STATE AIRLINE OPERATIONS

Press, Volume XCI, Issue 27603, 9 March 1955, Page 14

STATE AIRLINE OPERATIONS

YEAR EXPECTED TO SHOW LOSS

ADDITIONAL COSTS OF £177,000 (From Our Own Reporter) WELLINGTON, March 8.

It is expected that in the present financial year ending March 31 the National Airways Corporation will show a loss.

Airways and airport dues, which came into force on April 1 last year, will cost the corporation about £96,000. These charges bear heavily on the corporation, because they are based on the number of passengers carried. Another major factor will be increases in wages for pilots, ground staff, and office staff. Direct and indirect consequences of these increases are expected to mean an additional £Bl,OOO in expenses this year. Although the chairman of directors of the corporation (Sir Leonard Isitt) said today that he could make no comment until the balance-sheet was completed, it appears that a loss is almost inevitable; Additional charges amount to £177,000, against the recorded net profit last year of £44,717. Set against these increases. in expenditure will be additional revenue gained from fare increases applied on January 1, 1954. It was estimated that those increases would bring in £llO,OOO to the corporation each year. Better economy of operation is also expected to be derived from the added seating capacity of the DC-3 aircraft, which was increased to 26 seats from August, 1954.

The corporation said in its annual report to Parliament last year that “further expansion of passenger and freight traffic can also be anticipated, but the budget outlook for 1954-1955 has become marginal as a consequence of the heavier expenditure burden.” The problem of replacement of aircraft also faces the ' corporation. No decisions have yet been made to purchase new aircraft, but the most suitable machine for New Zealand conditions appears to be the Vickers Viscount airliner. The average cost of a Viscount is £300,000, and to replace its antiquated fleet of 21 DC-3’s with these machines will mean a heavy financial loss to the corporation for years to come.