Air New Zealand Looks To The Future

T he Asia/Pacific basin is the fastest growing region in the world andAir New Zealand plans to target this growing affluence to attract more tourists from Asia to the Australasian basin. It is here that its links with Qantas will prove beneficial (Qantas owns 19. 9% ofANZ whilst AmericanAirlines and JAL each own 7. 5%) as the airline can already funnel its US origin traffic through both nations, though presently cannot do the same for Asia.

Chief Executive Jim Scott recently stated that it is time that Qantas and Air New Zealand jointly negotiated bilateral traffic rights within the region with their respective governments to gain a stronger negotiating position rather than continually negotiating as individual countries. Mr Scott recently lobbied for the formation of a ‘Pacific Club’ of airlines with Qantas and Air New Zealand as joint leaders. He cites the growing emergence of a similar negotiating bloc within the often disparate group of European airlines and the strength of the US government’s efforts at projecting the objectives of its flag carriers abroad as examples of what could be done if the major carriers of Australasia and the South Pacific formed a united body.

Ironically, the airline is now not interested in pursuing domestic traffic rights within Australia, a considerable change in philosophy compared with a few years ago, when a senior executive was even given the full-time task of overseeing such an even tuality via the opportunities of Closer Economic Relations (CEA). Reasons now given for a reluctance to fly domestically centre largely on the fact that the Air New Zealand board do not consider that the massive investment that would be required to establish a viable Australian domestic infrastructure would be a wise investment of shareholders’ funds, especially when the money is required to boost the airline’s international growth which is of real benefit to the New Zealand economy. After watching Ansett New Zealand bleed to near death these past few years, ANZ is not about to emulate that possibility on a much larger scale in a deregulated environmentwithin the homeland of some of the world’s best domestic carriers, particularly whilst one of the major players is government owned and thus technically incapable of going bankrupt.

Other moves includethe continued withdrawal from domestic third level turboprop routes in favour of ANZ’s two commuter affiliates, Eagle Air and Air Nelson. T he airline already has its older F27 Friendships on the market though will keep its remaining F27-500s which have also been upgraded in recent years. Airline management does not see these depreciated aircraft being replaced for some considerable time. Meanwhile,the Boeing 737-200 fleet is being replaced by Stage 3 737-500 aircraft from next year onwards.

T he biggest fleet growth will come from the international long haul division where the airline is looking at an increase from just five 747s to 12 by 2000 along with the 767 fleet increasing from six to 20.

To cope with this, the engineering division will be greatly expanded to be able also to position itself as a major offshore heavy maintenance facility in the South Pacific. Air New Zealand already undertakes a growing amount of work for the RAAF and US government and is also undertaking some maintenance on behalf of Qantas. Working in the kiwi airline’s favour is the fact that it is estimated that it will still be at least another two to three years before Qantas is able to return to the international marketplace as a significant party maintenance centre, something that it became famous for during the early to mid eighties.

ANZ will also see its number of employees increase from 9,100 to nearly 16,000by 2000. Each department within the airline has set specific targets it wants to meet as the growth strategy gains momentum. As an example, the operations sector is aiming to streamline its performance to be able to achieve a situation :where 77% of domestic flights leave within one minute and 92% within 15 minutes. Internationally the target is 65% within one minute and 85% within 15 minutes. Staff are also aiming to reduce the time taken for processing to 40 seconds for domestic passengers and 160 for international. The end goal of these improvements will enable the reporting time prior to departure to be reduced to 15-20 minutes for domestic travellers and just 60 minutes for internationals. If the airline can achieve this, then it will obviously pay dividends in increased efficiency as well as

better utilisation of resources and a better overall product for the consumer.

Commenting on the Year 2000 Vision Statement, Air New Zealand chief executive Mr Jim Scott recently stated: “We are at the crossroads, but there is only one direction we can take. It’s the path that will lead the airline to year on year double digit growth through this decade and firmly position us in the year 2000 as one of the world’s top 20 international airlines.

“We are currently about the size of Swissair and SAS but we will grow at a faster rate because of our position on the rim of the fastest growing region of the world. We will grow to be the dominant international carrier in the Southwest Pacific region and we will do it by supporting tourist promotion into our part of the world”.

Privatisation, a new and aggressive management team and the concept of taking a long term view towards achievable goals has launched Air New Zealand into an era of targeted high growth and hopefully ensuring profitability.