International Air Services
New Zealand's remoteness from the rest of the world and its exceptionally large volume of overseas trade per head of population combine to make this country uniquely dependent on air and sea transport.
The Second World War reinforced the awareness, shown by successive Governments, of the importance of New Zealand's ability to exercise some influence in that field. New Zealand did not at first feel able to undertake on its own the financial responsibility for an international airline; and this fact, together with a real belief in international collaboration, led New Zealand to support, in the International Civil Aviation Organisation, the concept of a great airline jointly owned by many nations. This, however, did not come to fruition. But New Zealand did become a partner in British Commonwealth Pacific Airlines, of which the New Zealand Government held 30 per cent of the shares, the United Kingdom Government 20 per cent, and the Australian Government 50 per cent. BCPA operated trans-Pacific services on the Auckland–Nandi–Canton Island–Honolulu–San Francisco–Vancouver route from 1947 to 1954 when it was wound up. In 1940 New Zealand had also become a shareholder in Tasman Empire Airways Ltd., which gave regional services to Australia, Fiji, and Tahiti. In 1954 the United Kingdom withdrew from TEAL also, and Australia and New Zealand each became 50 per cent shareholders. By 1961 it had become clear that this joint ownership of the air-line had disadvantages, for each nation wished to plan its own airline policies. There was also a risk of difficulties in securing traffic rights from other countries, which are usually the result of bilateral negotiations. Neither Australia nor New Zealand would necessarily be regarded by other countries as being solely responsible for TEAL and for any exchange of rights on its behalf. These considerations became more important with the decision to build a full-scale international airport at Mangere, near Auckland, which, together with the new airports in Tahiti and in American Samoa, foreshadowed services by large jet aircraft between Australia and the United States via New Zealand, thus ending TEAL's Tasman monopoly and adding force to the arguments for TEAL to expand its route network in order to retain an adequate basis of operation. By 1961 also the trans-Tasman air traffic had increased to a point where it appeared economically possible to share TEAL'S traditional Tasman monopoly with QANTAS–which would be naturally inevitable if the Australian Government granted rights in Australia to a wholly owned New Zealand airline. Finally, by 1961 the air was obviously the dominant form of passenger transport (nearly two-thirds of all passengers to and from New Zealand in the year ended 31 March 1961 travelled by air) and air freight was increasing in importance. With all these considerations in mind the New Zealand Government negotiated for the purchase of the Australian shareholding in TEAL. The arrangements, which were concluded in July 1961, included the purchase of the Australian shareholding at par value (£N.Z.811,400), together with an intergovernmental agreement granting QANTAS rights to and through New Zealand and TEAL rights to and through Australia. The New Zealand Government, in announcing the agreement, paid tribute to Australia for the support which the larger country had given through the 21 years of the joint airline's existence.
In 1964 Tasman Empire Airways had a fleet of three Lockheed Electra aircraft on routes between Auckland, Wellington, and Christchurch on the one hand, and Sydney, Melbourne, and Brisbane on the other. In addition TEAL served Fiji and American Samoa, and (using a DC4 chartered from QANTAS) the Australian territory of Norfolk Island. In early years the airline had lost money, but from 1954 (when DC6 aircraft replaced flying boats) until 1964 it had earned over £1 million in profits. Irrespective of net profits, the company also represented an important source of gains and savings in overseas currency. In late 1965 TEAL will receive a fleet of three Douglas DC8 large jet aircraft for the operation of services to the United States and the Orient. The company's name will become Air New Zealand, although “TEAL” will be retained as a “brand name”.
In the year ended 31 March 1964 TEAL carried 91,766 passengers over the Tasman, 27,885 between New Zealand and Fiji, and 3,838 on the Norfolk Island and Tahiti routes–a total of 123,489 – and also carried 1,212 tons of freight and 450 tons of mail. Total revenues were £5,022,696, and net surplus for the year (after providing for obsolescence and taxation) was £205,382. These results justified the decision by Government that TEAL's monopoly of the Tasman need not be maintained.
An airline of relatively small size, such as TEAL, may have higher unit costs than larger airlines. In the case of TEAL, this tendency has been offset by high aircraft utilisation, both in terms of load factor and in aircraft hours per annum, by economical organisation, and also by the use of the company's engineering workshops for contract work on behalf of the Royal New Zealand Air Force, agricultural aviation and other small operators, the Army, Navy, and shipping companies. These operations showed a profit.
In October 1961 QANTAS Empire Airways also commenced trans-Tasman operations, and provided initially three services to every seven operated by TEAL. The ratio changed to four to six in 1962.
Other international companies to and from New Zealand in 1964 were Pan-American World Airways, Canadian Pacific Airlines, and British Overseas Airways Corporation, which operated Comet jet services from London across the Tasman.