The lesson we can draw from the experience is that this is a company that cannot fail. It will not be allowed to fail. Anyone who buys the Government's shares in the airline now buys with that comfort. That deprives the rest of us of the benefit that privatisation ought to bring.
Nobody is likely to be offered the Government's shares for a while, as Air NZ chairman John Palmer admitted at Parliament this week. The share price is languishing below the price Labour paid and the profitability of airlines is marginal at the best of times, which these are not.
Palmer, an enthusiast for privatisation in principle, said that the Government has not made the case very well. Businessmen often say this. They're right, but possibly not for the right reason.
When John Key is pressed he usually makes the business case for asset sales, not the economic case. There is a difference.
The business case is that it makes sense for the Government to release some capital from its profitable assets rather than borrow that amount when its operating account is in deficit.
The economic case is that better investment decisions are made by people who personally stand to lose money if things go wrong. Economists like the idea of risk. Businessmen don't.
Sir Bob Jones once said he never took a risk, he invested only in certainties. He made his pile in property when inflation was raging but even so, he probably speaks for investors in general.
Nobody would put much of their own money into a venture without a realistic assessment that it would succeed. That is why economists like privatisation.
But their reason only works for assets that face competition. If Contact Energy was to make a disastrous investment next week and the value of my shares fell through the floor, taxpayers need not care. Somebody else will buy the Clutha dams and the thermal stations and the public power supply will not flicker.
The same could be said for Mighty River Power, Meridian and Genesis Energy. They are perfect properties for privatisation, as is the state coal mining company Solid Energy. If that collapsed, it would either be bought by a better operator, probably foreign owned, or its fate would tell us the mines were no longer economic. Either way, the economy would be better off.
Businessmen praise competition and risk in theory, but they are not at all averse to taxpayer support if it is offered. They tend to see the economy as a business writ large possessing the enviable power to conscript capital. They readily understand economists' respect for their decisions but not the reason for it.
They like hearing Mr Key say "public-private partnerships" because the partner with the power of taxation is likely to cover any losses. It is called privatising the gains and socialising the risk.
If those marching against asset sales again last weekend could stop worrying about competitive power companies and start talking about Air NZ they would have a point.
They could start talking about the railway too. That was another privatisation that "failed" in the sense that two private companies couldn't make the asset pay for its maintenance. Late last month its value was slashed by an accountant's pen from $7.8 billion to at most $1.3 billion, which reflects only the revenue it is generating.
It is odd that sentiment is more easily aroused against sales of assets that are practically immovable. Farmland raises even more fear than hydro dams. But it seems to be transport assets that we really want to keep, economic or not.
An airline feels like a lifeline these days, and the railway we keep because it's there. Privatisation has told us their true cost.
