Corporate Social Responsibility at Air New Zealand

Aviation industry exerts great influence on growth of national economy and it has an overriding effect on national security. Air New Zealand is an international airline registered and based in New Zealand. It provides cargo transport services and air passenger within New Zealand, as well as to and from major regions.

To start with, all outside factors that may influence an organization constitute the external environment .This report will first describe the external environment through three perspectives: economic, technological and global forces, then the major CSR issues and the stakeholders. Finally, it will discuss how stakeholders influence the CSR policy and the implication of it.

Air New Zealand has made significant progress in the previous year according to a favorable economic climate and the company records a net profit after tax of $215 million. However, fuel prices continue to reach a record level - the price of jet fuel averaged US$90 per barrel this year, there is a US$13 increase per barrel compared to last year and drives a $143 million of the total increase in fuel cost. As fuel is the largest operational cost of aviation industry, continued high fuel costs remain a serious concern and it provides the airline industry with a significant challenge.

Secondly, the success of many organizations depends on how well they identify and respond to external technological changes. Air New Zealand will be the first airline in the world to receive the Boeing 787-9 which has longer range and greater capacity to enter airline service next year. The 787-9 has exceptional fuel efficiency and will offer the economics of large jet transports to the middle market, using 22 percent less fuel than any other jet of its size. This can help to achieve new levels of international competitiveness as it offers longer range and a lower cost per seat. Moreover, an upgraded web site and internet booking engine were released. A new flight information system has further enhanced the airport arrival and departure process for the domestic customers.

Lastly, the growth of international financial transactions and the resulting increase in air travel led to a greater global integration of the airlines and the development of cross border ownership. Despite this, the aircraft industry has proceeded along the path towards consolidation and globalization, characteristics associated with the normal development of many other industries. It has done this through the establishment of partnerships and alliances between airlines, sharing their networks to expand access to their customers. Hundreds of airlines have entered into alliances and Air New Zealand has joined one of the three major global airline alliances – Star alliance. Alliances provide a network of convenience and connectivity for global customers. Passengers benefit by the ability to share frequent traveler points, make seamless flight connections and gain other premium offered by the partner airlines.

As more and more organizations expand to become multinational operations, they are realizing that the implementation of a corporate social responsibility policy will enhance the number of opportunities for the corporations to grow. For multinational companies, the brand image and reputation play a significant role in improving the competitiveness. Air New Zealand is mainly criticized for two major issues relating to corporate social responsibility- high pay gap and environmental issues. Air New Zealand has been attacked for sharp differences in its staffs’ wages, with Chinese crew members receiving only a quarter of the salary of those from New Zealand. The comments labeling the largely state owned company as a 'flying sweatshop’ for paying its 30 Shanghai based flight attendants a quarter of what its home based crew was getting, and much less than the legal minimum wage in New Zealand(NZ Herald). New Zealand Herald reported that the Chinese received annual base pay of $NZ6,240 compared to $NZ24,000 paid to New Zealand attendants. In addition, different amount of daily cash allowance is also complained by the Chinese attendants.

Climate change continued to be at the forefront of global concern and the record number of passengers taking to the skies has raised environmental concerns over planes’ contribution to climate change. Many people criticized that flying is one of the major contributors to the growing environmental pollution. �The United Nations has released a report stating that aviation is responsible for over half of the pollution caused by transportation. The report stated that emissions from aircrafts, which are more persistent and damaging than ground level emissions, will be contributing much more to global warming by the year 2050’(Taneja,2004). The study also indicates that air travel is expected to grow by about 6% per year and fuel consumption is estimated