the airline will be sold. Mr Prebble, the minister who got the sell off rolling is said to be pressing for 100% privatisation, but this is opposed by other ministerial factions. The maximum amount of the airline that can be sold to overseas interests before the company’s bilaterals are voided is 35%.

Sources say it is almost certain there will be a public share float next year of at least 20% of the airline and it is understood some 10% is earmarked for sale to the airline’s staff.

Treasury advisers have recommended that different classes of shares be sold to ensure a limit on overseas ownership. For example it could issue 65% of the airline’s equity as A Class shares with the proviso they were sold only to New Zealand individuals or companies. Class B shares could be open to all comers.

Third Level Operators Take Airways Corp To High Court

Outraged commuter, charter and third level airline operators have forced an embarrassing backdown by the Airways Corporation over new charges. Huge airport and navigation charges – worked out under a new formula – were announced for light aircraft operators last February. After several delays they came into being on July 1st – but not before a body known as the Task Force was set up to fight them (July 88 AA).

After the first bills went out in August, the Task Force advised its members to pay an amount they considered appropriate. The Force advised that a going rate of about 20% of the total bill seemed appropriate in most cases. The advice was supported by operators throughout the country. Meanwhile, Mr Dennis Thompson, Chairman of the Air Transport Division of the Aviation Industry Association began amassing a fighting fund to have the new charges made the subject of a judicial review in the High Court.

Faced with hostility and a blank refusal to pay, the Corporation’s Manager of Airport Services, Mr John Mooney, advised operators in September of a ‘temporary’ change of direction. For the first year, operators would be given a special discount of 60% to “assist them to adjust to the new charges”. In the second year the discount would be reduced to 30% and it would be phased out by the third year.

Significantly, the Corporation agreed that the massive charges were in danger of “compromising safety” because some struggling third level operators were electing to fly under visual rules when the visual situation was marginal. The Corporation added that it would lose $1. 5m because of the discounts in the first year.

However the Task Force is not accepting the Corporation’s compromise. It would still proceed with the High Court case and donations of $500 and $1,000 were coming in daily, said Dennis Thompson. “We have two options now – to lie down and die or continue the fight and we’ll take the latter. ”

The row has produced considerable bitterness. Chairman of the Airways Corporation, Mr Frank Baldwin, declined to appear at the Aviation Industry Association conference and the Minister of Civil Aviation, Mr Bill Jeffries, faced a barrage of criticism. According to Dennis Thompson, the lack of professionalism shown by the Corporation in attempting to force through unrealistic charges boggles the imagination. · Could it be, asks Thompson, that not one member of the Corporation board has a previous background in aviation?

Anz Buys Into Commuters to Further Reduce Impact of Ansett NZ

Two years ago, the idea of Air New Zealand forming any kind of relationship with small provincial airlines would have resulted in loud hilarity. Small airlines were pesky creatures to be swatted hard it they showed signs of intruding.

Times change and Air New Zealand has just formed what it calls alliances with two of the most successful provincial carriers left in a field badly depleted by economic hard times and deregulation. The two are Eagle Air of Hamilton which flies three Bandeirantes on a widespread North Island network and Nelson Air which flies Chieftains and Navajos across the strait to Wellington and down the South Island west coast.

Late in July, Eagle and Air Nelson got together to form a marketing and operating alliance which saw Eagle hand over to Air Nelson one of its services (Nelson/Palmerston North) in the interests of efficiency. It looked to be the start of a provincial coalescing to withstand pressures from Air New Zealand. Air Nelson began operating a freight service to Wellington for Ansett New Zealand.

Then presto, in mid September Air New Zealand announced its partnership with the two smaller companies. It involves taking a 50% shareholding in each, increasing Eagle’s Bandeirante fleet to five; seeing Air Nelson operationally established with Metroliners and handing over a whole swag of former F27 services to the smaller airliners (in expectation that the 19 passenger Bandeirantes and Metroliners will be able to operate with greater frequencies and therefore demand).

While the move will save Air New Zealand some millions of dollars a year (and result in the withdrawal from service of three F27s), the strategy goes much deeper. lri getting on side with two of the biggest and most successful provincial airlines, Air New Zealand effectively isolates Ansett and guarantees itself the flow on from a large feeder system.

As Ansett New Zealand goes into its second year, Air New Zealand has need for coups. In two recent weeks, Ansett’s weekly uplift hit 19,000 or the equivalent of only a little less than a million passengers a year. They were especially good holiday weeks and Ansett is not pretending the million is in the bag. Nevertheless, its market share on the Auckland/Wellington/ Christchurch route is climbing through a third and will probably go higher when it flies into Dunedin in December.

The failure of the Aussie interloper to pack up and go home is a continuing irritant to Air New Zealand. The home airline’s chief executive, Mr Jim Scott, describes Ansett’s presence as “forced and contrived competition”.

Ansett New Zealand’s Manager, Mr John Buchanan, says he is not overly troubled by the outflanking move. He makes it clear the building battle will be fought on the main city routes; not on provincial services. That means passenger services and possibly fares which, despite deregulation, are at present matched exactly by the two airlines.

Air New Zealand Profit

Air New Zealand reported an operating profit of $NZ68. 7m for the 1987/88 year, compared with $108m for the previous year. But unlike 1986/87, it did not benefit from asset sales, mainly of aircraft, of $102. 5m. Turnover for the airline increased from $1,530m to $1,552m, but costs were up by 4. 3%.

The report by Chairman Hugh Fl. etcher and Managing Director Norman Geary highlighted two points: a claim that American carriers were dumping capacity in the South Pacific and the need for the airline to link up with one of the major computerised reservation systems (CRSs) being developed around the world.

Mr Geary said that during the year the small number of US mega carriers had strengthened their stranglehold on the American domestic market and appeared to be using domestic fare rises to subsidise international market share battles. US deregulation with the current market concentration had arguably gone too far and there was growing consumer disenchantment in the US with poor domestic services. The South Pacific had not been immune from expansionary moves by US carriers and the Pacific had become an air fares battleground which had intensified over the past year or so. “Capacity is being dumped in the South Pacific with significant profit implications for all operating in the region. ”

Of Ansett’s entry into the domestic market, Mr Geary said:

“There is no doubt that Ansett seriously underestimated Air New Zealand’s resolve and ability to compete. “New Zealand has yet to see the boost to tourism that some claimed would accompany Ansett’s arrival. Domestic aviation market growth over the last year has not been exceptional. ”

Since 1981/82 when the company showed a net loss of $49m and a $90m operating loss, the airline has recorded a cumulative net profit after tax of $705m. Passengers carried on internal services last year totalled 2. 962m, a 1. 2% decrease. International carriage grew to 1. 519m, a 7. 5% increase. The international passenger load factor increased from 68% to 70%, while the domestic PLF decreased from 70% to 69%.

A Step Back in Time

Newly established South Island company, Canterbury Planes Ltd, has purchased a Grumman Goose amphibian to operate tourist venture flights out of Lyttelton Harbour.

The venture is aimed at the international tourist trade with scenic flights around Banks Peninsula as well as fishing flights to Lakes Coleridge and Brunner. Initial work planned for the Goose was a regular passenger and freight service to Akaroa, a small harbour town about 60km from Christchurch. A Lake Buccaneer was to be used as a backup aircraft.

The entrepreneur behind the venture, Mr Stephen Pope, plans to build a $1. 5m flight centre on the shore of the harbour. It is planned to give the complex a 1940’s aviation flavour and a 1950’s DH Comet fuselage has been purchased in the US to be converted into a bar and restaurant.

Briefs

• The Air New Zealand sponsored city/Auckland Airport helicopter shuttle now appears less successful than earlier indicated (Sept 88 AA). The service was expected to be reviewed in early October because of a reported lack of patronage.

• Approaching the late September delivery date of its fourth Boeing 767-200ER, Air New Zealand decided it urgently needed a fifth. The airline has come to value the big twins greatly, especially their work on the long non stop routes such as to Singapore. So the company got in touch with Varig, from whom it was leasing a 767 and were negotiating a purchase of the machine in late September.

• Bushy faced aviators may be required to lather up and shave under amendments to civil aviation regulations due out in October. A draft of changes notes American tests which show that facial hair affects the mask-to-face seal. Captain Barry Cranston, the beard wearing controller of airline standards, said he was sympathetic with other pilots who wished to keep their beards. “But you have to make the necessary sacrifices to do your job professionally. ”

• Tread warily record snatchers. Aucklanders read in a full page newspaper advertisement recently that Air New Zealand had broken a record in flying from Sydney to Auckland in 1hr, 56mins and 45secs. The ad prompted Qantas captain Ian Watkins to check his log. He found that he had flown the same route in the same aircraft type (747) four hours earlier than Air NZ . . . and was 9 seconds faster.