THE PRESS FRIDAY, DECEMBER 23, 1988. New owners, old loyalties

Press, 23 December 1988, Page 16

THE PRESS FRIDAY, DECEMBER 23, 1988. New owners, old loyalties

Now that the Government has decided to sell Postßank and Air New Zealand the customers of both corporations will begin to reflect on how private ownership may change the kind of services they get. The Government’s reason for selling these enterprises, and other State-owned businesses, has been in essence to raise cash. In the instance of Air New Zealand, the further argument has been raised, and supported by the airline itself, that connections with much bigger international airlines will assist Air New Zealand to greater and surer prosperity. The ANZ Bank, essentially an Australian bank, may be able to handle Postßank better than Postbank could handle itself, but there is no obvious reason to believe that Postßank clients will suddenly feel more comfortable. Until the new owners take over and until any reshaping of Postßank is apparent, either within the ANZ or as a separate retail organisation, no real judgment can be made. One thing, however, is likely: many people who grew up with the old Post Office Savings Bank will feel strangers to the new business. Even if ANZ management steps out to preserve old loyalties, a lot of clients may instinctively look elsewhere and particularly towards the trust banks, which so effectively have built on the notion that they are institutions run primarily to serve the public rather than shareholders. A change in Government policy on State-owned enterprises does not automatically mean a

change in public attitudes towards public ownership.

By far the greater part of Air New Zealand’s profits come from the airline’s overseas business. The domestic section of the airline, with or without competition, is not a juicy plum for shareholders. The new foreign shareholders can probably be relied upon to feed overseas travellers into the domestic services of Air New Zealand. They have no obligation to do so; nor do they have any obligation to support Air New Zealand beyond the normal motive of any shareholder who wants to participate in a profitable business.

At home, the New Zealand traveller’s greatest concern will be over whether the new ownership, motivated by profit rather than any duty to supply the country with an air service, will continue to do as much as the airline has done in the past for a very modest profit on domestic services. Retention of the majority of shares in New Zealand hands guarantees nothing beyond the same desire to keep the enterprise profitable. Since the customers will no longer feel that they are supporting an airline in which, through State ownership, they all have a stake, Air New Zealand, like ANZ-Postßank, may also have loyalty problems. Both enterprises, to succeed, will have to perform well to make -good that inevitable loss of built-in loyalty.