Air NZ tallies Ansett grief

By Phil Boeyen, ShareChat Business News Editor

Tuesday 17th April 2001

The grounding of ten Ansett 767s is estimated to be costing Air New Zealand (NZSE: AIRVA) up to A$2 million a day, although the airline says it's too early to give an exact figure.

Air New Zealand chairman, Sir Selwyn Cushing, says claims in the Australian media that costs of the disruption are running at A$2 to A$5 million per day are speculation and are not based on figures provided by the company.

"It is still too soon to estimate reliably the daily costs being incurred by the disruption to services, but those costs are not expected to reach the lower end of the range suggested."

Sir Selwyn issued the statement following intense media pressure on the airline over the Easter weekend after ten of Ansett's Boeing 767 aircraft were grounded on Thursday evening.

Although many passengers had their holiday plans disrupted, Sir Selwyn says around 95% of the 132,000 people booked to travel on Ansett Australia flights between Thursday and Sunday were carried on aircraft provided by Ansett and Air NZ.

"The grounding affected 20% of Ansett's total passenger capacity. It was quickly replaced by aircraft leased from Air NZ, Singapore Airlines, Qantas, Air Canada, Emirates and Impulse.

"This has meant that throughout Easter almost all of Ansett's passengers have reached their destinations, with most delays lasting less than one hour and many passengers arriving on schedule."

Air NZ CEO Gary Toomey has criticised Australia's safety body, the Civil Aviation Safety Authority (CASA), for singling out Ansett for attention, and this has been backed up by Sir Selwyn.

"It is disappointing that Ansett's own advices to CASA and the systemic improvement being achieved in the maintenance area have not been sufficient to dissuade CASA from the current public and regulatory spotlight on Ansett's maintenance."

However Sir Selwyn says the group's main focus for the immediate future is to co-operate with CASA's investigation and ensure that aircraft are returned to operation as soon as possible.

"Last night, CASA was close to completing its check on the engineering and maintenance documents for each of the 10 grounded B767s and about to commence its physical inspections of the aircraft.

Sir Selwyn says the grounded Ansett Australia B767 aircraft should be cleared for return to operation in the near future, and he is confident the airline will retain its air operator's certificate.

"The present situation highlights the importance of fleet renewal plans for Ansett which the board will consider in the near future."

Although the operating costs of the Ansett grounding are yet to be finalised, what will be more difficult to estimate is the damage to the company's credibility.

With safety a major concern for all air travellers, Ansett will be under continued pressure to convince the Australian public and travel industry that its maintenance is up to date.

However the grounding has also hit at the airline's ability to deliver its product on time - another vital component of any airline's service, especially amongst the lucrative business market which Ansett is desperate to hold on to.

Factors to watch for in coming months will therefore not only be market share but also how much marketing money the airline needs to spend to stem the potentially huge loss of business.

In early trading Air New Zealand A shares have reached a new low of 94 cents a share, down 7 cents from last Thursday's close.

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