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Steve Creedy
24 September, 2019
When outgoing Air New Zealand chief executive Christopher Luxon started his tenure almost seven years ago, he was determined to run the company as a business rather than an airline.
He’d seen airlines go into bankruptcy multiple times and a lot of cash asks to shareholders because businesses were managed badly and issues were not dealt with “in the moment”.
“We used to say we’re going to run this as a business, not as an airline because airlines typically have excuses for poor performance and other businesses don’t do that or get away with that,’’ he recalls.
Since then, he adds, the situation has changed: airlines have become more realistic as well as more rationally and commercially focussed.
READ: Sound barrier legend Yeager sues Airbus.
“It’s interesting we’re in the down part of a cycle at the moment, or going through one, and I think people are being rational,’’ he tells AirlineRatings.
“They’re adjusting capacity, they’re thinking about recovering higher costs through higher prices.
“These are the staples of what good business people do and I think I’ve found that at an industry-wide level globally. I’m hopeful that this will be the first down cycle where people don’t go with the normal airline behavior and playbook.”
Luxon believes one reason for this may be an increase in the number of people coming into aviation from more diverse backgrounds.
That was the case when he joined Air New Zealand from Unilever Canada, where he had been president and chief executive responsible for a $US1.4 billion business and 1900 employees.
It was one of a number of leadership roles he’d held at the multinational during an 18-year career that helped shaped his views on how businesses should operate.
Born in Christchurch in 1970, he moved to Auckland at the age of seven but returned to Christchurch to finish his last years of high school and gain a master’s degree in commerce with a major in business administration from Canterbury University.
His first management role was as the brand manager for Unilever’s detergent business in New Zealand but he quickly progressed to Australia, Asia and then the US.
He argues that the fresh blood was something needed by an industry he saw as too inward-looking and calcified.
“I often felt like you swapped CEOs among airlines around the world and you get exactly the same results because they do exactly the same airline stuff,’’ he says.
“I think that honestly has changed a lot in my time.”
READ: 150,000 stranded as Thomas Cook collapses.
Luxon didn’t step straight into the leadership role; he joined Air New Zealand in May 2011 and cut his aviation teeth as group general manager international airline before taking over from Rob Fyfe at the end of 2012.
He began the job with a growth and customer service mantra he followed with an unwavering determination and energy.
Air New Zealand says kia ora to Chicago. Photo: Air NZ
The airline has added destinations such as Chicago, Buenos Aries and Taiwan during his tenure and this week confirmed a previously announced agreement to buy eight Boeing 787-10 Dreamliners powered by GEnx-1B engines.
Looking back over his own performance, Luxon says he continued the legacy started by his predecessors and he sees Air New Zealand today as a stronger business in “a customer sense, a cultural sense and a commercial sense”.
“Commercially we’ve gone from 11 to 12 million customers when I started to up to 17 million,’’ he notes. “Our network has obviously expanded tremendously throughout the Pacific Rim — I think it’s 40 percent bigger than it was when I started.
“We’ve done a lot of that expansion through very good and smart joint venture partnerships with many of our alliance partners and we have fundamentally a very strong balance sheet.
“We’re consistently ranked in the top three airlines in terms of an investment-grade rating. So that just says we have enough financial firepower to deal with competition and invest appropriately.”
A recent slowing of demand has seen some restructuring at the carrier and the airline's Boeing 787 fleet has been hit by global problems with Rolls-Royce Trent 1000 engines.
But Luxon says it remains “incredibly strong commercially with a good set of competitive advantages we keep protecting and enhancing”.
In terms of customer service, he points to the introduction of digital and customer service teams as well as changes to the loyalty program as part of his legacy.
“Customer satisfaction in terms of the net promoter score is probably seven times the industry average and three times the Star Alliance/airline average,’’ he says.
“And when you’re ranked the number one reputation and trust company in New Zealand and Australia – Australia for the last three years and New Zealand for the last five years – it just means that customers really are highly attached to the business and the brand.
“They have high expectations of us and hold us to a higher standard – which is fantastic – but also there is a massive attachment.”
From a cultural standpoint, Luxon says Air New Zealand is in the business of "flying people, not planes", and has 12,500 “excellent Air New Zealanders who are highly emotionally attached to the business”.
That’s important, he says, because staff optimally deliver customer services if they are feeling good about the company and where it’s going.
Other achievements include diversity and inclusion programs that have seen the percentage of women in the top leadership team widen from 16 percent to 44 percent and Maori partnerships.
So why leave if things are fundamentally going well?
The departing CEO says the time was simply right for a change.
“The reality is seven years is quite a long time to be CEO – most CEO’s in Australia and New Zealand typically average about four and a half years and then they get moved on or there’s some other issue that happens,’’ he says.
“I feel pleased that my tenure in that context is a really good length of time.
“As I looked forward, I thought it’s a great length of service, it’s about right and feels like a good time for someone new to come in and actually to build and preserve and enhance on the stuff we’ve built but also from their own stamp and their own personality keep doing things differently.
“I felt like that off the back of Rob Fyfe. I thought Rob did a great job as CEO off the back of Ralph and Ralph did a great job of kickstarting the whole reset.
“The torch just gets passed and the work goes on. That was my thinking really.”
His one regret is that he wishes he’d moved faster — “making bolder, braver, faster decisions to be honest.”
The saddest day was losing an Air New Zealand staff member in this year’s Christchurch massacre.
“That was one of the most tragic days I had to deal with but that’s really it,’’ he says. “There are no individual decisions I look at and say ‘We got that kind of wrong’.
“It’s more the pace of those decisions.”
So what’s next for the former chief executive?
There has been a great deal of speculation that Luxon will enter politics, but he cautions that this is not a given.
He’s looking forward to “decompressing a bit” at the end of the year.
“These are pretty full-on jobs,’’ he says. “When you’re a CEO of an airline, stuff happens every day and it’s 24/7 so decompressing and processing the seven-year period will be important on a personal level.
“And part of this for me is just thinking what I want to do next?”
He notes that continuing in a corporate role would likely mean moving overseas again, something he has already done.
He is also passionate about issues such as modern slavery and fighting sex trafficking and is on the board an NZ Christian aid organization that works with those issues.
“I just really admire what those people do around the world and it’s a problem that needs to be solved,’’ he says. “So could I do something in that space.”
The New Zealand political option is also on the cards and Luxon can see himself dealing with longer-term challenges the country faces around infrastructure, automation and productivity as well as some of the social issues.
“I know there’s lots of conjecture and people are talking about all sorts of things, but in my head what I really want to be able to do is to take the time and really think about it,’’ he says.
“So by the time I get to the end of the year, I’ll have a really good view as to what I think I’m doing.”
When outgoing Air New Zealand chief executive Christopher Luxon started his tenure almost seven years ago, he was determined to run the company as a business rather than an airline.
He’d seen airlines go into bankruptcy multiple times and a lot of cash asks to shareholders because businesses were managed badly and issues were not dealt with “in the moment”.
“We used to say we’re going to run this as a business, not as an airline because airlines typically have excuses for poor performance and other businesses don’t do that or get away with that,’’ he recalls.
Since then, he adds, the situation has changed: airlines have become more realistic as well as more rationally and commercially focussed.
READ: Sound barrier legend Yeager sues Airbus.
“It’s interesting we’re in the down part of a cycle at the moment, or going through one, and I think people are being rational,’’ he tells AirlineRatings.
“They’re adjusting capacity, they’re thinking about recovering higher costs through higher prices.
“These are the staples of what good business people do and I think I’ve found that at an industry-wide level globally. I’m hopeful that this will be the first down cycle where people don’t go with the normal airline behavior and playbook.”
Luxon believes one reason for this may be an increase in the number of people coming into aviation from more diverse backgrounds.
That was the case when he joined Air New Zealand from Unilever Canada, where he had been president and chief executive responsible for a $US1.4 billion business and 1900 employees.
It was one of a number of leadership roles he’d held at the multinational during an 18-year career that helped shaped his views on how businesses should operate.
Born in Christchurch in 1970, he moved to Auckland at the age of seven but returned to Christchurch to finish his last years of high school and gain a master’s degree in commerce with a major in business administration from Canterbury University.
His first management role was as the brand manager for Unilever’s detergent business in New Zealand but he quickly progressed to Australia, Asia and then the US.
He argues that the fresh blood was something needed by an industry he saw as too inward-looking and calcified.
“I often felt like you swapped CEOs among airlines around the world and you get exactly the same results because they do exactly the same airline stuff,’’ he says.
“I think that honestly has changed a lot in my time.”
READ: 150,000 stranded as Thomas Cook collapses.
Luxon didn’t step straight into the leadership role; he joined Air New Zealand in May 2011 and cut his aviation teeth as group general manager international airline before taking over from Rob Fyfe at the end of 2012.
He began the job with a growth and customer service mantra he followed with an unwavering determination and energy.
Air New Zealand says kia ora to Chicago. Photo: Air NZ
The airline has added destinations such as Chicago, Buenos Aries and Taiwan during his tenure and this week confirmed a previously announced agreement to buy eight Boeing 787-10 Dreamliners powered by GEnx-1B engines.
Looking back over his own performance, Luxon says he continued the legacy started by his predecessors and he sees Air New Zealand today as a stronger business in “a customer sense, a cultural sense and a commercial sense”.
“Commercially we’ve gone from 11 to 12 million customers when I started to up to 17 million,’’ he notes. “Our network has obviously expanded tremendously throughout the Pacific Rim — I think it’s 40 percent bigger than it was when I started.
“We’ve done a lot of that expansion through very good and smart joint venture partnerships with many of our alliance partners and we have fundamentally a very strong balance sheet.
“We’re consistently ranked in the top three airlines in terms of an investment-grade rating. So that just says we have enough financial firepower to deal with competition and invest appropriately.”
A recent slowing of demand has seen some restructuring at the carrier and the airline's Boeing 787 fleet has been hit by global problems with Rolls-Royce Trent 1000 engines.
But Luxon says it remains “incredibly strong commercially with a good set of competitive advantages we keep protecting and enhancing”.
In terms of customer service, he points to the introduction of digital and customer service teams as well as changes to the loyalty program as part of his legacy.
“Customer satisfaction in terms of the net promoter score is probably seven times the industry average and three times the Star Alliance/airline average,’’ he says.
“And when you’re ranked the number one reputation and trust company in New Zealand and Australia – Australia for the last three years and New Zealand for the last five years – it just means that customers really are highly attached to the business and the brand.
“They have high expectations of us and hold us to a higher standard – which is fantastic – but also there is a massive attachment.”
From a cultural standpoint, Luxon says Air New Zealand is in the business of "flying people, not planes", and has 12,500 “excellent Air New Zealanders who are highly emotionally attached to the business”.
That’s important, he says, because staff optimally deliver customer services if they are feeling good about the company and where it’s going.
Other achievements include diversity and inclusion programs that have seen the percentage of women in the top leadership team widen from 16 percent to 44 percent and Maori partnerships.
So why leave if things are fundamentally going well?
The departing CEO says the time was simply right for a change.
“The reality is seven years is quite a long time to be CEO – most CEO’s in Australia and New Zealand typically average about four and a half years and then they get moved on or there’s some other issue that happens,’’ he says.
“I feel pleased that my tenure in that context is a really good length of time.
“As I looked forward, I thought it’s a great length of service, it’s about right and feels like a good time for someone new to come in and actually to build and preserve and enhance on the stuff we’ve built but also from their own stamp and their own personality keep doing things differently.
“I felt like that off the back of Rob Fyfe. I thought Rob did a great job as CEO off the back of Ralph and Ralph did a great job of kickstarting the whole reset.
“The torch just gets passed and the work goes on. That was my thinking really.”
His one regret is that he wishes he’d moved faster — “making bolder, braver, faster decisions to be honest.”
The saddest day was losing an Air New Zealand staff member in this year’s Christchurch massacre.
“That was one of the most tragic days I had to deal with but that’s really it,’’ he says. “There are no individual decisions I look at and say ‘We got that kind of wrong’.
“It’s more the pace of those decisions.”
So what’s next for the former chief executive?
There has been a great deal of speculation that Luxon will enter politics, but he cautions that this is not a given.
He’s looking forward to “decompressing a bit” at the end of the year.
“These are pretty full-on jobs,’’ he says. “When you’re a CEO of an airline, stuff happens every day and it’s 24/7 so decompressing and processing the seven-year period will be important on a personal level.
“And part of this for me is just thinking what I want to do next?”
He notes that continuing in a corporate role would likely mean moving overseas again, something he has already done.
He is also passionate about issues such as modern slavery and fighting sex trafficking and is on the board an NZ Christian aid organization that works with those issues.
“I just really admire what those people do around the world and it’s a problem that needs to be solved,’’ he says. “So could I do something in that space.”
The New Zealand political option is also on the cards and Luxon can see himself dealing with longer-term challenges the country faces around infrastructure, automation and productivity as well as some of the social issues.
“I know there’s lots of conjecture and people are talking about all sorts of things, but in my head what I really want to be able to do is to take the time and really think about it,’’ he says.
“So by the time I get to the end of the year, I’ll have a really good view as to what I think I’m doing.”
