Problems For National Airways

Press, Volume CI, Issue 29908, 23 August 1962, Page 12

Problems For National Airways

In all the circumstances, the National Airways Corporation ended its 1961-62 year in better financial shape than might have been expected. For the net loss of £96,182, compared with a net profit of £51,483 in the previous year—the first reverse of its kind since 1950-51—the corporation may blame the Government rather than any administrative shortcomings of its own. It is unfortunate for the corporation that reequipment with modern, expensive aircraft has coincided with a general increase of economic stresses and with intensified efforts by the Government to make airport and airways services as self-supporting as possible. The corporation can point with justifiable satisfaction to the continued growth of its services; but its worries have been aggravated tremendously by the inadequacy of airports, navigation aids, and other amenities that must be provided in advance of better aircraft.

For an undertaking of its size, the corporation was already committed to sufficiently heavy reequipment expenses without the unforeseen levying of an additional £300.000 in customs duty on new aircraft. The corporation’s anxiety about the effect of airport and airways dues has increased progressively since the dues were introduced in 1954. This burden has more than quadrupled in the last six years, and is now 8 per cent. of the corporation’s operating revenue. Already, the corporation is suffering from a decline in public patronage —something at least partly attributable to higher fares, which result in turn from higher costs. In April the Minister of Civil Aviation (Mr McAlpine) announced that airport and airways dues would be. increased again from October 1: and the corporation seems to have good reason for concern about the decision This year the entire system of dues is under review by a Government-appointed committee; but no recommendations have yet been announced.

National Airways » can take pride in the fact that its profits have been earned

after the payment of ordinary taxation and interest on capital, and without concealed subsidies on freight or mail. The legislation under which it operates, however, lays upon it a duty to satisfy public needs in a way no privately-owned organisation is ever expected to do. This creates financial problems that may not be solved by strict adherence to the normally desirable principle of “ making the user pay ”, It is reliably estimated that 60 per cent, of the corporation’s passengers pay their own fares; and fare increases to cover operating difficulties may well prove self-defeating. Clearly, the corporation cannot jeopardise its record of safety and efficiency in any attempt to improve its finances. Because New Zealand civil aviation seems to be entering a period of unprecedented demands for additional facilities and services, it may be necessary for everybody to adopt a less businesslike but more realistic attitude towards the profit-earning capacity of National Airways.