Air NZ chief revenue officer Cam Wallace explains how the airline is switching to cargo as a money spinner. Video / Supplied
Opinion
COMMENT:
With the global airline industry forecasting billions of dollars of losses due to the Covid-19 crisis, our experts focus on Air New Zealand's response to the crisis.
Air New Zealand is the country's national carrier, and the Government has a majority stake in the company. As a result ofthe Covid-19 crisis, the majority of Air New Zealand's flights have been cancelled, and thousands of jobs are at risk at the airline.
How is the company managing the crisis? With a new chief executive, the company is facing a major crisis which many believe is the most serious challenge to the airline industry since 9/11 and the 2008 global financial crisis.
Catastrophic events will often limit the response of organisations in a crisis, but how they choose to respond can have far-reaching consequences for their reputation.
Covid-19 has been brutal to the aviation, tourism and retail sectors and now the whole country is being asked to make significant sacrifices.
The Government – a 52 per cent owner – won't let the national carrier fail and the $900 million loan is the second bailout in a little over 10 years. But everybody understands the extraordinary circumstances and the necessity of the response to save a strategic asset with a crucial role in maintaining vital exports and imports during the crisis, and once it's over, to rebuild tourism.
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What Kiwis want in return is for the airline to show similar understanding and generosity.
How people are treated when cancelling flights, waiving rebooking or change fees, and helping relocate stranded family are tangible demonstrations of reciprocity. What's more, its frontline staff in call centres have been excellent ambassadors under incredible pressure.
The airline will be mindful that support for reasonably priced regional services in the future will be another tangible expression.
The airline won acclaim flying to Wuhan to pick up stranded Kiwis and it may be involved in repatriating others marooned by Covid-19 travel restrictions.
It has also consistently emphasised its focus on getting through this crisis and chief executive Greg Foran took a $250,000 pay cut to help reduce costs.
Air New Zealand chief executive Greg Foran. Photo / Phil Prenderville
Clarity of communication and calmness under pressure are highly regarded leadership attributes and Foran has consistently demonstrated both, earning respect and goodwill from staff, customers, shareholders and other stakeholders.
Former Air New Zealand CEO Rob Fyfe won admiration for his handling of the Perpignan Airbus 320 crash in 2009 with a response that was proactive, personal and acknowledged the emotion of the tragedy. Foran has displayed a similar level of empathy and understanding.
The decisions and messages may be tough, however, the leadership and delivery against brand values has been impressive.
Chris Galloway, Senior Lecturer at Massey University
The old cliché that the more things change, the more they stay the same is no longer true (if ever it was).
As Air New Zealand has confronted the coronavirus crisis, it has been dealing with circumstances no business, no airline, no government could have contemplated just a few months ago.
In doing so, boss Foran has demonstrated effective crisis leadership by early taking a personal salary hit ahead of having to cut back on his biggest cost: staff. Here I must declare an interest: my daughter works for Air New Zealand in Wellington. She speaks of processes designed to minimise forced redundancies and maximise opportunities for those who might have been thinking of moving on anyway.
Fair enough. Foran has also foreshadowed a smaller business going forward: a clear signalling of an expectation that coronavirus effects will be long-lasting and that the future of the global airline industry hangs under a big question mark.
Yet while smart crisis response now is vital, the real test for Air New Zealand – and other businesses – is yet to come.
Let's be somewhat optimistic and assume that in the coming months, a suitable anti-Covid-19 vaccine will be found and that its distribution will be sufficient that business can move to more familiar modes of operating, albeit on a different scale. Then what?
It's well established in crisis studies that while pre-planning is a must and effective crisis incident response is essential, it is the post-crisis phase that is often the most challenging.
Many senior executives simply want to push the crisis into the background and "move on". Big mistake. This is the time when lessons need to be absorbed, new operational procedures and structures introduced, and reputations rebuilt where damage has occurred.
It's often the case that no matter how well handled, crises inflict some reputational damage. By the time we're able to see some brighter skies ahead, Air New Zealand and its operational environment are likely to be very different. While some airlines won't survive, others will significantly reconfigure their fleets, such as by retiring huge people-carriers like the Airbus A380.
In all of this, what's needed is more than a steady hand at the controls.
As in due course Air New Zealand emerges from this truly unparalleled crisis, it will require resilience and determination to leverage the innovation for which it has already made a name.
- Daniel Laufer, PhD, MBA is a global expert on crisis management and Associate Professor at Victoria University of Wellington.
