Air NZ right to rebuff interference

Air New Zealand has given all companies with a Government shareholding a good example of how to stand up to politicians who think they have the right to interfere in commercial decisions. A few weeks ago Winston Peters attacked the airline’s sponsorship of the visit of President Obama when it was first reported. This week Jones blew smoke over its withdrawal of air services to Kaitaia and the Kapiti coast.

Peters said he was speaking out as Minister of State-Owned Enterprises, seemingly unaware Air NZ is not an SOE. The Government has a 51 per cent stake in the airline but Finance Minister Grant Robertson is the nominal shareholder, not Peters. But if he is going to put pressure on the management of SOEs he is threatening to undermine the reason they were so constituted.

New Zealand needs the most efficient economy it can develop, especially in its transport services and infrastructure where Government-owned or partly owned organisations may be necessary. Managers focused on financial results tend to make more objective operational decisions than politicians courting popularity.

Jones, as Minister of Regional Development, seems to think it is his job to keep everyone’s nearest airport operating. He needs to raise his sights. It is his job to help regions share the national prosperity that an efficient economy generates. Right now, many regions are sharing the fruits of a tourism boom, the result of the efforts of a very good national airline among other things.

Air NZ promotes this destination overseas as well as maintaining a first-class performance as national flag carrier. It also provides internal air services and has had to do so under competition from budget airlines on main trunk routes. Competition keeps internal air services as efficient as they can be, which means the level of service to every region reflects its cost and commercial return.

In places of low population requiring a level of fares passengers find prohibitive, residents usually choose to drive some distance to a busier airport. That is cost efficient for those people and the airline. Regions do not need a minister who wants no change to the present network. Since ceasing flights to several uneconomic centres in 2014, Air NZ says it has increased regional services by 12 per cent and fares had fallen by 8 per cent overall.

In response to Jones’ outburst this week, it announced it had written to its shareholding minister stressing it will continue to act independently in decisions about regional services. “Any appearance of a lack of commercial independence is viewed seriously by the Air New Zealand board and is ultimately potentially damaging to the interests of all shareholders, including the Crown,” the letter said.

Chief executive Christopher Luxton explained: “The Crown has the same rights as any other shareholder. That doesn’t mean they can dictate the operations of the company, they can’t use their majority position to make the company make noncommercial decisions.”

Well said.