New Zealand News

The Chief of Air Staff, Air Vice Marshal John Hosie, OBE, said the decision to close Wigram – where military flying training started in 1917- was a “major wrench. . . Wigram is where we started, but the situation we face in the 1990s could not have been foreseen when Sir Henry Wigram set up the company that would eventually become the Royal New Zealand Air Force”.

The Wigram closure announcement, made in a RNZAF news release, came as the result of a long awaited study of the cost benefits of closing either Wigram or Woodbourne, halfway between Christchurch and Wellington.

Taking into account thecostofrelocating training assets and personnel, the study showed that to relocate Woodbourne’s resources would cost more than twice as much as the relocation of Wigram’s. Additionally the annual savings from closing Wigram are estimated at $NZ10m compared with the annual savings at Woodbourne of only $NZ7. 5m.

The decision to close Wigram has been driven by Defence cost cutting. The Air Force says it would cost $NZ34. 5m to relocate Wigram’s resources, against Woodbourne’s $NZ82m. It is understood close to 550 permanent staff at Wigram will be affected by the closing. Of this, 268 will be posted to either Woodbourne, Ohakea or Auckland. About 40 will remain in Christchurch in the short term to service the excellent RNZAF museum, the 3 Squadron Iroquois detachment (involving about 15 personnel, comprising air and ground crews) air force recruiting, cadet forces and US military involved in America’s Antarctic activities.

However for 235 personnel at Wigram there are no specific vacancies available. An RNZAF spokesman has said a redundancy scheme for military personnel may be necessary.

Plans for Wigram’s Flying Training Wing to move to Ohakea are already underway. The move will be completed by June 30. Ground training schools at Wigram, including Nos 2 and 3 technical training schools and the command training school are going to the Woodbourne base – where new accommodation and other facilities are expected to cost $NZ32m; these costs take in Ohakea’s requirements.

Air Vice Marshal Hosie said the RNZAF museum at Wigram would “provide a link between the founding of military aviation in New Zealand and the RNZAF of today. He said Defence policy had a “clear focus to reduce the costs of support and moving that cost to maintain the operational or ‘teeth’ end of our organisation”.

Early this year a Christchurch woman whose father worked at Wigram during the 1939-45 war, and whose son did his military flying training at Wigram, wrote to the Christchurch Star seeking people who were keen to see the air base retained in some way. As a result the Wigram Airfield Development Support Group was formed and supporters are seeking signatures on a petition which asks the government to ensure that the runway and surrounding land which comprise the air base “remain classified for aviation activities”.

Before this group was formed, a consortium of civil aviation interests was hard at work, keen to develop the base as an aviation centre.

A former Air New Zealand employee, Bob Davidson, who was with the airline from 1956 to 1989, heads the Wigram Consortium. He told AA it was vital that the 247 hectare site was not sub divided and sold. The consortium proposes an integrated civil aviation centre involving flight and aviation industry related training, a tourist flying venture, aviation electronics training and maintenance ventures.

Bob Davidson told AA: “The consortium believes there could be between 6000 and 8000 people working at Wigram and other places within 10 years”.

More than a dozen parties are involved in the consortium.

Air NZ Profit up 8% But. . .

Air New Zealand reported a bottom line profit of $NZ60. 9m -up 8. 7%-for the six months to December 31.

Soon after this financial success however, it was reported that about 200 airline jobs would go by June. Air New Zealand already cut 200 jobs in the final half of last year. In April 1990 the airline had just over 9000 staff, now it is about 7400.

The airline’s directors said the profit for June-December was satisfactory, going against the trend. The result was in contrast to conditions of nil to low growth in the worldwide aviation industry.

The leading United States based airlines posted record losses last year, while most Asian and European airlines have reported deteriorating profitability in the most recent financial period. In the year to last June, Air New Zealand reported a healthy bottom line profit of $NZ115. 1m.

In the December half, operating revenue was 6. 9% higher at $NZ1164m. Seat kilometres flown increased 9. 4% through additional capacity but passenger seat kilometres failed to keep pace, growing 6. 5% and leading to a fall in passenger load factors.

The airline reported that it had leased two aircraft for six months and three years, in spite of an oversupply in the international leasing market. Air New Zealand’s longhaul Pacific and European route revenue contributions rose 12% but price competition denied the company significant net earnings growth from the extra business. On the Asia/Japan routes, flight revenue increased 13% but price competition again affected net earnings.

Mount Cook Group posted a solid performance and the Jetset travel operation also improved it performance.

Total assets rose 16. 8% to $NZ2. 813bn. Shareholders’ funds rose 9. 7% to $NZ1. 080bn; earnings a share were NZ28. 9c com- pared with 30c.

Directors say that while the likely result for the year to June 30 is difficult to predict, an outcome close to the $NZ115. 1m achieved in the June 1992 year would be “highly acceptable”. Air New Zealand faces a “demanding time” as a single Australian and New Zealand aviation market emerges, directors said. Key structural changes include the merging of Qan- tas and Australian Airlines, the sale of a 25% stake in the enlarged Qantas to British Airways and the residual 75% to yet- to-be determined interests, and the designation of Ansett Australia as the third international carrier to operate out of the single market.

The changes present new opportunities for Air New Zealand, directors said, with ability to enhance shareholder value dependent ultimately on its response to the evolving regional environment. On the job front, Mike Talbot, president of the Airline Pilots Association here, said pilots would not be affected by redundancies. There is a clause in pilots’ contracts which says they could not lose their jobs for productivity improvements.

In an internal memo, Mr Jim McCrea, the airline’s managing director, told staff that more jobs had to go if the airline was to improve productivity. He told staff that it would be a major challenge for the airline to achieve its 1991-92 earnings which saw profits of $NZ115. 1m being recorded.

Aviation Tax Plan Draws Warning

Job losses and company closures might result from the NZ Civil Aviation Authority’s proposed “payroll tax,” says the Aviation Industry Association’s president, Dennis Thompson.

The Authority is planning to introduce a “safety system subscription” which would levy airlines, flying schools and engineering workshops an annual subscription to $NZ1300 for each staff member.

Replying to the plan, Mr Thompson says flight training firms would be uncompetitive if hit by the tax, driving away overseas contracts and revenue.

He also accuses the government of “double dipping”. More than $NZ100m in charges was paid by the aviation community, of which $NZ6. 7m from airline passengers was paid into the consolidated fund from the Airways Corporation.

Mr Thompson suggests that $NZ6. 7m should be used by the government to fund the shortfall in funding for the Civil Aviation Authority. He also says an “enlightened” minister of aviation would seek ways to develop growth and encourage an industry that could reward New Zealand-“not club it down and penalise the entire economy”.

The CAA says its proposed industry subscription was necessary to ensure public safety. The Authority’s director, Kevin Ward, says the subscription was needed to pay for provision of essential services such as investigation of incidents and random checks on aircraft operators.

Under the new system all operators would be charged a subscription based on a flat rate per head of staff. There will be different rates for different activities reflecting the risk of that activity. Risk is what determines the appropriate level of regulatory activity plus the size of the operation measured in staff numbers.

Operators requiring the greatest investment in safety standards and therefore the greatest effort by the CAA will be required to pay the most.

The CAA says it needs to develop the subscription to recover $NZ5. 6m to fund operations. Its total proposed budget for 1993- 94 is $NZ11. 8m. For the 1993-94 year $NZ3m is expected to be recovered from industry in the form of fixed fees and hourly charges for services. A further $NZ3. 2m is to be paid by the government for policy advice and the production of new rules. Mr Ward says the figure of $NZ5. 6m is based on independent analysis by management consultants who recently confirmed our productivity to be comparable with good private sector standards. We have also reviewed our activities to confirm we are only engaged in those safety related tasks required by the Civil Aviation Act and our agreement with the Minister of Transport.

“In our first year of operating as an independent authority we have succeeded in reducing operating costs $NZ1m. ” Last December the government reaffirmed its position that all activities of the CAA arising through the activity of aviation had to be paid for by members of the industry.

Mr Ward adds: “We have conducted an exhaustive examination of a range of options including the possibility of a charge per passenger and a fuel tax but believe the subscription is the best solution”.

Transport Minister Rob Storey says the industry knew it would have to pay most of the CAA’s costs. “The industry knew when the CAA was first proposed that it would be required to be largely self sustaining in terms of funding from the aviation industry, with taxpayer funding being confined to policy advice services and the development of the new civil aviation safety rules systems. ”

Ansett NZ Plans Staff Cuts

Ansett New Zealand is to lay off staff and reduce other workers to part time employees.

Staff here have received information from the airline, which got airborne in 1987, saying Ansett intends to “restructure” its staffing levels. Ansett New Zealand is “reviewing costs and manpower” but a spokesman, John Cordery, declined to comment further, saying it was an internal matter.

According to the national secretary of the New Zealand Engineers Union, Rex Jones, the redundancies would involve the ramp and freight staff. The union, he added, had discussed the issue with Ansett New Zealand and was “doing its best” to protect the entitlements of full time staff.

The internal staff notice said the changes would be “effected across a broad spectrum of the company. “Where redundan- cies are necessary, a voluntary option will be offered”, reduc- ing the likelihood of forced redundancies.

Staff were assured proper consultation with the workers’ bargaining agents would be held.

Fees Dispute Settlement

Two regional airlines, Air Nelson and Eagle Air, have paid $NZ4m in an out of court settlement with the Airways Corporation to end a long running dispute over fees.

In October 1990, the Corporation introduced new charges on aircraft in the five to eight tonne category, reducing a previous 65% discount to 20% Several regional carriers, including Air Nelson (50% owned by Air New Zealand), and Hamilton based Eagle Air (an Air New Zealand subsidiary) issued court proceedings for a judicial review of the fees.

The case was set down in the Wellington High Court but a week before the start, the out of court settlement was reached; the two carriers have paid all outstanding charges plus interest and withdrawn their review application. In return the Corpora- tion will shortly announce new discounts for five to eight tonne aircraft.

Air Nelson’s managing director, Robert Inglis, said the Corporation’s revised discounts satisfied the airline’s requirements. Industry sources said the back charges and interest owned by the two airlines was some $NZ4m; Air Nelson paid the substantial portion of the sum.

Jet Problems Not Safety Risk

Problems with the new Aermacchi trainer jets for the Royal New Zealand Air Force are not a safety risk, says the Ministry of Defence.

The capability procurement manager for the ministry, Robin Johansen, said the Air Force had placed some restrictions on the way the jets were flown but it did not believe there was a danger of losing one.

The Ministry’s programmes and projects director, group captain Rick Bulger, said technical faults with the Rolls-Royce engines were causing the aircraft to stall and surge.

New Zealand has taken delivery of 12 to 18 Aermacchi jets. Parliament’s foreign affairs and defence select committee was told by Mr Johansen that the problems had been in deceleration and acceleration, not in steady flying.