What's your thoughts...
Given the Shane Jones debate...
Independent company or social provider of regional air services?
Should Air New Zealand remain an independent company free from Government interference AND/OR should it have a responsibility as the national carrier to provide social, regional air services?
We don't live in Canada where subsidised flights are the only way into a place. We have alternatives.
ReplyDeleteIf they went down the path of going to all the small towns it would put other operators out of business, who would get subsidies and who wouldn't.
If the government was worried they could put the dividend back into airnz as a subsidy.
Jones needs to stop grandstanding and let the decision take its course.
Of course irrespective of the withdrawal from PPQ, airnz should have given the residents the courtesy of more notice. Clearly they were attempting to avoid 3mths of outcry, just a quick rip the bandaid and the pain will be over quicker.
Air NZ does not have a social mandate to operate regional services. Air NZ board does have a mandate to its shareholders to operate a profitable business return dividends to them including the government. Air NZ is operating ATR72/Q300 regional routes that are profitable.
ReplyDeleteIf Shane Jones wants Air NZ or Air Chathams, Soundsair, etc to operate borderline or non profitable regional routes, then he better get his regional development cheque book out and start paying subsidies.
Aren’t the ratepayers in Westport and Taupo already subsidising the Soundsair services?
DeleteI believe so.
DeleteNope only if booked flights are less than three seats
DeleteSo they're being subsidised.
DeleteYeap. The difference is that the local council is underwriting not subsidising. If they can't sell the seats the council effectively buys the empty ones (obviously to an agreed amount)
DeleteOnly for flights that are less than three passengers which Taupo hasn't had to do as of yet
DeleteI wonder what the Westport ratepayers think about that?
DeleteOn one hand, these local bodies tell us that there is an insatiable demand for air travel from these places, yet on the other are happy to underwrite the services.
The routes are NOT subsidised.
DeleteAs far as I recall, to give some assurance on the investment Soundsair committed to the routes, the Taupo and Westport councils agreed to underwrite the first three seats on each flight
Seems a prudent move from a shrewd operator on an unknown route and was publicized at the time
I very much doubt the councils have had to pay any $$ to Soundsair? Others may be able to comment with more certainty?
Westport is the same to by no... according to the many reports by the Taupo district council. They haven't had to underwrite any seats as of yet.
DeleteAir NZ should remain an independent company free from Government interference to develop its own business to suit passenger demands whether it is international and or regional. It shareholders expects the airline to make profits not loss.
ReplyDeleteWhether Air should stay an independent company free from Government interference or not the Shane Jones media stunt will make it harder to drop more provincial routes... I had heard more were coming...
ReplyDeleteIs this due to Air NZ's 'one aircraft type to route' policy, meaning Air NZ wants to use ATR72's only for regional routes and the Q300's will be replaced?
DeleteIt seems odd that Shane Jones has allocated money for Kerikeri airport upgrade but no money to upgrade Kaitaia airport. Kerikeri being one of the major gateways to the Bay of Islands for international tourists.
In today NZ Herald, a comment was made that - 'Christopher Luxon has pointed out that second-tier airlines such as Air Chathams and Sounds Air are the right size for these markets and those airlines are growing'.
As a company answering to shareholders, then I absolutely think Air NZ needs to maintain as much independence from political influence as is possible.
ReplyDeleteHowever, as the government is also one of those shareholders, they absolutely have the opportunity to choose to reinvest some or all of their dividend into supporting more marginal regional routes for the sake of national good.
Having worked in an industry which has been heavily subsidised by government at times, I'm fairly strongly against subsidisation because of the way it distorts markets and tends to pad the margins of existing providers for the term of the subsidy rather than actually build new demand and capacity. I don't see subsidisation as a positive way to help grow smaller airlines like Air Chathams, Sounds Air etc. The government would serve the regions better by building regional business and industry, and the resulting growth in demand for regional air services will build the capacity and hopefully profitability of those airlines by default.
Now, that being said, AirNZ DOES have social responsibilities to the regional customers it does choose to serve, and that is to be a bit more forthcoming and transparent about how their services are operating and the reasons behind their decision making. I think the PPQ decision is particularly on the nose to the locals (I'm one of them) because it clearly wasn't a issue of profitability and was simply one of reprioritisation of resources. If they'd said that from the start and planned a more graceful exit, then they wouldn't be facing the same level of ill will towards them at the moment. It actually just
boils down to decent customer service really!
Why does airnz have a social responsibility?
DeleteDoes intercity (or whatever the brand is now) have a social responsibility?
Coasters can comfortably drive to 2 different airports served by a multiple number of airlines. Yes a little inconvenience but better than some.
Perhaps airnz has a social responsibility to serve Great Barrier Island or Whitianga. What about Stuart Island?
This is a measured decision, they are prepared to upset a few people to make others happy.
If the government was needing a socially focused airline they should have mandated that.
Its a business.
I think we're talking about two different things when we refer to social responsibility. To my mind, it's about companies having a duty to balance business interests with some empathy towards the people that their operations affect. It's not about charity, which is what services to places like Great Barrier Island, Whitianga or Stuart Island would be.
DeleteSo, yes... Intercity does have a social responsibility; every business does. Doesn't make them obliged to run bus services unprofitably, but it does oblige them to acknowledge that some people rely on their services and obliges them to consider that when the plan their service delivery.
No one can argue that the Kapiti Coast has been left without links to the wider world by AirNZs decision to cut its services. Indeed it is within practical driving distance to WLG and PMR, and it is still serviced by two smaller carriers providing air links to the South Island. Like you say, it's better than some other regions. But the point is that AirNZ committed to the service in 2011 on the understanding that locals 'use it or lose it'. The locals held up their side of the deal and used it, and even stuck with using it while the reliability of the service deteriorated considerably in the last 6-12 months. And the locals probably wouldn't have been as concerned about losing it if the cancellation of the service if it had been handled with a bit of... social responsibility.
Given the ongoing and massive waste of public money on frivolities (flag referendum for example), it's not unreasonable for some marginal routes to be subsidised to support the regions needing it. The subsidy doesn't need to go to Airnz, the other players like Sounds Air and Chathams will do as good, or better, job and the money is filtering through to the local economy
ReplyDeleteIn the overall scheme of squandering NZ taxpayer money, any subsidies will be just a drop in the ocean, but there will be measurable benefits to the community as a whole
I think the days of being a 'socially responsible' airline ended when NAC and Air NZ were merged. Things have changed and we need to move on. Air NZ must remain independent of the government and not succumb to every little town that wants an air service. They proved that the Beech 1900D for example was too expensive to operate when you take into account the often small numbers of passengers that used some services on this type (ie HLZ to AKL). As an independent company Air NZ has an obligation to its shareholders to make a profit and thereby be able to purchase new aircraft to continue their expansion as a successful airline. I appreciate that this may sound harsh, but it is a reality of the society we live in today. Their notice to Paraparaumu was indeed not very well thought out in terms of the time frame - that said there is now a possibility that Chathams may take up the route with an aircraft much better suited to the local population rather than have a half empty aircraft operating that is unable to produce a profit from that route.
ReplyDeleteIt should be fully privatised with the money used to build high speed rail between Hamilton and Auckland
ReplyDeleteI live near Pukekohe. With a bit of traffic, it’s over an hour to Auckland Airport. About the same as PP to WN? Should we have an air service to Pukekohe?
ReplyDeleteYes because that's socially responsible!
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