As the national carrier posts a big loss and regional fares continue to soar, politicians are sparring over whether majority public ownership still makes sense, writes Catherine McGregor in today’s excerpt from The Bulletin.

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Air New Zealand at a crossroads

Air NZ has reported a $59m pre-tax loss and a $40m bottom-line loss for the six months to December, a big reversal on last year’s profit. The airline says global engine maintenance delays, higher fuel and airport costs, a weaker New Zealand dollar and sluggish domestic demand have all taken their toll. In response, chief executive Nikhil Ravishankar has launched a comprehensive “strategic reset”.

The dire numbers have prompted Act leader David Seymour to renew his call for the government to sell its 51% stake, saying taxpayers were paying twice – “once as a taxpayer and once as a passenger”. He added: “Get woke, go broke. We hear about electric planes, glossy reports on climate change, paper cups in the Koru Lounge. What they can’t seem to do is take off and land on time.” Winston Peters hit back, calling any share sale “economic lunacy” and urging ministers to back the airline’s future rather than “hocking it off”.

The case for selling

The argument for divestment has been building for some time. Writing in the Sunday Star-Times last year, Roeland van den Bergh found some concern about the government being both regulator and majority owner. The Taxpayers’ Union labelled that a “blatant conflict of interest”, arguing a sale would reduce taxpayers’ exposure to commercial risk and boost competition.

Irene King, a former senior Air NZ manager, raises a different concern. With the Crown as majority shareholder, the airline operates under a “mixed imperative” that can dull commercial “sharpness”, she says. Take the electric cargo aircraft currently being tested on the Wellington-Blenheim route. While Air NZ has expressed pride in the project – which forms part of its plans to be net zero by 2050 – King says a fully private company would have told its biggest shareholder “in no uncertain terms” that it was “an unaffordable flight of fancy”. Her broader worry is that the airline’s sustainability ambitions, however worthy, are ultimately being underwritten by taxpayer money.

The case for keeping control

Yet there are many reasons not to sell up. Van den Bergh notes that airlines are notoriously volatile businesses: in the 24 years since partial renationalisation in 2001, Air NZ has made bottom-line profits in 19 of them, despite racking up heavy losses during Covid. Supporters of public ownership argue that a down year like this one is precisely why a long-term shareholder with a national interest matters.

There are also non-financial considerations. Air NZ employs almost 12,000 people, anchors a wider aviation ecosystem and underpins tourism and export flows in a small, geographically isolated economy. The airline’s status as critical national infrastructure is why the government spent $885 on renationalising it back in 2001. Winston Peters is among those warning that if the government chose to sell up again, this time it would stay sold.

Regional routes and rising fares

Overlaying the ownership debate is mounting frustration over domestic airfares. RNZ analysis last year found some last-minute regional flights costing up to $3 per kilometre, with routes such as Wellington–Blenheim and Hokitika–Christchurch particularly expensive. In response to criticism, Air NZ says its domestic costs such as airport charges have risen 40% since 2019 and smaller aircraft are inherently more expensive to operate.

Soaring fares and route cuts have prompted the government to intervene to support independent regional airlines. This week, associate transport minister James Meager announced a $1.1m concessionary loan to Golden Bay Air from the Regional Infrastructure Fund, aimed at encouraging airline competition and preserving connections. Other carriers, including Air Chathams and Sounds Air, are also seeking support. Regional airlines play an outsized role in linking remote communities, moving medical staff and sustaining local economies – yet many are financially fragile. As Newsroom’s Jonathan Milne put it: “At the end of the day, someone has to pay to keep the community connected, and it’s turned out to be the taxpayer.”