FLIGHTS LAST YEAR ONLY HALF-FULL

Press, Volume CIII, Issue 30534, 1 September 1964, Page 3

FLIGHTS LAST YEAR ONLY HALF-FULL

S.P.A.N.Z. Seeks 25 p.c.

Reduction In Fares (Neu? Zealand Press Association) WELLINGTON, August 31. On an average, each flight made by South Pacific Airlines of New Zealand, last year was only half-full, the general manager (Captain R. D. Daniell) told the Air Services Licensing Authority today. S.P.A.N.Z. is seeking approval for a 25 per cent cut in fares for a restricted number of passengers in D.C.3 Viewmaster aircraft between Auckland, Wellington and Christchurch.

Fares- for children would remain at half of the existing level of adult fares.

Members of the authority are Messrs G. H. Lusk (chairman), W. H. Smith and T. W. White. Mr M. F. Chilwell (Auckland) appears for S.P.A.N.Z. Objectors to the application are National Airways Corporation, represented by Mr R. B. Cooke, Q.C., with him Mr S. G. Lockhart, the Railways Department (Mr B. J. A. Cathro), and the Auckland Clerical Workers’ Union (Mr D. Jacob). Mr F. Young holds a watching brief for the Department of Civil Aviation. Captain Daniell said his airline’s load factor for the year ended June, 1964, was 53 per cent, which was less than the figure for the,previous year. S.P.A.N.Z. needed a load factor of 62 per cent to “break even.” He had refused to disclose the load factor for last year on the grounds that the figures had not been audited and to reveal them in public would be doing a disservice to the shareholders. He was willing to reveal them to the authority in camera, said Captain Daniell. Mr Lusk ruled, after application by Mr Coooke, that the figures should be made public. Cheap Seals Appearing for S.P.A.N.Z., Mr Chilwell said the company would deliberately restrict the number of seats released at the cheap rates. This would protect the number of seats required in en route centres served by the airline. S.P.A.N.Z. would continue to fly the same routes, which did not include a direct Auckland-Wellington service, but it considered that some passengers would prefer to take the longer route, at the cheaper rate.

S.P.A.N.Z. proposed the reduced rates should be known as “trunk piston fares,” said Mr Chilwell. Under its plan the company would charge £5 12s 6d single for the Auckland-Wellington sector and £3 12s 6d for Wellington-

Christchurch. The AucklandChristchurch flight would cost £8 12s 6d. The present fares for these sectors are Auckland-Wel-lington, £7 10s: WellingtonChristchurch, £4 16s; Auck-land-Christchurch, £ll 10s. Mr Chilwell submitted that it was fair and reasonable that passengers flying in unpressurised piston-engine aircraft should be allowed to travel at cheaper rates. Hopes Of Profit If the special fares asked for were granted and resulted in more passengers equivalent to only 2 per cent of present traffic over the Auckland - Wellington - Christchurch route, then S.P.A.N.Z. would make a profit. Captain Daniell said N.A.C. had demonstrated a “destructive intent” in its competition with S.P.A.N.Z. in the specialised fields of scenic flying and charter work which S.P.A.N.Z. had developed and hoped to do well in.

He said if the authority felt there should be unrestricted competition in these

fields, it should also agree there should be some competition on the main trunk air routes of New Zealand. 200 A Week Captain Daniell said S.P.A.N.Z. needed about 200 additional fares a week to become an economic airline, which it would get if its application was granted. After questions about S.P.A.N.Z’s losses since it began operations in 1960, Mr Cooke said the company had lost about £200,000 and had debts of something over £lOO,OOO, but still came forward with an application to reduce fares. Captain Daniell agreed that this was so. He said that if the application was successful the company would be in a position to carry on. Mr Cooke asked if the application had been endorsed by Mr Ansett. Captain Daniell said the proposition had been developed by the company and had

been first discussed with the minister three months ago. Mr Cooke: Do your shareholders know about it? Captain Daniell said the shareholders were being informed today by circular of the application. Load Factor Captain Daniell told Mr Cooke that S.P.A.N.Z.’s load factor for the year ended June, 1964, was 53 per cent, a lower figure than in' the previous year. “We have had difficulty in maintaining an economic load factor. If this application is granted we expect the load factor to be in the range from 68 to 70 per cent,” said Captain Daniell. Mr Cooke: Has the company ever in its history achieved a load factor anywhere near that? Captain Daniell: No. Captain Daniell said S.P.A.N.Z. had reason to believe there would be a demand for the cut-rate flights. Late service flights operated previously by S.P.A.N.Z. had a load factor of about 60 per cent. The service was abandoned because of operational difficulties. From Railways Captain Daniell suggested that N.A.C. would provide only a small proportion of cutrate travellers. The others would come from those who would normally use private motor-cars and the railways. Captain Daniell said S.P.A.N.Z.’s application was based on the fact that the company needed additional revenue. Captain Daniell said there was no need for N.A.C.'s heavy profits from the main trunk routes to decline because, with its Friendship aircraft, the secondary services would become progressively more economical. Gift Of Shares Captain Daniell said that Mr Ansett now held no shares in S.P.A.N.Z. All Ansett's share certificates had been handed to the company’s secretary and the New Zealarid board had been invited to make recommendations as to how the shares should be distributed and under what conditions to the staff. No documents had yet been signed, no deed of trust drawn up, but the share certificates had been formally handed in.

The board was now considering setting up a provident fund or a trust. The intention of Mr Ansett’s gift was clear. The gift was genuine. Apart from members of the staff, 850 members of the public held shares. These would be minority interests now. Captain Daniell told Mr Cooke there was no question but N.A.C. would be able, to take oyer S.P.A.N.Z.’s commitments, but he would not agree that it would be cheaper for the country if N.A.C. did so. I (Proceeding)