Editorial: No way out for Air NZ engineers

Two things pointed to the extent of the problems that dog Air New Zealand's engineering division. The first was the widespread staff realisation that a review of the operation would be the forerunner of job losses. It was simply not expected that the number of proposed redundancies would run to 600. The second was the Air NZ chairman's admission that even the thwarted alliance with Qantas would not have solved all the "issues" associated with the long-haul engineering operation. Taken together, these suggest Air NZ has little option but to trim the workforce to match the division's workload.

The move is most regrettable. The engineers are highly skilled, and have played an important role in building the airline's reputation. Given that, it is not surprising there have been calls from several quarters for the staff to be retained. It has been suggested that the Government, as the airline's 82 per cent shareholder, should intervene. It could, so the theory goes, accept a smaller dividend in return for instructing Air NZ not to proceed with the redundancies.

That, however, would place the airline on the slippery slope which, in a particularly telling manifestation, led to the New Zealand Railways operation of 20 or so years ago. In time, it would lead to even more drastic action, and more calamitous staff upheaval. To suggest otherwise is to ignore the economic realities that have undermined the engineering division.

Nor is it possible to argue that its woes will repair themselves sufficiently over the next few years to justify cancelling the layoffs. With the exception of the benefit likely to be derived from a falling dollar, the problems afflicting the division are, in fact, likely to deepen.

The first of these is the competition from overseas maintenance bases, many in Asia and some 10 times the size of Air NZ's operation. Air NZ can match these in quality but not on price. The failure of a marketing campaign to sell the airline's engineering services to other carriers confirms as much.

Additionally, overseas airlines have had to meet rising fuel bills if they wished to send their aircraft the long distance to Auckland for servicing. That situation is unlikely to improve to any great degree, given the difficulties on both the supply and demand side of the oil industry.

Nor is there likely to be an upswing in the demand for engineering services, as such. Modern airliners, like cars, require less maintenance - and will require even less in future. That is not to say that safety will not continue to be hugely important to airlines, especially for their reputations. But it makes little sense to suggest Air NZ's aircraft will start falling out of the sky if they are maintained in Asia. Such an idea was surely consigned to history when we started buying Japanese cars in large numbers.

The turnaround in the engineering division's fortunes has been dramatic. Just a few years ago, it was regarded as the jewel in the airline's crown. Now, Air NZ says it will will save $100 million over five years by having its wide-bodied jets serviced overseas. Rapid change is, however, part and parcel of the airline industry. And nimbleness is a key requirement, especially for a company whose limp share price also reflects fierce competition on transtasman routes and the need to improve yields on long-haul flights.

It is imperative Air NZ explores all avenues for retaining as many of its engineers as possible. They are an important resource, which, if laid off, would probably be lost to the country. Sadly, however, it is hard to see this jewel regaining much of its lustre.