Air NZ’s cleanup challenge
Engine problems will make it tougher to reduce emissions
Air New Zealand has made tackling fallout from the growing flight shame movement one of its priorities for the coming year, but the latest problem with its Rolls-Royce engines will make it harder to hit targets.
The airline’s chair, Dame Therese Walsh, says the company will tackle carbon reduction head-on.
“We are in no way not going to face into a flight shaming phenomena — we’re not going to bury our head in the sands at all.”
While there is some evidence that more travellers in other countries are switching from flying to less-polluting forms of transport, there is no sign of this hitting Air New Zealand.
Its latest operating statistics show the number of passengers carried in October rose 1.4 per cent to 1.37 million, while in the first four months of this financial year growth was 2 per cent to 5.7 million.
A survey this year by investment bank UBS showed travellers are already choosing not to fly, with 21 per cent of the 6000 people polled in the US, Germany, France and Britain saying they had cut back on flights during the past year because of the environmental impact.
Air New Zealand’s growth, and having to fly less efficient leased aircraft last year, pushed up carbon emissions at a time when it was aiming to reduce them as part of a broad sustainability push.
Because of the Rolls-Royce engine problems, fuel-efficient Dreamliners have been out of action at times and more disruption is looming this summer, meaning more flying will be done with more polluting aircraft.
Leased aircraft are generally older and Air New Zealand has a Boeing 777-300 leased from Eva Air and is working on leasing another to provide cover over summer.
The difference in fuel economy is stark. A Dreamliner burns about a tonne and a half less fuel per hour than an earlier model Boeing 777-200.
Walsh, speaking in Seoul in South Korea following Air NZ’s inaugural flight to the city, said the airline’s own sustainability panel put a “mirror into our face and that is really healthy”.
She said there remained strong demand into New Zealand because of its remote location but that meant flying long distances.
“We know we need to do as much as we can to get our carbon footprint down,” she said.
Passengers have been sluggish to do the same, with just 4.6 per cent of Kiwis offsetting the emissions from their flights in the past year. This compares with 7.3 per cent of North American passengers and nearly 10 per cent of those from Britain.
Walsh said the focus on sustainability provided a challenge for all New Zealand tourism operators.
“It’s not just about whether you’ve flown or how sustainable the airline is, but everything else on the ground.”
Acting chief executive Jeff McDowall said the airline had invited key investors and suppliers to meet executives this month to discuss sustainability. “We’re a big emitter of carbon — we’re not hiding from that.”
Its aircraft produced 3.47 million tonnes of carbon dioxide in the 12 months to the end of June, but on a per-unit basis that had been cut by 2.3 per cent a year during the past decade.
The airline was working with Z Energy to produce alternatives to kerosene-based fuel which were “quite advanced”.
Possible alternative fuel sources included woody biomass in this country but there could be an international solution.
“The other thing we’re conscious of as an airline is that it doesn’t matter where we collect biofuels from. If the economies of scale were such that it was better to collect it in Singapore or Los Angeles, for example, we’re exploring those angles,” said McDowall.
“The whole aim of it is to try and embed sustainability in any key decision we make. There’s not one single solution.”
In demand
Incoming chief executive Greg Foran has already said the airline needs to be a world leader in sustainability and there’ll be a strong demand for his views on that and other topics when he starts work next year.
Walsh says there’s a buzz in business circles about the Kiwi head of Walmart US, who starts at Air NZ in February.
She and McDowall have just been to visit him at a Walmart innovation centre in the United States which made wide use of robotics to fulfil orders.
“It was a fantastic opportunity to get to know him better, to take him through some of the challenges and opportunities and to understand his life at Walmart.”
Foran was down to earth with Walmart staff and he would get down to detail in order to understand processes properly.
“I think we found a lot of similarities between the airline challenges and the retail challenges — they’re not the same industries but there are some areas of overlap and intersection,” said Walsh.
Being the president and CEO of Walmart US was a high profile job so he would be accustomed to the spotlight that will follow him to his new job.
“He’s already aware of how much of a profile that comes with the role. He’s been inundated with requests to talk to him.”
Facing the competition
Air New Zealand is into its second year of a domestic codeshare with Qantas and exploring other areas of mutual interest where the two don’t compete. Biofuel development, where Qantas has committed $54 million over 10 years, is an example.
But otherwise the two airlines compete fiercely. Air New Zealand already draws on the Australian market for its flights to the United States and will target Aussies for its Auckland-New York non-stop services starting next October.
Air New Zealand announced the muchanticipated service just days after Qantas trialled a non-stop Sydney-New York flight, but any commercial services would be some years away.
Qantas’ joint venture partner American Airlines could cause Air NZ some pain, though, with more flying to the US out of Auckland and a seasonal service out of Christchurch to Los Angeles.
Air NZ will fly from Christchurch to Singapore this summer and McDowall says the airline is looking at more long-haul flying out of the southern city.
“We have been considering that for some time, whether it be to LA or other cities — it continues to be something we look at.”
American’s expansion is not all bad news. He expects its massive network in the US will stimulate the total market and also feed more passengers onto his airline’s dominant domestic network here.
For Air NZ, the non-stop Seoul flight is a return to South Korea after 22 years. Forward bookings are strong and the airline was able to attract close to 50 journalists to a launch event in the city where McDowall was the centre of attention.
Product changes
Air NZ is modifying its business premier seats, making storage more convenient, which will be rolled out next year. More significant work is underway.
It is also close to finalising the complete overhaul of seats as a result of research and development at its “Hangar 22” test bed.
The work is well advanced and will be fitted into its new Dreamliners — the stretched 787-10 — when they start arriving in 2022. The introduction of new crew uniforms has been delayed and won’t be seen until 2023 as part of a review of the airline’s visual identity.
This will influence the future look and feel of long-haul aircraft interiors, lounges, check-in experiences and digital presence. It had planned to introduce new uniforms for 4500 staff in 2021.
“Given how important it is that our future uniform complements the broader look of our airline, we made the decision earlier this year to defer the selection of a designer by 12 months and launch the uniform in 2023,” a spokeswoman said.
McDowall says there’s no plan to follow Lufthansa’s lead and drop a second hot meal on long-haul flights.
“It’s not something we’re considering. The longer the flights, the more you have to be conscious of nutrition and catering — when you’re on a long flight it’s part of the experience. It’s what punctuates the journey so we don’t want to compromise that.”
We know we need to do as much as we can to get our carbon footprint down.
Air NZ chair Dame Therese Walsh