In the 1930s governments in all countries were being drawn into aviation. The state’s responsibility for national defence resulted in government-subsidised pilot training and airfield construction. Airmail services were a public good also worthy of state subsidy. Safety issues demanded expensive navigational aids and the certification of pilots.
The state steps in
In New Zealand, licensing of air services was introduced in 1934, to create a more rational commercial environment for the development of aviation. The Labour government elected in 1935 went further: its intention was to nationalise commercial aviation. Labour believed it was the state’s responsibility to provide essential services, like railways, electricity, and now aviation. At first, the war and more pressing social priorities diverted the government from this objective, though in the end the wartime depletion of air transport made it easier for the government to intervene.
The National Airways Corporation
The New Zealand National Airways Act 1945 was a significant turning point. It created an airline structure which defined New Zealand aviation for more than 30 years. It determined that only one airline could profitably serve the main trunk route, and that the surpluses from this service should subsidise secondary routes to provincial towns.
The new legislation created a single domestic airline – the National Airways Corporation (NAC). On 1 April 1947 NAC formally took over the private airlines’ aircraft, timetables, engineering services, and most of their key personnel. The airline was governed by a board chaired by Chief of Air Staff Sir Leonard Isitt. The general manager of Union Airways, F. Maurice Clarke, continued in this role for the new corporation. New Zealand had thus joined other Commonwealth countries, including England, Canada, South Africa and Australia, in having state airlines at the core of their post-war aviation policies.
NAC’s first five years were difficult. The airline lost money, suffered three fatal crashes, and struggled to meet licensing conditions. As a state monopoly, it was also under political attack from the National party in opposition. After defeating Labour in 1949, National announced its intention to sell the airline wholly or in part.
Despite its difficulties, NAC managed a spectacular expansion of air services. By December 1951 it was carrying passengers on a network from Kaitāia to Invercargill. Provincial businesses, politicians and citizens were quick to appreciate the service, and increasingly reluctant to risk disruption or loss by any dismantling of NAC. The airline had regained profitability by 1952, and National’s threat to sell it receded. Politically secure again, NAC remained the dominant airline until its enforced merger with Air New Zealand in 1978.