In 1990: Can Air New Zealand compete?

In another of a regular series of articles on aviation, Martyn Gosling of the Dominion wrote the article below about Air NZ which was fundamentally based on whether or not it could succeed against competition, following its privatisation in 1989.

Some key points from the article are:

• Air NZ spends more promoting tourism to NZ than all other entities put together
• The airline has a strong reputation with the public, based mainly on its international service.
• Its reputation domestically was different, in part because it flew from the old terminal in Wellington, with poor service (noting the infamous pack of cheese that was difficult to unwrap and highly processed (and with little taste).
• A brief history of major challenges to the airline in recent years. Including Erebus in 1979, the Christmas 1984 cabin crew strike and the emergence of Newmans Air then Ansett NZ.
• Arrival of Ansett NZ as majority foreign owned was "unprecedented" for domestic airline access anywhere in the world, noting Australia wouldn't let Air NZ fly domestically in Australia. Air NZ fought back against Ansett NZ, with airbridges and on-board meals, and Ansett took over 100% of Ansett NZ as Brierleys pulled out. 
• Privatisation of Air NZ was a sale to Qantas, American Airlines and JAL, not British Airways as Air New Zealand wanted.  Apparently Australian and NZ government were both interested in a Qantas-Air NZ merger, so it came that Qantas owned 25% of Air NZ.
• Industrial relations remain fraught, with the latest issue being pilots refusing to crew the airline's Boeing 747-400

Fundamentally the article has little of substance to support any analysis as to whether Air NZ would thrive under competition or not.  It clearly was doing ok on domestic services, but there is little comment about international. 

The neighbouring article accurately summarises the airline's history from the days of flying boats.  It noted the airline chose to buy smaller airlines to replace Fokker Friendships. It notes some of the key competition challenges for the airline faces, notably:

• Domestic competition
• Noise restrictions emerging especially at Wellington Airport (affecting operation of Boeing 737-300 series - this was subsequently addressed by the airline buying hush kits)
• Acquiring third-level airlines (Air Nelson, Eagle Airways) to take over regional routes from its own Fokker Friendship fleet

It was noted that at the time of the article (April 1990), Air NZ's fleet comprised of:

• 5 Boeing 747-200
• 7 Boeing 767-200ER
• 11 Boeing 737-200 (including some Advanced series, although the article mistakenly listed them all as such)
• 10 Fokker Friendship F-27 500
• 5 Fokker Friendship F-27 100 (being phased out)
• 1 Boeing 747-400 (leased out to Cathay Pacific)

On order were:

• 2 Boeing 747-400
• 5 Boeing 767-300ER (although that type was not specified in the article)
• 6 Boeing 737-200 Advanced (called "quiet", which was a misnomer as the Boeing 737-300 order did not come for some years)

Wellington Airport: the saga of the domestic terminal

The saga of Wellington's domestic airport terminal was one from the 1960s through to the end of the 1990s, and one that more recent generations know not of, but it was the embarrassment of the 1970s and 1980s for Wellington in the way that water infrastructure is looking like in the mid 2020s.

When Wellington Airport was opened in 1959, its (then only) terminal was a temporary building, having been a De Havilland aircraft factory from the 1920s.  It has a range of characteristics that became infamous over the years. It would leak, it was draft ridden and in winter, cold.  All aircraft were boarded using steps as entrance onto the tarmac was at ground level.  In 1977 a new international terminal was built adjacent, as part of a plan to rebuild the whole terminal, but as it was a joint central/local government venture, there was no agreement on which entities would pay how much to pay for new capital investment. The international terminal served on average one or two flights a day at the most, and only to Australia.  It wasn't until Ansett New Zealand emerged on the scene in 1987, intending to build its own separate new terminal (adjacent to international), that the old terminal got significantly refurbished, at the cost of Air NZ, keen to not be seen to have a second-rate terminal.  It introduced airbridges, carpet, a lounge and improved the lighting and heating considerably.

However, the present day terminal emerged as a result of reforms starting in 1988 to corporatise and subsequently in 1998 part privatise the airport, so that it could operate as a business, borrow against landing charges and revenue raised from airlines, retail concessions and parking.  Political arguments and finger pointing between central and local government ended immediately, as it was clear the airport could raise the finance and pay for a new terminal itself.

In 1999 the new terminal opened, integrating the international and Ansett buildings into one, and is the terminal known today.

Below is a series of clippings highlighting some of the moments in recent history surrounding the debate over replacing the terminal.  I have a great deal more of this in my files that I have yet to dig out, so apologies for the haphazard nature of it...

The "Tin Shed Report" was a multipart series of articles in the Evening Post in 1985 questioning why there has been no progress on a new terminal.  The first was the Managing Director of Challenge Properties (which would later merge with Fletchers to become Fletcher Challenge) proposing that it be a property development that it could lead, but local politicians thought its proposals were "unrealistic". The second article was the then WCC Design Engineer discussing the Challenge plan, including plans for commuter airlines to use the international terminal check-in (which was underutilised with only one or two flights a day). The third article was then Miramar electorate MP, Labour's Peter Neilson describing how the Council had prioritised the international terminal and then a runway extension over the domestic terminal replacement.  WCC had called for the Government to fund its proposed runway extension as a priority, but the Government had rejected it (the local pressure at the time was due to Air NZ having dropped international flights from Wellington, as it had disposed of its McDonnell Douglas DC-8 aircraft and neither DC-10s nor Boeing 747-200s could operate 

The then Lange Government had proposed that funding for a new terminal would be split evenly between Central Government and WCC, and was dependent on WCC accepting a more corporate structure for Wellington Airport (within three years the Government corporatised the airport, along with corporatisation of multiple airports around the country).  At the time the concern was that WCC was delaying progress in agreeing on a new corporate structure.

2 October 1985 Wellington airport terminal

This truncated part of the editorial in 1985 had the Evening Post view of the time, which was that WCC wanted Wellington to be a "special case" that should get full government funding for a new terminal, which was not the government's position at the time.

14 October 1994 - success of Wellington Airport company

The corporatisation of Wellington Airport was reported by the Evening Post to be a success, with a modest profit.  Note at the time it was 66% owned by the Crown and 33% by Wellington City Council.  The editorial notes some would say "who would want to buy it" if it were privatised, given constraints on its location.  It noted the airport company has increased landing fees, increased income from retail concessions and parking, and cut spending. It notes new airport terminals will be built in four years.  The editorial indicates if more airlines are to come to Wellington, the airport has to improve.

Cook Strait News 25 July 1994

Cook Strait News was a local eastern suburbs newspaper in Wellington. This ad from the airport company reports on its twenty-year masterplan depicting visually how it intends to use its land.  Perhaps the most notable part that did not proceed, is bridging over the Cobham Drive end of the runway.

On the eve of the opening of the new terminal in June 1999, the Evening Post produced this two page cutaway of the terminal, with some history and statistics. By this time Wellington International Airport Limited was 66% privately owned (Wellington City Council retains a 33% shareholding). It would be fair to say, the transformation is unrecognisable compared to the "old tinshed"

1990 - Does Air New Zealand need to make a major fleet decision?

In 1990, Martyn Gosling wrote in the Dominion that Air NZ needed to make a major decision about its international aircraft fleet soon to "replace its entire fleet". It came to pass that the decision it actually made was to acquire the Boeing 767-300ER, but the article focuses heavily on the Airbus A340, which the airline did not buy.  The article appears driven by Airbus saying that unless Air NZ orders the Airbus A340 soon, it will not be able to get any until the mid or late 90s, and that would mean Air NZ would be "forced" to pay more, to buy a Boeing aircraft sooner.  The article claims the airline needs to consider replacements for its Boeing 747-200 fleet and Boeing 767-200ER fleet for the late 1990s.  In fact, the 747-200s were not phased out completely until 2000 and were replaced by Boeing 747-400s, that had initially been leased to Cathay Pacific (due to an industrial dispute), and the 767-200ERs were not phased out until 2005.

The article notes that Air NZ had been privatised in 1989 to a Brierley consortium including Qantas, JAL and American Airlines, and speculated that airline management had been focused on business other than fleet replacement, including the floating of 30% of the airline's shares on the stockmarket.  There are questionable claims, like how the Airbus A340 would be an "ideal" complement, to the 747, although later experience indicated that it was a poor alternative to the Boeing 777 (although this would not appear in Air NZ's fleet until 2005).

A good deal of the article appears based on Airbus marketing, as it was frustrated that Qantas did not order the Airbus A340, and touted it as "missing out" on the latest technology and lower seat costs. Airbus was also selling the A330, at the time it was seen as a medium-haul wide body in competition with the 767, with the A340 being for long haul (with four engines in the age before ETOPS gave the A330, 767 and 777 permission to render the A340 and eventually 747 redundant).  Airbus appeared frustrated that Air NZ had never ordered from it (and it did not until its first Airbus A320s arrived in 2003 to replace Boeing 737-300s on short-haul international routes. 

It was noticed that 1990 was a period with high demand for new aircraft.  Apparently Continental Airlines (which subsequently pulled out of NZ, and merged with United in 2012) claimed it would fly A340s from LAX to AKL (it did not).  The Airbus A340 was not introduced into service until 1993, and although it had some early success, it was overshadowed within a few years by the Boeing 777 and production ceased in 2012.  

The article notes availability of the McDonnell Douglas MD-11, but it is described as "interim technology" (and its performance was underwhelming compared to the Airbus A340.  It warned that Air NZ better order aircraft soon or it would have a "fleet of old buses".

In conclusion, the article proved wrong. Air NZ ordered the Boeing 767-300ER as its mid-sized long haul aircraft and operated them from 1991 to 2017, primarily to Asia, but also to Perth and the stopping services across the Pacific such as AKL-PPT-LAX and AKL-RAR-LAX.