Expert Backs ANZ Strategy

An aviation expert says Air New Zealand’s strategic moves leave it well-positioned to survive any impact from the US-led conflict in Iraq.
Professor Nawal Taneja, chairman of the Aerospace Engineering and Aviation Department at Ohio State University, is here to run an Air New Zealand-hosted aviation symposium in Queenstown starting next Monday.

Appearing on TV One’s Telstra Clear Business programme this morning Professor Taneja said he believed Air New Zealand was better-placed than most airline operators to emerge untroubled from the Iraq war.
“A number of the conventional airlines, or as we call them legacy airlines, have been in trouble long before this Iraq war or even September 11, 2001,” he said.
“The positive side of it (the war) is that it really does now provide an opportunity for some of these airlines to restructure themselves and go through the problems that cause them to be where we are today.”

He emphasised Air New Zealand was already well ahead in this regard.
“The reason I think that they have a greater chance of success is that whereas in the past when conventional airlines tried to do low-cost subsidiaries it was more window dressing,” he said.

“They did not really re-engineer the costs out of it on a permanent basis and from what I can tell they (Air New Zealand) have done that. So from the figures that I see, they`re able to make a return on the new airline’s operations. In other words even with lower fares they`re able to make a return because they really have taken the process and cut the costs on a structural basis. So that part of it is very healthy.”

Appearing on the same interview, Air New Zealand’s Chief Operating Officer Andrew Miller said there had been a 5-10 per cent drop in forward bookings on some routes.


However, he said the airline wasn’t concerned.

“We`ve got two good tools in our kit, a new re-engineered Express model, single class but keeping what the business traveller regards as important,” he said.

“We managed to reduce fares between 20 and 30 per cent and domestically we`ve seen a 20 per cent uplift in domestic travel and that has put us in a really good, strong position in regards to the current situation.

“And we have Freedom, a value-based airline, flying on the Tasman with significantly good results and we believe with these two tools that we do have, one on the Tasman and one domestically, we are well positioned to ride through this storm.”

Professor Taneja also said he supports the concept of strategic alliances.

“For a small airline to survive in the emerging world of the airline business there`s no question we have to have strategic alliances,” he said. “Strategic alliances vary all the way from just having commercial agreements of sharing seats and buying seats on one another to actually having equity, ownership in that. For small airlines that`s the only way to go.” Mr Miller added: “I think it (the war) underpins the strategic long term reasons for our partnership with Qantas.”