A turbulent take: why David Seymour is so wrong in his calls to sell off Air New Zealand

Sunday, 1 March 2026

OPINION: It would be comforting to be so certain about something as Act Leader and deputy Prime Minister David Seymour was in calling for the full privatisation of Air New Zealand after its $40 million tax loss.

But it wouldn’t be much fun being so utterly wrong.

Seymour’s plug-and-play solution flies in the face of economic logic and the crucial role the flag carrier plays in the national interest – not to mention the lessons of the airline’s history.

The 52% government-owned airline said their half-year loss was largely down to global engine maintenance delays (faced by many airlines), a slow recovery in domestic demand, rising costs, and a weaker Kiwi dollar.

Seymour’s focus was instead on a 'get woke, go broke” theme. Apparently planning for lower-emissions electric planes and brand-enhancing glossy reports on climate change were somehow distracting the company from getting its planes to leave on time.

Oh, and paper cups in the Koru Lounge are not just an affront to the better-heeled travelling public (or those who get access as a perk of their job – MPs for instance) but another cause of the malaise that saw the company slip from decent profits in the past two years to a half year loss.

On one score – the ridiculous prices of domestic flights and limited routes – it’s hard not to agree with Seymour.

But surely companies that have been run by such able executives as Greg Foran and Seymour’s immediate superior, Prime Minister Christopher Luxon, can do more than one thing; strive to be profitable, punctual, brand conscious and environmentally friendly? Walking today doesn’t mean you have to leave chewing gum until tomorrow.

The company’s half-year loss was just a hook for Seymour to tout what his coalition partner Winston Peters called “blind ideology”.

As well as the sale of Air NZ shares, Act has consistently pushed for the sale of the Crown’s 51% stake in three power gentailers, which have just reported large profits in the same half-year as Air NZ’s loss. The big four gentailers, which include privately-owned Contact, reported a 42% increase to a combined $1.85 billion profit– a figure you can confidently double to around $3.6 billion for the full year .

It seems that when it comes to Act’s view of state-owned commercial entities, it’s a case of sell them when they make a loss, sell them if they make a profit.

Or to be more charitable, Act believes it is best not to own them (so taxpayers did not carry the risk and tie up capital) and they would be better run in private hands. The reasons are just noise.

Now, it follows that if you want to fully privatise Air NZ then surely you ought to also be prepared to let it fail – otherwise you are privatising the potential profits while socialising the risk to the taxpayers. (This is also an argument for full ownership, but we are where we are.)

It is easy to hypothesise about the effects of a bust Air NZ on our domestic economy, our export markets, our productivity and our unemployment rates.

But they remain scenarios because no government would allow such a crucial piece of the national infrastructure and our international links to fall over. So a full sale comes with an inbuilt moral hazard to the taxpayer. Not just too big to fail, but too important to collapse.

Which is where the lessons of history come in. The first is from 2001, when a perilous Air NZ, privatised back in 1987, required an $855 million bailout from the government, which ended up with 82% of the shares.

The finance minister of the time, Michael Cullen, was clear where the most blame should go. “The incompetence of the private sector management and governance of the airline for much of its time since its privatisation.”

In his autobiography Cullen writes: “Many were delighted to see the government taking back majority ownership. Those committed to the superior capacities of the private sector under any circumstances never forgave us for our actions.”

Cullen took several issues into account before intervening, including the viability of Air NZ as a national carrier, international market reaction, the impact on competition, the impact on consumer confidence, the impact on air traffic rights, and ownership risks, all of which would also apply to a re-privatised Air NZ that flew into strife.

But those of us covering the story at the time were left in no doubt that the most compelling reasons for the bail-out were that the country could not allow the market alone to determine the viability of our national carrier, nor could any government – for political as well as economic reasons - allow it to fail.

It wasn’t the last time Cullen was forced to step in to buy back a privatised state asset. Humming the old Burt Bacharach banger Planes and Boats and Trains as he wandered past waiting reporters he announced in 2008 a $665 million buy-back of the rail and ferry operations, renamed KiwiRail (after having bought back the rail tracks for $1 in 2004).

Fast-forward to 2019 and the Covid crisis underscored the crucial role played by Air NZ and other airlines – beyond what the market would provide – as the Government stepped in with a $600 million “aviation support package” to provide capacity for exports and imports including medicines, in the face of dysfunctional supply chains. There was also a quasi-bailout of Air NZ, which was badly mauled by the crisis, through a $900 million government loan facility.

That’s the argument, in a nutshell, for why a sale of Air NZ shares shouldn’t happen (and perhaps why the privatised portion should be bought back, although there are hazards in that too if the government’s intention is built into the share price).

But will it happen soon?

It is vanishingly unlikely.

NZ First and Winston Peters have ruled it out and by contrast seem to be leaning towards the repurchase of some privatised assets such as the power company shares.

Luxon has ruled it out this term.

Labour won’t and neither will the Greens and Te Pāti Māori.

That leaves only an unlikely National-Act majority – or some tough negotiating and compromise-swapping in coalition talks on the Right after this year’s election.