Air New Zealand’s daredevil with a head for heights

A report in The Dominion Post says that Air New Zealand’s strategy boss Nathan Agnew says Pacific Blue’s arrival on domestic routes was no surprise, with the Kiwi airline more focused on expanding its long-haul business, and making the trip more comfy. 

For an airline man though Nathan Agnew is rather fond of jumping out of aeroplanes, with Air New Zealand’s point man on strategy having done about 400 skydives.  He also holds a private pilot’s licence, though he has yet to jump out of plane that he was also flying.

Fortunately for the airline’s passengers, the 38-year-old Australian is focused on getting as many people as possible on board the airline’s gleaming new aircraft and making them so comfy they won’t want to get off at the other end.

Mr Agnew joined Air New Zealand in October last year, hot on the heels of 30 per cent cuts to head office, which followed the shake-up that saw 600 engineering staff out of work.  That month negotiations started with airport workers that resulted in 300 more losing their jobs.

The benefits of that strategy, as well as new domestic aircraft and several new long-haul routes, are beginning to pay dividends.

Attention is now turning to preparing the airline for the next step with the arrival of a new fleet of Boeing 787-9 Dreamliners and 777-300ERs, which will replace the flagship 747-400s by 2012. The new fleet can fly farther and more economically than the airline’s existing planes, opening the possibility of flying to many more destinations. Passengers can also expect significantly improved seats and cabins.

Mr Agnew is unconcerned by the arrival of Pacific Blue as a domestic competitor in November, as both Pacific Blue’s parent Virgin Blue and Qantas budget offshoot Jetstar had made their plans to enter the domestic market clear for some time, he says.

“So this is no surprise to Air New Zealand and our strategy … has reflected this for some time.”

That included the addition of two more Boeing 737s in the first half of next year and reducing the cheapest domestic fares by up to 26 per cent earlier this year.

Despite that, Pacific Blue’s entry on the main trunk route has immediately sliced another 30 per cent off the lowest fares on the route.

The domestic and trans-Tasman markets will continue to grow organically in line with the economy, Mr Agnew says. Long-haul is where the growth is and the opportunity to open new markets.  At least 20 long-haul destinations are under consideration at any one time, and of those about six are on the priority list.

But for now Air New Zealand’s strategy of adding one new direct long-haul route a year is also on hold. Hong Kong to London, and Shanghai, have been added to the network in the past year, and flights to Vancouver, Canada, start in November. Another new route is unlikely to be announced till 2009, before the arrival of the first 787s and 777s in 2010. “All of the aircraft that we have in the fleet today are fully utilised,” Mr Agnew says.

There is little risk of Air New Zealand being caught off-guard by the lack of available aircraft, since the global shortage of aircraft means airlines do not have the capacity to add new routes, he says.

Air New Zealand’s decision to order new planes at a time that others were holding off also means it will be at the head of the queue, giving it an advantage.

Future services will aim for additional cities in countries that the airline already flies to, and fast-growing economies where demand for air travel is “exploding”, like China and to a lesser degree some South American countries.

In-bound tourism accounts for 70 per cent of the long-haul business.

In light of the high Kiwi dollar and record fuel prices, which make a New Zealand holiday more expensive for most foreigners, the airline plays a vital role in selling New Zealand as an “absolutely must-see destination”, he says.

“These days with air travel being generally affordable and there being a multitude of destinations and carriers that you can fly, you certainly cannot take it for granted that the destination that you are marketing is going to be the most popular.”

To help make the 24-hour journey halfway around the world more appealing, designers and engineers have been challenged to come up with a revolutionary economy cabin for the new fleet, which Mr Agnew suggests could even lead to seats being replaced with sleeping pods.

“We have given our engineers a brief, almost like a Skunk Works project, to think about how you might make a concept like that work.” Though the pod idea may ultimately not be economic or practicable, “certainly it is in our evaluation set”.

The new more fuel-efficient fleet will also reduce the airline’s carbon emission by about 20 per cent, something increasingly important to European travellers.

A voluntary carbon offset programme will be launched later this year for passengers who want to pay an extra amount on their fare, which the airline will invest in projects that reduce the impact of greenhouse gases, like reforestation, Mr Agnew says.

The marathon runner and triathlete already walks or cycles to the office to do his bit for the environment, and in an apparent competition with chief executive Rob Fyfe – who is flat-out planting thousands of trees at his Waiheke Island retreat – Mr Agnew has bought enough carbon offsets to ensure that he and his wife are carbon-negative.

“A large part of this is not just taking corporate responsibility, but also taking individual responsibility.”

Mr Agnew’s background in aviation stretches back to 14 years ago when, as a graduate of the University of Western Australia, he joined the Boston Consulting Group, which had Qantas as a major client.

“That is probably where I cut my teeth in the aviation industry.”  After seven years he became a partner in a boutique corporate advisory firm, this time with Ansett Australia as a client, along with international airports and rail operators.

“There are not many airlines in the region that I haven’t had something to do with.”  A sabbatical followed in 2005, before he joined Air New Zealand in the role that is not dissimilar to that previously held by Mr Fyfe.

An impressive portfolio of responsibilities includes the group’s strategy, network development, fleet planning and government relations.

What sets Air New Zealand apart from the rest is the speed with which big decisions are made, he says.   “If Air New Zealand was just another corporate, then my discussions with Rob would not have lasted more than a few moments.”

And he has certainly picked up on the boss’s mantra that Air New Zealand can only survive by being more innovative and more nimble than other airlines.  “We really get that in our industry you need to stay a step ahead of competitors, and the only way that you can do that is being faster to market.”

Air New Zealand’s success in doing that has caught the attention of others.  “We have a lot of larger carriers that want to come and talk to us about our internal processes and how it is that we are taking far- reaching decisions.”

What they learn, however, is that there is an X factor “that fortunately is hard for others to replicate”.  

Central to the success are the flat management structure and the latitude given to senior management to make decisions, supported by an actively involved board.

Big airlines like Qantas and Singapore Airlines simply cannot match the speed of that interaction.

Report by The Mole