Prime Minister Christopher Luxon has delivered a blunt assessment of Air New Zealand’s latest financial performance, describing the national carrier’s result as “clearly a very poor performance”. But if the airline is expected to explain what went wrong and how it intends to improve, New Zealanders are entitled to ask similar questions of the Government.
Luxon Calls for Air New Zealand Turnaround
Air New Zealand employs about 11,700 people, many of whom may have been surprised by the Prime Minister’s unusually direct criticism of the airline’s latest financial result.
“It’s clearly a very poor performance,” Luxon said.
He went further, saying Air New Zealand needed to explain what had caused such a significant loss and, more importantly, what it intended to do to build a stronger business.
“We expect them to very quickly turn it around and get the company growing again and performing strongly.”
That expectation is understandable. But the same standard should apply to the Government.
New Zealanders should be able to ask what the Prime Minister inherited, what circumstances have been outside his control, what remains within his control, and what his Government is doing to improve the country’s performance.
Domestic Airfares Put Pressure on Travellers
Plenty of New Zealanders would prefer to fly with the national carrier, but increasingly high domestic fares can make that choice difficult.
Last week, a same-day return flight from Dunedin to Wellington cost $1,333.75. The previous week, a return trip between Dunedin and Christchurch cost $857.75.
Together, those two relatively short domestic journeys cost $2,191.50. Neither flight was operated by a jet, both were full, and reduced frequency meant there were limited alternatives.
GST Adds to the Cost of Flying
There is another element worth considering.
Of the $2,191.50 spent on those flights, $285.86 was GST.
Businesses may be able to claim GST back, but most ordinary New Zealanders travelling to visit whānau, attend a funeral, conduct personal business or simply move around the country cannot.
That portion of the airfare does not go to Air New Zealand. It goes to the Government.
That distinction matters when considering why domestic aviation has become so expensive and who ultimately influences the costs passengers face.
Air New Zealand’s $336 Million Loss Needs Context
A $336 million pre-tax loss is unquestionably significant. But headline numbers alone do not explain the operating conditions behind them.
Global engine problems have forced expensive Air New Zealand aircraft to remain grounded. The airline estimates the disruption reduced its latest result by about $190 million.
Conflict in the Middle East pushed fuel prices higher, taking another $135 million from the result.
Maintenance costs increased by $139 million, while aviation-system expenses — including fees, levies and airport charges — rose by another $142 million.
Together, these pressures demonstrate the complexity of operating an international airline from a geographically isolated market such as New Zealand.
Some Challenges Are Beyond Airline Management
Air New Zealand chief executive Nikhil Ravishankar must manage the company’s response to higher fuel costs, grounded aircraft, maintenance pressures and increasing aviation charges.
But he does not control the underlying causes of many of those problems.
That is where the Prime Minister’s criticism becomes harder to reconcile with the realities facing the airline.
Luxon understands the aviation industry better than most political leaders. Before entering politics, he served as chief executive of Air New Zealand.
He knows the people, pressures and economics involved in operating the national carrier. More importantly, he knows what it is like to occupy the chief executive’s chair now held by Ravishankar.
Government Should Face the Same Questions
Holding Air New Zealand management accountable is reasonable, particularly given the airline’s importance to New Zealand’s domestic connectivity, tourism sector and international links.
But accountability should work both ways.
If the Government expects Air New Zealand to clearly explain what it inherited, what went wrong and how it plans to restore stronger performance, New Zealanders should reasonably expect the same transparency from those running the country.
The airline faces circumstances beyond its control alongside challenges it must address itself. Governments operate under similar conditions.
The real question, therefore, is not whether Air New Zealand should be held accountable for its performance. It should.
The question is whether the Prime Minister is prepared to apply the same standard to his own Government.
Alexander Donovan writes for News Collective, covering news, politics, business, technology, sport, entertainment, and lifestyle. He focuses on clear, reliable reporting and useful information, helping readers stay informed about current events, emerging trends, and stories that matter.