• Profits, Dividends or Customers?

    The Herald made a valiant attempt to explain last Friday how Air New Zealand had managed to produce a record $663 million profit.  They quoted the Chief Executive, Christopher Luxon, as attributing the result to the tourist boom, the fall in fuel costs, improved cost control in general and the efforts of a dedicated staff – all of which no doubt had a part to play.

    He was not reported, however, as mentioning another significant factor – the pressure exerted by the government to maximise profits (and therefore the dividend the government is paid), even at the expense of neglecting Air New Zealand’s responsibilities as the national carrier.

    This latter factor is of particular significance to a large number of hitherto loyal Air New Zealand customers, who would willingly remain loyal given half a chance, but who have been left high and dry by the withdrawal of services from various less populated parts of the country.  Those erstwhile customers include me and my friends, neighbours and family, whose service from Whakatane was arbitrarily withdrawn a year or so ago.

    It is not only individual travellers who suffer the consequences of this decision.  The local economy takes a hit as well, since the inability to fly to other parts of the country and back will deter many others from living in a spot which suddenly seems to have become so inaccessible.

    We are, on the whole, well served by the providers of national services, most of whom recognise and discharge their responsibilities to the further-flung parts of our country.  Power and telecom companies do their best to disregard and overcome the problems of remoteness.  The Post Office continues to maintain their excellent rural delivery service.  But Air New Zealand pulled the plug in the interests of maximising profits; they seem to operate on a rather restricted definition of what it means to be the “national” carrier.

    It was not that there was insufficient demand.  The direct flight to Wellington once a day had already been cancelled but the three or four daily flights to and from Auckland in a small 20-seater plane were usually pretty full.  The problem seems to have been that a small plane is less economical to operate than, say, a 50-seater – and there wasn’t enough demand to justify that larger plane.  Rather than settle for less than optimal profits and run the risk of disappointing its government shareholder, Air New Zealand was prepared to abandon its Whakatane customers – though no doubt expecting a non-reciprocal loyalty from them when it came to choosing an airline in which to travel overseas.

    That would be bad enough.  But when the small airline, Air Chathams, stepped into the breach and provided a very welcome substitute service, Air New Zealand again showed how little the interests of the customers they had deserted actually mattered to them.  They showed no interest in co-ordinating schedules and ticketing arrangements with Air Chathams, with the result that passengers arriving at or departing from Auckland on their way to or from Whakatane are treated as though the trip between Whakatane and Auckland has nothing to do with Air New Zealand.  The fact that passengers fly Air New Zealand from Wellington to Auckland only as part of a journey to Whakatane is of no concern to our national carrier; when we step off the Air New Zealand flight, they wash their hands of us all over again.

    It is not possible, for example, to get a single ticket for the journey from Whakatane to Wellington or vice versa.  Nor is it possible for those whose membership pf the Koru Club has been paid for or earned as frequent flyers to use the Koru Lounge In Auckland if they fly Air New Zealand to Auckland then and have a long wait for the onward Air Chathams flight to Whakatane.  They are refused access to the Lounge because they do not have an onward Air New Zealand ticket.  It is not only, in other words, the Whakatane flight that has been withdrawn but also any consideration as an Air New Zealand customer.

    Air New Zealand may care little about their customers but they do have the comfort of pleasing not only their own Minister but also the Minister of Finance.  The half billion dollars they have contributed to the government’s coffers may have been earned at the expense of hitherto loyal customers but will have earned golden opinions from Air New Zealand’s ministerial owners who seem equally unconcerned about those living in less populated areas of the country.  Perhaps Christopher Luxon has a little more explaining to do about that $663 million.

    Bryan Gould

    29 August 2016





1 Comment

  1. Neville Lowry says: August 28, 2016 at 11:34 pmReply

    Well said Bryan, I have long felt aggrieved regarding the loss of corporate memory, that of their Union Airways/NAC beginnings, beginnings of an airline to deliver a service. To help, enable etc. Truly this is a mean uncaring government.