Issue 314: Wounded Roo

“When I walked in as an outsider in late 2001 after the Ansett collapse and the recapitalisation, the overwhelming feeling that you got was of a whole lot of people who were absolutely stunned and couldn’t believe what had happened, who were looking for leadership to answer firstly, ‘how did this happen?’ and ‘what on earth are we going to do to get out of this?” Palmer recalled separately.

“And I think the quality of the leadership has been critical in a succession of outstanding executives that has enabled people to [build a sense of ] confidence. Because I think we’ve always had the technical capability, I think we’ve always been reasonably customer friendly, but [we put] a much sharper point on that and put a much greater emphasis on how important that is to success, because even if you have really good product, if you don’t have outstanding customer service, you don’t have anything. And we decided very, very early on, going right back to early 2002, that of all the things we could make a difference on, nobody else could actually create an airline with a true Kiwi spirit attached to it with a very unique Kiwi flavour.

“I think that we’ve really done something special in that decade. It takes a long time to build that, it is a very long, slow process, it is a very easy process to injure if you’re not careful, so you can never get complacent about it. But I think that [has been a] great success. And when you get the other pieces alongside good management, good financial management, and really good product, you just say ‘well, why can’t we be the best in the world?”

If you don’t have outstanding customer service, you don’t have anything. JOHN PALMER

By many measures the strategies and plans put in place and executed by Palmer and Norris, and subsequently Norris’s successors in Rob Fyfe and now Christopher Luxon, have led to the Kiwi flag-carrier becoming one of the best airlines in the world, with a reputation for innovation and world class product and service, and a decade-long run of profitability that is now seeing it make record returns.

Continues Palmer: “With my unbiased outsider’s hat on (Palmer resigned as Air NZ chairman last September), I think you’d say I think we are as good as any. [But] I wouldn’t go so far as to say we are the best in the world, and you should never think that, because when you think that that is when you perhaps stop looking at the competition. It is really important that you don’t get to that, and I don’t think that we will.

“I think the good thing about [current CEO] Christopher [Luxon] is he is not remotely satisfied with where we are, and that’s a great attitude to have – we have created a great platform and we have done some great things but in terms of the sort of results that we can get, we haven’t anywhere near hit the potential of this business. And this aircraft [the 787] allows us to start really doing that. ” The 787-9 certainly represents much about what Air New Zealand is doing right at the moment, from its preparedness to be the launch customer for a new aircraft type, to its willingness to invest in new aircraft for new routes and new growth, to its cohesive approach to design and product.

The end result is a product and service that passengers will love (with the caveat that the nine-abreast economy class is a bit squeezy) and an aircraft that the airline’s number crunchers will love thanks to its 20 per cent lower fuel burn per seat (in part because Air NZ has squeezed in 302 of them) and the 10 extra tonnes of cargo compared to the 767s it is partially replacing.

This then is an airline that seems to have the balance right between a close attention to the numbers and an understanding of what drives those numbers and drives revenue growth.

That is not to say there haven’t been bumps along the road for Air New Zealand, and that there aren’t more challenges ahead, but the airline’s turnaround and subsequent success does illustrate the art of the possible when a company can knit together all of the elements that lead to success: leadership, vision, execution of that vision, and an emphasis on corporate/ workplace culture, customer service and product.