Big challenges for new Air NZ boss

Making New Zealand exciting again and combating stiff airline competition are some of the big challenges facing Air New Zealand’s new chief executive, aviation experts say.

Last week the national carrier said Greg Foran, chief executive of retail giant Walmart’s US operations, would take up the reins in the first quarter of 2020.

The Nz-born executive will replace outgoing chief executive Christopher Luxon.

Luxon leaves the airline in relatively good shape thanks to significant investment in fleet upgrades, new routes and stimulating inbound tourism.

Foran does not have an aviation background but neither did Luxon.

While Air New Zealand is a tiny company in comparison to Walmart, the airline comes with its own unique set of challenges, and plays an important role in the lives of New Zealanders.

Here are five obstacles aviation industry leaders say Foran will need to overcome.

Aviation commentator and former chief executive of the Aviation Industry Association Irene King said one of the most pressing challenges facing Foran would be the need to make New Zealand a top destination for international travellers again. ‘‘Recreating that excitement around destination New Zealand is going to be quite a difficult challenge,’’ King said.

New Zealand was no longer a ‘‘must visit’’ destination, she said.

She said one way to stimulate demand was to focus on attracting Australian tourists.

‘‘I would be working really hard in the Australian market. Sure it’s more competitive but we do have a cool product offering.’’

Board of Airline Representatives New Zealand executive director Justin Tighe-umbers said domestic demand had softened and international growth has generally flattened.

Capacity was reducing as a result, he said. ‘‘This year alone we’ve seen three airlines pull out of New Zealand, and others are pulling back services.’’

Tighe-umbers said passenger demand was dropping off just as costs were starting to bite.

‘‘Air New Zealand is in good financial shape, but there is a tough operating environment ahead. . . ’’

New Zealand was entering a period of huge investment, as airports, navigation services and border agencies all replaced ageing infrastructure, he said.

While this would provide much needed improvements, it would add significant cost to airline operations, he said.

King said getting costs under control, especially domestic costs, would be essential to the success of the company.

House of Travel commercial director Brent Thomas said Air New Zealand had performed well over a number of years and a big challenge for Foran would be maintaining that momentum.

One way would be to keep investing in modern, efficient aircraft and opening new routes, such as Auckland to New York, because that’s what gets travellers excited, he said.

NZ Airports chief executive Kevin Ward said there were risks that came with being such a strong domestic player, with a monopoly on many domestic routes.

Airfares and flight frequencies had a lot of influence on the economic and social health of the regions, he said.

If the airline grew domestic capacity, with the same or lower airfares, it enabled more people to fly, he said.

Despite some capacity reduction into New Zealand Thomas believed competition would remain fierce for Air New Zealand. New Zealand had nearly 30 international airlines serving a population of less than 5 million.

Air New Zealand would need to have an efficient and nimble fleet that could be utilised in response to competitors’ moves, he said.

Air New Zealand is a heavily unionised company and factions between union members and the company can have major disruptions to the company and travellers. This means Foran will need to form a good relationship with union delegates and the workforce if he wants to avoid any major employment relations headaches.