Sell Air NZ now – it’s a national embarrassment, not a strategic asset

The Taxpayers’ Union is adding its voice to the growing calls for the sale of the Government’s stake in Air New Zealand, saying taxpayers shouldn’t be forced to own a struggling airline and politicians are no good at running commercial businesses.

Taxpayers’ Union Executive Director Jordan Williams said:

“Air New Zealand proves exactly why politicians should be nowhere near the controls of a commercial business. Since becoming Government-controlled, it’s become unreliable, expensive, down-market, and unable to wash its face financially. That’s not a strategic asset — it’s a national embarrassment sitting on the Crown’s balance sheet.”

“This is the only airline where you pay twice: once as a taxpayer and once as a passenger. It’s the worst of both worlds. Taxpayers carry the risk, customers wear the cost of the inefficiency.”

"Government ownership inevitably politicises governance, with the board inherently balancing two masters: commercial performance and political interests. That tension is built into the system.”

“Take the well-circulated rumour that Dame Therese Walsh is being lined up to be the next Governor-General. On the one hand, as Chair she is bound to act in the best commercial interests of the company. On the other, any director of a majority state-owned enterprise knows they must keep on side the political leadership of the day.”

“It’s naïve to pretend that doesn’t come at a price. Even if no explicit pressure is applied, the incentives are obvious. Political ownership inevitably distorts commercial judgement.”

“We saw precisely this during the recent industrial action by international aircrew. Under Government ownership, the unions knew they could apply political pressure. That leverage is used to push up the airline’s cost base in ways a purely private company would be far more resistant to.”

“Contrast with Qantas. As a privately owned airline, and not having to keep shareholding ministers happy, it's been far more successful at staring down the unions and keeping costs under control. Private ownership doesn’t eliminate tough negotiations, but it removes the political pressure point. That matters, because every concession driven by politics rather than performance ultimately shows up in higher fares for passengers and weaker returns for shareholders — including taxpayers.”

The Taxpayers’ Union rejects claims that majority state ownership is necessary to protect regional connectivity.

“If regional routes are genuinely uneconomic but socially necessary, then be transparent, tender, and contract them. Don’t hide behind majority ownership of a bloated airline and pretend that’s a policy.”

Williams said the Government should sell down its 51 percent stake, use the proceeds to pay down debt, and remove the politics from the airline once and for all.

“Air New Zealand used to be a national icon. Under political ownership, it’s fast becoming a national embarrassment.”

Disclosure: Jordan Williams also serves as a Vice President of the New Zealand Airline Passenger Association (PAX-NZ), commentating on aviation matters. He has previously accepted gifts from QANTAS (complimentary premium status) and Air New Zealand (corporate hospitality and sports tickets).