08 April 2010

Coastair questions chairman’s role

Source : Westport News, 1 April 2010

The airline forced to quit its service between Westport and Christchurch is now questioning the role of a man who chairs the boards of two state-owned enterprises. Coastair canned its thrice-weekly service last July, after just three months, when Air New Zealand began a six-month trial twice-weekly service partly underwritten by Solid Energy. AirNZ withdrew when the trial ended, saying the service was not viable. John Palmer chairs both Solid Energy and AirNZ’s boards. Coastair chief executive Terry Hewitt said Mr Palmer had a clear conflict of interest. Solid Energy’s financial backing had helped AirNZ destroy the competition from Coastair, he said. “It looks as though we were pushed out so the people on the West Coast would have to go to Christchurch via Wellington, which suits Air New Zealand because they were flying those routes.” Solid Energy communications director, Vicki Blyth said Mr Hewitt’s allegations were “absolutely untrue”. Mr Palmer acknowledged there were conflicts of interest in his chairmanship of both boards. He followed normal board procedure of absenting himself from any decisions where a conflict of interest might apply. The decision to partly underwrite the AirNZ flights was made by management, not the board, which was merely briefed on it, Ms Blyth said. Solid Energy had been trying for three years to get an AirNZ service operating between Christchurch and Westport. She acknowledged some of its staff had been using Coastair, but said Solid Energy had sought a deal with AirNZ because it was Solid Energy’s “preferred supplier”. She denied that AirNZ might have used Solid Energy to help knock out Coastair as competition. “I think that is a huge conspiracy theory. As far as we were concerned, we were wanting to get a service between Christchurch and Westport. All these conspiracy theories were just nonsense.” Unfortunately, the service had attracted fewer passengers than expected, including fewer Solid Energy and Stockton Alliance staff than hoped for, Ms Blyth said. Since it was canned, Solid Energy staff had had to revert to driving between Christchurch and Westport, or flying via Wellington. Mr Hewitt said AirNZ’s “aggressive” behaviour had cost Coastair $75,000 and forced it to put off four of its five employees – all highly experienced pilots. It continued to fly, but now did only charter and freight work. He had complained to the Commerce Commission, but he doubted anything would come of the complaint. “It’s pretty hard to fight the old state-owned bully boys.” The commission should be asking AirNZ some serious questions, he said. “It (the trial service) was anti-competitive and designed to drive us out of the market, no other reason. We were affecting their business.” Mr Hewitt said AirNZ had begun its service knowing it would be uneconomic to run a Beech 1900D on the Westport-Christchurch route when patronage was likely to be only about eight passengers a trip. AirNZ revealed when it stopped the service that passenger loadings had averaged just over 10. Mr Hewitt said Coastair might have reinstated the Westport - Christchurch service if the Buller District Council had promised to stop other commercial airlines using Westport airport for the same route. Council had refused. AirNZ was “screwing” Westport customers, he said. The News reported recently that more Buller people were driving to Nelson or Christchurch because they could fly to Wellington return for less than a third of the price of a return flight from Westport.

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