Key Points:

Air New Zealand was paying the going rate for Chinese crew working the route to Shanghai in the same way it would pay a different rate for British flight crew based in London, Prime Minister Helen Clark says.

Labour Minister Trevor Mallard has asked the Department of Labour to look into pay disparities between Air New Zealand staff based in China and here.

On Saturday, former immigration minister Tuariki John Delamere labelled the state airline a "flying sweat shop" for paying Chinese flight attendants on Auckland-Shanghai services little more than a quarter of their New Zealand colleagues' wages.

He said the majority Government-owned airline hired more than 30 Chinese workers.

Mr Delamere today said that the immigration service manager in China who had arranged the visas for the Chinese staff was last July appointed Air New Zealand cabin crew manager for Shanghai.

The Weekend Herald quoted an Air New Zealand official as saying the Chinese workers were not employed directly by the airline but were seconded by a Chinese company, Fasco, which set their salaries based on market relativity in China.

But this prompted Mr Delamere to also query whether Air New Zealand had made a "false declaration" if it had applied to Australian authorities for transit visas for Chinese airline crew.

He produced an application form in which it said staff were employees of Air New Zealand.

The form did not name any Chinese staff. Mr Delamere said he understood it was a generic application the company used.

An Air New Zealand spokeswoman did not have any comment.

The transit application was for a routine cabin crew flight training exercise from New Zealand to Australia where there was a flight turnaround of about 1.5 hours with the flight crew not clearing customs.

Mr Delamere told NZPA he had been fighting on behalf of Chinese air attendant Crystal Zeng, who had wanted to work out her notice with Air New Zealand to take up a new job in New Zealand. She had graduated with a tertiary qualification from a New Zealand university. But when she had returned to China to work out her notice, her work visa was cancelled.

Mr Delamere said there was no provision in New Zealand law to give someone a work visa to work for a Chinese company that was not registered in New Zealand.

It was also prohibited from issuing a work visa to people who were paid less than the minimum wage.

Alliance Party co-leader Victor Billot said the low pay issue was a "red alert" to workers about what free trade deals would mean for New Zealand when "inferior conditions, contracting out, aggressive corporates and a hands-off approach" by the Government would push down wages and conditions for workers.

Mr Billot predicted the new step would be for Air NZ to contract out all their international and domestic flight crews to Chinese labour hire agencies.

But Miss Clark pointed to market rates at work, saying for instance that while Shanghai staff were paid less, those based in London would be paid more than those based in New Zealand.

Her understanding was that airlines who based crews in Shanghai did not directly employ them. They were employed through a local government agency.

Air NZ paid "substantial taxes" to the Chinese government over and above the wages paid to Chinese workers.

"I would imagine that Air New Zealand is paying the going rate in China. It has, I believe, a very low level of attrition of staff there which suggests that probably the rate is fair in comparison to others.

"If you are asking me would I expect a market rate in Shanghai to be the same as New Zealand's, not I wouldn't. No more than I would expect the London rate to be the same," she told reporters.

"In the end, Air New Zealand has to make judgements about what constitutes the New Zealand experience on the planes but certainly it does source crews from elsewhere. Sometimes they will be paid more, as I would suggest is the case with London. Sometimes the market rate will be less, as is undoubtedly the case in Shanghai."

Air NZ overwhelmingly employed New Zealand-based staff except in a couple of places, she said.

A spokeswoman for Mr Mallard said he had this morning asked the Department of Labour to report to him and he expected this to be done in the next few weeks.