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Current as of 26/12/14 07:40PM NZST

Grant Bradley

Aviation, tourism and energy writer for the Business Herald

Rivals inspire Air NZ audit

Airline's chief looks for improvements and to forge new alliances at aviation seminar

Christopher Luxon. Photo / Sarah Ivey
Christopher Luxon. Photo / Sarah Ivey

Air New Zealand is doing a top-to-bottom review of service and looking to forge new alliances as it faces the prospect of more intense competition and cutting costs.

About 700 aviation industry heads are gathering in Cape Town. Among them is Air New Zealand's chief executive Christopher Luxon, who said the service review would include every "moment of truth" where his staff interact with the public.

The International Air Transport Association's annual meeting will discuss safety, the impact of the industry on the environment, how tickets are sold and financial sustainability.

Airport-style security will be in place for South Africa's Vice-President Kgalema Motlanthe, who will be at the meeting tonight.

Six months into the top job, Luxon has substantially remodelled the executive structure of Air New Zealand, which the Government wants to sell more of on the sharemarket.

A new role, the general manager of customer experience, has been filled by former Virgin Atlantic and Etihad Airways executive Calum Laming who was devising new standards across the business.

"He's going through our whole system end to end."

The airline has won awards for service and while he said he wanted staff to retain their "can do"approach, there needed to be more consistency across the business.

The airline has received complaints from wheelchair passengers in the past fortnight, and Luxon said it wasn't perfect. "We do get it wrong because it's a people-led business."

Luxon said the airline's airpoints programme, which has also attracted flak, was being reviewed to ensure it was properly calibrated to meet the needs of high value customers.

This week's Iata meeting amid tight security is Luxon's first and he has meetings scheduled with other airline chiefs.

Airlines are forming deeper alliances and different types of agreements away from traditional groupings to cut costs and provide more services.

He said alliances would continue to be very important in the future.

Luxon first joined the airline as its long-haul boss nearly two years ago and during that time it had forged a new arrangement with ANA in Japan, Virgin Australia and most recently Cathay Pacific on Hong Kong and London routes.

There has been analyst speculation that Singapore Airlines would be a possible partner to give Air New Zealand better connections into Southeast Asia and to Europe.

He would not be drawn on which airlines Air New Zealand was talking to.

"We're talking to a range of airlines, suffice to say. Sometimes they get nowhere."

Air New Zealand is also cutting costs where possible, including hiring new cabin crew on lower average wages, which has angered staff.

Luxon said it was necessary to compete with low-cost carriers.

"Cabin crew costs are higher than our competitors but we don't want to get a series of temps and secondees."

The two-day Iata meeting will be told of the financial outlook for the industry amid signs of a choppy recovery.

While Air New Zealand remains profitable with forecasts that earnings will double this year, the host carrier, South African Airways, is being propped up by the Government and has been wracked by board and senior executive turmoil during the past year.

The industry is notoriously volatile and before the meeting Iata director general and chief executive Tony Tyler said it was keeping its head above water, but barely.

Grant Bradley travelled to Cape Town courtesy of South African Airways and Air New Zealand

- NZ Herald

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