ATW's 2012 Airline of the Year - Air New Zealand

The journey Air New Zealand has taken over the past decade has been extraordinary. For many legacy and flagship carriers, adapting to the tumultuous global economic and market changes of the past 10 years has been a huge and difficult challenge. But our Airline of the Year, now a two-time winner of this award, exemplifies how inspired management, innovative leadership and team spirit can overcome the hurdles and ensure that a legacy airline can still be a leader in the air transport industry. While many of its contemporaries have cut back on services, ANZ introduced innovative service and inflight products that helped grow customer loyalty while setting the standards for aircraft, environment and operational performance.

The airline’s fiscal year ended June 30, 2011 and was severely impacted by the Christchurch earthquakes, along with natural disasters in two other major markets, Australia and Japan. ANZ also had to contend with significant swings in currency and soaring fuel prices.

CEO Rob Fyfe said that operating conditions in the six months to June were the most difficult ANZ has faced in a decade.

However, ANZ still posted a fiscal-year net profit of NZ$81 million ($68 million), down just 1% compared with the year-ago period. And operating revenue was up 7% to NZ$4.34 billion with a 4.3% increase in yield on international routes to 9.8 cents. Passenger numbers increased 6.3% to 13.1 million.

The airline also grew capacity, reporting a 2.5% year-over-year lift in ASKs to 32.35 billion. RPKs climbed 4.5% to 26.99 billion and load factor was up 1.6 points to 83.4%.

ANZ management has developed a number of successful and innovative commercial strategies. As a result, this is one of just a handful of airlines that still rewards shareholders with an annual dividend, and it is one of just three airlines that enjoy an investment grade rating from Moody’s. At the end of June, cash on hand as a percentage of annual revenue was 36%. Adjusted gearing was 45%, putting it well ahead of many global carriers.

Operating on a global stage yet with a home market of just 4.5 million, ANZ faces unique challenges. Its international long-haul business is dominated by inbound travelers who can choose their national carrier. And yet, ANZ controls 43% of the New Zealand inbound and outbound traffic and is the number one airline on all international routes with only a single exception. It is also the sixth most admired “Australian” company according to one Australian survey. In New Zealand, it was named as the company with the best reputation by consultancy AMR and the Reputation Institute.

On trans-Tasman routes, the most competitive international market in the world, ANZ offers passenger-pleasing technologies such as Panasonic’s e-FX IFE on its Airbus A320s and Boeing 767-300s as well as a new fare structure called Seats to Suit. Since its launch of Seats to Suit in late 2010, ANZ has seen a 15% jump in customers while five of its eight competitors have lost market share.

The airline’s economy Skycouch and premium economy Spaceseat products have won ANZ the Conde Nast Traveler’s 2011 Innovation and Design award and the Skytrax 2011 World’s Best Premium Economy Class Airline award.

ANZ has also seen a 6.2% decline in reported lost baggage, while the industry suffered a 6% increase.

It is therefore not surprising that in the Star Alliance Customer Satisfaction Survey, ANZ has placed first in “overall satisfaction” for seven consecutive quarters.

ANZ’s operational performance is also stellar. It has equipped six Boeing 737s and all 15 of its Airbus A320s with Required Navigation Performance technology, boosting schedule reliability at weather- and terrain-challenged destinations such as Queenstown. The airline was also the first to introduce 240 min. ETOPS with its Boeing 777-300ERs.

ANZ is committed to being “the world’s most environmentally sustainable airline.” It accomplished the industry’s first sustainable biofuel flight at the end of 2008 and the first Asia and South Pacific Initiative to Reduce Emissions flight from Auckland to San Francisco. ASPIRE flights are now conducted daily.

 “Environmental responsibility is a cornerstone of flight operations,” Fyfe said. Since 2005 ANZ has implemented fuel-saving initiatives that when summed equate to a reduction of 142,000 tonnes of CO2 each year, or 5% of total fuel consumed. In 2009 it launched Airbus’ “sharklet” winglets on its new A320s, which will reduce carbon output further, and it has equipped its 767s with Aviation Partners Boeing Blended Winglets.

Over 67% of the airline’s energy consumption—excluding aircraft—comes from renewable resources and the airline announced a memorandum of understanding with Australia-based Licella to examine developing and marketing a process to convert woody biomass into sustainable aviation biofuel in New Zealand.

A commitment to its staff, customers and shareholders, concern for the environment, innovative approach to business, and a solid financial performance combine to make Air New Zealand a worthy choice as ATW’s 2012 Airline of the Year.

View Awards Presentation Video Here