Political turbulence for Air NZ
National carrier comes in for more flak for its regional links — but it can’t fly everywhere
Shane Jones isn’t the first and won’t be the last politician to stick it to Air New Zealand. Although he may have picked the wrong place to first have a crack — Kerikeri’s air links are expanding thanks to Air NZ — he felt he was doing his job as the minister for the regions and, equally, he’s appealing to the New Zealand First base.
And he’s not the first with an eye on the polls to have a swipe at the national carrier.
A month out from the 2014 election, Sir John Key chose Blenheim as the venue to publicise how he’d raised the issue of high regional airfares with the airline.
While not nearly as colourful as Jones — who has described Air NZ as a “corporate taniwha” — Key did talk of “monopoly type” positions and the need to deliver fair pricing to the regions.
That wouldn’t have hurt National in the provinces and it helped galvanise work already under way at the airline.
In a case of being careful what those in the regions wished for, later that year Air New Zealand announced an expansion of its overall network, bigger planes and greater frequency but the axing of services to Kaitaia, Whakatane and Westport.
And in 2015 Key was shoulder to shoulder with Qantas Group top brass at the launch of Jetstar’s regional services and he said Kiwis in the regions would be “cheering wildly” at the Aussies’ plans.
His subtle prodding of Air New Zealand was well short of Jones’ spray which was on Tuesday politely called “unfair” by Air NZ boss Christopher Luxon and yesterday as “economic vandalism” by National.
But both illustrate that the national carrier is a big target for politicians of any stripe, and those among its 15 million passengers a year who feel let down.
Most Kiwis feel strong ownership of the airline. So they should — they do own more than half of the $3.8 billion company through the government’s shareholding and the airline goes to considerable expense and effort to market itself into Kiwi hearts; recently with mixed success.
The 2014 “regional reset” came after three years of losing $1 million a month on provincial routes. While three towns were ditched, capacity has been increased by 12 per cent and, according to the airline, fares have fallen by 8 per cent.
Jetstar’s arrival on four routes helped push down prices and if you’re living in one of the towns or cities that is well served you’re going to be a lot happier than if you’re in one of the towns no longer served.
And there are a few of those — Air New Zealand does come and go — Wanaka, Masterton and Whanganui have been waved goodbye in the last few years.
Luxon says its latest axed service — Kapiti to Auckland — is a “greater good” call. That service had reliability issues and these had a knock-on impact on other, denser parts of the network.
Although it will fight aggressively to preserve its dominance of the lucrative domestic market — it has about 80 per cent — it can’t and won’t fly everywhere. Some places just don’t pay for Air New Zealand.
Luxon has pointed out that second-tier airlines such as Air Chathams and Sounds Air are the right size for these markets and those airlines are growing.
Finance Minister Grant Robertson is well aware of the Government’s arm’s-length relationship with the commercial operation of the airline, but has indicated one way the Government could assert greater control is when board appointments are made.
One of the latest intake of directors is worth noting.
Late last year Key was confirmed on to the Air New Zealand board. His experience as Tourism Minister, business background and international connections make him well qualified to help oversee the airline, which enjoys commercial success and is also seen as a leader in dealing with its 11,000 staff.
How Key’s previous advocacy of the regions fits in is unknown, but expect the airline to spend more energy on highlighting what it does in that part of its business now the political spotlight is
back on it.