Air New Zealand CEO Greg Foran says new airline welcome to try its luck, but would likely be broke in two years

Air New Zealand chief executive Greg Foran says recent scrutiny of airfares reinforces what a tough market New Zealand is to operate in.

He told Newstalk ZB another airline was welcome to try its luck in New Zealand, but nobody would make any money, and the newcomer would probably fold within two years.

The Commerce Commission said a competition study into domestic air travel was unlikely to give consumers a better deal, releasing its findings yesterday.

It found structural issues linked to population density and the costs of flying were probably bigger factors in determining airfares than any lack of competition.

Foran told Mike Hosking the airline had been forced to absorb many cost increases, and he had empathy for the impact on consumers.

“We mitigate them where we possibly can.”

Foran, who leaves the job in October, said New Zealand’s population was too small to support another big airline.

“You could put another airline into New Zealand … the prices will come down, but no one will make any money, and in one to two years, an airline will leave."

He added: “We get the benefit of living in a country with not so many people, but that means you don’t get the benefit of scale.”

Foran said even Australia, with about five times the population of New Zealand, had not shown an ability to support many airlines.

Airports and airlines have been trading blame about airfares, with each group saying the other contained “monopolies” – Air New Zealand and Auckland Airport.

“Our job is to be fair,” Foran said today.

Consumer NZ has called for more scrutiny of the sector and Finance Minister Nicola Willis has indicated she was open to a market study of airfares.

Foran this morning also discussed the early days of his role at the airline in late 2019, after he arrived from US retailer Walmart.

“I had not heard of Covid when I got the job. It had not surfaced,” he told Newstalk ZB.

He said when the pandemic arrived, then-Prime Minister Jacinda Ardern called to give him advance notice around likely border closures.

Ongoing issues for the airline included Rolls-Royce and Pratt & Whitney engine maintenance issues.

Some of these issues would linger after his departure as CEO.

“For sure there will be some issues that will still be ongoing for the next year-and-a-half.”

But he said the airline was making progress on the 787-9 Dreamliner retrofit.

The Dreamliner's new premium economy section. Photo / Michael Craig

Foran said important tasks for him were building on the airline’s legacy and ensuring the company had a good culture.

He said international tourism, which is yet to surpass pre-Covid levels, was returning, but slowly.

Foran said yesterday’s announcement that a visa translation fee would be scrapped was welcome news.

He estimated the change would save tourists from countries outside the 60-nation visa waiver bloc, including China and India, about $100 or $110.

But he said more work was needed to bring foreign visitors to New Zealand.

“We were slow out of the blocks.”

Foran said it was important for tourism benefits to be spread nationwide, not just concentrated in places such as Queenstown.

He said he had no new job lined up but was open to suggestions.

John Weekes is a business journalist covering aviation. He has previously covered consumer affairs, crime, politics and court.