1 00:00:05,559 --> 00:00:06,000 Speaker 1: Kyota. 2 00:00:06,040 --> 00:00:09,160 Speaker 2: I'm Chelsea Daniels and this is the Front Page, a 3 00:00:09,240 --> 00:00:16,360 Speaker 2: daily podcast presented by the New Zealand Herald in New 4 00:00:16,440 --> 00:00:20,880 Speaker 2: Zealand is set to cut eleven hundred flights, affecting about 5 00:00:20,920 --> 00:00:27,440 Speaker 2: forty four thousand customers. CEO Nikhil Ravashanka has cited unprecedented 6 00:00:27,680 --> 00:00:31,600 Speaker 2: jet fuel prices as the cause, which he said could 7 00:00:31,640 --> 00:00:35,360 Speaker 2: not be passed on to customers who were already facing 8 00:00:35,560 --> 00:00:39,200 Speaker 2: cost of living challenges. A normal price for jet fuel 9 00:00:39,280 --> 00:00:42,080 Speaker 2: is about US eighty five dollars a barrel, but the 10 00:00:42,120 --> 00:00:44,800 Speaker 2: product is now at about one hundred and seventy dollars 11 00:00:44,880 --> 00:00:48,159 Speaker 2: US a barrel as a result of the war in Iran. 12 00:00:48,680 --> 00:00:51,120 Speaker 2: It's all prompted the government to round up a bunch 13 00:00:51,159 --> 00:00:55,800 Speaker 2: of senior ministers to oversee the country's fuel security. Today 14 00:00:55,800 --> 00:00:59,120 Speaker 2: on the Front Page, aviation journalist Grant Bradley is with 15 00:00:59,280 --> 00:01:02,280 Speaker 2: us to take a look at the current situation and 16 00:01:02,560 --> 00:01:10,360 Speaker 2: crises passed and whether air travel will ever be the same. So, Grant, 17 00:01:10,400 --> 00:01:13,759 Speaker 2: we're hearing a lot about jet fuel prices and how 18 00:01:13,760 --> 00:01:18,200 Speaker 2: it's affecting airlines globally. We've been told not to panic. 19 00:01:18,800 --> 00:01:19,800 Speaker 2: Should we panic? 20 00:01:20,400 --> 00:01:25,640 Speaker 1: Look, we're facing an immediate price search. 21 00:01:27,319 --> 00:01:27,440 Speaker 3: Nine. 22 00:01:28,200 --> 00:01:30,200 Speaker 1: If you've already bought your ticket, you're not going to 23 00:01:30,200 --> 00:01:33,000 Speaker 1: be paying more. If you are looking to travel a 24 00:01:33,040 --> 00:01:36,680 Speaker 1: little bit further down the track, well yeah, you are 25 00:01:36,760 --> 00:01:40,319 Speaker 1: going to be paying a bit more. But this is 26 00:01:41,400 --> 00:01:46,600 Speaker 1: an event that comes around in aviation. Say on average 27 00:01:46,600 --> 00:01:51,680 Speaker 1: every seven years there's a geopolitical event, a health emergency 28 00:01:51,840 --> 00:01:58,920 Speaker 1: that will affect airlines adversely, and by extension passengers. These 29 00:01:58,920 --> 00:02:02,400 Speaker 1: things become a little bit more frequently than that these days, 30 00:02:02,400 --> 00:02:05,400 Speaker 1: but these are the kind of things that airlines plan for, 31 00:02:06,560 --> 00:02:12,440 Speaker 1: and planes are going to keep on flying people. As 32 00:02:12,480 --> 00:02:18,160 Speaker 1: we learned after the pandemic, there's this very strong desire 33 00:02:18,360 --> 00:02:24,720 Speaker 1: to get places. It's an unstoppable need to connect. And 34 00:02:24,800 --> 00:02:31,079 Speaker 1: so I always figured that the airline industry is populated 35 00:02:31,080 --> 00:02:36,880 Speaker 1: by bioptimists, and they always look ahead and they find 36 00:02:36,919 --> 00:02:37,200 Speaker 1: a way. 37 00:02:37,320 --> 00:02:39,240 Speaker 2: Well, you wouldn't want to be a CEO in an 38 00:02:39,280 --> 00:02:42,440 Speaker 2: airline if you didn't have that sunny disposition, I suppose, 39 00:02:42,520 --> 00:02:45,240 Speaker 2: because you'd be quite down all the time, wouldn't you. 40 00:02:45,800 --> 00:02:49,920 Speaker 1: Yeah, Well that's right. It's these are kind of jobs 41 00:02:49,960 --> 00:02:55,000 Speaker 1: for the fainthearted. And well we saw this with the 42 00:02:55,040 --> 00:02:58,919 Speaker 1: previous in New Zealand. CEO Greg Flauran. He started work 43 00:02:59,120 --> 00:03:03,160 Speaker 1: the just about the day they started canceling flights as 44 00:03:03,200 --> 00:03:06,760 Speaker 1: a result of COVID, and that was his introduction to airlines. 45 00:03:07,800 --> 00:03:13,960 Speaker 1: Nicole Rubashanka, he's also having a baptism of fire for 46 00:03:14,080 --> 00:03:17,560 Speaker 1: different reasons, and so he's moved into the top job 47 00:03:17,560 --> 00:03:20,679 Speaker 1: at their New Zealand at a time when it's facing 48 00:03:22,240 --> 00:03:26,120 Speaker 1: a world of pain. In a way, even before this 49 00:03:26,280 --> 00:03:30,840 Speaker 1: jet fuel crisis, so what he in New Zealand was 50 00:03:30,880 --> 00:03:36,160 Speaker 1: facing has been fairly well rehearsed, but with rising costs, 51 00:03:36,400 --> 00:03:41,000 Speaker 1: strong competition on some key routes, and particularly a shortage 52 00:03:41,000 --> 00:03:48,880 Speaker 1: of aircraft, and so they came into this event not 53 00:03:49,000 --> 00:03:53,680 Speaker 1: in great shape. Their first half loss of fifty nine 54 00:03:53,720 --> 00:03:58,640 Speaker 1: million dollars looks even before this was on track to 55 00:03:58,640 --> 00:04:01,320 Speaker 1: getting worse for the fully. So in a way, this 56 00:04:01,480 --> 00:04:04,960 Speaker 1: is another kick in the guts very air New Zealand, 57 00:04:05,160 --> 00:04:07,440 Speaker 1: in particular at a time when some of its peers 58 00:04:08,000 --> 00:04:11,800 Speaker 1: we're doing particularly well. You look across the Tasman quantus 59 00:04:13,280 --> 00:04:17,159 Speaker 1: around about a one point five billion dollar profit for 60 00:04:17,240 --> 00:04:21,520 Speaker 1: the first year, so other airlines been doing a lot 61 00:04:21,560 --> 00:04:25,919 Speaker 1: better than a New Zealand because they've got they weren't 62 00:04:25,920 --> 00:04:27,200 Speaker 1: a better place operationally. 63 00:04:27,400 --> 00:04:30,400 Speaker 2: Have we ever just like simply run out of jet fuel. 64 00:04:31,240 --> 00:04:36,640 Speaker 1: There's been supply problems before, but you know, you go 65 00:04:36,720 --> 00:04:40,440 Speaker 1: back to the Iran Iraq War, the Straits of the Moose. 66 00:04:40,480 --> 00:04:46,120 Speaker 1: We were targeted then all oil and short supply. There's 67 00:04:46,120 --> 00:04:49,560 Speaker 1: been specific events that have led to jet fuel problems, 68 00:04:49,839 --> 00:04:53,520 Speaker 1: and especially in New Zealand with pipelines breaking and so forth, 69 00:04:53,560 --> 00:04:58,240 Speaker 1: but globally there's always been a bit of gas in 70 00:04:58,279 --> 00:05:01,880 Speaker 1: the tank. With this current event, it's jet fuel. It's 71 00:05:01,880 --> 00:05:06,880 Speaker 1: particularly the hardest. I've seen a figure that while about 72 00:05:06,880 --> 00:05:11,880 Speaker 1: twenty percent of crude oil goes through the Straits of Amos, 73 00:05:11,880 --> 00:05:16,560 Speaker 1: which are under fire at the moment, it's around but 74 00:05:16,640 --> 00:05:22,800 Speaker 1: forty percent for jet fuel for European and customers in 75 00:05:22,839 --> 00:05:28,520 Speaker 1: other parts of the world. So jet fuel is spiking 76 00:05:28,600 --> 00:05:35,159 Speaker 1: particularly dramatically at this stage. It's all about the refiner's margin, 77 00:05:36,800 --> 00:05:42,080 Speaker 1: and those margins have bln out like nothing before. We've 78 00:05:42,080 --> 00:05:44,719 Speaker 1: seen these oil price spikes before, but nothing like this 79 00:05:45,000 --> 00:05:45,479 Speaker 1: jet fuel. 80 00:05:46,080 --> 00:05:49,560 Speaker 2: I've seen that the IA has agreed to the largest 81 00:05:49,720 --> 00:05:53,560 Speaker 2: ever oil stock release, so they'll be releasing four hundred 82 00:05:53,640 --> 00:05:58,559 Speaker 2: million barrels of oil from strategic reserves, and that will 83 00:05:59,240 --> 00:06:03,719 Speaker 2: contribute through jet fuel pressures. Where would you place the 84 00:06:03,760 --> 00:06:08,520 Speaker 2: seriousness of this jet fuel crisis and situation if we 85 00:06:08,520 --> 00:06:11,799 Speaker 2: were to look at similar disruptions. I'm thinking like COVID 86 00:06:11,839 --> 00:06:14,720 Speaker 2: for example, of course, but also like the GFC nine 87 00:06:14,760 --> 00:06:17,960 Speaker 2: to eleven even you would have been reporting during that. 88 00:06:18,320 --> 00:06:21,039 Speaker 1: Yeah, that's right. Well, nine to eleven was very much 89 00:06:22,240 --> 00:06:26,839 Speaker 1: a short, very sharp shock to the especially in the 90 00:06:26,839 --> 00:06:32,120 Speaker 1: biggest aviation market in the world in America, and there 91 00:06:32,160 --> 00:06:34,760 Speaker 1: were real fears there that people would be reluctant to 92 00:06:35,520 --> 00:06:39,000 Speaker 1: chump on planes. After that, it didn't take long to recover. 93 00:06:39,080 --> 00:06:42,240 Speaker 1: It took a matter of weeks to months, and even 94 00:06:42,279 --> 00:06:47,120 Speaker 1: in America. And then after that we had an Asian 95 00:06:47,200 --> 00:06:54,880 Speaker 1: health crisis SARS again, Asian airlines affected by that, some 96 00:06:55,040 --> 00:06:58,920 Speaker 1: fears that it was going to become a pandemic. It 97 00:06:58,960 --> 00:07:03,880 Speaker 1: didn't and demand recover and yeah, you're right the identify 98 00:07:04,040 --> 00:07:10,680 Speaker 1: the GFC. Interestingly, just before the GFC, oil spiked to 99 00:07:10,720 --> 00:07:13,960 Speaker 1: well over one hundred dollars a barrel, and so on 100 00:07:14,040 --> 00:07:18,920 Speaker 1: real terms, a lot higher than today. Airlines kept on 101 00:07:19,000 --> 00:07:24,160 Speaker 1: flying and then in a way the world was held 102 00:07:24,960 --> 00:07:30,640 Speaker 1: by a very sharp recession the GFC itself. So we 103 00:07:30,720 --> 00:07:35,440 Speaker 1: saw prices taper off. There's been volcanoes in Iceland, volcanoes 104 00:07:35,480 --> 00:07:38,040 Speaker 1: in the middle of the North Island here in New Zealand. 105 00:07:38,760 --> 00:07:41,200 Speaker 1: And then you know, the biggest of them all, of course, 106 00:07:41,400 --> 00:07:48,120 Speaker 1: was COVID. And that was not an operational or or 107 00:07:48,320 --> 00:07:52,200 Speaker 1: a supply problem cost problem. It was a demand problem. 108 00:07:52,640 --> 00:07:56,160 Speaker 1: People weren't allowed to fly or they most certainly didn't 109 00:07:56,200 --> 00:08:00,440 Speaker 1: want to. And this was sitting here in New Zealand. 110 00:08:00,440 --> 00:08:05,240 Speaker 1: It looked existential for the airline industry. But you know, 111 00:08:05,440 --> 00:08:08,920 Speaker 1: being what it is, as soon as border has opened, 112 00:08:09,680 --> 00:08:14,640 Speaker 1: airlines they've got planes they need to fly, and people 113 00:08:14,760 --> 00:08:20,040 Speaker 1: realize the value of connecting. And so the recovery from 114 00:08:20,560 --> 00:08:25,680 Speaker 1: COVID by all airlines was phenomenal, and you know, for 115 00:08:25,880 --> 00:08:28,440 Speaker 1: a lot of the turban is quite unexpected just how 116 00:08:28,520 --> 00:08:30,880 Speaker 1: strong that was in New Zealand went on to make 117 00:08:30,920 --> 00:08:35,360 Speaker 1: a second biggest profit and necessary and other airlines have 118 00:08:35,520 --> 00:08:40,959 Speaker 1: just thrived. So this one, well, you know, who knows. 119 00:08:41,040 --> 00:08:46,000 Speaker 1: It's up to the President of the United States. I 120 00:08:46,040 --> 00:08:50,560 Speaker 1: guess as to where this goes. It's very unclear about 121 00:08:50,960 --> 00:08:55,719 Speaker 1: what the aim is. There's plenty of arguments about the 122 00:08:56,120 --> 00:09:04,360 Speaker 1: wisdom of what he's done, but will be up to 123 00:09:04,400 --> 00:09:07,280 Speaker 1: him to a certain extent. And then, of course, you know, 124 00:09:07,320 --> 00:09:13,440 Speaker 1: as everyone's learned the Iranian response, whether it's a I think, 125 00:09:13,640 --> 00:09:16,120 Speaker 1: whenever you see the word cease fire following this, it's 126 00:09:16,160 --> 00:09:19,760 Speaker 1: going to be always prefaced with the other word fragile, 127 00:09:20,000 --> 00:09:23,440 Speaker 1: and that will really mean something in this case. So 128 00:09:23,640 --> 00:09:27,079 Speaker 1: there'll be nervousness about the Middle East and supply of 129 00:09:28,000 --> 00:09:34,960 Speaker 1: oil for the rest of the world for quite some time. 130 00:09:35,840 --> 00:09:38,720 Speaker 1: And the other part of that is, of course, what's 131 00:09:38,840 --> 00:09:41,360 Speaker 1: going to do to global economy, So we're looking at 132 00:09:41,400 --> 00:09:49,360 Speaker 1: a global recession, and again that will impact demand for 133 00:09:50,200 --> 00:09:55,040 Speaker 1: flying around the place, as even though people don't feel 134 00:09:55,080 --> 00:09:59,320 Speaker 1: the need to fly, it is to an extent discretionary 135 00:09:59,320 --> 00:10:01,600 Speaker 1: and if they're really feeling in the pocket, they won't 136 00:10:02,600 --> 00:10:04,760 Speaker 1: and that means the alliance will pull back, and that's 137 00:10:05,200 --> 00:10:13,680 Speaker 1: that's not good favorite one for anyone. Are you looking 138 00:10:13,720 --> 00:10:17,600 Speaker 1: at more significant cuts two roots in the medium to long. 139 00:10:17,480 --> 00:10:21,280 Speaker 3: Term, It's it's hard to say ran they're possible. The 140 00:10:21,400 --> 00:10:26,160 Speaker 3: situation is very volatile at you know, the at one 141 00:10:26,240 --> 00:10:29,120 Speaker 3: hundred and seventy dollars mark. Maybe it's worth giving you 142 00:10:29,120 --> 00:10:31,560 Speaker 3: a bit of a sense of what normal looks like right, 143 00:10:31,679 --> 00:10:35,640 Speaker 3: So jet fuel price anywhere between eighty to ninety dollars 144 00:10:36,080 --> 00:10:39,040 Speaker 3: should be seen as being normal. And to give it 145 00:10:39,280 --> 00:10:42,960 Speaker 3: put it in context, we track fuel cost to two 146 00:10:42,960 --> 00:10:46,280 Speaker 3: decimal points, so every cent matters in this game. 147 00:10:46,559 --> 00:10:48,080 Speaker 1: So had seventy is waco. 148 00:10:48,240 --> 00:10:49,760 Speaker 3: I mean, it's unprecedented. 149 00:10:51,559 --> 00:10:53,559 Speaker 2: I'm going to say this word and I hate saying 150 00:10:53,559 --> 00:10:57,320 Speaker 2: this word, but unprecedented. People are saying that this is unprecedented. 151 00:10:57,320 --> 00:10:59,960 Speaker 2: But COVID was unprecedented, right, And like you Si Rite, 152 00:11:00,080 --> 00:11:02,960 Speaker 2: he said it was a demand issue versus a jet 153 00:11:03,000 --> 00:11:08,040 Speaker 2: fuel issue. Would you do you reckon that demand out 154 00:11:08,120 --> 00:11:12,800 Speaker 2: like as a situation, as a crisis, would outweigh a 155 00:11:13,480 --> 00:11:16,440 Speaker 2: shortage of jet fuel? And if so, if that is 156 00:11:16,480 --> 00:11:18,839 Speaker 2: the case, then it's quite a good thing that they 157 00:11:19,320 --> 00:11:22,480 Speaker 2: airlines bounced back after COVID, because that kind of shows 158 00:11:22,559 --> 00:11:24,439 Speaker 2: us the resilience of the industry. 159 00:11:24,840 --> 00:11:28,320 Speaker 1: Look, both can be managed to a certain extent. You know, 160 00:11:28,360 --> 00:11:30,640 Speaker 1: as we're seeing with you in New Zealand, they're pulling 161 00:11:30,679 --> 00:11:33,360 Speaker 1: back on flying and so they're not needing the same 162 00:11:33,400 --> 00:11:39,160 Speaker 1: inputs for you know, to a certain degree, there's fuel 163 00:11:39,400 --> 00:11:42,720 Speaker 1: costs around the margins, and so what they're putting into 164 00:11:42,720 --> 00:11:48,840 Speaker 1: the businesses they can control that. The airlines have got 165 00:11:49,440 --> 00:11:54,439 Speaker 1: a little less control over demand, you know, with macroeconomic 166 00:11:54,520 --> 00:11:59,720 Speaker 1: factors affecting people's wallets. However, they can certainly stimulate demand 167 00:12:00,320 --> 00:12:05,280 Speaker 1: by putting on better pricing, putting on new routes, and 168 00:12:07,360 --> 00:12:11,079 Speaker 1: basically more capacity. Other parts of the world saw a 169 00:12:11,160 --> 00:12:15,880 Speaker 1: lot more of that post COVID. It didn't happen so much. Here. 170 00:12:16,360 --> 00:12:20,440 Speaker 1: We're not back to the same levels of long walk 171 00:12:20,520 --> 00:12:24,920 Speaker 1: con activity as we were in twenty nineteen. But yeah, 172 00:12:25,040 --> 00:12:30,560 Speaker 1: be that as it may. The again, this will all 173 00:12:30,559 --> 00:12:34,280 Speaker 1: depend on the duration of this of this current crisis, 174 00:12:35,080 --> 00:12:41,920 Speaker 1: and who can know what's inside Donald Trump's here. 175 00:12:42,120 --> 00:12:45,240 Speaker 2: Well, speaking of prices, I mean, we had a New 176 00:12:45,360 --> 00:12:51,600 Speaker 2: Zealand their results obviously abysmal. Then we had, you know, 177 00:12:51,720 --> 00:12:55,800 Speaker 2: this morning, the news of eleven hundred flights being canceled 178 00:12:55,880 --> 00:12:59,360 Speaker 2: up until May, and then also in New Zealand announced 179 00:12:59,440 --> 00:13:02,000 Speaker 2: this week it would lift the cost of its domestic 180 00:13:02,080 --> 00:13:05,599 Speaker 2: flights by ten dollars, short haul international by twenty and 181 00:13:05,679 --> 00:13:08,520 Speaker 2: long haul by ninety. That's in response to the surge 182 00:13:08,520 --> 00:13:12,600 Speaker 2: and jet fuel crisis. But in terms of I mean, 183 00:13:12,840 --> 00:13:16,520 Speaker 2: you can't just keep adding on more money to flights, 184 00:13:16,600 --> 00:13:19,240 Speaker 2: right there has to be an end to that. 185 00:13:19,760 --> 00:13:22,400 Speaker 1: You know, airlines will test the market, they'll know where 186 00:13:22,640 --> 00:13:27,400 Speaker 1: the elasticity is in terms of consumers' ability to pay 187 00:13:27,440 --> 00:13:31,560 Speaker 1: for something. New Zealand was definitely feeling that, or has 188 00:13:31,640 --> 00:13:34,960 Speaker 1: been for over the last year or so domestic weakness, 189 00:13:36,040 --> 00:13:38,400 Speaker 1: so it would have been loathed to put up those feares. 190 00:13:38,640 --> 00:13:41,480 Speaker 1: And of course they get hammered on regional routes in 191 00:13:41,600 --> 00:13:49,079 Speaker 1: public forum for US for those high regional costs. On 192 00:13:49,200 --> 00:13:53,599 Speaker 1: international routes where they have about forty percent of the 193 00:13:53,640 --> 00:13:56,760 Speaker 1: traffic coming out of New Zealand, they can drive the 194 00:13:57,120 --> 00:14:02,880 Speaker 1: accept price with a little more comfort. Interestingly, and winners 195 00:14:02,880 --> 00:14:08,160 Speaker 1: and losers game at the moment. Of course, their flights 196 00:14:08,240 --> 00:14:13,360 Speaker 1: to the United States and then with partners on to 197 00:14:14,960 --> 00:14:21,480 Speaker 1: Europe would be pretty foot now because folks aren't going 198 00:14:21,520 --> 00:14:24,560 Speaker 1: through the Middle East, and so airlines that can offer 199 00:14:24,600 --> 00:14:29,240 Speaker 1: an alternative route to Europe doing particularly well. So we're 200 00:14:29,240 --> 00:14:35,480 Speaker 1: seeing Singapore Airlines, CAFA Pacific, the mainland Chinese carriers and 201 00:14:35,760 --> 00:14:38,440 Speaker 1: then of course the New Zealand corners going through the States. 202 00:14:38,600 --> 00:14:40,800 Speaker 2: I saw a stat this week actually Grant and New 203 00:14:40,880 --> 00:14:44,760 Speaker 2: Zealand is apparently booked over a thousand people from Australia 204 00:14:44,800 --> 00:14:46,760 Speaker 2: and New Zealand to Europe. Of it last week and 205 00:14:46,840 --> 00:14:49,520 Speaker 2: last year they booked less than one a day, so 206 00:14:49,560 --> 00:14:52,720 Speaker 2: that really, I mean, it's not stopping people going to 207 00:14:52,760 --> 00:14:56,400 Speaker 2: Europe for their European holidays, but it's just how many routes, 208 00:14:56,480 --> 00:14:59,400 Speaker 2: so how many how many different ways are there to 209 00:14:59,440 --> 00:15:00,880 Speaker 2: get to Europe from New Zealand. 210 00:15:01,160 --> 00:15:05,360 Speaker 1: You can't fly their NonStop at the moment. I had 211 00:15:05,400 --> 00:15:10,160 Speaker 1: it from a travel agent last week that you know, 212 00:15:10,240 --> 00:15:13,760 Speaker 1: maybe about eight percent of their business would go through 213 00:15:13,800 --> 00:15:17,640 Speaker 1: the Middle East, and so that's Qatar and Dubai so 214 00:15:18,560 --> 00:15:21,760 Speaker 1: to a large extent, even though Emirates are still flying, 215 00:15:21,840 --> 00:15:24,240 Speaker 1: a lot of people have been discouraged from taking those 216 00:15:24,280 --> 00:15:29,040 Speaker 1: flights for have rebooked, canceled and got a refund or 217 00:15:29,120 --> 00:15:32,160 Speaker 1: rebuilt for further out. So Middle East is a little 218 00:15:32,160 --> 00:15:34,680 Speaker 1: off the agenda at the moment, and there's certainly the 219 00:15:34,720 --> 00:15:39,320 Speaker 1: Ministry of Foreign Affairs and Trades advices do not travel 220 00:15:40,240 --> 00:15:42,520 Speaker 1: and you're going to have trouble getting insurance going through there. 221 00:15:42,600 --> 00:15:46,280 Speaker 1: So yeah, so you're asking about the other ways to 222 00:15:46,320 --> 00:15:51,320 Speaker 1: get there, well, to Singapore then on to Europe. Singplere 223 00:15:51,440 --> 00:15:54,840 Speaker 1: Airlines got pretty good network into Europe KFA Pacific through 224 00:15:54,880 --> 00:15:59,480 Speaker 1: Hong Kong and the mainland Chinese carriers will be doing 225 00:15:59,480 --> 00:16:02,359 Speaker 1: well out of it because they were of from recently comparedive 226 00:16:02,360 --> 00:16:07,360 Speaker 1: fears already, so all of a sudden they're back on 227 00:16:07,560 --> 00:16:11,200 Speaker 1: in the equation. And then the other main way of 228 00:16:11,240 --> 00:16:14,160 Speaker 1: getting to Europe would be through the United States, and 229 00:16:14,200 --> 00:16:18,520 Speaker 1: that's mainly with the New Zealand through San Francisco, La Houston, 230 00:16:19,120 --> 00:16:23,040 Speaker 1: New York, and then of course Quantus does in New 231 00:16:23,120 --> 00:16:23,800 Speaker 1: York as well. 232 00:16:24,080 --> 00:16:26,360 Speaker 2: I saw that the Air New Zealand CEO was pretty 233 00:16:26,440 --> 00:16:28,640 Speaker 2: quick to point out that flights to the Pacific and 234 00:16:28,720 --> 00:16:33,080 Speaker 2: to regional destinations, so like your Hockiteca, Timado and Topoor, 235 00:16:33,440 --> 00:16:36,160 Speaker 2: they were less likely to be impacted by this. How 236 00:16:36,240 --> 00:16:40,520 Speaker 2: important is this foreign airline because you and I both 237 00:16:40,640 --> 00:16:43,040 Speaker 2: know that as soon as a flight to you know, 238 00:16:43,080 --> 00:16:46,680 Speaker 2: Auckland to Todong is disrupted, it does make headlines. 239 00:16:47,720 --> 00:16:50,800 Speaker 1: Yeah, well that's right. Well, you know, any disruption and 240 00:16:50,840 --> 00:16:53,280 Speaker 1: a network is going to have knock on effects. In 241 00:16:53,360 --> 00:16:59,360 Speaker 1: New Zealand's under political pressure to retain its regional network 242 00:16:59,400 --> 00:17:02,520 Speaker 1: here and NEC in it you know, flies to twenty 243 00:17:02,520 --> 00:17:08,000 Speaker 1: places around the country. There's a big political imperative to 244 00:17:08,600 --> 00:17:12,680 Speaker 1: retain that network properly in New Zealander is that those 245 00:17:13,800 --> 00:17:17,000 Speaker 1: flights are fairly costly to operate. In a lot of cases, 246 00:17:17,359 --> 00:17:20,000 Speaker 1: the smaller planes that they operate to the very smallest 247 00:17:20,720 --> 00:17:24,240 Speaker 1: town's pretty old. They're you know, the Q three hundreds 248 00:17:24,280 --> 00:17:28,160 Speaker 1: are around about twenty years old on average and may 249 00:17:28,200 --> 00:17:31,800 Speaker 1: have to fly well into next decades. So not as 250 00:17:31,840 --> 00:17:35,320 Speaker 1: reliable as in New Zealand would like, and as I say, 251 00:17:36,000 --> 00:17:39,160 Speaker 1: not as efficient as a brand new plane. There's no 252 00:17:39,480 --> 00:17:43,600 Speaker 1: replacement plane for that aircraft size on the horizon either, 253 00:17:43,720 --> 00:17:48,520 Speaker 1: So the regional networks a challenge. And yeah, you mentioned 254 00:17:48,520 --> 00:17:54,720 Speaker 1: the Pacific Islands there, Well, you know, there's there's a 255 00:17:54,760 --> 00:17:59,280 Speaker 1: big obligation that in New Zealand fields here to keep 256 00:18:00,359 --> 00:18:06,720 Speaker 1: connected to the Pacific Islands for friends and family her visits. 257 00:18:08,160 --> 00:18:09,280 Speaker 1: As I understand, the. 258 00:18:11,480 --> 00:18:18,320 Speaker 4: Current review of her flights for the next six weeks 259 00:18:19,400 --> 00:18:22,359 Speaker 4: may involve some Pacific Island services, but not many. 260 00:18:23,400 --> 00:18:26,440 Speaker 1: I think they're looking at Bali as a as perhaps 261 00:18:26,560 --> 00:18:29,879 Speaker 1: one an international service that might take a bit of 262 00:18:29,880 --> 00:18:32,120 Speaker 1: a trimble or more of a consolidation. 263 00:18:32,640 --> 00:18:35,680 Speaker 2: Yeah, I saw a few days ago the chief executive 264 00:18:35,680 --> 00:18:38,800 Speaker 2: of Air Chathams actually told aren Z that the rising 265 00:18:38,840 --> 00:18:41,959 Speaker 2: cost of oil is costing them about one hundred and 266 00:18:42,000 --> 00:18:46,720 Speaker 2: forty thousand dollars extra a month in fuel to your knowledge, 267 00:18:46,800 --> 00:18:50,000 Speaker 2: how much generally would you say the airlines account for 268 00:18:50,119 --> 00:18:54,520 Speaker 2: or budget for in their kind of modeling in terms 269 00:18:54,560 --> 00:18:56,919 Speaker 2: of that, Because one hundred and forty thousand dollars, you know, 270 00:18:57,080 --> 00:19:01,240 Speaker 2: I can't spare that next month. But how much generally 271 00:19:01,240 --> 00:19:03,119 Speaker 2: how much buffer do they give themselves? 272 00:19:04,000 --> 00:19:09,240 Speaker 1: Look not much. Airlines are very thin margin businesses, high volume, 273 00:19:09,280 --> 00:19:14,000 Speaker 1: thin margin. You know, there's often a statistic that comes 274 00:19:14,000 --> 00:19:18,280 Speaker 1: out annually that across the globe, you know, airlines either 275 00:19:18,320 --> 00:19:21,480 Speaker 1: making the price of a cup of coffee on every 276 00:19:21,520 --> 00:19:24,879 Speaker 1: passenger the price of a you know, and then the 277 00:19:24,920 --> 00:19:27,520 Speaker 1: next year might be a bit better any airport sandwich. 278 00:19:27,600 --> 00:19:32,080 Speaker 1: So things have to go pretty right most of the 279 00:19:32,119 --> 00:19:36,440 Speaker 1: time to be profitable. And so airlines can can burn 280 00:19:36,560 --> 00:19:40,359 Speaker 1: money pretty quickly just as they can earn it just 281 00:19:39,880 --> 00:19:44,760 Speaker 1: as just as quickly. So I think a foresight bars 282 00:19:44,760 --> 00:19:48,520 Speaker 1: looked at the air U Zealand's current problem and they 283 00:19:49,080 --> 00:19:52,840 Speaker 1: estimate it will cost some another four to five million 284 00:19:52,840 --> 00:19:57,200 Speaker 1: dollars a day. So they're they're big used as a fuel. 285 00:19:57,240 --> 00:20:01,320 Speaker 1: It's there alongside labor, it's said experience. 286 00:20:07,560 --> 00:20:12,280 Speaker 5: The reality is there's huge volatility in these markets and 287 00:20:12,560 --> 00:20:16,400 Speaker 5: this will put pressure on in New Zealand that ultimately, 288 00:20:16,680 --> 00:20:19,000 Speaker 5: you know, we want to make sure that you know 289 00:20:19,359 --> 00:20:21,480 Speaker 5: as a government we're doing everything we can to be 290 00:20:21,640 --> 00:20:23,920 Speaker 5: able to respond. That's why Nicola Willis has put in 291 00:20:23,960 --> 00:20:26,679 Speaker 5: place a minister or group looking at how we do 292 00:20:26,800 --> 00:20:30,360 Speaker 5: respond and to be seeing what if there are things 293 00:20:30,400 --> 00:20:33,080 Speaker 5: the government can do to stuften the impacts here in 294 00:20:33,119 --> 00:20:34,640 Speaker 5: New Zealand looking at what those. 295 00:20:34,440 --> 00:20:37,000 Speaker 1: Are, including a cash injection for in New Zealand. 296 00:20:37,000 --> 00:20:37,880 Speaker 2: Would you consider that? 297 00:20:38,280 --> 00:20:40,399 Speaker 5: Oh, look, that's not that's not something I think the 298 00:20:40,400 --> 00:20:43,639 Speaker 5: minister's considering at this stage. I think the reality is 299 00:20:43,680 --> 00:20:46,320 Speaker 5: in New Zealand has to has to weather through, whether 300 00:20:46,359 --> 00:20:49,479 Speaker 5: weather the storm. 301 00:20:49,800 --> 00:20:54,000 Speaker 2: Just lastly, I mean we talk about these jet fuel situations, 302 00:20:54,200 --> 00:20:57,000 Speaker 2: like you said, about every seven years. It's getting to 303 00:20:57,280 --> 00:21:00,440 Speaker 2: be a little bit more common. Now. Are there any 304 00:21:00,440 --> 00:21:03,760 Speaker 2: things over the years or ideas that they've come up 305 00:21:03,800 --> 00:21:07,440 Speaker 2: with recommendations rather saying look we need to do this now, 306 00:21:07,800 --> 00:21:11,399 Speaker 2: say for instance, increase fuel storage in New Zealand or 307 00:21:11,400 --> 00:21:14,239 Speaker 2: at Auckland Airport or something. Is there anything that just 308 00:21:14,320 --> 00:21:16,840 Speaker 2: comes up time and time again where you're sitting there 309 00:21:16,840 --> 00:21:19,680 Speaker 2: scratching your head like why has this not happened yet? 310 00:21:19,960 --> 00:21:24,400 Speaker 1: What you always see during these times is renewed focus 311 00:21:24,480 --> 00:21:29,080 Speaker 1: on alternative ways to propel planes, so different types of fuel. 312 00:21:30,520 --> 00:21:34,679 Speaker 1: Two thousand and eight, when jet fuel prices really spiked, 313 00:21:34,880 --> 00:21:40,680 Speaker 1: it's huge enthusiasm for sustainable aviation fuel SAD as they 314 00:21:40,720 --> 00:21:43,560 Speaker 1: call it. People try to make it out all sorts 315 00:21:43,560 --> 00:21:49,360 Speaker 1: of things, nuts from jetropha trees, and there was mustard, 316 00:21:49,440 --> 00:21:58,840 Speaker 1: seeds andes, the technology works airlines wanted. But then the 317 00:21:58,840 --> 00:22:04,159 Speaker 1: fuel price drops and that real momentum for change ebbs 318 00:22:04,200 --> 00:22:08,240 Speaker 1: as well. Since then, again, you know, work's been going 319 00:22:08,240 --> 00:22:14,720 Speaker 1: on in the technology, feedstocks, plant matter, used oil. It's there, 320 00:22:15,440 --> 00:22:20,159 Speaker 1: but there hasn't been the financial incentive for refiners and 321 00:22:20,240 --> 00:22:24,359 Speaker 1: producers to make a lot of it. So at the moment, 322 00:22:25,160 --> 00:22:29,040 Speaker 1: staff is literally a drop in the bucket for airlines. 323 00:22:30,359 --> 00:22:36,040 Speaker 1: But you know, anything that can wing airlines off fossil 324 00:22:36,080 --> 00:22:38,840 Speaker 1: fuels has got to be a good thing in the 325 00:22:39,800 --> 00:22:42,240 Speaker 1: in the medium to long term. It's just a matter 326 00:22:42,280 --> 00:22:44,560 Speaker 1: of producers getting on board and making a lot of 327 00:22:44,600 --> 00:22:45,080 Speaker 1: it well. 328 00:22:45,200 --> 00:22:47,359 Speaker 2: And New Zealand brought a whole bunch from was it 329 00:22:47,440 --> 00:22:49,679 Speaker 2: San Francisco. They got it from, Yeah. 330 00:22:49,560 --> 00:22:52,680 Speaker 1: They've They've got it in from a range of places, 331 00:22:53,800 --> 00:22:59,480 Speaker 1: and yeah, they they're acutely where that they have to 332 00:22:59,760 --> 00:23:06,280 Speaker 1: fuel to proof flying for in the long term. And 333 00:23:06,359 --> 00:23:09,120 Speaker 1: it's good for the planet. But these airlines always think 334 00:23:10,040 --> 00:23:13,919 Speaker 1: about their balance sheet as well. They kind of know 335 00:23:14,040 --> 00:23:20,280 Speaker 1: that it makes financial sense. I expect to see a 336 00:23:20,359 --> 00:23:25,159 Speaker 1: resurgence of interest and well, what happens when oil stops flying? 337 00:23:25,400 --> 00:23:30,520 Speaker 1: What's the alternative? It's there, but can it be Producer. 338 00:23:30,080 --> 00:23:33,680 Speaker 2: Scale, thanks for joining us, Grant pleasure, thanks for having me. 339 00:23:36,760 --> 00:23:39,879 Speaker 2: That's it for this episode of The Front Page. You 340 00:23:39,920 --> 00:23:43,680 Speaker 2: can read more about today's stories and extensive news coverage 341 00:23:43,720 --> 00:23:47,359 Speaker 2: at enzidhrald dot co dot nz. The Front Page is 342 00:23:47,400 --> 00:23:51,399 Speaker 2: hosted and produced by me Chelsea Daniels Caine. Dicky is 343 00:23:51,440 --> 00:23:55,600 Speaker 2: our studio operator, Richard Martin, our producer and editor, and 344 00:23:55,640 --> 00:23:59,520 Speaker 2: our executive producer is Jane Ye. Follow the Front Page 345 00:23:59,600 --> 00:24:02,600 Speaker 2: on the heart app or wherever you get your podcasts, 346 00:24:02,920 --> 00:24:06,960 Speaker 2: and join us next time for another look beyond the headlines.