CityJet - NZ's Low Cost Airline

CityJet has its origins in freight operations North South Aviation and TranzGlobal. In early 1999 Steve Mosen’s and Paul Webb’s TranzGlobal was rebranded as CityJet and the company moved to start a low-fare passenger service. The passenger services were in addition to its scheduled freight services that incorporated Auckland, Palmerston North, Wellington, Nelson and Christchurch using Embraer Bandeirantes ZK-KML (c/n 110248), ZK-TZL (c/n 110378), and ZK-TZM (c/n 110328). The company also acquired an ex-Ansett New Zealand Bandeirante ZK-REU (c/n 110298), which was reregistered as ZK-TZN to CityJet on the 15th of April 1999.

Embraer Bandeirante ZK-KML on freighter duties at Nelson on 25 June 1999.

  

When announcing its plans for passenger services CityJet said it would connect Palmerston North with direct flights to Auckland, Nelson and Blenheim and Wellington with up to five direct  flights to Nelson a day and two flights a day to Blenheim. Fares were set as low as $29 between Nelson and Blenheim and Wellington and from $49 between Palmerston North and Nelson or Blenheim. The Wellington fares under-cut the cheapest Air New Zealand and Ansett New Zealand fares which, at that time, were both about $89 and Origin Pacific’s cheapest fares which were $69. The fares were also very cheaper than the three ferry operators; The new Top Cat service had a $35 introductory fare, Cook Strait Sea Cat’s fare was $49, while the Interislander fare cost $46 and the Lynx fast ferry $59.  

The proposed timetable as at 4 May 1999 in preparation for the launch of passenger flights on the 31st of May 1999

The Dominion, 24 May 1999

Embraer Bandeirante ZK-TZL between passenger flights at Woodbourne on 24 June 1999.

  

Passenger flights began on the 31st of May 1999 with flights operated between Wellington and both Nelson and Blenheim and between Palmerston North and both Nelson and Blenheim. The introduction of the airline services improved the utilisation of the four Bandeirantes, but the increase in business also necessitated the addition of another aircraft to the fleet and Reims/Cessna 406 Caravan II, ZK-CII (c/n F406-0012) was registered to CityJet on the 24th of June 1999.

The Dominion, 31 May 1999

Reims/Cessna 406 Caravan II at Nelson on 25 June 1999

The launch of CityJet was not without its problems. Ansett New Zealand took CityJet to the High Court after selling them a Bandeirante saying that CityJet had contravened the sale agreement by using the Bandeirante in competition with Ansett. It withdrew the threatened court action when CityJet said the aircraft in question were used on the freight only services. Ansett later served a winding up notice on the Pyrenees Ltd, the company which owned CityJet's aircraft, alleging that Pyrenees Ltd had failed to pay for a Bandeirante aircraft. Paul Webb told the Nelson Evening Mail that the aircraft in dispute was Ansett's last remaining Bandeirante, which was operated by subcontractor Rex Aviation and that CityJet had cancelled the contract and had never taken delivery of the aircraft, although it has purchased several others from Ansett New Zealand, all of which have been paid for.

In June 1999 CityJet also caught Parliament’s attention by inviting its young pilots to pay $20,000 to get co-pilot time on its Bandeirante freight flights. CityJet would employ pilots who had as little as 300 hours flying time, of which 50 had to be multi time. The $20,000 was described as a contribution “towards training costs” and for that young pilots could gain flying hours on CityJet’s freight services.

The Dominion, 23 June 1999

The Dominion of the 7th of July 1999 carried a profile on CityJet’s co-owner, Paul Webb, and this article gives a good glimpse into how CityJet was going at that time. He told the Dominion, “Most CityJet flights were fully booked… CityJet was competing against Cook Strait ferries rather than against other airlines by targeting passengers who did not normally travel by air. The service, including aircraft and check-in, is basic: the objective is to offer cheap seats on a reliable service, not unlike getting on a bus. CityJet was trying to grow the market by encouraging a new breed of traveller, not take market share from existing operators. The change in travel patterns would need a change in mind set, Mr Webb said. Nelson was an example of a transient city, used to flying. In a city like Hamilton the inhabitants preferred travelling even great distances by car, Mr Webb said. Most airline seats sold in a year were sold to a small group of repeat travellers. However, early customer information indicated many customers who were not regular air travellers were now taking advantage of the low fares. The service had appealed to families and groups. Mr Webb said the biggest growth market in tourism was backpackers. CityJet was targeting them through backpacker accommodation and word of mouth among travellers. Backpackers were keen to see New Zealand by land one way then return by air to save time… Freight still accounted for about two thirds of revenue, though passenger revenue was catching up. Aircraft were reconfigured every day from passenger during the day to freight at night by removing the seats.”

Enjoying the early morning sun, Embraer Bandeirante ZK-TZM at Christchurch on 11 May 1999.

On the 2nd of August 1999 the company expanded its passenger services and introduced passenger flights between Auckland and Palmerston North. The company was also keen to service Christchurch. CityJet certainly had plans for further expansion; the NZ Herald of 12 October 1999 carried a situations vacant advertisement for Bandeirante and Jetstream 31 captains and first officers.  

The Dominion, 2 August 1999 

Such plans did not come to pass, however, as on the 14th of October the Civil Aviation Author­ity grounded CityJet after an investiga­tion showed it had been under-record­ing flight times on each of the four Bandeirante aircraft by about 30 percent. The investigation was launched after the owner of the Cessna 406 Twin Caravan, ZK-CII, reported that flight times were being under-recorded while the aircraft was on lease to CityJet. To enable to airline to get airborne again the Civil Aviation Authority and CityJet officials arrived at an agreement whereby CityJet had to add 33 percent to each flight time flown after 31 May and 20 percent be added to all air­craft flight time prior to that date "to prevent any possible safety oc­currence and to allow the CAA to con­duct further investigations."

CityJet disputes this version of events. Ian Wishart’s article in Investigate magazine (http://www.investigatemagazine.com/march00jet.htm) reports that it was CityJet, not Civil Aviation, which made the discovery that ultimately caused the airline’s downfall. When pilots flew "sectors" they were required to enter details in a flight log and file it with the company’s head office. According to Webb, those ‘draft’ logs were faxed through to Airwork each day for maintenance scheduling purposes. A data entry clerk at CityJet then typed the information into the airline’s own maintenance computer and corrected any obvious typing mistakes as she went. In early September, the clerk came to Webb with a query. "She came to us and said ‘How can you fly from Wellington to Blenheim in five minutes?’ "We said ‘Well, you can’t. That can’t be right’, and we had a look at it." Aircraft maintenance relies on the number of flying hours the plane has logged up between service checks. Flights are normally measured between "off blocks" – which is when the aircraft wheels are first released from the wheel chocks and it begins taxiing to the runway for departure – and "on blocks" which is when it comes to rest at its destination terminal. But within that parameter is also the actual flight time. Let’s assume the flight departs Auckland Airport at 1pm and arrives at Wellington at 2pm. The actual flight time in the air might be only 50 minutes, which means the airliner taxied for five minutes at either end on average. According to Webb, he discovered the CityJet pilots had adopted a practice allegedly used by Air New Zealand Boeing 737-200 pilots...

Webb quickly realised, in assessing the "five minute" Wellington-Blenheim flight, that the pilot had logged 10 minutes of taxi time either side, leaving an unrealistic flight time on his draft log. The horrible implication began to dawn on CityJet management, and they immediately alerted the authorities. "On or about the 16th of September, we issued Airwork and the CAA with an internal finding identifying the fact that we had that under-recording procedure." Webb personally drafted a seven page report and fired it off to Airwork’s maintenance team and Civil Aviation headquarters. "So we were the people that tipped Civil Aviation off." Not that that’s how Civil Aviation broke the news to the Government. Instead, it claimed the victory in discovering this scandal for itself and its anonymous tipster.

Wanted Bandeirante and Jetstream flight crew - NZ Herald, 12 October 1999

Whatever version is correct the result was the same. CityJet was grounded. While its aircraft were grounded CityJet chartered two aircraft to maintain its services before its first Bandeirante returned to the air on the 17th of October. A second followed a few days later and a third by the end of the month. After further investigation the CAA re­placed the previous 33% and 20% requirements by stipulating that 9 minutes be added to all flights by each aircraft, and to each "lifed" component for each flight during the period it was fitted to the aircraft, regardless of whether the part was still on the aircraft.

Embraer Bandeirante at Nelson on 31 May 1999.

On the 3rd of November 1999 it was announced the CityJet’s co-founder, Paul Webb had sold his share of the company to his business-partner Steve Mosen, after a difference of opinion about the company’s future direction.

Paul Webb in the Dominion, 7 July 1999

CityJet’s problems continued and on the 10th of November 1999 the Civil Aviation Authority ordered CityJet to stop flying passengers and decreed that all its 54 pilots must pass written and practical tests. The company was still allowed to carry freight but CAA director Kevin Ward announced that "following a lengthy meeting with CityJet management I have decided to impose several conditions on the air operator certificate held by the company. Passenger operations by the airline are prohibited for up to 14 days, pending completion of the ongoing investigation. Within the next 14 days, all company pilots, including training and management pilots, must undergo a written test of aircraft technical knowledge conducted by Aviation Services Ltd. Within the next 30 days those pilots must undergo a flight test with an independent flight examiner to demonstrate their piloting proficiency in the aircraft. CityJet can continue its freight operations in the meantime."

The cessation of the passenger services was, in many ways, the last straw for CityJet and it was placed in receivership on the 16th of November 1999 owing some $4 million. The receivership led 107 staff being laid off, at least eight CityJet trainee pilots losing up to $22,000 each and some 7000 passengers without flights. The company had hoped its continued freight service would enable it to trade out of its difficulties and 21 staff were re-employed for the freight operation but all operations were suspended by the Civil Aviation Authority on the 30th of November 1999.