“The reason he asked me was not per se because I was CIO, I think it was largely because I was just the newest person on the team with the freshest set of eyes,” says Fyfe of the directive from the CEO, Sir Ralph Norris.
“The challenge he gave me was to say, ‘What sort of airline should Air New Zealand become if we were to have a viable future?’”
At that time he conducted the review, the economics of the airline industry and the Air New Zealand business itself was “quite challenging”. Fuel has doubled in price in the last four years, which added another $600 odd million of costs the airlines had to absorb without any significant rise in fares.
In this situation, it was easy for the CEO or the executive team to spend all their time focused on the bottom line, he says. This is particularly true for Air New Zealand, a “subscale operator sitting at the bottom of the world” and flying some of the longest airline routes.
“We were never going to be able to create a competitive advantage through purely managing the financial metrics. We just didn't have the scale, and the airline business is a scale business.”
Sir Ralph Norris told him to “put the economics aside and start the strategic review”.