20 December 2005

Air NZ engineering part saved by sensible union

There appears to be a deal for part of Air NZ’s engineering services in Auckland and Christchurch to remain, thanks to the EPMU and the Aviation and Marine Engineers' Association negotiating sensibly with the airline to provide service efficiently. Around $38 million worth of savings have been agreed.

However, it will still mean the end of jet engine maintenance as that can clearly be done at lower cost elsewhere. This is not surprising, Air NZ is not a big airline and the economies of scale of bigger operations elsewhere go against it.

This should be seen as a win-win, especially as many of the engine workers who will be made redundant could be snapped up by other employers.
It is also a feather in the cap to Andrew Little and the unions involved - better to negotiate and find a way forward that suits both parties than stand your ground and find you lose it all - Air NZ, after all, has to compete with other airlines. I doubt that many who are supportive of the workers always fly Air NZ to show solidarity.
Nevertheless, Sue Bradford is holding out claiming that engine maintenance is a strategic asset. Well it isn't for Air NZ, and how is it for NZ inc? The engines are not made here, the fuel is not local in origin, and planes are, funnily enough, rather portable. What strategic goal would there be? Would there be a war and our airliners can't hop across the Tasman to get their engines' fixed?
Sue needs to join the 20th century - companies do not need to own all factors of production to operate effectively and efficiently, and they probably shouldn't! Air NZ doesn't make planes or produce jet fuel, or airline seats or anything else - it is an operator, marketer and provider of services. You could argue it "strategically" needs to do everything from fuel to planes - it doesn't - and it shouldn't undertake an activity because it can - because that will cost more, and it will cost the airline - either by increasing fares (reducing market share) or reducing net dividends (and the capital able to reinvest in new planes or other areas of better return).
It's called running a business - which is what it is - and unfortunately, too many Green MPs have little to no understanding of basic economics. Air NZ has needed bailing out twice by the taxpayer in its history, in both cases following excessive interference in its business by the government - as long as the government owns it, it should be left well alone.

1 comment:

Anonymous said...

Are we not in the 21st century?