Air NZ praised for airline smarts

Air New Zealand’s reputation as one of the smartest airlines in the world has helped it land its second highest profit in the fact of ‘‘unprecedented’’ competition.

Chief executive Christopher Luxon was ‘‘very proud’’ of what his staff had achieved despite facing its highest number of competitors, who he said were often much larger and had deeper resources.

So much so, about 8500 Air New Zealand staff who were not part of other incentive programmes were paid a $1700 bonus - slightly down on last year’s $2500 bonus.

To face down 10 new competitors in the past year, and still make an after tax profit of $382m for the year to June 30, was ‘‘really fantastic’’, Luxon said.

CAPA Centre for Aviation executive chairman Peter Harbison said the result was very good for what was ‘‘certainly a tidy little airline’’.

‘‘Across the board, it seems to be getting things right.

‘‘It’s one of the smartest airlines in the world, there’s no two ways about it.’’

Luxon said the company’s performance was the result of a strong platform it had put in place and the systems it had built over the past five years or so.

The airline had invested about $3 billion in its fleet, making it one of the youngest and most modern in the world, bringing lower costs and an enhanced customer experience.

It covered about 80 per cent of the domestic market, and between 40 and 45 per cent of international, as both inbound and outbound travel from New Zealand had double-digit growth.

Furthermore, Air New Zealand had strong loyalty from its customers, exhibited by 16 per cent growth in its Airpoints numbers to more than 2.5 million members.

Last year, 900,000 flights had been paid for with Airpoints, Luxon said.

But it had also made big investments in digital technology, its people, and in diversifying routes.

‘‘Those things have stood us in good stead.

‘‘We’ve done a good job competing.’’

Asia had been tough, Luxon said, particularly with new airlines flying here from China, but the company anticipated strong growth from Japan after it started flying to Tokyo’s Haneda Airport.

Visitors from Japan had increased from 60,000 a year to 101,000 in the past few years, making it a top five visitor market for the country.

‘‘We have been positive about Japan for some time.’’

Competition had also eased on some routes, which left Air New Zealand very optimistic for the year ahead: Luxon said it was aiming to improve on this year’s financial performance.

Harbison said there was no obvious sign of any headwinds for Air New Zealand.

It had been impressive in getting things right where others did not, such as its fuel hedging, and its overall strategy had been effective.

Air New Zealand’s domestic dominance would still likely be its main strength, he said, but its new routes to the United States and Latin America seemed to be performing well.

Japan was no shoo-in, but a number of people were thinking positively about it at the moment.

A competitive Asia more broadly had been trouble for all airlines, but while overall there was a relatively favourable operating environment, Air New Zealand had done well in the face of tough competition.

‘‘I think they’re looking pretty good.’’