NEW ZEALAND NATIONAL AIRWAYS CORPORATION FOURTH ANNUAL REPORT, YEAR ENDED 31st MARCH, 1950

Appendix to the Journals of the House of Representatives, 1950 Session I, H-35

THE LIBRARY CANTERBURY I' :.V RSITY COLLEISb CHRISTi.HURCH. N.Z.

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1950 NEW ZEALAND

NEW ZEALAND NATIONAL AIRWAYS CORPORATION FOURTH ANNUAL REPORT, YEAR ENDED 31st MARCH, 1950

Presented to Both Houses of the General Assembly Pursuant to Section 29 (3) of the New Zealand National Airways Act, 194.5

The Hon. the Minister in Charge of Civil Aviation. Sir,- — Pursuant to the provisions of section 29 (3) of the New Zealand National Airways Act, 1945, a report on the operation of the Corporation, together with a copy of the Balance-sheet and report of the Auditor-General in respect to the year ended 31st March, 1950, is tendered to you herewith for presentation to Parliament. The network of services within the Dominion remained unchanged during the year, but extra frequencies were scheduled where necessary to meet passenger demands. Night flying was introduced on a regular schedule service basis for the first time in New Zealand in November, 1949. A high degree of regularity was maintained, and of the total services scheduled throughout the year, 96*22 per cent, were flown. The total mileage flown on internal service and charter flights during the year was 4,823,266 revenue-miles, representing an increase of 12-2 per cent, on the previous year. Passenger-miles created were 69,441,927, representing an increase of 24-7 per cent, on the previous year. Revenue passenger-miles were 49,478,365, representing an increase of 11-63 per cent, on the previous year. The number of passenger journeys was 204,707, an increase of 17-1 per cent, on the previous year. The passenger load factor fell from 79-58 per cent, in 1948-49 to 71-25 per cent, in 1949-50. This was attributable in a large degree to the poor loadings during the winter months following upon the accident on 18th March, 1949. From mid-August, however, there was a noticeable improvement in passenger load factors and in the revenue trend. This was then progressive, and passenger revenue for the period 12th December, 1949 to Bth January, 1950, was 28-8 per cent, higher than for the corresponding period in 1948—49, and established a record. The summer traffic throughout, however, also showed a marked and sustained improvement on the previous year.

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FINANCIAL The following is a concise review of the financial result of the internal service for the year ended 31st March, 1950: £ s. d. Operating and incidental revenue .. .. 1,050,993 9 2 Operating expenditure, excluding depreciation and interest .. .. .. .. 1,152,727 10 6 101,734 1 4 £ s. d. Depreciation .. .. 182,520 6 4 Interest .. .. .. 44,421 3 8 — 226,941 10 0 £328,675 11 4 The total revenue, £1,050,993, showed an increase of 15*171 per cent, on the revenue for the previous year. Passenger revenue, £840,727, increased by 10-37 per cent., freight and excess baggage increased by 40-8 per cent., revenue from carriage of mail increased by 5*61 per cent., and charter revenue increased by 61-06 per cent. Of the total operating revenue, passenger revenue contributed 80-42 per cent., freight and excess contributed 5-68 per cent., mail revenue contributed 4-31 per cent., charter revenue contributed 7-8 per cent., and incidental revenue contributed 1-79 per cent. Total operating expenditure, including depreciation and interest, represented 41-06 d.' per saleable ton-mile created, or 0-66 d. per ton-mile less than the previous year (a reduction of 1-582 per cent.). On the other hand, the cost per revenue ton-mile — viz., 62-013 d 2-06 d. per ton-mile greater than in the previous year (an increase of 3-436 per cent.). These circumstances are largely indicative of the reduced loadings during the winter months, which were responsible for the reduction of the passenger load factor for the year to 71-25 per cent., as compared with 79-55 per cent, for the previous vear, and the over-all load factor to 66-2 per cent., as compared with 67-48 per cent, in 1948-49. The revenue trend is illustrated by comparing the revenue earnings for certain periods of the year, as under : —•

The reduction in the average cost per ton-mile created has been accomplished, notwithstanding rising costs in various directions. There have, for example, been general wage increases, including retrospective payments to aircrews in accordance with the Arbitration Court award ; the annual depreciation charge on flight equipment has been increased considerably by reason of the additional outlay on aircraft converted and brought into service during the year or late in the previous year, and by reason also of additional provision on the Lodestar aircraft to complete their amortization by 31st March, 1952.

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Period. | Operating Days. Revenue. i £ 1st April to 25th June 74 211,565 26th June to 17th September 72 202,441 18th September to 10th December. . 72 232,680 11th December to 31st March (1950) 95 404,308

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PERSONNEL The number of persons employed by the Corporation has been reduced from 1,112 at 31st March, 1949, to 993 at 31st March, 1950. This total includes staff employed in the operation of the Pacific regional services and in the administration of the transient passenger establishment at Nadi Airfield, Fiji. The reduction in the number employed is due partly to the initial steps in the closingdown of Hobsonville maintenance base consequent upon the projected relinquishment ot the Sunderland (Auckland-Fiji) service to Tasman Empire Airways, Ltd., and partly to general consolidation following upon an intensive programme of development. The average ton mileage created per employee now represents 9,000, as compared with 6,736 in the previous year. FLEET At 31st March, 1950, the aircraft of the Corporation consisted of— DC-3 passenger liners .. .. 7 DC-3 freighters .. .. .. 6 Lockheed Lodestar .. .. .. 11 Lockheed Electra .. .. .. 1(2 retired pending disposal). DH-Dominie .. .. .. .. 5 DH-Rapide .. .. .. .. 1 DH-Fox Moth .. .. 3 34 Two Lockheed Electra aircraft have been retired from service and the third Electra is also shortly to be withdrawn, and these are available for disposal. In addition to the aircraft enumerated, the Corporation has also operated on behalf of the Government two Sunderland flying-boats between Auckland and Fiji, with an occasional trip to the Chatham Islands. There were no aircraft accidents during the year involving personal injury, but the Board regrets to report that one DH-Dominie aircraft, ZK-ALC, was destroyed by fire while on the ground at Rotorua on 14th January, 1950, as the result of a grass fire ignited by the aircraft engines. As the Corporation has now completed its first term of three years, it is fitting to recapitulate in some detail what has been accomplished in that period. The nationalization of certain undertakings in the Dominion, including commercial air transport, has naturally focused a good deal of public attention on the Corporation's activities and the financial results of its operations, particularly in view of the recent general election and change of Government. In presenting the following aspects of commercial aviation as undertaken by the Corporation, the Board wishes to make it clear that it is not concerned in any controversy as to which particular policy should be followed. The Board feels, however, that it should outline the policy under which it has been required to operate since it assumed control of the Corporation's services, and also what has been accomplished in giving effect thereto. That policy was clearly expressed in the title to the New Zealand National Airways Act, 1945, which reads An Act to make provision for the incorporation of the New Zealand National Airways Corporation for the purpose of Establishing and Operating National Air Transport Services to meet the Needs of the People of New Zealand and for the Purpose of Fostering and Encouraging the use of Air Transportation within New Zealand and between New Zealand and other Countries ; and to make Provision for other Matters incidental thereto.

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It is true that the first air regulatory legislation passed in 1934 was a part of the steps taken by the Government of that time to co-ordinate the development and operation of all forms of transport through the activities of the Transport Department and statutory Licensing Authorities. The change in Government in 1935 brought a change of policy for the following year : the administration of commercial aviation was transferred to the Air Department and the Minister for Air was made the Licensing Authority. It was not until 1945 that the major step was taken to place commercial aviation under one statutory operator. The original Act of 1934 made it necessary for the Licensing Authority to take into account, inter alia, the transport services already in existence as well as the value in air defence. The Act establishing the N.A.C. in 1945 did not repeal the 1934 Act, but made an extremely important change. Thus, section. 21 of New Zealand National Airways Act, 1945, reads as follows : Notwithstanding anything to the contrary in the Transport Licensing (Commercial Aircraft Services) Act, 1934, in any case where an application for an aircraft-service licence is made by the Corporation or by a contractor to whom the Corporation has requested the Licensing Authority to issue such a licence, the Licensing Authority may issue -the licence subject to such conditions as he thinks fit to impose notwithstanding that other transport services, whether by air or otherwise, may already be provided in respect of the localities to be served or the proposed routes, or any of them. There could be no doubt that this change meant that the expansion of aviation was not to be retarded by any objections from or consideration of other forms of transport, and just as logically that its development had infinitely wider objectives than just an addition to internal transport utilities. In 1948 the National Airways Corporation Act was again amended and Parliament entirely repealed the 1934 Act. The N.A.C. was empowered to operate any service without having to go through the procedure of applying for a licence. Provision was retained, however, under which the Minister could issue licences to other operators, and here again a significant change was made in that any reference to other forms of transport was eliminated and the specific reference to air defence retained. Experience of what happened in the last war is too fresh in the minds of those directly concerned with the operation of commercial aviation for them to be in any doubt as to its real value in national emergency. The majority of aircraft and trained personnel were commandeered for national service for the duration of the war. Conversely, since the war it has acted as the main medium for the rehabilitation and continued training and equipment of valuable air personnel. It has purchased aircraft, plant, and equipment from War Assets to the value of nearly £250,000. In addition, the Corporation has during its term paid to the Government the following amounts : Duty and sales tax on — £ Fuel and lubricating-oil .. .. .. .. 77,304 Spare parts . . .. .. .. . . 30,305 Plant and equipment .. .. .. .. 16,500 Rents on hangars and buildings superfluous to post-war needs .. .. .. .. .. .. 20,000 Interest on capital advances .. .. .. .. 95,449 £239,558 It has, by prudent reserves, provided to date £389,447 towards the amortization of aircraft and other flight equipment. In this connection; depreciation, and more especially the obsolescence factor, is of considerably greater proportion and significance than in other transport undertakings, and this provision, though large by comparison with such undertakings, necessarily conforms with airline practice throughout the world.

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As will be seen, one of the Board's main statutory responsibilities was to establish and operate a national service. Whilst natural prudence has been exercised in the standard and scale of operations, the Board felt it necessary to meet the needs of the people of New Zealand by planning a network that would take some years to achieve fully its objectives and provide in the interim a valuable auxiliary in the sphere of air strength. The present standard and network do in fact fulfil these two paramount objectives and at costs that are comparable with other airline operators in other parts of the world. The extent to which the N.A.C. has " fostered and encouraged the use of air transportation " is exemplified by the large increase in the passengers carried and the general public satisfaction with the standard of service provided, evident by to-day's high load factors. The Board has developed the present network of air services under a defined policy. Whatever changes may be made, policy will still be the vital factor in the standard of service and its financial results. It is doubtful whether the actual value in pounds shillings and pence of services provided by the State to commercial aviation free of charge has ever been assessed. Such services as are established are directly essential to aviation generally, and primarily to support the air defence organization. But nowhere throughout the world does the airline operator meet the cost of providing aerodromes, meteorological services, navigation aids, &c., or the cost of the administration of the Civil Aviation Department. In most countries the airline operator is afforded direct financial assistance, in addition to those free services, in order to enable it to pay dividends to its shareholders. This aspect of commercial aviation is well expressed by Mr. Peter Masefield, a prominent British authority, in a paper presented to the Royal Aeronautical Society, in which he states : We must face the fact that major civil airlines have never yet been operated at a profit if all concealed and unconcealed subsidies are deducted—although certain short-haul services have made both ends meet. The reason for the uneconomic value of long-range operations up to the present has been that the profits from excess of revenue over direct operating costs have never been sufficient to meet the overheads. Two reasons have contributed to this : the fact that the aircraft themselves have not been able to carry sufficient payload to show an adequate margin of revenue over operating costs ; and the fact that overheads have tended to be very high because of the pioneering and developing nature of air transport and the relatively small scale of the business hitherto. Subsidies have therefore been necessary. Subsidies arise in many forms. There is the direct subsidy on operations made in the form,of deficiency grants to meet operating losses. There is the indirect subsidy in the form of mail payments at rates that may be greater than the commercial scale. There is the hidden subsidy that may be either in the payment of development costs on new aircraft, or in the form of provision, in greater or lesser degree, of airports and the ground aids necessary for airline operation. It is clear from the above extract that the developing of air services in this Dominion is going through similar phases to those of other countries. Indeed, a study of other forms of transport discloses that they too have received material assistance by way of concealed and unconcealed subsidies during their development. In fact, the progress of new forms of transport has produced transport utilities far in excess of the capacity of the integral parts to operate at a profit. Shipping and railways, long past their developmental stage, are in many cases unable to secure sufficient revenue to meet operating-costs. Municipal undertakings in the field of transport are suffering the same fate. It is probable that if a thorough investigation were made into road costs and annual maintenance, concealed subsidies in commercial road transport would be revealed also. These factors may be the price of progress, but they certainly do indicate that national policy, which controls the development and expansion of all forms of transport by major decisions on the provision of railways, aerodromes, roads, and harbours, is in

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the main responsible or the ultimate financial results in the operation of the services. This may be inescapable if the country is to keep abreast of progress, but as any form of subsidy—concealed or unconcealed —can lead to the concealment of operational inefficiencies, an added responsibility is placed upon the management to satisfy both itself and the public that every care is being taken to avoid inefficiency and extravagance. The Board and the whole of the personnel of N.A.C. have been fully conscious of this responsibility. A fully qualified aeronautical engineer has been secured from Great Britain to take charge of the Engineering and Maintenance Division, and he has made an exhaustive and successful survey of the whole of this most important Branch. Prior to the employment of this engineer, the Corporation arranged for a visit by Mr. W. A. Baird, Engineering Manager of Qantas Empire Airways, who in March, 1948, reported, inter alia : The standard of general engineering maintenance throughout N.A.C. is as high as any other maintenance organization I have seen recently. The man-hours associated with the " Wright 1820 " engine overhauls are commendable ; so also are the man-hours involved in the " P. and W. Wasp Junior " engine overhauls ; the present inspection system is quite reasonable ; and the stores issue system. The standard of maintenance carried out on the airframes is also quite high when one considers everything associated with to-day's conditions. An independent consulting accountant of high standing was engaged to make a special survey and report on the Corporations' accounting system. Extracts from his report are given hereunder : After a close association with the day-to-day workings of the accounting routine, I am more convinced than ever that the book-keeping system in use at N.A.C. is very good indeed. I have no hesitation in stating that I would have been proud to have installed, or been associated in installing the bookkeeping system in operation . . . This is not a big accounting staff considering the enormous amount of detail work that necessarily flows through this office. In addition to these steps, the General Manager and departmental executives have been despatched to Australia on many occasions to attend air transport conferences and examine related aspects of the Commonwealth's airlines. The Board has from its inception appreciated and accepted its full responsibility for the safety of its operations and has kept closely in touch with world-wide practices and developments. The Board has consistently and whole-heartedly supported the management and executives concerned in their determination to preserve the absolute safety factor of the services. Large sums have .been spent on both equipment and training in order that this aspect of the Corporation's activities should be adequately and effectively safeguarded. Commercial air transport falls into two main categories : (a) its place in the internal transport system of the country, and (b) its place in strategic air defence. Two world wars have resulted in phenomenal advances in aviation. Self-preservation demands that nations must keep abreast of this progress. Modern aircraft and aerodromes with every scientific advance in navigational aids must be maintained. Commercial air transport is now recognized, and expanding rapidly internally and internationally throughout the world. Nowhere is its existence based entirely on commercial considerations. And yet in the field of transport there can be no question but that it is destined for still greater expansion ; in fact, it is impossible at this juncture to visualize its ultimate scope. Within the vision of transport authorities there is apparently no other form of transport that will supersede it as compared with the evolution that has taken place in surface transport from the horse-drawn coach to railways, ships, and motor-vehicles. There is no doubt need for co-ordination of the various forms of transport, but there must be taken into consideration factors other than commercial; the over-all economic life of the country, vastly improved communications, defence, and future potential of the various means of transport must be given weight.

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It has already been mentioned that the N.A.C. has endeavoured to fulfil its obligations imposed by statute —to provide a service to meet the air requirements of the Dominion and to foster and encourage the use of air transportation. As a national operator charged with the complete provision of commercial air services, the Corporation could not logically confine its operations to those already well-favoured trunk routes. A national service means what its name implies—and should thus reasonably serve all parts of the Dominion. The aim was therefore to inaugurate an efficient trunk service on a long-range plan and run in conjunction therewith feeder services on the basis that these feeder services were justified to meet the public requirements and that they would strengthen the trunk service and enable it in turn to assist materially in meeting deficits on the less payable routes. By reason of aerodrome limitations in these areas, this policy has necessitated using several types of aircraft. This is contrary to the most economic practice in commercial airline operation. If the Board had decided and had been allowed to confine its operations to payable routes serving areas that could be worked with one type of aircraft, then on the existing basis of operation it would have been more successful financially, but it would not under this limitation have fulfilled its obligation or satisfied the public demand. The Board can claim that there has been no sustained dissatisfaction expressed from the press or public in any part of the Dominion where air services have been operated by the Corporation, and the growth in services and present patronage by the travelling public is such as to leave no doubt that this modern form of transport will continue to expand, especially when up-to-date aircraft, a reasonable standard of aerodromes, and other essential facilities are available to give it the necessary assistance and encouragement. As already indicated in previous reports, the working losses would not have been so great if major changes had not been introduced over which the Board had no control —i.e., the closing-down of Rongotai and Mangere, and other operating restrictions. Whilst the Board accepts full responsibility for initiating the policy of development, every expansion of service has had the endorsement of the Government and has had to meet the requirements of the Civil Aviation authorities. The policy under which the Board was required to operate has herein been explained, but the magnitude of the task that confronted the Corporation and its staff in giving effect to that policy is not generally realized. This is perhaps best indicated by a recapitulation in a little more detail of what has been accomplished over the past three to four years. New Zealand at the commencement of the Corporation's existence, had a small and limited air service coverage, and the Corporation was instructed to take over these existing air services and build them into a national service to meet all civil requirements. The Corporation was also instructed to take over the staffs and aircraft employed in these services and in the transport section of the Royal New Zealand Air Force, Practically all the aircraft taken over had to be modified to meet the requirements of the Civil Aviation Branch and also to provide a standard of comfort necessary to satisfy the travelling public. From April, 1946, the number of passenger aircraft operated on New Zealand internal services increased from 5, aggregating 60 passenger seats, to 31 aircraft, aggregating 386 passenger seats, with 5 freighter aircraft in addition. During this time the annual mileage flown increased from 902,000 per annum to 4,800,000 per annum. The revenue passenger mileage created was increased from 16,000,000 in 1946-47 to 69,500,000 in 1949-50, In addition to the provision of these increased air transport facilities within the Dominion, the Corporation has, in accordance with the requirements of the Government, operated for the past two and a half years a weekly flying-boat service between Auckland and Fiji, a weekly land-plane service between Auckland and Norfolk Island, and a fortnightly land-plane service between Auckland and the Cook Islands via Norfolk Island, Fiji, Tonga, and Samoa.

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Even under favourable conditions the development of air services from such small beginnings to these capacities would have been a major undertaking, but the Corporation has been faced with many post-war conditions that were the reverse of favourable. As a prerequisite to the operation of these services it was necessary to supplement the aircraft acquired from existing airlines with such suitable types as could be obtained, and which were also adaptable to the maintenance organization available. This involved the purchase of additional Lodestar and Dakota aircraft from the New Zealand Government. The aircraft so acquired were mainly Air Force machines, and, as already indicated, all had to undergo extensive, overhaul and rebuilding to convert them to the required civil standards. Concurrently with the building-up of the air fleet, aircrew and maintenance staffs had to be obtained and trained up to the standard set by the Corporation, and to the satisfaction of Civil Aviation Branch. To carry out the instructions to build up an air service to the extent required, it was thus necessary initially to use the only types of aircraft that were available, and it is only now, after three years of operation, that the Corporation is approaching the position when it can concentrate on the most economical and efficient of these types. Complete standardization on one type of aircraft has not been and will not be possible for some time to come, mainly on account of aerodrome limitations, including dimensional and licence restrictions. A thorough investigation has been made into the question both of standardization on one type and the possibility of selecting a modern type of recent manufacture, but the Board has been forced to the conclusion that it will probably be some years before any suitable aircraft will be available from the United Kingdom on which the Corporation could standardize. In the meantime, the Board is converting the Douglas airliners to twenty-four-seaters, and with further conversions will place these aircraft on service wherever aerodromes and reasonable capacities will warrant this being done. The contemplated extension of night flying schedules should add both a new passenger potential and secure greater aircraft utilization. Night flying should also materially assist in maintaining a high standard of daily completion of schedules previously impracticable when flying was restricted to daylight hours. With the completion of the aircraft conversion programme in 1949 and the culmination of most of the preliminary establishment programme, and having regard to the necessity for improving the unfavourable financial position, a complete reorganization was undertaken throughout the Corporation. This was enthusiastically supported by all concerned, and a consolidation period was entered whereby certain major decisions were taken. A budgetary system of control was instituted. By the 'operating budget, which was prepared at the beginning of the year under review, a loss of £358,668 was projected. Mainly as the result of the measures taken to consolidate the position of the Corporation, a substantial reduction of £102,186 on the budgeted expenditure was achieved. While this was, to a large degree, offset by a considerable reduction in revenue below budget expectations due to the adverse effect of accidents, the actual result showed an improvement of £29,993 on the budgeted result. After the tests of the Marathon aircraft, which proved in its then state of development unsuitable for our requirements, further Douglas conversions were authorized and for the fleet to be converted to twenty-four-seater aircraft. The Maintenance Department began a survey of its facilities with a view to the adoption of more economic practices without detracting from safety in any direction. Time-tables were subjected to an investigating committee, and services realigned to traffic potential, which resulted in considerable savings being effected.

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A drive to restore confidence was made by a lecture and film tour throughout the country by the Public Relations Officer and a senior Captain (Pilot), which had very good and noticeable results. Teletype circuits were introduced as soon as available to facilitate bookings, ensure prompt attention to passenger requirements, and to ensure the fullest possible utilization of seating capacity provided. Development towards increasing the freight potential was given attention, and has resulted in increased loads, which ultimately will necessitate a special freighter schedule. Other important matters are at present under review and rearrangements being made that will further improve the financial position of the Corporation. Operating expenditure includes provision for the amortization of the Lodestar aircraft and related equipment by 31st March, 1952, and of the Douglas aircraft and related equipment by 31st March, 1953, but it is now expected that the serviceable life of the latter will be extended by two or even three years. The annual charge for depreciation thereon will be reviewed accordingly, and probably reduced in the light of developments in the next year. By reason of membership of the International Air Transport Association (I AT A), the Corporation enjoys the privilege of being agent for member airlines throughout the world and of being able to arrange and sell air transport on a world-wide basis. It has also been appointed General Agent for British Commonwealth Pacific Airlines, TransCanada Air Lines, and Trans-Australia Airlines, with other general agencies pending. This process of consolidation is still in progress, and the field of potential economy has not yet been fully covered. Notwithstanding the fact that the Corporation is operating comprehensive air services throughout the Dominion, including a number operated at considerable loss, and despite the impediments placed upon activities by the use of remote airfields at Paraparaumu and Whenuapai, the budgetary position indicates that operating losses, which reached £328,675 last year, will be substantially reduced for the current year and probably to a figure little in excess of £lOO,OOO, after meeting all charges including interest on capital. In its task the Board has received the whole-hearted support of the management, executives, and staff of every branch, and it is noteworthy that not one man-hour has been lost on account of industrial problems on the internal services. The Board has enjoyed the most harmonious relations with its personnel, and would like to acknowledge the high standard of service and co-operation which has been given by all members of the staff and which has contributed so largely to the development of an airline organization that is comparable in all respects with airlines in other countries. Leonard Isitt, Chairman. J. S. Hunter, Deputy Chairman. F. W. Mothes, Director. W. W. Hynes, Director. H. Worrall, Director.

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STATISTICAL SUMMARY, YEAR ENDED 31st MARCH, 1950 New Zealand Internal Services

Pacific Regional Services

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— 1948-49. 1949-50. Percentage Increase. Route mileage 2,580 2,622 1-63 Mileage flown — (a) Revenue 4,298,922 4,823,266 12-2 (b) Non-revenue, including training 419,297 185,848 Passengers carried: Revenue 174,836 204,707 17-09 Passenger-miles created 55,690,283 69,441,927 24-69 Passenger-miles: Revenue 44,323,199 49,478,365 11-63 Average passenger journey (miles) 263 241-7 Freight, excess and mail (lb.) 2,593,087 3,631,016 40-03 Excess baggage (ton-miles) 48,406 69,602 43-79 Freight (ton-miles) — Service 194,449 281,573 44-81 Charter 600,682 745,781 24-16 Mail (ton-miles) 108,580 121,251 11-67 Load factor 67-48 66-2 Passenger load factor 79-55 71-25

— 1948-49. 1949-50. Route mileage .. .. .. .. 5,273 5,273 Mileage flown 412,442 417,631 Passengers carried : Revenue 6,390 6,336 Passenger-miles created 7,237,822 7,427,421 Passenger-miles : Revenue .. .. 5,341,620 5,264,202 Average passenger journey (miles) .. .. 836 830-8 Freight, excess, and mail (lb.) 89,380 106,670 Excess baggage (ton-miles) 4,160 3,972 Freight (ton-miles) 21,691 31,829 Mail (ton-miles) 15,599 16,417 Load factor 67-90 64-4 Passenger load factor 67-54 70-9

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NEW ZEALAND NATIONAL AIRWAYS CORPORATION Operating Account (New Zealand Internal Services), Year Ended 31st March, 1950 Operating revenue— £ s - Passenger .. .. • • • • • • • • 840,727 0 6 Freight 51,102 11 4 Excess baggage .. .. • - • • .. • 8,227 410 Mail money .. .. •• •• •• •• 45,026 7 11 Charters .. ■ • • • • • • • • ■ 81,586 15 10 Incidental and sundry revenue.. .. .. •• 24,323 8 9 £1,050,993 9 2 Operating-expenses — £ s - dFlying operations .. .. •• -• •• 413,705 17 10 Direct maintenance: Flight equipment . . •• 173,178 14 1 Indirect maintenance .. • • ■ - - • 143,481 5 3 Ground operations .. .. •• •• •• 91,683 15 2 Passenger services .. . ■ • ■ • - • • 113,047 15 3 Freight services .. .. • - • • • • 400 10 11 Traffic and sales .. . • • • • • • • 102,204 12 7 Advertising and publicity .. .. •• •• *15,719 11 9 Administration .. .. .. -- •• 71,021 9 4 Aircrew training .. .. .. - • • • 22,982 13-11 Deferred training expenses .. .. .. - • 5,301 4 5 £1,152,727 10 6 £ s. d. Loss, excluding depreciation and interest .. .. .. 101,734 1 4 Depreciation— Flight equipment .. .. .. ■ • • • 165,576 19 11 Ground equipment .. .. •- •• •• 16,943 6 5 Interest on capital at 3J per cent, per annum .. .. 44,421 3 8 Net loss for year ended 31st March, 1950 .. £328,675 11 4 Profit and Loss Appropriation Account as at 31st March, 1950 £ s. d. Balance at Ist April, 1949 (net loss to 31st March, 1949) .. 243,318 7 6 Add net loss on Operating Account for year ended 31st March, 1950 328,675 11 4 571,993 18 10 Less subsidy received from New Zealand Government .. 343,318 7 6 Balance at 31st March, 1950 .. .. .. £228,675 11 4

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NEW ZEALAND NATIONAL AIRWAYS CORPORATION— continued Balance-sheet as at 31st March, 1950 Capital and Liabilities £ s. d. Assets £ a. d. Capital Advances from New Zealand Government Aircraft and flight equipment (see provision for under sections 23 and 24 of New Zealand National obsolescence, £249,483 lis. 6d.) .. .. .. 580,306 Oil Airways Act, 1945 .. .. .. .. 1,500,000 0 0 £ s. d. Reserves— £ s. d. Land and buildings at cost .. 261,538 2 11 Insurance .. .. .. 25,445 10 7 Less depreciation .. .. 21,010 11 8 Replacements .. .. .. 16,072 2 7 240,527 11 3 41,517 13 2 Plant, equipment and tools .. 100,675 2 7 Creditors— Less depreciation .. .. 22,196 0 8 Sundry creditors .. .. 254,964 11 11 78 479 J n Accrued liabilities .. .. 77,478 8 10 Motor-vehicles .. .. .. 21,165 18 1 Deferred credits .. .. 53,856 19 7 Less depreciation .. .. 8,193 6 0 386,300 0 4 12,972 12 1 Provision for obsolescence— Office furniture, fittings, &c. .. 48,094 7 8 On aircraft engines and propellers 249,483 11 6 Less depreciation .. .. 5,426 15 0 On spare parts .. .. 139,963 12 6 42,667 12 8 389,447 4 0 Spare parts and stores (see provision for obsolescence, £139,963 12s. 6d.) .. .. .. .. 451,435 15 0 Debtors— £ s. d. Sundry debtors .. .. 88,483 12 9 Agents'balances .. .. 25,969 11 11 Accrued assets .. .. 3,849 11 8 Deposits and prepayments .. 10,400 2 10 Pacific services : Recoverable ' balances .. .. .. 126,011 8 5 254,714 7 7

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Cash on hand and in bank .. . . .. 349,668 18 0 Acquisition of other airlines .. .. .. 36,129 19 9 Acquired Assets Value Adjustment Account .. .. 18,532 1 0 Preliminary development and deferred expenses .. 23,155 6 0 Profit and Loss Appropriation Account .. .. 228,675 11 4 £2,317,264 17 6 £2,317,264 17 6 L. M. Isitt, Chairman. D. E. Foley, Treasurer. Wellington, 18th September, 1950. I hereby certify that the Operating Account and the Profit and Loss Appropriation Account and Balance-sheet have been duly examined and compared with the relative books and documents submitted for audit, and correctly state the position as disclosed thereby.—J. P. Rutherford, Controller and Auditor-General. Approximate Cost of Paper.—Preparation, not given : printing (2,749 copies), £4l.

By Authority: R. E. Owen, Government Printer, Wellington.— 1950.

Price 6d.]

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