Airline Loss Explained

Press, Volume CII, Issue 30191, 24 July 1963, Page 16

Airline Loss Explained

(N.Z. Press Association) WELLINGTON, July 23.

Surprise that the chairman of South Pacific Airlines of New Zealand (Mr J. F. Johnston) could read into the National Airwavs Corporation annual report that S.P.A.N.Z. was “one of the major factors in bringing about the loss sustained by the corporation during the financial year,” was expressed today by N.A.C. chairman of directors (Sir Andrew McKee).

In a statement today. Sir Andrew McKee said the reference to S P A N Z. in the annual report was clearly in only one particular respect—uneconomic services "This section of the report quite clearly indicates two main reasons why services on secordary routes were uneconomic

“The first of these, which was emphasised as being of vital importance was the un-

economic cost of operation of DC3 aircraft on secondary services. The report said this situation could be corrected by the speedy completion of secondary airfields. "I* is the second point listed under uneconomic services in the NA C report, •said Sir Andrew McKee “which dealt with the effect the! SPA.NZ had on the corporation’s operations ’’The reference to S P A N Z in full reads: ‘The second ireao.nl is the effect of the operations of South Pacific Airlines of New Zealand. Ltd Although this company serves places which are not being served by the corporation, it also traverses directly or indirectly a considerable portion of the corporation’s secondary route structure with a consequent sharing of traffic. 1 * Sir Andrew McKee said Mr Johnston had read tar mon into this section of the report than it contained. Sir Andrew McKee asked reasons for N A C's current loss They included:

(DA 2 per cent, decline in traffic (2) The higher level of airways and airport dues <3 The effect of the Aramoaoa. particularly on North Island - South Island services.

(4) The low use of Friendship aircraft on secondary routes because of the slow development of airfields. (5) High standing charges associated with heavy depreciation and high interest on capital investment

Sir Andrew McKee questioned Mr Johnston's statement that the SP A N Z general route alignment was completely different from that followed by N AC A. ough SPA.NZ. certainly supplied some connecting passengers for N A C. services.” he said, “we believe that an examination of their route structure will indicate that they must necessarily deprive the corporation of a greater number than they supply “It is true that SPA.NZ might not fly routes which are parallel with the corporation’s in every case, but they do in fact, service the same points of origin and destination as do many N A.C services.

“Therefore. S.PANZ. while not one of the most serious causes of our financial loss nevertheless certainly deprives the corporation of passengers and assisted N A C to present an unsatisfactory balance sheet for the recent financial year,” he said.