Air Transport World

Air New Zealand takes more aggressive stance.

Auckland--Air New Zealand has had a rough go of it in the '80s. The national airline of New Zealand has suffered all of the privations that other airlines around the globe have suffered. The economic recession hit New Zealand just like most other nations. It also hit the United States and Australia, the two largest sources of passengers coming to New Zealand. Air New Zealand was also hurt by the world oil crisis which in large part caused the economic recession, even more so than other carriers. Shortly after the 1979 crisis Air New Zealand was paying U.S. $1.30 for a gallon of kerosene while U.S. airlines were paying 80^.

Air New Zealand also had some unique problems to go along with all of the normal challenges facing airlines. First there was the merger of Air New Zealand, the government-owned flag carrier of New Zealand, and New Zealand National Air Carrier Corporation (NAC), the government-owned domestic airline.

Most mergers are unsettling, even airline mergers. There are certain economies that are gained from mergers, and many of these involve increased productivity, often with less people than the total of the two separate companies prior to the merger. When the two New Zealand airlines were merged to form the new Air New Zealand in April 1978, the New Zealand government said that no people could be fired, and none could be "disadvantaged." British Airways can tell you how well mergers develop under these rules.

Adding to the airline's mounting woes was the grounding of its McDonnell Douglas DC-10 fleet curtailing service to the U.S. following the American Airlines Chicago accident in May of 1979.

Then in November 1979 Air New Zealand had a real tragedy. It lost a DC-10 on Mt. Erebus in Antarctica with 257 people on board including a crew of 24. Many airlines have had catastrophic accidents, but this one hit Air New Zealand very hard. The airline had operated since 1939 with few problems. Most of the people on board were New Zealanders, and as one airline official put it, "There were few people in New Zealand, especially at the airline, who didn't know somebody who knew somebody on that airplane."

The accident was also very hard on Air New Zealand's management which came under the scrutiny of a Royal Commission of Inquiry. The commission blamed the airline's flight operations division for the accident charging that the crew's navigational information was inadequate, thus causing them to become lost before impacting on Mt. Erebus. The airline later won an appeal, but Air New Zealand's management was hurt by the entire episode, and several changes have been made.

With all of these problems Air New Zealand has enjoyed very little success in the 1980s until recently. Until now the airline has suffered a steady decline in passenger traffic since 1979 when it carried 4.4 million passengers. It carried only 3.8 million passengers in 1982. After many years of profitability, both at NAC as well as at Air New Zealand, losses mounted. There has not been an operating profit since the fiscal year ending March 31, 1979. …

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