Value of Air N.Z. merger queried

Press, 13 September 1980, Page 7

Value of Air N.Z. merger queried

PA Auckland The Air Services Licensing Authority has . been asked to press for a clear picture of the financial relationship between the domestic ana international wings of Air New Zealand. The member of Parliament for Sydenham, Mr John Kirk, made submissions to the authority when it heard an application from Air New Zealand to abandon some of its domestic services and reduce others. Speaking as chairman of the Labour caucus committee on transport, Mr Kirk said the taxpayers’ airline was seeking to make dramatic changes without declaring its correct economic position. Information given so far had obviously been incorrect. Mr Kirk said the authority should be given access to a confidential report on the benefits of the Air New Zealand merger with the National Airways Corporation.

There ~ was widespread concern, he said, that domestic business was being used to subsidise the inter-! national side of the airline. Nearly $l5 million was being collected from internal travellers by the jet fuel tax and the domestic air travel Jtax. Yet $l6 million was ibeing provided for a share increase by the Government in a bill before Parliament to assist with buying 747 jumbo jets for international travel. | The authority, Mr Kirk said, should be concerned that proof of no cross-subsi-dising has been given and that no evidence was offered that the merger was a sucjcess. He believed the proposed cuts would result in new costs if crews had to stay overnight away from home. Twenty-eight pilots, their families and households, had! been moved from Wellington! to Auckland at a very significant cost after the merger, 1

Mr Kirk said. Now, domestic pilots had to stay overnight in Wellington at a probable cost of $260,000 a year. Decision-making in the airline was defective, said Mr Kirk. Much of the airline’s costs were self-in-flicted, created by some senior executives and rubberstamped by the board. Mr Kirk’s submissions led | to the authority’s chairmans (Mr J. H. O. Tiller) asking J counsel for Air New Zealand: to prepare a report on I whether the costs of domes-! tic services could have been! absorbed without fare and freight charge increases under the former National Airways Corporation. I Counsel for Air New Zealand asked Mr Kirk if the| airline’s New Zealand director, Mr I. M. White, who had earlier given evidence, had given sufficient detail. Mr Kirk replied that he had been impressed by the amount of detail the witness supplied.