Air New Zealand cargo boss Anna Palairet: Leading the fastest growing part of the business

Air New Zealand general manager of cargo, Anna Palairet. Photo / Michael Craig

Not far from Air New Zealand's freight operation at Auckland Airport, a Boeing 777 sits in storage on the tarmac.

As a few of the airline's 777s are held in reserve here, with the rest being sent to the United States for what could be permanent storage in the desert, it is the cargo operation that is doing the heavy lifting.

For the foreseeable future Air New Zealand is a domestic operation, and income from freight flights is the its fastest growing revenue source.

While passenger revenue plunged 21 per cent over the last year to $3.9 billion, cargo has increased 15 per cent to just on $450 million, with $21m of that from a Government scheme to subsidise air freight up to June 30.

Passenger revenue will fall even more dramatically in the current year, likely to be hit by a full 12 months during which international passenger traffic has been at a fraction of previous levels, while cargo is set to climb.

The cargo division has a new general manager, Anna Palairet, who has 14 years of operations experience at the airline. Her most recent job, in property and infrastructure, slowed as costs were slashed.

One showpiece property project — what would have been the world's largest single arch timber aircraft hangar — is on hold. It didn't get much further than the sod-turning stage.

In cargo, it's different. "It's exciting to become involved at a time when we can become half of the revenue," Palairet says. "This has become a cargo-led network."

The 45-year-old says she was attracted by the leadership opportunity. "You come to a point in your career where it becomes leadership — the organisation saw an opportunity at a time when I was ready to do something new."

She has had commercial experience with big corporates including the NZ Dairy Board (now Fonterra), Carter Holt Harvey and Amcor in Australia. Before her property role at Air NZ, she has headed procurement and led commercial portfolios in the company's engineering, group supply chain and business performance divisions.

While there had been room for transformation in the property area, change in cargo would be evolutionary rather than revolutionary.

Across Air NZ, more than 4000 of 12,500 staff have lost their jobs since the start of the year. In freight, numbers have fallen from about 400 to 260 or so.

"There have been some heartbreaking times," says Palairet. "The job for us all as leaders is to be buoyant for our people because they have gone through some really tough times.

"Buoyancy is the key and keeping everyone focused forward is what we have to do."

Early in the pandemic, the airline was arranging charters within 48 hours to meet the acute need for personal protective equipment (PPE) and Palairet says there's still adrenalin flowing in the freight division as the company is still in the tactical phase of working through what is the airline industry's worst commercial crisis.

"We're still very much in the mode of adapting to the new abnormal," says Palairet, who will report to chief executive Greg Foran following the departure of Cam Wallace, who has had oversight of cargo among his other roles since June.

During the pandemic Air New Zealand has flown the bulk of about 60 to 70 flights under the Government's $300m-plus International Airfreight Capacity Scheme.

Between a third and a half of flights are cargo-only, with all freight stored in the belly hold of Dreamliners, where passengers' bags are usually kept. The aircraft can carry just on 20 tonnes below their main passenger deck.

Freight arriving at Air New Zealand's cargo base in Auckland. Photo / Michael Craig

Other airlines have stripped out seats and Boeing has set up new engineering operations to convert passenger aircraft to cargo. Palairet said Air New Zealand did look at taking out seats in Boeing 777s and 787s .

"Taking something like that through a conversion is a very lengthy process. It can take months and months and at the time we didn't know how long this was going to go for. It just felt it wasn't a viable option for us."

She said the Government freight scheme was opened to other airlines, which was needed for competitive tension.

Since Air New Zealand started flying under the scheme on May 8, it has operated more than 500 return flights, carrying over 20,000 tonnes of cargo in and out of New Zealand. A surge in online shopping during lockdowns has boosted the volume of individual packages being imported.

Demand for fresh New Zealand food was strong. In July and August the airline helped exporters get 500 tonnes of seafood into North America and more than 250 tonnes of crayfish into Asia. Seasonal exporters are starting to gear up, with 1200 tonnes of capsicums to be exported to Japan and Australia, more than 1500 tonnes of chilled lamb into Britain and Europe for Christmas, and over 3000 tonnes of cherries into Asia in time for Chinese New Year.

This will strain freight capacity, says Palairet, who took over from Rick Nelson as general manager of cargo.

Despite the specialised freight flights, the collapse in overall air traffic around the middle of the year meant that on average global air freight volumes are down about 16 per cent and capacity has plunged by 23 per cent. Freight rates here are through the roof.

''We would all say that freight rates aren't what anyone would want to see continuing but it's supply and demand," she says. "Certainly, the exporters have an understanding that freight rates can't be what they were pre-Covid."

Kreming it

Air NZ says it is the first airline in the world to fly Krispy Kremes as part of their supply chain. The frequency of flights and its partnership means it can deliver doughnuts within a matter of hours. Since the stores in Wellington and Christchurch opened in September 2019, it has flown 2,288,880 doughnuts out of Auckland.