Air NZ fleet replacement: good news for Boeing as Dash 10 is favoured

Manufacturers had been eagerly awaiting Air NZ’s decision on a replacement for its fleet of Boeing 777-200.

Airbus, with its new A350, had all been but ruled out by industry observers last week because of the cost and complexity of introducing another wide-bodied jet to a small fleet.

The choice therefore was between the new Boeing 777-900 and a later model of the Boeing 787 Dreamliner, the Dash 10.

Air   NZ today confirmed  the decision to purchase eight Boeing 787-10 Dreamliner aircraft powered by GE Aviation’s GEnx-1B engines.

At today’s list prices, the agreement represents a value of US $2.7 billion.

Getting the numbers right in Genter’s drive (long-distance) to zero road deaths

Catching up on our ministerial press statements after the Christmas break, we noted a small glitch – which was quickly corrected – in something from Associate Transport Minister Julie Anne Genter’s office.

The corrected version said the official holiday period had ended with nine people tragically killed in crashes on New Zealand roads.

This was three people fewer than the 12 who died in the previous holiday season.

The original version of the statement had said nine was two people fewer than the 12 who died last holiday season.

Economic health of NZ’s port sector is being brought into question

Significant questions are being raised about the economic efficiency and competitiveness of the port sector.

Reports this week of the  Commerce Commission receiving complaints  about  anti-competitive conduct   by  NZ   port companies  follow the  Office of the Auditor-General   writing to port company chairs and  CEOs to raise a raft of issues identified  in its annual audit of the  sector.

The  OAG  had  found  considerable  variation in port companies’ approach to valuations.

Others  involved in the industry are convinced  many ports  are  making  uneconomic  investment  decisions,  some  companies earning  less  than  2%   return on  equity.  They  back  the OAG   who  advised  port companies  to use   fair value, based on expected  cash flows to be  generated.

The  complaints to the Commerce  Commission have spurred  it to start a preliminary assessment of the conduct that is being questioned but it hasn’t embarked on a formal investigation. The  report  said a number of these complaints raised potential issues about various ports taking advantage of their market power in markets for the supply of services.

The national port network is also under review from legislators with the upper North Island supply chain study underpinning the government’s desire to integrate port, rail and road transport infrastructure.

We await KiwiRail’s explaining the benefits of two systems on the Main Trunk Line…

Point of Order  was lamenting  in   an earlier post  how the taxpayer has to  suck  up  the  $35m   cost of the  of the  Ardern-Peters  government’s decision  to  retain  electric  locos,  soon  to be  refurbished,  on the  Main Trunk  Line  between  Hamilton and Palmerston North.

This in  effect was a reversal of  the decision taken  two years  ago to  ditch the  North Island  electric locos  and  replace them with diesel-powered engines.

What Point of Order  failed to mention in that  earlier  post  is that the  latest batch of KiwiRail’s new DL class diesel-electric locomotives has arrived at the Port of Tauranga.

More public money shovelled into the KiwiRail firebox to help the environment

The  poor old taxpayer who  poured more than  $1bn into   state-owned  KiwiRail during the term of the  National  government  is  being hit up  for  another $35m   to reverse the decision taken  two years  ago to  ditch the  North Island  electric locos  and  replace them with diesel-powered engines.

The Ardern-Peters-led coalition has decided to refurbish the 15  units in  the electric fleet — even  though the   argument  to replace  them  was “compelling” .

While  the  government  now  says it is keeping electric locomotives on the North Island Main Trunk Line running to help meet its long-term emissions goals and boost the economy,  KiwiRail  earlier  said it was essentially running “a railway within a railway” by having the electric section.  (The North Island Main Trunk runs from Auckland to Wellington but is electrified only between Hamilton and Palmerston North). The doubling up of service facilities, inventory, training and maintenance required with two separate systems on the line, KiwiRail said, adds to  inefficiencies and unreliability.

The    $35m  now earmarked  for  refurbishment of the trains and electric control system  is additional to the $4bn  for public transport and rail under the National Land Transport Programme.