Air New Zealand braces for turbulence

In the face of compounding pressures, can the national carrier stay the course?

Mōrena, and welcome to The Bulletin for Monday, September 9.

In today’s edition: No public consultation on gun club regulation change prompts concern, what would happen if Wellington City Council refused to hold a Māori wards referendum and The Spinoff turns 10 and we’ve ranked all of our iconic rankings. But first, a bumpy ride for the national airline.

(Photo by Morgan Hancock/NurPhoto via Getty Images)

Diving profits

A couple of months ago, we talked about the controversy over surging flight prices in New Zealand, with much of the focus being on the national carrier – Air New Zealand. Airfares are regularly in the news, but they’re only small piece in a bigger puzzle. There has been a heightened focus on the airline industry here and abroad this year, with well-covered turbulence at major manufacturer Boeing through to the diving profits of Air New Zealand, as reported last week by the Herald’s Grant Bradley. All of those are in someway connected, so this morning, we’re going to look at some of the issues facing our national airline and what the company’s boss has said about the future.

Compounding pressures

As Bradley reported, Air New Zealand’s after tax net profit for the year ending June was $146m, in line with forecasts but notable given it came after a post-Covid recovery that resulted in one of the company’s best financial results. In a detailed report for The Post this weekend, Roeland van den Bergh explained some of the challenges Air New Zealand is facing now and bracing for in the future. One major issue is increased competition from overseas airlines, not just the perennial rivalry with Qantas on trans-Tasman routes but also from the United States, contributing to a more crowded global market and a battle for cheap fares.

Then there are the global maintenance problems impacting a number of airlines, which have resulted in planes being grounded. The Centre for Aviation reported that Air New Zealand’s new 787s won’t start arriving until the end of next year. “Aircraft groundings due to engine shortages is now commonplace in the industry, but it hits particularly hard for airlines like Air New Zealand that have relatively small fleets,” the industry news site noted.

The climate suffers

Against the backdrop of this, Air New Zealand made the decision to abandon its 2030 climate target, becoming the first major airline to do so. It was a move that made headlines around the globe, perhaps unsurprising given the scrutiny over corporates and their role in contributing to climate change – air travel in particular is one of the biggest contributors to the climate crisis. The airline’s chief executive, Greg Foran, partially blamed the slow “introduction of newer, more fuel-efficient aircraft into the fleet” for making the decision, reported The Guardian.

Earlier in the year, reported Newsroom, Air New Zealand urged for government action to make the purchasing of “sustainable aviation fuel” easier, though the coalition has opted not to move forward with two studies Labour funded into the viability of producing sustainable fuel.

Air New Zealand has opted to keep the industry target of net zero emissions by 2050. But, in a piece for The Spinoff, Danny Rood argued this was an example of “classic greenwashing” – meaning an outward display of good intentions around the climate but with little substance to back it up. “Those setting 2050 targets without a 2030 target won’t be around professionally or politically to dance the accountability waltz,” wrote Rood. “Following through on your commitment matters…”

Writing for the NBR (paywalled), Hamish McNicol and Calida Stuart-Menteath argued that even hitting that 2050 goal seems unlikely given the current state of things. “There are many levers that need to be pulled before it gets off the ground.” In the last week, reported RNZ’s Eloise Gibson, Air New Zealand has come in at the bottom of an Otago University study that ranked big local companies on their climate targets.

What the future holds

In a recent interview with the Herald’s Madison Reidy, Greg Foran said he was optimistic about the future and predicted an economic upturn in the latter half of the year. “It feels like we’re at the bottom of that cycle,” he said. While travel demand has reduced, both domestically and internationally, the airline has made a concerted effort to boost routes in the Asian market. Japan in particular has become a popular destination, aviation analyst Shane Solly told The Post, and Air New Zealand has added thousands of extra seats onto that route, along confirming a return to Seoul.

Further expansion into India, or even a return to Europe, was a longer term goal, Foran told RNZ’s Checkpoint. But that wouldn’t be possible until new planes started to arrive. "It's a pretty cyclical business,” said Foran. “There are periods when you get tailwinds, and there are periods when you get headwinds.” He’s not wrong, Air New Zealand has been here before and the airline’s profits can bump around as violently as a Bombardier Q300 leaving Wellington. But the challenges on the horizon are newer and, in some cases, out of the airline’s control: more competition, heightened scrutiny on the climate, and maintenance issues keeping aircrafts on the ground.

Taking your tech overseas? Join us for a webinar on Wednesday 2 October 8-9am

Understand what decision-makers in the UK, US, Australia and Singapore are looking for, so you can boost your tech’s appeal in these key markets. We’ll share the latest research insights and how you can use them to improve your brand positioning and storytelling. Register today to claim your free spot. (sponsored)

The rankers become the ranked

It’s The Spinoff’s birthday this week and we’re celebrating. This morning, Hera Lindsay Bird takes on the great Spinoff tradition of a ranking, opting to dig back through the archives and rank every ranking written by a current or former staff writer for The Spinoff. 

“While it was mostly a joy to read back over these pieces, I worry reading so many rankings in under a fortnight has done permanent damage to my brain and I’m only going to be able to think in descending hierarchical order for the rest of my life,” Bird said.

Where does your favourite ranking place? Read on to find out.

For the first time ever you get to have a say. Tell us what you think of Hera's rankings and you’ll go in the draw to win a mega hamper of goods ranked by The Spinoff. Entries close midnight Sunday, September 15. Rank our rankings now.

No public consultation on gun club regulation change

Thomas Mead at 1News has reported that associate justice minister, and former gun lobbyist, Nicole McKee made changes to regulation for gun clubs without public consultation, prompting concern from officials. The change removed certain requirements for gun clubs ahead of an impending reporting deadline and put an end to a measure designed to gather information about the sale of firearms, reported Mead. The change was implemented through an order in council, meaning it was actioned quickly using McKee’s power as a minister.

But Ministry of Justice officials raised concerns the change relied on “evidence from one group of stakeholders” and “other perspectives are not known”. The public wasn’t consulted despite officials noting that there would likely be a “range of perspectives on the issue”. McKee defended the swiftness of her action. "I've given them [gun clubs] some immediate relief that does not impact on public safety."

Can you believe it, The Spinoff is 10 years old! 

We are celebrating all week on The Spinoff with special content and prizes.

Don’t miss your opportunity to rank our rankings and get in the draw to win a mega hamper of goods ranked by The Spinoff. If you’re a Spinoff member you can get an extra entry into the draw by playing our birthday week treasure hunt. Find out more here.

You’re not meant to ask for presents, but if you’re not a member now would be a great time to gift us your support. We cannot overstate how vital support from our readers is, especially as we navigate uncertainty and look at the next ten years of telling Aotearoa stories.

Thanks for being part of our story, we wouldn’t have made it to this mighty milestone without you.

Click and Collect

• More than 400 church leaders have signed an open letter to MPs calling on them to vote down David Seymour’s Treaty Principles Bill.

• Just two councils voted to remove Māori wards after the government passed legislation forcing councils to either remove them or hold a binding referendum about their existence. In his latest Windbag column, The Spinoff’s Joel MacManus asks what would happen if Wellington City Council refused to hold a referendum.

• Interesting read from The Post’s Andrea Vance, revealing that a number of Health New Zealand staff were required to sign gag orders (NDAs) as the agency buckled under financial pressure.

• Labour leader Chris Hipkins has reiterated his intention to reset the party after last year’s election and bring back more of a "traditional Labour flavour". Luke Malpass in The Post has a good analysis of Labour’s election chances.

• A couple of health stories worth your time: Jo Moir at RNZ looks at a new poll showing health has jumped up in a ranking of New Zealanders’ concerns. Meanwhile, Georgina Campbell at the Herald reports women having their labour induced at Wellington Regional Hospital will be forced to share rooms due to a leaking pipe (but toast is back on the menu).

• Speaking of planes: A business case is in the works to replace the breakdown prone Defence Force 757s as maintenance costs skyrocket.

• For Herald Premium subscribers, Derek Cheng has an in-depth explainer of the former National MPs picked for important positions by the current coalition. (Paywalled)

Right now on The Spinoff

For The Spinoff Essay, Kiran Dass pays tribute to tea, the universal panacea. Infomercial queen Suzanne Paul looks back at her life in TV, from Coronation Street and The Blue Monkey to a lot of reality television. Shanti Mathias visits and ranks the crème de la crème of Auckland’s secondhand bookshops. Damian Alexander and Shelton Woolright of Blindspott share their perfect weekend playlist.

That’s it for this morning, thanks for reading. I’ll catch you back tomorrow.

Want to get in touch? Join the conversation in the Substack comments section or via email at thebulletin@thespinoff.co.nz if you have any feedback on today’s top stories (or anything else in the news).

If you liked what you read today, share The Bulletin with friends, family and colleagues.