Air New Zealand's Christopher Luxon: My toughest year

Since he took over the top job at Air New Zealand in 2013, it's been a great run for Christopher Luxon.

In that time the fast-growing airline has reported its highest profit ever, picked up an overhead locker-load of international accolades for its products and service, and Luxon has won awards for his leadership.

But in the past eight months the ride has been bumpier.

''It's been the toughest year for me'' says the 47-year-old.

''You would think the sixth year into the job would be a much easier proposition but without doubt it has been the toughest for the business in my tenure as CEO.''

The airline had been hit with a series of events including the rupture of the fuel pipeline from Marsden Point to Auckland Airport, Rolls-Royce engines on many of its Dreamliners needing repairs, and half a dozen extreme weather events since January.

And with a change of Government, the airline has felt political heat it hasn't experienced for years.

Luxon says it's been tough on the airline's 12,000 staff.

''It's been really frustrating for our people and our business because we're trying to do the right thing,'' he said as he prepared to go to Sydney where he yesterday announced a codeshare deal with Qantas and will meet with other airline leaders at the annual International Air Transport Association meeting.

''We have people who wake up every day and want to serve our customers as well as they possibly can and we haven't been able to hit the standards that we've set for ourselves around that at times.''

The rupture of the fuel pipeline to Auckland cut jet fuel supplies for more than a week, causing serious disruption for all airlines, but particularly Air New Zealand, which uses the airport as a hub. The airline last week launched court action against Z Energy and BP over losses of $4.3 million.

But the engine issues mean continued disruption. While there were known corrosion issues around the world with turbine blades in some of the Rolls-Royce Trent engines, the usual maintenance cycle was expected to cover them.

But two serious engine problems on separate Air New Zealand Dreamliners on successive days in December forced groundings and a radical change of strategy to inspect engines and where necessary repair them in Singapore.

Rolls-Royce Trent engines on Dreamliners have been plagued by problems. Photo / Alan Gibson

Disruption struck at the worst possible time - over the busy pre-Christmas period. A separate issue in engine compressors has exacerbated the problem since April, with further groundings and engines being taken off aircraft for repairs.

The impact has been profound, hitting tens of thousands of passengers with hundreds of cancellations, delays and disrupted schedules.

The airline has had to train cabin staff and pilots to fly different aircraft types and faced challenges getting crews to the right place at the right time.

The engine problems came at a time of rapid growth to meet heavy demand.

''It's hard keeping up with the base level of growth let alone with events being thrown on top,'' says Luxon.

He says Air New Zealand - unlike other affected airlines overseas - opted to keep cancellations to a minimum by juggling its fleet and urgently enlisting the services of Portuguese wet lease charter airline Hi Fly on flights across the Tasman.

''We made a determination to keep our customers travelling even if it has been sub-optimal and a bit ropey at times.''

''Other airlines decided to ground fleets and cancel flights. We've said 'no' - it's important to get people from A to B. It may not have always been to the Air New Zealand standard or the way we wish it to be.''

The impact of the engine problems will continue through winter, although Air New Zealand is negotiating for two longhaul dry lease aircraft its crew can fly to bolster its fleet.

Then there have been the ''incredibly frustrating'' weather events.

Weather records for the past 20 years turned up one or two storms leading to significant disruption each year. This year there have already been five or six.

''Most of our customers have been really patient but a small percentage of them are very difficult in those moments and quite abusive to our staff. It's a reality of flying in an island nation.''

Cyclone Gita grounded Air New Zealand planes in Wellington in February. Photo / Marty Melville

The airline has also been under attack from Regional Development Minister Shane Jones, who called for heads to roll after a row over Air New Zealand's withdrawal from Kapiti escalated in March. The airline is a big target for politicians - former Prime Minister and now Air New Zealand board member Sir John Key once made mileage out of what Jetstar's entry into regional routes could do to pricing - but in Jones the airline faces a far more active agitator.

Luxon plays down any rift with the Government, whose shareholding minister, Finance Minister Grant Robertson, can put forward new board members for election at the end of the year.

Of Jones, Luxon says: ''I know him well - I think the challenge is that we need to tell our story and narrative much better. If flying in regional New Zealand was really straightforward there'd be a lot of people wanting to do it.''

And then there was the cockroach.

A passenger on a flight from Australia said there were bugs on a plane.

Luxon says there are many ways the airline cleans planes in line with quarantine rules, including with long acting insecticides.

But the airline carries about 15 million passengers a year and insects can come on in luggage. ''There are lots of ways that cockroaches can come on board - I'm adamant that we're doing a great job,'' he says.

If a rocky year is getting to him, he's not showing it. It helps being in an industry full of optimists — they have to be.

Aside from the years around its near-collapse at the start of the century, Air New Zealand has largely made profits — and super-profits most recently. But you don't need many fingers to count how often the industry as a whole has been in the black.

Luxon has alot to look forward to.

New A321 aircraft are due from the end of the year, improving economics on short range international flights; three new Dreamliners (with new model engines) are coming; and the airline is launching new routes to Taipei and Chicago at the end of the year. The Qantas codeshare deal is also a neat replacement for the Virgin Australia liaison that has ended messily.

The former Unilever executive still regards himself as an airline outsider, as someone to challenge what he still sees as some outmoded practices in other airlines.

''Having said that, over the last five years the airlines have got much more commercial, much smarter and realise sustaining losses on loss making routes is not the way to run a business.''

Next week Luxon is in the spotlight at the IATA meeting, a member of what is being billed as a highlight, the chief executive insight panel.

He says like all airlines, Air New Zealand faces increased customer expectations among the 40,000 passengers it carries each day.

''I do think there is massively rising customer expectations and that is a global phenom around the world, not just in aviation but in all sectors of business,'' he says.

''There's a lot of challenges this company is trying to rise to but it's making us better. We do really appreciate that customer feedback and it's a good wake up call for us to look at what we could do better.''