Air NZ's flying salesman

Air NZ boss Christopher Luxon has sold everything from soap to icecream. Now he wants to sell tickets - lots more tickets. Aviation writer Grant Bradley reports from Cape Town.

Christopher Luxon. Photo /
Christopher Luxon. Photo /

The airline outsider in Air New Zealand boss Christopher Luxon doesn't like some of what he's seen at the annual gathering of global aviation leaders in South Africa this week.

Luxon forged a big career in the sometimes ruthless world of consumer goods sales in North America, and towards the end of the conference in Cape Town he said the aviation industry could be quite myopic.

"It's complex and addictive and people stay for a long time but the danger of that is that you get a groupthink and a mode of thinking that might need a bit of shaking."

Air New Zealand has an international reputation for thinking outside the square and Luxon said that from what he saw this week, that has put the airline in a good spot.

"It's quite exciting because if you're going to innovate and compete we shouldn't be afraid of being world class from New Zealand. We shouldn't be intimidated by any of the carriers, to be brutally honest."

The 42-year-old has two years' industry experience, first helping revamp Air New Zealand's international business, then taking the chief executive's job in January.

He's easy company: the non-drinker adroitly did the schmoozing at the International Air Transport Association meeting, which has a clubby, cosy feel, as Cape Town was battered by one of the worst winter storms in more than a decade.

And he's a quick learner: at a media event he easily handled a barrage of questions from international aviation journalists who can spot aircraft models from vast distances and talk in airline code.

And if Luxon didn't know it already, amid the furore over an aspiring flight attendant's tattoo, he's learned that he's running a big company in a small country.

Unilever sells to 2 billion people a day and finds itself in the occasional media scrum - including one he fronted over a raunchy deodorant commercial - but he said he was a little surprised how the tattoo issue dominated public conversation.

"The public dimension is a little bit more intense in New Zealand - there's a different level of profile than I had to deal with in Canada or the States but it's not unfamiliar - it's part of the responsibility of the role."

Luxon succeeded Rob Fyfe as chief executive and brings a different style; until now he has kept what he calls his "streamlined" head down and largely stayed out of the media. While Fyfe had a mercurial streak and helped build an airline with lots of sizzle, the methodical Luxon is now chasing sales.

As part of his "Go Beyond" strategy, the airline aims to sustainably double the average earnings of the past 10 years. He's on track this year, with underlying profit forecast at $235 million to $260 million, compared with the $94 million achieved in the previous year.

Fyfe acknowledges the differences between the two. He was also in Cape Town, working as an adviser to Panasonic's inflight entertainment division.

"Christopher came out of that American business system that's a very different kind of style, and I think it's really important that a new CEO has a style that is uniquely his own because people need to disconnect from the previous leadership."

LUXON'S 18-year career at Unilever took him to Australia, Britain, the United States and finally Canada, where he was in charge. He earned his stripes selling everything from Magnum icecreams to Persil washing powder, to retail giants such as Wal-Mart, and was hailed as a marketing superstar for defeating arch-rival Procter & Gamble in a global deodorant battle. It was at Unilever that he developed what he calls "sales literacy".

That's what he is introducing to the airline, which he said is world class in almost everything it does, apart from selling tickets.

Based on his fast-moving consumer goods (FMCG) background he's taking a more pragmatic approach, working with travel agents the airline has previously moved to circumvent. "We need to hunt in a pack as a tourism industry. That's why we're building relationships with the broader tourism industry because we can't do it alone and nobody else can either."

The airline's marketing team was now working with counterparts at Auckland and Christchurch airports - traditional foes over landing fees - and he was out talking to travel agents.

One agent, who did not want to be named, said he had met Luxon three times this year after failing to ever get a meeting with the airline before, adding that the new chief executive wanted to sell tickets through any channel, just as long as they were on Air New Zealand.

Luxon said New Zealanders at their worst were petty and squabbled over small amounts of money, but at their best were unbeatable.

Relationships with the travel agents have improved.

"It comes from a packaged goods background. At Unilever I would sit down with the top management of Wal-Mart and we'd agree a business plan for the coming year, not about how we would switch market share but how we could grow the market," he said. "I'm wanting to bring that same thinking. I have a sales and marketing literacy, a CEO of Air New Zealand should be out in the trade talking with the top management of our key trade partners.

"You can be very protectionist, very defensive and be very siloed but that's not the way of the future."

Luxon often refers to his consumer goods background, and two key appointments to his executive team have similar experience - one from Campbell's Soup and another from Procter & Gamble. He is keen to introduce more of what he learned at Unilever.

The big North American FMCG companies would "war game" what competitors were up to and how each would respond, and then counterpunch. He said he'd like to bring similar strategies at Air New Zealand.

FOR CHRISTCHURCH-born Luxon, a career in consumer goods was in the blood.

His father was a sales executive for Johnson & Johnson, his mother a psychotherapist and counsellor. Aged 7, Luxon and his family moved to Auckland where they lived in Howick, before returning to Christchurch where he finished high school.

As a teenager he met his future wife Amanda at a church youth group. He still goes to a non-denominational Christian church. "My faith is very important to me," he said.

At Canterbury University he completed a Master's in Commerce, majoring in business administration, and in his final year was recruited into Unilever's management trainee programme. Luxon was attracted to Unilever because of its size and business culture, but pounced when he heard of the opening at Air New Zealand's international operation - which he took with the understanding it would put him in the running for the top job.

"I feel very connected to the mission and the purpose of this company - I grew up in a world where I wanted to be a business guy and a lot of the business models when I grew up were property developers and wheeler-dealer types," he said.

While he could have worked in private equity, he said he chose to come back.

"It's not just about the money (his basic salary is $1.25 million) or about the title - who we are is a lot bigger than what we do."

While the language can be lofty, Luxon is essentially down to earth and has impressed others outside the airline - one person in the travel industry calls him "brilliant" - and from Air NZ headquarters the view is that he salesman

Luxon brings a different style to that of former Air NZ chief Rob Fyfe (pictured).

has tightened the lines of responsibility and accountability.

Rob Mercer, head of private wealth research at Forsyth Barr and a long-time Air New Zealand analyst, said Luxon had in a short time garnered a lot of support and was clear about where improvements lay.

"There's an attention to detail, Christopher gives you the impression he's a 24/7 guy. There have been strengths before him but now he's bringing in another level of capability with the global consumer [experience]."

THE OTHER side of improving profitability is cutting costs and here Luxon has been as rigorous as he has in reorganising sales.

While he was running the international airline, unprofitable routes that were bleeding up to $2 million a week were axed and new alliances started to save money and open up new sales channels.

This year some call centre operations have been outsourced and cabin crew are now hired on lower average costs than "legacy" staff.

Luxon is unrelenting about cutting unnecessary expense.

"It's making sure they're matched to the market. Slash and burn is a quick way of improvement but we're trying to do it in a sustainable way."

Cabin crew costs were higher than competitors', but the airline did not want to get a series of temps and secondees.

While Luxon has maintained a low media profile, he's been active in talking to industry groups. Last week he told a hotel industry conference just how running the rule over all spending can benefit the business. A change in strawberry jam supplier saved the airline $200,000 a year, which was spent on memory foam mattresses for business class cabins across the fleet. The new jam was "good enough" and it was better to buy mattresses that were superior to its rivals'.

There he showed he does a nice line in self-deprecation - not something that is always apparent in aviation. He showed delegates a picture of a younger Luxon working as a porter at a Christchurch hotel in the early 1990s - complete with hair.

Across the industry, fuel and labour costs are where airlines spend most of their money and moves to bring down staff costs put him into conflict with unions.

About a third of the Air NZ group's 10,000 staff are covered by the Engineering, Printing and Manufacturing Union, whose airline representative, Strachan Crang, said the strategy was simple: "Increase revenue and reduce costs. It's there and it's plain to see."

Crang said Luxon had been engaging with unions and the relationship was respectful.

"We'll do our damnedest to protect the jobs of our workers. It puts us on a collision course on some issues."

Another aviation industry source, who, like many, has to deal with Air New Zealand's dominance and did not want to be quoted by name, said Luxon's big challenge will be managing crew disgruntlement, keeping them smiling as costs are cut.

Luxon offers little comfort to those worried about cost cutting. It would be a continuous process.

"We have to make sure we're getting rid of cost and complexity that frankly our customers are not prepared to pay for in higher ticket prices. Just because we've got inefficiencies in our system there's no excuse to pass that on to our customer."

In a message to staff this week he's been buzzing about his own executive team, but the industry outsider is hard-nosed about the wider airline business.

"The industry gets tied up in a lot of the uncontrollables - fuel, natural disasters, economic meltdowns and the competition. Those sort of things happen to all of the airlines at the same time but they're often used as excuses for poor performance by airline CEOs and executive teams. What we're trying to do is stop all that."


Christopher Luxon

• Age: 42

• Married to Amanda. He says the couple have "date nights" every Saturday - "it may sound hokey but we allow ourselves that time".

• They have two children, William and Olivia.

• Master's degree in commerce from Canterbury University.

• 18-year career at Unilever in NZ, Australia, Britain, the United States and Canada.

• Base salary: $1.25 million plus bonuses to be disclosed.

• Lives in Remuera.

• Interests: water skiing, Mini cars (he has a variant, a 1966 Riley Elf), the country music of Brad Paisley and Tim McGraw.


Grant Bradley travelled to Cape Town courtesy of South African Airways and Air NZ.

- NZ Herald

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