10 March 2024

Skybus - Trying to Fly through a Legal Loophole


Despite never actually flying a revenue earning service Skybus was one of New Zealand’s most ambitious post-War airline proposals as it attempted to find a way of competing with the national carrier. It was an innovative idea but from the beginning it was plagued with problems. Its battle to get airborne is a story of not trying to fly through a legal loophole.

On the 6th of October 1980 it was announced that within 11 weeks Skybus would be operating domestic scheduled air services in New Zealand between Auckland, Wellington, Christchurch Dunedin and Palmerston North using three McDonnell Douglas DC-8-53 and one McDonnell Douglas DC-9-32. Fares, it was announced, were to be between two-thirds and three-quarters of those charged by Air New Zealand. Also announced were feeder services from 17 provincial centres as well as an international charter service. 

Fronting the operation were three men who had been involved in the failed Nationwide Air, the “car ferry” operation which had operated ATL Carvairs. Newspaper coverage described Matt Thompson as an Auckland businessman, John Rutherford, as a Christchurch barrister and solicitor, and Mr Murray Purchase, as an Auckland-based transport consultant, who had been marketing manager for Nationwide Air. Also joining them was John Yates, who was an Auckland businessman and publisher.

Murray Purchase, Matt Thompson and John Yates with a model of a DC-8 in Skybus colours. Source : Nelson Evening Mail, 7 October 1980

Skybus looked to the example of Denver Ports of Call which was a private airline which operated flights for the Denver-based Ports of Call Travel Club from 1967 to 1992. It was the largest travel club in the United States, with at one time over 66,000 members. Skybus director Matt Rutherford cited Ports of Call as having made a $2.98 million profit the previous year and that Skybus was based on this enterprise to some degree.

The key to airline’s concept was the intention for Skybus to operate as an "aero club" within air services licensing legislation. Under section 14 of the Air Services Licensing Act, aero clubs could operate aircraft without a licence, provided the aircraft was owned or leased by them, and the only people carried were club members. The airline stated that As all Skybus passengers would be aero club members, the airline says it can legally carry them without a licence. The second basic cornerstone to the Skybus concept was that everyone had to be a member of an aero club. The airline said it could start operations once it had 20,000 paid-up members.

This loophole in the air services licensing legislation meant Skybus did not need to appear before the Air Services Licensing Authority to gain a licence. To ensure this the Aqua Avia Society was formed to operate under the Industrial and Provident Society Act. People who became members of the Aqua Avia Society would automatically would also become members of an aero club which did not have to adhere to the regular licensing requirements of other air service operators. Skybus argued that society members would be able to fly in aircraft owned or hired by the society. The society was set up so there were no proprietary shareholders and all benefits were retained by the society for all members. Prospective members were able to join the Society for five years for $75 or a life membership for $150. Membership was to be limited to 80,000.

So what did this mean for the travelling public? Matt Thompson told the Press that Skybus air fares to all foundation life members will be one-third less than the current air fare being charged for the equivalent flight by the State-owned airline. Term members will be eligible for a 25 per cent reduction. This was later qualified by Mr Thompson when asked what would happen if the "State-owned airline" embarked on a price war. He said the pledge could not be a "complete all-time pledge” but would have to come within sensible business practice. Social benefits offered by the society included free air travel for all life members aged 75 or more, and half-fare travel for all life members over, the age of 65. Student and apprentice members would be accorded a half-fare standby, and in the instance of a family of whom all were members, the first would be eligible for the normal discount rate and the second adult and subsequent immediate family members - up to a limit of six - would fly at half fare. Mr Thompson said also that membership of the society would result in a 20 per cent reduction on rental car hire and that negotiations were under way to achieve discounts for members with an as yet unspecified hotel chain. 

The aircraft, he said, would be obtained on a five-year lease. Ordinary line maintenance would be done at Christchurch, major work at Hong Kong. Pilots and aircrew would be New Zealanders and the venture would create about 315 new jobs in the aviation industry in New Zealand. The service on the main trunk would not be a stripped-out, “bring-your-own-lunch” one, he said. Morning flights would provide a continental breakfast, brunch flights would provide an open sandwich with coffee, tea, or even wine if a licence was approved, and evening flights would provide hot savouries with coffee, tea or wine. Seating would be in two classes on the DC8 aircraft — 130 economy seats, which would be eligible for the lower fares, and 16 first-class seats, which would cost about the same as the Air New Zealand fare. The DC9, in which all seats would be economy class, would service Dunedin and Palmerston North as well as Christchurch and Wellington. A proposed timetable for the initial main trunk service had been drawn up. Under it, there would be six flights in and six flights out of Christchurch each day heading to Wellington, Auckland, or Palmerston North, and one flight each day in and out of Christchurch for Dunedin. 

Once the feeder services were begun, these would connect with the main trunk airports and it was envisaged that eventually there would be a service from the four main centres to Kaitaia, Whangarei, Hamilton, Tauranga, New Plymouth, Gisborne, Napier and/or Hastings, Wanganui, Palmerston North, Masterton, Blenheim, Nelson, Westport, Greymouth, Timaru, Oamaru, and Invercargill. The Greymouth Evening Star reported that the proposed timetable for Greymouth-Blenheim-Wellington is:- Depart 7.15am, 11.50am, 4.45pm. Arrive from Wellington 10.20am, 3:10pm and 8.10pm. All the flights would link with other main centre routes and other provincial services.

Reservations would be made by a toll-free dialling system into a main computer, which would write tickets automatically and confirm reservation by telex. The society also intends to run overseas charter flights, and has held discussions with English operator, Mr Freddie Laker, with a "favourable reaction" but no commitments, according to Mr Thompson. He indicated that the airline would look at connecting with cheap Laker North American-European flights. Other newspaper coverage talked about charter flights to overseas destinations such as Australia, Hong Kong, Fiji, Hawaii and North America and associated discounts on car rentals and hotel accommodation.

Not surprisingly the Minister of Civil Aviation, (Mr McLachlan), sought an urgent report on the legalities of the proposal. In Wellington’s Evening Post of the 7th of October he said he had still seen no firm proposal from a principal of the Skybus companyHe had learned of the company's creation through the news media. The principal of the company, Mr Matt Thompson, is well known to me and I feel he owes it to the country and to potential members of the scheme to give straight answers to some pertinent questions." Questions the Minister wanted answered:

  • What discussions Mr Thompson had had with the Royal New Zealand Aero Club and what agreement had been reached?
  • Which affiliated clubs had expressed an interest in into the scheme?
  • Where the three DC8s and one DC9 aircraft were coming from, and an assurance for the travelling public that the aircraft would be maintained and serviced to the same standards that Air New Zealand regarded as normal?
  • Where pilots to fly the aircraft were to come from, and what the provisions for refuelling and ground facilities were to be?

The Royal New Zealand Aero Club, the overseeing body of the nation's aero clubs, and whose aero club members were exempt from air services licensing provisions, was also not convinced by the scheme. In September 1979 it had rejected an application for associate membership from the Aqua Avia Society. The RNZAC outlined its position in various newspapers, stating that it would have "grave reservations" about the proposal if it appeared to place the objects of aero clubs in danger. These objects were to train pilots, many of whom went on to commercial flying, and only people carried are club to foster the sport of aero club flying... The intention of the exemption for clubs was not to permit scheduled main-line carriage of 140-odd passengers at a time, and the Government might amend the legislation rapidly if it appears that the loophole would stand up in court.

Air New Zealand's chief executive, Morrie Davis, was reported in the Nelson Evening Mail as saying that he would not comment on the proposals until after the Government and aero clubs have had their say.

On the 8th of October 1980 more details appeared in the Press… The aircraft would be leased, and. there were options with Air Canada for one DC8 and Philippine Airlines for two DC8s. Negotiations were in train with a European operator for a DC9, Mr Thompson said. Working capital would be based on membership of an estimated 20,000 subscribers. The aircraft would be serviced at Christchurch, where a hangar was already available, and main frame and main checks would be done at Hong Kong, Fuel was readily available, Mr Thompson said, and he was negotiating with several oil companies. Flight service would be high. The company would employ 75 cabin staff - meals would be served - and 50 pilots. "Of the 350 staff required, I am confident that most will be New Zealanders” Mr Thompson said.

The Royal New Zealand Aero Club - which represents most New Zealand aero clubs - rejected an application by Aqua Avia for associate membership status in 1979, but a senior officer of one of New Zealand’s biggest aero clubs said in Auckland yesterday that the aviation industry needed somebody like Mr Thompson to “ginger up” Air New Zealand and the Ministry of Transport. However, although the Canterbury Aero Club is sympathetic, it seems unlikely that the new venture will gain the club’s following. “The club does not want to be used by commercial interests,” said the president, Mr G. Berryman.

Further concerns were reported on the 11th, including from pilots who were not impressed with the Skybus proposal. The President of the Airline Pilots' Association (Captain D. G, McAllister), said the aircraft Skybus planned to use, DC8s, did not have a good fuel efficiency record. "In fact, they are about the worst example available,” he said. He said they would use twice as much fuel as a Boeing 737 and carry only 10 per cent more passengers. It was acceptable to use them as Air New Zealand did, at peak times, but not all the time. Captain McAllister believed that the only way the airline would work would be on a shoe-string budget. There was no room for that type of business in New Zealand. He did not think Air New Zealand pilots would be queueing for jobs with the new airline.

The Nelson Evening Mail reported on how the airline was to be promoted on the 13th of October. National organisers of Skybus promotion have launched a New Zealand wide membership drive with promises of high income for six weeks for successful recruiters. The sales technique seems to be based on a pyramid system with one regional organiser responsible for a handful of sub-organisers who in turn engage eight more commission sellers. Membership subscriptions in the Skybus company, Aqua Avia Society Ltd cost $150 for life or $75 for five years. Commission for the front-line sellers ranges from $4 an enrolment to $10, depending on the number of enrolments. Sub-organisers in provincial areas have been told to anticipate at least $3000 commission for the six weeks. 

The initial advertisement, published in newspapers including the Evening Mail yesterday, offers successful commission sellers high incomes during the six weeks of the promotion. But sub-organisers in Nelson were complaining today they didn't have enough information to tell people. While many people have indicated genuine interest in supporting the Skybus concept of cheap air travel, no one has yet fronted up with cash, they said. The sub-organisers, contacted through advertised telephone numbers in Nelson, declined to be named. Two sub-organisers spoken to said there was to be a meeting tonight where it was hoped more information would be forthcoming. 

One question was how people would get their full refunds - once commissions had been paid - if the scheme failed to get off the ground… The Nelson sub-organisers said there was apparently going to be some link with third-level airlines to get Skybus members to the main centre services. "The membership drive is supposed to be backed up with extensive advertising," said one sub-organiser. "There is talk about linking with Freddie Laker to give cheap, world-wide flights. Nobody's selling in Nelson - it's all wait and see. I’m not very happy at present and if I don't get answers tonight I'll pull out."

The Dominion, 18 October 1980

A closer look at the proposed timetable

Within three weeks 500 to 600 people had joined the Aqua Avia Society and, more importantly, agreements and been reached with the Hauraki and Piako aero clubs. The Air Services Licensing Act stipulated that licence exemptions apply only to aero clubs affiliated to the RNZAC and which carry their own members in their own or hired aircraft. On the 29th of October the Press reported director John Rutherford saying the Hauraki Aero Club’s  decision meant Skybus could now get off the ground. He said that the Skybus promoters were still anxious to get a number of other aero clubs to join the scheme, however. Skybus could exist with just one club. “We can now lease aircraft in the Hauraki club's name and get them to operate throughout the country.” 

In response the Royal New Zealand Aero Club said member clubs which contracted with the Aqua Avia Society would be suspended from RNZAC membership immediately. On the 30th Mr M. Bettjeman, president of the RNZAC, was reported in the Press saying  that the RNZAC’s executive had doubts about the viability of the project. “In view of our concern to protect member aero clubs who may not be aware of all the relevant factors, this executive has unanimously resolved that any clubs who contract with Aqua Avia Society will be immediately suspended from membership of the RNZAC” An RNZAC statement said that since October 6, when the Skybus project had been unveiled, the RNZAC had not received any detailed information about the operational and financial viability of the venture in spite of repeated requests to Messrs M. Thompson and J. G. Rutherford, two of the Skybus directors. “The absence of such information reinforces our doubts as to the viability of the scheme," it said. “We are also conscious of those member clubs which suffered financial losses as a result of the operations of Nationwide Air and its associates in which Messrs Thompson and Rutherford were involved.”

The statement said that inherent in the scheme was a member aero club’s contracting with the Aqua Avia Society to use the exemption under section 14 of the Air Services Licensing Act which obviated the need for an air service licence. According to the RNZAC the effects of this on member aero clubs are:

  • Section 14 requires that members of Aqua Avia must also have full rights of membership of the contracting aero club. The consequence of this would mean that control of the aero club would be taken from existing membership.
  • The same section provides that the club would be responsible to own or hire the aircraft in this case large jets, and therefore a contracting club would be legally responsible for the debts incurred.
  • The purpose of the sections is to allow the traditional functions of the aero clubs and, in particular, the carriage of its own members. If member clubs lost this exemption it would be catastrophic to their activities.

In spite of the RNZAC move, the Aqua Avia Society, acting or "legal advice” decided to press on with its plans. Mr Rutherford said the RNZAC had no authority to interfere in the "internal housekeeping” of its members. He believed that members could be expelled only for ceasing to offer flight training or for ceasing to pay dues. If the RNZAC acted outside its constitution it could expose itself to “substantial claims.” Legal action might be necessary to stop the RNZAC from expelling any members although it was hoped to settle the matter by negotiation. The Hauraki and Piako clubs had indicated since the RNZAC announcement that they would “stand by” the project. Four or five other clubs had also been approached and these had all expressed concern that the RNZAC executive should have acted in such a high-handed manner without consulting member clubs.

On the same day, in a separate article in the Press, it was reported that the Hauraki Aero Club has withdrawn from its agreement with the Aqua Avia Society. On Tuesday, the club agreed to give the society membership - and thus the means to avoid obtaining a commercial operator's licence. However, the move provoked its parent body, the Royal New Zealand Aero Club, to issue a threat of suspension if the agreement was not invalidatedThe secretary of the Hauraki Aero Club, Mr Graeme Wood, said that the club had sent the RNZAC a telegram saying it would withdraw from its agreement. "We did not want anything to go wrong," said Mr Wood. "Our actions in going in could jeopardise member clubs' activities." He thought that other aero clubs throughout the country could be affected if the Government took action to alter in some way section 14 of the Air Service Licence Act, which allowed the clubs to carry passengers.

More clouds were looming for Skybus. On the 31st it was reported that the Consumers’ Institute had described joining the Aqua Avia Society as a “high-risk” investment.

On the same day it was reported that the Skybus scheme was being investigated by the Securities Commission. The commission’s chairman, Mr C. I. Patterson, said yesterday that he was not satisfied that the mechanics of the Skybus proposal were being satisfactorily explained to the public. After studying advertisements and a pamphlet including a coupon to be filled in by prospective members, he was “not happy about it, by any means.” Mr Patterson said that the constitution of the Skybus scheme was unusual in that it was constituted under the Industrial and Provident Societies’ Act, which did not contain the safeguards of the Companies Act relating to the making of offers to the public. The society had not explained its proposed methods of financing or whether members could be called on to meet any liabilities. The society was also misleading the public in asserting that it was running an airline. That could be lawfully established only by the acquisition of an air-service licence. “And I take it that the society does not intend to apply for one.”

While the Hauraki Aero Club pulled out of the Skybus scheme the Piako Aero Club remained defiant supporting it and subsequently had their membership of the Royal New Zealand Aero Club suspended. The Aqua Avia Society went to the High Court seeking an injunction restraining the RNZAC from taking any disciplinary action against any of its member aero clubs who wished to negotiate or enter into any contractual agreements with the Aqua Avia Society. The Society also placed before the courts a claim for $2.3 million in damages against the RNZAC. If it was prevented from attracting as many members by “unwarranted interference” in its contract arrangements it would stand to lose about $2.3 million

A Piako Aero Club representative told Aviation News that members felt the RNZAC had acted a little prematurely in the matter and gave the impression of trying to sweep the Skybus concept under the carpet. At the same time members had been very impressed with the forthright and open way Aqua Avia's directors had dealt with them and all decisions made by the Aero Club to date had been based solely on the presentations put forward. "Meantime things have quietened down and we are carrying on as normal," he said.

On the 3rd of November it was decided by Cabinet that the Government would not tighten the law to stop the Skybus scheme. A change of the law, or, more probably, a new regulation passed by an Order-in-Council, could have been used to prevent the Aqua-Avia Society from using the legal nicety on which it bases its proposal for a new airline. The following day the Press suggested the rejection was hardly startling given the Government’s stand on competition and support for private enterprise. But the decision makes it apparent that the Government now believes the venture will fail of its own accord without the political embarrassment of having to say “no” and being seen as the stumbling block. The Government certainly is uneasy about the proposal and for several reasons... The Prime Minister (Mr Muldoon), said after Cabinet meeting that the Government was concerned about the Skybus proposal but felt that the best way to express, that concern was to give the public the maximum amount of information rather than to legislate. “There was a suggestion that we could stop this thing by a regulation which would 'slightly' alter the regulations that apply to aero clubs,” he said. “On balance we decided that it was not appropriate for the Government to step in and take such action at the moment. We do believe that there are certain aspects of this thing that should be brought to the notice of prospective investors, certain aspects of their liabilities.” Mr Muldoon said that the Government would encourage a ‘‘buyer beware” attitude

Responding to the statement, Mr Thompson invited the Securities Commission to suggest changes. "None of our rules are onerous; Indeed, when the registrar (of industrial and provident societies) approved the rules, he paid particular attention to those provisions, and considered them fair when approving them. It must be apparent that we have been at lengths to say Skybus is a commercial venture and, in the event of anything untoward happening, the funds belong to the membership, not the directors as has been implied." Mr Thompson said all clubs had provisions to levy members. Golf and sports clubs always had this power. If members did not like it, they could resign or force a special meeting to change the rules. All members received a copy of the rules when they joined. He believed the Ministers and the commission chairman had not construed the rules in the correct manner. Aqua Avia members would control the society at all times, and would elect the directors. At that time, the "Post" asked Skybus director Mr John Rutherford to explain the references to annual subscriptions and levies. Mr Rutherford's reply was that "annual subscriptions" was included to cover the possibility of future one-year memberships, which Skybus does not have at present. "Levies" would be charged only to people making international flights with Skybus, he said. He said that to get around aviation regulations in other countries, Skybus might have to fly as a "private flight." To do this it would not charge a fare. It would levy members instead, and give them a flight in return. It would then tell the foreign country involved that the passengers on board were not fare-paying travellers. Only those travelling would be levied, according to Mr Rutherford. 

The more people looked at the Aqua Avia/Skybus proposal the more questions were asked and concerns raised. On the 5th of November the Minister of Transport (Mr McLachlan), the Minister of Justice, (Mr McLay) and the chairman of the Securities Commission (Mr C. I. Patterson) issued a joint statement claiming the promoters of Skybus have said nothing in general publicity material about imposing a passenger levy to cover costs and borrowing…  This information was on the Aqua Avia Society file held by the Registrar of Industrial and Provident Societies, but was not mentioned in any of the publicity material or application forms seen by them. For this reason it was in the public interest that a joint statement was made on the matter which went on to detail concerns about particular rules and member’s potential liabilities.

Responding to the statement, Mr Thompson invited the Securities Commission to suggest changes. "None of our rules are onerous; Indeed, when the registrar (of industrial and provident societies) approved the rules, he paid particular attention to those provisions, and considered them fair when approving them. "It must be apparent that we have been at lengths to say Skybus is a commercial venture and, in the event of anything untoward happening, the funds belong to the membership, not the directors as has been implied." Mr Thompson said all clubs had provisions to levy members. Golf and sports clubs always had this power. If members did not like it, they could resign or force a special meeting to change the rules. All members received a copy of the rules when they joined. He believed the Ministers and the com-mission chairman had not construed the rules in the correct manner. Aqua Avia members would control the society at all times, and would elect the directors. At that time, the "Post" asked Skybus direc-tor Mr John Rutherford to explain the references to annual subscriptions and levies. Mr Rutherford's reply was that "annual subscriptions" was included to cover the possibility of future one-year memberships, which Skybus does not have at present. "Levies" would be charged only to people making international flights with Skybus, he said. He said that to get around aviation regulations in other countries, Skybus might have to fly as a "private flight." To do this it would not charge a fare. It would levy members instead, and give them a flight in return. It would then tell the foreign country involved that the passengers on board were not fare-paying travellers. Only those travelling would be levied, according to Mr Rutherford. 

On the 7th of November Mr Justice Speight's decision on Aqua Avia's claim against the RNZAC's  suspension was announced. He said, the crux of the matter was a provision in Section 14 of the Air Services Licensing Act 1951. That section exempted clubs that were affiliated with the Royal New Zealand Aero Club from obtaining an air service licence to carry passengers providing the aircraft belonged to the club and the passengers were members. It was clear that the plaintiff company (Aqua Avia Society Ltd) had been formed for the purpose of people joining and becoming members of an affiliated aero club, he said. If there was a loophole in the law that could be legally used, then it should not be interfered with merely because its development met with the disapproval of others in aviation. The judge said it was probable that the prime anxiety of the Royal New Zealand Aero Club was that the evasion of the air licensing regulations might imperil the more orthodox use of that section by member aero clubs. That danger had been removed in the meantime, according to public declarations by the Prime Minister that there was no intention of cancelling the availability of the Section 14 exemption, he said. Another prime concern seemed to be an apprehension, that might be justified in due course, that the venture would be ill-fated and might bring individual aero clubs into disrepute or financial disadvantage. However, there was still sufficient freedom that if the Piako Aero Club wanted to enter the venture it should be able to. The judge said it was only speculation, rather than proven, that the scheme would be detrimental to amateur aviation.

On the 10th of November the Press reported on Skybus' connection with Guiness Peat Aviation Ltd. The Irish company will operate the airline initially until New Zealanders have enough expertise to take over. But the Aqua Avia Society Ltd, which is behind Skybus, has first to come up with the $1,000,000 deposit to start the operation and the first of the aircraft rolling. The marketing vice-president of Guinness Peat Aviation, Mr William McCormack, said in Auckland this week: "What has staggered us is the slow response (from people wanting to join the society). "We know it is a brilliant idea which has to work." The society backing had to come through subscriptions, he said. He did not know exactly how much the society had in hand but it was a "good way towards" the $1,000,000 deposit on the first aircraft. The society hoped to come up with the deposit within 30 days and his company could have an aircraft operating within 30 days of getting that deposit

The following day the Press reported that Skybus could be flying by Christmas.  The Skybus scheme’s first flight may take off from Britain by Christmas, bringing members of the Aqua Avia Society to New Zealand with the society’s first aircraft. Plans for a flight to Australia have stalled as Australian civil aviation authorities consider the society’s application for landing rights. The society was looking for members in Britain on the same basis and at the same membership rates that it had advertised in New Zealand, Mr Rutherford said. At least as many members were sought to fill the aircraft - about 160 passengers - but more would obviously be welcome, he said. The plan would involve flying the aircraft - a DC8-53 - to New Zealand and flying New Zealanders to Britain after it arrived here. Company director John Rutherford said the Australian leg could be included in the final flight plan if the landing rights were granted in time

On the 13th of November Aqua Avia director and Christchurch lawyer John Rutherford met with the Securities Commission and was presented with a memorandum detailing areas of concern. John Rutherford agreed the society's rules needed amendment to meet the points in the memorandum which included, the apparent ability of the society's board of directors to fix its own and employees' remuneration without limitation, make future levies on members for unspecified amounts at unspecified times and make levies on a discriminatory basis as the directors thought fit. The commission said there appeared to be no limitation upon the directors' borrowing power, or power to enter into commitments on the society's behalf. It also appeared past members of the society would remain liable for debts incurred while they were members

At the end of November Matt Thompson headed overseas completing plans for incoming overseas flights. In a statement before his departure he indicated that 2600 people had signed up as members of the Aqua Avia Society and that discussions with car rental companies, trade union groups, hotel chains and others were expected to bring bulk membership to well over 8000 by Christmas. "Considering all that has been thrown at us in an attempt to keep us grounded the membership figures are excellent," Mr Thompson said. He added that impetus in sales was now obvious and there was no doubt Skybus would fly — all over the world. 

Clouds, however, were starting to build in Skybus' flightpath. The Press of the 1st of December identified a number of hurdles the airline had to overcome... 
  • The sole licensing authority related to the operation of international scheduled services was the Minister of Civil Aviation. According to the International Air Services Licensing Act, 1947, the Minister can refuse a licence if the proposal is not "desirable in the public interest,” if the financial ability of the applicant to continue the service is in doubt, if the proposed fares and charges are unsuitable, and if the safe, orderly and. economic development of international air services in New Zealand might be affected. An all-encompassing provision allows the Minister to include any other such matters as he thinks fit
  • The Civil Aviation Regulations of 1953 required a permit to cover international chartered services. This contains only one provision - a broad one. The Minister may impose any conditions he thinks fit. The Ministry of Transport does not yet know whether Aqua Avia plans scheduled or chartered international services
  • Tariff approvals have to be issued under the International Air Tariff Regulations, 1978, for chartered and scheduled international services. Under these regulations, the Secretary of Transport must have regard to “the public interest,” satisfactory economic operation of international air transport, any relevant international conventions, agreements or arrangements which might bear upon fares, and that all-encompassing criterion again - “any other matter he considers relevant.” 
  • The document “External Civil Aviation Policy of New Zealand”, published in December 1979, specified the role of the national carrier and provided for Government decisions in the event of conflicts of interest. The document says all applications from additional carriers will be judged in terms of the policy’s goals, one of these being the development of a network of air services in New Zealand’s economic interests. To meet these goals New Zealand should have a State-owned international airline, provided that it operated competitively. An efficient airline would save and earn foreign exchange. The operations of a State-owned international carrier could be guided. Given that Skybus would under-cut Air New Zealand and bite into its patronage, affecting its competitiveness and ability to earn overseas exchange, it could be expected that Skybus applications of various kinds would be disallowed on policy grounds
  • An Air Services Certificate was required, for both domestic and international operations. Issued by the Director of Civil Aviation, it ensures Skybus operates up to safety standards. The chief controller, Air Services Policy, Mr J. C. Kennedy-Good, says no other statutory consents are required for Skybus’s domestic service. However, the Minister of Energy must approve any application from the airline, as a new user, for a fuel allocation. If Aqua Avia plans to store fuel in New Zealand it will also have to approach port authorities, or oil companies, or local authorities for consents. Mr Kennedy-Good wondered at storage capacity, recalling New Zealand’s inability during a Pan Am fuel crisis, to berth a relief tanker to help with refuelling problems on the New Zealand leg. Aqua Avia would also have to make arrangements with airport authorities for space at terminals and use of handling equipment. He said that Skybus would not qualify for the fuel refund granted to licensed operators. At 6c a litre this would probably save the society $1m a year on its proposed services. It was this lack of fuel refund that the directors of Skybus - who were also behind the failed airline Nationwide - claimed caused the collapse of Nationwide. Mr Kennedy-Good said aviation authorities in America, Tahiti and Britain would have to grant approvals to Skybus operations. As an innovative venture, it might not gain the semi-automatic approval granted to charter flights. 
Further international plans were announced in mid-December. Skybus director Murray Purchase said Skybus intended to offer fares $144 cheaper than Air New Zealand's lowest return fare to Europe with a projected return fare of $1399 including a one-and-a-half-day stopover in Phoenix, Arizona, subject to approval by the Ministry of Transport. He said the first Skybus flight out of Auckland to Gatwick (London), via Papeete and Phoenix, was expected to leave on the 6th of February 1981 after the first DC-8 arrived from Philippines Airlines. He also announced that a second DC-8 would arrive from that airline soon after, and this would make a similar trip to the UK. Passengers on the first flight would be able to pick up the second aircraft later flights for the return journey. Mr Purchase expected Skybus to operate UK flights at two-weekly intervals. They would operate, he said, with capacity for about 150 passengers. Asked about the proposed domestic operation, which Skybus initially said would start about December 20, Mr Purchase said that had been delayed by the unavailability of aircraft for early delivery. "There are a lot of aircraft on the books of brokers, but a lot of them still flying. They have to be phased out of existing operations," he said. Skybus directors Mr John Yates and Mr Matt Thompson were in Montreal yesterday, discussing the availability of a third DC8 and a DC9 with Air Canada. Mr Purchase said he thought domestic trunk services might begin by the end of April. 

A few days later the Securities Commission announced that they were still not satisfied with the Aqua Avia Society’s revision of its constitution and this brought a further flurry of newspaper coverage. Meanwhile, Skybus’ plan to have a meeting with all interested parties was called off when only the New Zealand Airline Pilots' Association and the Piako Aero Club accepted the invitation to attend. Those who declined the invitation included the Prime Minister, the Minister of Tourism, the chief executive of Air New Zealand and departmental heads of Transport, Treasury and the Securities Commission. 

On the 16th of December the Press reported Matt Thompson saying that Skybus had a firm arrangement with the United States operator, Evergreen International Airlines, to provide the aircraft for the first charters between the United Kingdom and New Zealand.” The first charter, he said, would begin on February 1.

Coming into Christmas 1980 the Aqua Avia Society announced that it had 3000 members as it continued to plan for the first charter flights to the UK in February. It also changed the Society’s rules, deleting the right to issue a special levy on members, limiting the liability of each member to $1 and making resignations effective from the day they were received by the society’s secretary. On the 22nd of December it was announced that Sir Reginald Barnewall, an Australian and a founder director of Polynesian Airlines, had been appointed a director of the Skybus airline. 

On Christmas Eve Skybus applied to the Ministry of Transport for landing rights for its first international charter flight from San Diego to Auckland in late February using an Evergreen International Airlines 252-seat McDonnell Douglas DC-8 Series 63. Matt Thompson said, Initially, just one aircraft would be used. The first projected schedule of flights, planned for late February and March, would be three round trips from the United Kingdom, and two round trips from the United States. Skybus had met a very good response for the initial charter from the United States, and had had an "excellent response" in the United Kingdom. "The whole concept of Skybus has been very enthusiastically received," he said. "The concept is something that's captured the imagination of a number of major operators." The interest shown by New Zealanders who wanted to travel had been very good, but the reaction of the bureaucrats had been indifferent. "We believe that Skybus's concept is very sound and given even half a chance to prove itself it will find a slot in the market because it's very much in the public interest." Evergreen International Airlines, Mr Thompson said, would be taking on New Zealand crews where it could, and after the first month's operation, it was hoped a large proportion of the crews would be locally staffed. 

In early January 1981 additional details were released about the proposed flights to the UK. It was envisaged the complete round trip would take about three weeks, with a turnround in London, and refuelling and rest stops only in Honolulu and Winnipeg. Hotel accommodation for passengers for one night at Honolulu would be included in the fare. Meanwhile a Ministry of Transport spokesman said the Ministry would try to have the application processed well before February 27. By early February not all the paperwork had arrived.  On the 6th of February the air services policy controller, Mr J. C. Kennedy-Good, said that the Ministry of Transport was still waiting for all the necessary papers to be filed. New Zealand’s bilateral aviation agreement with the United States required Evergreen to file a certificate of compliance. This certificate would confirm that all aspects of the proposed flight complied with the charter provisions of the bilateral agreement. Mr Kennedy-Good said Aqua Avia officials and Evergreen officials in the United States had been told by the Ministry of the need for the certificate. But in spite of requests for the certificate there had been no sign of it.

In a surprise move, Skybus directors asked John Rutherford to resign on the 11th of February. When he refused John Yates, Murray Purchase, and David Culham, along with the Aqua Avia Society’s secretary treasurer, Murray Tracy, all resigned because of an inability to reconcile differences between themselves and John Rutherford. These indicated there was little chance of the society’s being granted landing rights in New Zealand while he remained on the Board. The following day Matt Thompson, Skybus' original architect, also tendered his resignation. Meanwhile Sir Reginald said that he had maintained a neutral, position towards the directors. “I am absolutely straight down the line, in my loyalty to the job we are trying to do,” he said. Skybus' standing is unchanged from an operations point of view. It had hoped to make its first flight to San Diego from Auckland on February 27, but this looks unlikely because the charter airline, Evergreen International, has not filed a certificate of compliance with United States-New Zealand air regulations. Nor has it obtained permission from Britain to fly on to that country on future flights. Mr Rutherford said that although he was disappointed a rift had surfaced, he did not expect the resignations to affect the “forward progress” of the society. “It’s business as usual as far as the (remaining) directors are concerned.”

The executive vice-president of Evergreen International Airlines, Mr Don Ufford, said in a telephone interview reported in the Evening Post on the 14th of February that the negotiating position remained unchanged. "I think that both the directors who have resigned and those who remain agree that the concept is bigger than any one of the personalities involved. We are planning to proceed," he said. Mr Ufford saw negotiations continuing with new faces around the table. "We don't intend to withdraw any proposals. We intend to sit down and make sure that we have a course properly charted. "Probably a March 1 start-up is a bit optimistic. However, we see the programme continuing."

Meanwhile the Skybus Board chairman Sir Reginald Barnewell called for a special meeting of members to elect a new board because of the failure of repeated efforts to obtain cohesion among the directors. He asked the two remaining directors, John Rutherford and Waka Kele to step down which they subsequently did. The meeting on the 4th of March elected Sir Reginald Barnewall, David Culham, Jill Grbic, Denis Thompson,  and John Trolove. Former director John Rutherford, was nominated but withdrew. He told the society in a letter that he believed there was some merit in starting with a “clean sheet” in respect of the election. He had also been invited to join a new business enterprise, which might conflict with the interests of the society. On the 24th of April the Press reported on this new enterprise... New Zealand’s ‘first’ overseas air charter service has been approved by the Government, according to a director of the charter company, World Air Charter, Ltd. The Ministry of Transport approved last week an Auckland-San Francisco service to be run by World Air Charter. The charter company is owned by Messrs J. G. Rutherford and W. T. Kele. former directors of the Aqua Avia Society. These flights never happened.

After months of frustration the Aqua Avia Society’s board announced a new plan on the 12th of May 1981. The Society had decided to enter into a two year lease for a 76 seat Vickers Viscount from British Air Ferries Ltd. According to the society’s chief executive, Mr W. M. B. Thompson, three daily flights are planned between Auckland and Wellington. There will be three services a week to Christchurch and Dunedin. Mr Thompson said that the society hoped to be operating in about three months. Skybus' fares, with Air New Zealand fares in brackets, were expected to be; Auckland-Wellington, $99 ($160); Auckland-Christchurch, $150 ($230); Auckland-Dunedin, $195 ($296); and Wellington-Dunedin, $150 ($246). In addition to the aircraft British Air Ferries would provide flight crew and engineers with the aircraft being serviced at night and during weekends. Mr Thompson did not expect any problems in getting the project off the ground. The society had the right to operate the aircraft through an aero club. All the society now had to do was to comply with air safety and navigational requirements. Those, he said, were mechanical requirements which could be met. Mr Thompson said the society also planned to start  international flights. Membership, he said, was almost 6000. A contract was signed for the first Viscount on the 21st of May.  

In June 1981 another Skybus international charter proposal collapsed. The Civil Aviation Division's air services policy controller, John Kennedy-Good, said Aqua Avia's lawyer, Graeme Jenkins, and board member John Trolove sought approval for a charter flight from New Zealand to Queensland - using what is believed to be a Polynesian Airlines Boeing 737. Mr Kennedy-Good says the sort of detail required before approval could be given includes fare charges and what compensation would be available if the flight was cancelled. Such provisions are required under international law. Although Mr Kennedy-Good was firmly of the mind that Aqua Avia had made a formal application for the charter, the society's secretary Mr Richard Lynch, denies an application was lodged. Mr Lynch says last week's meeting was merely a preliminary inquiry, so civil aviation requirements could be learnt. The application would be lodged in the next fortnight, depending on how helpful civil servants were in providing the necessary information, he said. But earlier last week, Aqua Avia's chairman, Sir Reginald Barnewell, said the application for the Queensland charter had already been lodged. He said a flight was planned for August 4 or August 11, and would give society members a fortnight in the Sunshine and Gold Coast areas. 

Evening Post, 8 July 1981

With a lease signed for a Viscount Skybus looked for a 15th of September start date. Not surpsisingly there were problems. On the 14th of July the Evening Post reported that the Piako Aero Club president,  Bruce McCrae, had said no contract had been signed with Skybus. A Skybus spokesman, Mr Derek Little, said this was incorrect. An agreement had been signed on October 13 last year between Aqua Avia and Skybus. He was asked specifically if the agreement meant that Skybus members were affiliated as aero club members, and he replied: "They [Piako] do the carrying, and all Skybus members are members of Piako automatically.” However, when this was put to Mr McCrae today he said the Skybus statement was not entirely right. "What we have is an agreement of intent only.  Further to that, we now have a [proposed] agreement, a more permanent contractual agreement, which we are scrutinising at this time." Mr McCrae was then asked if Skybus members were now members of the Piako club, automatically. "Not at this time, no," he said. He could not be definite on a time when contract negotiations would finish.

In mid August the Associate Minister of Civil Aviation, Aussie Malcolm, was reported as saying “I am concerned that the Aqua Avia Society should state that it will operate its first domestic service on September 18 when it has no authority to do so ” he said. “The society has made a number of announcements about starting dates for its services and in no case has it been ready to start,” he said. “It should be made quite clear that neither British Air Ferries, nor Aqua Avia, nor the Piako Aero Club have applied for any of the operational approvals necessary to permit the safe operation of the aircraft the society proposes to use... “The Civil Aviation Division of the Ministry of Transport has received no application for an air service certificate, nor, in fact, is there evidence that the Aqua Avia members are bona fide members of an aero club affiliated to the Royal New Zealand Aero Club,” said Mr Malcolm. “It is not even clear that the proposed service will be exempt from the licensing requirement of the Air Services Licensing Act,” he said.

On the 2nd of September 1981 a work-permit dispute delayed the Viscount's departure from the UK. According to a spokesman for Skybus, New Zealand House in London has declined to provide work permits for five pilots who were to fly the aircraft to New Zealand. The pilots - three captains and two flying officers employed by British Air Ferries - include two New Zealanders. A spokesman for Skybus, Mr Derek Little, said telegrams had been sent to all Government Ministers asking for an explanation. The airline had also been in touch with the Minister of Immigration (Mr Malcolm), who denied there was any attempt to stop the pilots coming to New Zealand.

The situation raised the ire of British Air Ferries' chairman, Mike Keegan. “New Zealanders are just a bunch of unadulterated savages. They’re the worst people I’ve ever had to deal with. I prefer Ugandans. Even the most uneducated savages have treated me with more courtesy.” Mr Keegan was venting his anger after having heard from New Zealand that his firm's Viscount aircraft, which had been scheduled to fly out last week for delivery to the Aqua Avia Society, had been refused landing rights in New Zealand. He said that he had received a telegram from New Zealand’s Civil Aviation Division saying that the division did not know enough about the matter and needed more time to look into it. “They must be the only people in New Zealand who did not know about it,” Mr Keegan said. “We have had teams of people but there negotiating. There have been newspaper articles, discussions: I don’t, see how they can not know about it. “They are obviously trying to draw our company into the politics of the matter. I am not involved in those politics and I do not care about them. All I want is to be told yes or no. “If they say no, that is fine with me. I will just sack the New Zealanders I have hired. I do not want to be involved in their argument.” "It does not worry me. I am a millionaire several times over. I am going to my yacht on Sunday to sail around the Greek Islands. “But other people are not so lucky. This group of people I have employed here have left their flats, sold their houses: children have left schools because they thought they were going out to New Zealand. They have just been treated like animals.” Mr Keegan said that British Air Ferries employed about 20 people, including 12 New Zealanders, to direct and train air crew and staff in New Zealand to ensure the safe running of the air service. There has been unusual delay and difficulty in getting entry permits for those who needed them to work in New Zealand for several months. Mr Keegan was bitter about the way he said that his company had been treated by Air New Zealand. “I spent almost £250,000 with Air New Zealand having air crews trained. Then when we went to New Zealand they spent 10 days pretending to negotiate and the day we were due to go home handed us an envelope with a letter saying they had now decided not to service our planes. “We operate 27 aircraft in eight countries. In 30 years we have had no accident and we always make a profit. “We understand and follow correct rules and procedures for all the countries we deal with and New Zealand is the only one we have had trouble with.” 

Meanwhile, in Wellington, the Civil Aviation Division's chief controller of air-services policy, Mr John Kennedy-Good, said that an application from British Air Ferries for landing rights in new Zealand was still under review. The main point at issue was that the division was not sure who would use the aircraft in New Zealand. The division had been told by the Aqua Avia Society that the operator would be the Piako Aero Club but there had been no confirmation of this from the club. The division would contact British Air ferries by telex about the matter. Mr Kennedy-Good said, “We have not refused landing rights: the application is under consideration.”

On the 10th of September the Aqua Avia Society was granted a landing permit for its leased Viscount on the condition that it was transferred to the New Zealand register of aircraft before being used by Skybus. On the same day the Piako Aero Club changed its rules to enable Aqua Avia society members to become full members of the club. The president of the Piako Aero Club, Mr Bruce McCrae, said that the club would be applying for the Viscount's air services certificate. "We have got to put the Viscount on our air services certificate apart from our air service licence." Skybus also announced that 24 work permits for British Air Ferries personnel would be sought at the time the aircraft went on the New Zealand aircraft register. Skybus also said that 150 New Zealanders would be recruited and trained by the British Air Ferries staff as soon as the granting of their work permits allowed.

Skybus' Vickers Viscount in British registration at Brisbane, Australia, in September 1981. Photographer unknown

On the 23rd of September Vickers Viscount G-AOHT arrived in Auckland after its ferry flight from the Southend in the UK to Auckland.

Skybus' Vickers Viscount ZK-SKY at Auckland in late 1981. Photographer unknown

Vickers 802 Viscount G-AOHT (c/n 168) first flew on the 20th of June 1957, being delivered the following month to British European Airways as "Ralph Fitch". With the merger of BOAC and BEA it was registered to British Airways on the 31st of July 1973 before being sold to British Air Ferries Ltd on the 15th of June 1981. It was renamed as "Carol." On the 19th of October 1981 its UK registration was cancelled and it was registered to the Piako Aero Club (Inc) as ZK-SKY on the 20th of October 1981. 

The Skybus Vickers Viscount G-AOHT prior to its delivery to New Zealand at Charles de Gaulle Airport, Paris, in May 1979. Photo : J Mounce Collection

The arrival of the Viscount did not solve Skybus' problems. On the 24th Captain Maurice McGreal, assistant director of flight operations with the Civil Aviation Division, told the Press that a meeting had been arranged for Tuesday with the Piako Aero Club, which will run the Skybus service... The Piako Aero Club has therefore become responsible for the service. Mr McGreal said that Tuesday's meeting had been arranged to discuss the realities of the relationship between the regulatory authorities (Civil Aviation) and the operator of aircraft carrying 50 to 60 people. Piako will need an extension of its existing air service licence, which is to fly a three-seat Cessna. For this to be granted Civil Aviation has to approve the Skybus operations manual, training manual, and maintenance manual. It will also have to clarify the responsibilities of those running the service and be satisfied that they are qualified. Under the Civil Aviation regulations the manuals have to be approved page by page, a process which Mr McGreal said would take more than a few days. He said that although the Piako proposal had been in the wind for some time “quite frankly never until this time have things tightened up to the point where they understand what they are required to do.’’

In October a number of first flight dates came and went as the paper wars continued. Meanwhile check-in facilities for Skybus were approved the Auckland and Wellington airport terminals.

Evening Post, 3 November 1981

A closer look at the proposed Viscount schedule

Finally, on the 4th of November 1981, Skybus' Viscount ZK-SKY took to the skies flying from Auckland to Wellington, Christchurch and Dunedin with touch and goes at Hamilton, Palmerston North and Invercargill. Under the command of Captain Mike Watt, the chief pilot of British Air Ferries, the plane was due to make an early take off from Auckland and land at Wellington, Christchurch and Dunedin. In addition, it was to make "touch and goes" (touch the runway and take off again) at Hamilton, Palmerston North and Invercargill. The purpose behind the flight was to familiarise the three captains and two first officers on board with the airports that Skybus will service. It was not a commercial flight and there were no passengers. However, just before the flight was due to take off, Skybus found that it needed a licence for its radio transmitters. An airline representative had to hurry off to the Auckland chief post office to complete the formality. The delay meant that the Viscount did not touch down at Wellington until 2pm, four and a half hours late. As an aside I had a university exam and couldn't get to Christchurch airport to see the Viscount's arrival. I found out later the Viscount was so late I would have been able to see it.

The Dominion, 21 November 1981

Two Skybus hostesses, Elaine Batchelor, of Essex (left) and Viv Bird, of London, give the thumbs up to the airline’s 76-seat Viscount aircraft on its arrival at Christchurch Airport on 4 November 1981. Source : The Press, 5 November 1981

Meanwhile, the airline kept working towards obtaining its air service certificate from the Civil Aviation Division. The Division suggested changes to the wording of contracts drawn up between the Piako Aero Club and companies providing services to Skybus. On the 12th of November Skybus submitted its final documentation to the Civil Aviation Division which related to  contracts for the maintenance and servicing of the Vickers Viscount aircraft. 

Meanwhile, in an unexpected move, on the 12th of November 1981, Sir Reginald Barnewell and Lady Barnewell used the Viscount to fly to Wellington on a business trip. The Press reported Sir Reginald saying the aircraft was on lease to Skybus at a cost of $8000 a day, whether it flew or not. It had been sitting on the ground so long that one of the British Air Ferries pilots was faced with running out of licence time unless he flew the machine. It was a business trip to Wellington, and two people had to be picked up in Hamilton. So it made good economic sense to fly the Viscount down. The only cost was the fuel used.

Another photo of Skybus Vickers Viscount ZK-SKY at Auckland in late 1981. Photo : J Mounce Collection

On the 16th of November the Director of Civil Aviation, Captain E T Kippenberger, approved an air services certificate for the Skybus operation, however, another disaster was looming. On the 19th of November 1981 the Minister of Immigration, Aussie Malcolm, announced that after taking legal advice he had refused work permits for Skybus' English aircrew. The inaugural flight was scheduled for the following day, leaving Auckland at 5pm and arriving in Wellington at 6.20pm with the return flight due to leave Wellington at 7pm, arriving in Auckland at 8.20pm.  The Minister said, "I have now been given legal advice that the pro-posed Skybus operation appears to be a breach of the Air Services Licensing Act." Mr Malcolm said he was not prepared to issue work permits for an activity that appeared to be in breach of the law. "Skybus appears to have reached checkmate unless they now apply for an air services licence," he said. "This is the course of action that has been consistent-ly recommended to them; is clearly set out in the law; and is followed by every other commercial airline in New Zealand." 

Auckland Star, 21 November 1981

Piako spokesman Mr Gibson said he was surprised by the minister's move. "This is the first indication we have had from the Government that they consider it an illegal operation. We believed we were conforming to the law and the regulations." He said a barrister and solicitor had worked overnight on the legal questions to see if Skybus was in breach of the regulations... An Auckland report through the Press Association today quoted a "some-what embarrassed" Mr Malcolm as strongly denying  that the blocking of the work-permits was a last minute ploy to prevent the airline getting off the ground. He said negotiations had been continuing over the permits for some time and the final information he required was only received from the Skybus staff on Wednesday. "I am most concerned to see that cabinet and myself are not made whipping boys over this." Mr Malcolm said that what it boiled down to was that Skybus had used a highly complicated and legalistic loophole in setting up the airline. It had been made plain to them by the Government all along that if they were to succeed, they would have to comply with other requirements in a meticulous way. A further blow to Skybus came yesterday with another batch of resignations. Mr Richard Lynch resigned as general manager of the Aqua Avia board and as a director of the society and Mrs Jill Grbic, the sales director, also resigned. 

Aussie Malcolm playing with Skybus... Evening Post, 25 November 1981.

In response Skybus went to the High Court for a declaratory judgment on whether its operation was legal. When Aussie Malcolm was informed of this he realised that it would take about two weeks for the High Court decision to be made, so, in his words, "I decided on the spot to issue temporary permits," Mr Malcolm said. "They can fly immediately." This enabled Skybus' first, non-revenue return flights between Auckland and Wellington, to operate later that day on the evening of the 20th of November 1981. 

The flight left Auckland for Wellington at 5.18pm yesterday under the command of Captain Mike Watt and co-pilot M. J. Castell-Spence. In the cabin were New Zealanders Anne Farmer and Judy Parry.  On board were 34 passengers made up of Skybus staff, members and media representatives. The plane landed in Wellington at 6.35pm and stopped at gate nine where Air Pegasus technical director Bert Harris was the first to disembark. Passengers were carried free on the flights and among them were Auckland couple Patrick and Doris Cavanagh. "It was a beautiful flight. We'll certainly be doing it again and we were prepared to pay for it," Mr Cavanagh said. Passengers were served wine, tea, coffee and club sandwiches during the flight. Most returned to Auckland to complete the round trip after being shouted drinks at the airport bar. 

Forty-seven passengers were on the Viscount when it left at 7.30pm to return to Auckland. Among them were Murray Hunter, his wife Vicky and their four children. Mr Hunter had sold his business earlier this year to sell membership for the Aqua Avia Society. "It's an enterprising Kiwi having a go," Mr Hunter said of Skybus. "I've got faith in it, that's for sure." "It's the first step," Captain Watt said of last night's flight from Auckland. "It's not the war over and done with, but it's certainly an important first step down the road." 

The following day the Evening Post of the 21st carried an interview with Aussie Malcolm... Asked today whether he had consulted with Government colleagues before changing his mind on the crews' work permits, Mr Malcolm said the decision was his, and his alone. The "Post" also put it to the minister that by issuing permits, he was still condoning an operation that he believed to be illegal. He said this was "a subtle way of changing the issue." He said the reason for his change of mind was that Skybus executives had indicated to him that they were prepared to seek a judgment from the court - and this was what the Government had been wanting them to do all along. 

There’s been a strong tendency by Skybus and supporters to paint me as a representative of government hostility who is trying to block the operation," he said. "Nothing could be further from the truth." Mr Malcolm said the legal question of whether Skybus needed a licence under the terms of the Air Services Licensing Act was one that had been "thrashed to death millions of times" since the cut-price airline was founded last year. Skybus had consistently refused to go for a licence and had consistently said they did not need a licence. Mr Malcolm said the courts should now be able to sort out that point. "When Skybus said yesterday that they would prepared to go to the court I was quite happy to give them the benefit of the doubt," he said. "The court moves will unravel the whole argument of Skybus." 

The minister has been accused this week of making an 11th hour move to block Skybus, in that he waited until the day before it was due to make its inaugural flights before announcing that the crew would not get work permits. But he denied this, saying that he was only furnished with important information from Skybus this Wednesday. Asked today what this information was, Mr Malcolm said it was a response from the Skybus aircrew as to nature of their employment detailing that they were members of the Piako Aero Club and that they were not working for a commercial air service. Mr Malcolm said his legal advice were that they were not, in fact, members of club as stipulated in the rules, and that the airline was, in fact, a commercial operation. It was on this informs that he based his initial decision against granting work permits. 

Mary-Ellen Barker, who travelled on the first Skybus flight, wrote a piece for the Auckland Star which was published on the 21st of November 1981... At the airport, right on time for check-in, grinning Air New Zealand staff directed us to "the hole in the wall round the corner." Which was not so much sour grapes, as the literal truth. The ticketing staff were framed by wiring sprouting out of the walls, bare gib and two workmen on saw stools in a last-minute rush to put the Skybus sign up. It was enough to make even the most relaxed of air travellers feel a little damp-palmed. But jostling round the counter for elbow room were many more enthusiastic Skybus staffers than eager passengers. Even the off-duty British Air Ferries stewardesses had slipped into their white gloves, navy suits and felt hats for the occasion, their first official appearance after eight weeks of thumb-twiddling in Auckland. The uniforms, like the crew, came with the plane in a British package. Skybus uniforms, said the stewardesses confidently, will be lighter, to suit the New Zealand climate. 

The Skybus Viscount ZK-SKY at Wellington on 21 November 1981. Photo : Evening Post

One Skybus member, waiting for the boarding call, said: "It's all just a repetition of the pirate radio business. "The Government did everything they could to stop it, till the people got fed up and said leave it alone." If that was the case, certainly more pirates than passengers were on the flight. Only six members were aboard. The other 27 passengers were mostly Skybus staffers or their families, with a sprinkling of reporters and cameramen. The plane itself, with a red, white and blue Skybus logo, was discreetly tucked away at the farthest-flung departure gate, with hardly an Air New Zealand koru in sight. Inside, it was not much different to any other once-familiar NAC Viscount. Only the safety instructions with a few lines translated into Arabic and the overhead fans every few rows of seats, showed it was foreign. The hostess welcomed us aboard on behalf of the Piako Aero Club, and the muzak was definitely jazzier, with occasional bursts of disco and reggae. 

A round of cheering and clapping marked take-off and landing. Seats were comfortable, with plenty of leg room. The wine flowed freely, despite some anxious moments before take-off with a stubborn keg tap, and the atmosphere of an office picnic came with the club sandwiches. Passenger Mrs Elsie Neal, from Beachlands, said: "It's a good way to kick my heels up. "I knew I was taking a bit of a gamble - if it went ahead, I was lucky. If it didn't, too bad." But Captain Mike Watt pointed out that one swallow does not make a summer. He had been amazed at the tangle of red tape that kept Skybus on the ground. "We're operating in a sensitive area. The Government feels it has to be sure. My attitude is that their caution is understandable, and we'll be doing everything we can to make sure we're operating within the law." An hour and 20 minutes later, Flight 04 reached Wellington. First sight inside the terminal, a toy rocket machine with a small boy inside. The sticker on the side read: "I'll tell the world I fly Skybus." 

A second Skybus non-revenue flight for society members and staff flew into Wellington from Auckland on the 21st of November. The Viscount landed at 6.20pm and left again for Auckland, at 7.25pm with 68 passengers on board. While the airline had limped into the air it still had numerous problems to overcome. The most pressing of these was $8000 a day the leased Viscount cost and the need of nearly full loads to recoup costs and overhead expenses. 

Skybus had hoped to commence scheduled services on Monday the 23rd of November. Legal concerns , however, held that Skybus was placing its passenger insurance cover at risk by carrying paid-up passengers before the High Court judgment was heard. The Piako Aero Club was also concerned about the possible repercussions of operating a service which could be found to be illegal. This necessitated the cancellation of the first revenue flights from Auckland to Wellington and Christchurch and return on the morning of the 23rd. It was hoped the afternoon Auckland-Wellington-Auckland flight would take off but this too was cancelled, Aero club spokesman and Aqua Avia director Mr Charlie Parsons said he had received legal advice assuring him the insurance policies were in order. But the declaratory judgment was another matter. "We have never acted outside the law and we never will," Mr Parsons said from Morrinsville. Mr Parsons said he was optimistic about the hurdles delaying passenger-paying flights. "We have overcome countless obstacles setting this thing up," he said. "I am optimistic we can overcome these ones. One has got to be positive."  

On the 24th of November 1981 Skybus cancelled all scheduled services until further notice after Skybus officials failed in their attempt to persuade the Secretary for Transport, Mr A J Healy, to hold off his threat to prosecute if fare paying passengers were carried. British Air Ferries Mike Keegan, who was in New Zealand, refused to comment until after he had held talks with Skybus and Piako Aero Club officials.  

The following day Skybus announced that it would seek an air services licence as a completely restructured company thereby ending its year-long attempt to bypass the Air Services Licensing Authority using the Aero Club loophole. It was also announced that within a few days the Viscount, ZK-SKY, and its crew would leave New Zealand for Indonesia. The lease of the Viscount had cost the Aqua Avia Society $500,000 from the time it had departed from the UK. Mr Keegan said his company had a two-year, $6 million lease arrangement with Aqua Avia "but we let them off the hook because we do not wish to make anyone broke because of a few mistakes." The Piako Aero Club, which was to be the vital link in Aqua Avia's attempt to get an new air service established without having to go through the Air Services Licensing Authority, has no role to play in a normal application. The application will be made by Skybus Ltd whose major shareholders will be the Aqua Avia Society and British Air Ferries. While the controlling interest in the company will remain in New Zealand hands British Air Ferries will provide the expertise and some of the capital to run the airline. 

Mr Keegan, who said he expected to be on the company's new board of directors, could not say how much his company was prepared to invest in Skybus Ltd. While his company's investment would be substantial it would also provide aircraft for any routes for which Skybus was granted a licence. He suggested that it would take between three to six months to get an application before the Air Services Licensing Authority. The secretary of the Aqua Avia Society, Mr Brian Shackleton, said at a news conference that the decision to seek a licence was a step in the right direction. The society intends to develop "post haste" the advantages of its large membership in obtaining discounted goods and services, such as rental cars and accommodation. The vice-chairman of Aqua Avia, Mr David Culham, said that the 30,000 membership was a significant advantage in negotiating group discounts. If Skybus is successful in gaining a domestic air service licence, all members of the public will be able to travel, but it is envisaged that Aqua Avia members will be able to do so at a substantial discount, he said. 

By the end of month the Aqua Avia Society was seeking unpaid subscriptions to further the process of applying for an air service licence and the continued viability of the society. The battle, however, was lost. Staff lost their jobs in early December and the request for unpaid subscriptions largely went unheeded. Attempts at holiday package deals overseas failed. The final nail in the coffin came at the end of 1982 when an order was been made in the High Court at Auckland for the winding up of the Aqua Avia Society. Mr Justice Vautier granted an application for winding up by the Inland Revenue Department which was owed $37,743. 

Meanwhile, on the 30th of November 1981 the Viscount ZK-SKY was registered to British Air Ferries (NZ) Ltd, Auckland. The following day it departed Auckland flying to Indonesia where it was operated by Bouraq Indonesia Airlines. It's New New Zealand registration was cancelled on the 8th of December and it was placed back on the UK register as G-AOHT. 

On the way to Indonesia... ZK-SKY at Brisbane in December 1981. Photo : J Mounce Collection

On the 31st of March 1982 it set out on its return to the UK where it saw service with a number of British airlines. Its Certificate of Airworthiness expired in May 1986 and it was placed in storage before being at Southend in March 1991.

After its time with Skybus, a couple of photos of Vickers Viscount G-AOHT... with Euroair at Luqa, Malta, in November 1984

After its time with Skybus, a couple of photos of Vickers Viscount G-AOHT... with Virgin at Gatwick, London, in May 1985

So ended an optimistic and colourful chapter in aviation history. As a final postscript the Air Services Licensing Amendment Bill was passed in November 1983 opened the way for competition for New Zealand's domestic and international air services. One wonders what would have happened if Skybus had been able to take to the air under the new regulations and hadn't been strangled by legal loopholes.

People included : 

Aqua Avia Secretary Treasurer - Richard Lynch, Brian Shackleton, Murray Tracy

Chief Executive - Matt Thompson

Directors - Sir Reginald Barnewall, David Culham,  Jill Grbic, Waka Kele, Richard Lynch, Murray Purchase, John Rutherford, Denis Thompson,  John Trolove and John Yates

Flight operations - Captain Bill Kirk

General Manager - Richard Lynch

Ground handling - Mr Ken Gibson

Hostess - Elaine Batchelor, Viv Bird, Anne Farmer and Judy Parry

Maintenance - Mr Jack Carr 

Pilot - Mike Watt, M. J. Castell-Spence

Sales Manager - Frank Thompson

Spokesperson : Derek Little 

Technical co-ordinator - Squadron Leader John Trolove. 


  1. Another outstanding and comprehensive article Steve, well done, I remember all this going on but didnt fully understand it until now

    1. Thank you so much... I was very much the same. It's important our airline history is preserved

  2. That was a massive effort. Something I had only vague recollection of.

  3. Anthony (Tony) PorterMarch 23, 2024 4:42 PM

    I clearly remember this whole saga as it unfolded back in the early eighties when I was a young commercial pilot and a saga which you've obviously thoroughly researched and chronicled so accurately and articulately; and thanks to your literary genius Steve, I now know the full story of this unfortunate example of how government driven bureaucratic BULLYING and blatant obstruction, ruined what should have been a huge success story and a venture that would have benefitted thousands of decent, hard-working, thus deserving New Zealanders.
    Governments (and their staff) are supposed to work to benefit the citizens who elect them to office, not obstruct and subjugate them with their assumed 'authority'.
    After reading this superb account of the events which inevitably led to SkyBus's planned and guaranteed failure, I now despise them even more!

    Thank you Steve - GREAT work, at least worthy of some kind of literacy accolade.