Air New Zealand Welcomes Report

Media Release 18 April 2008

Air New Zealand Welcomes Report

Air New Zealand today welcomed the Department of Labour's report on the employment of Shanghai-based cabin crew.

Air New Zealand Group General Manager Long Haul Airline Ed Sims said the report confirmed the airline had met legal and policy requirements when establishing its Shanghai crew base.

"The report holds no surprises for us and clearly shows that criticism of the airline on these matters has been unfounded," Mr Sims says.

In particular, the Department of Labour found:

* Chinese employment law applied to the agreement between Air New Zealand and the Chinese Air Crew.

* There is no requirement that a New Zealand-based employer must always employ staff offshore under New Zealand employment law.

* Air New Zealand is required to employ the Chinese Air Crew through a Chinese Government organisation, Foreign Aviation Service Corporation (FASCO).

* Chinese Air Crew are not required to hold New Zealand visas to travel to New Zealand under New Zealand law. However, until New Zealand entered into a reciprocal visa free arrangement with China, the Chinese government required the Chinese Air Crew to hold a New Zealand visa before travelling to New Zealand. The Chinese Air Crew's visas were therefore granted as an exception to New Zealand immigration policy.

The facts:

* Air New Zealand's Shanghai Crew Base was set up in 2006 with 64 staff to ensure we were able to provide a crew solution to meet the needs of our customers. 90% of our customers on the Auckland-Shanghai route are Mandarin speaking and we felt it was essential the majority of our crew could communicate in Mandarin with our customers.

* All foreign airlines are required by law to work through a government agency when recruiting both cabin crew and ground staff in China. Air New Zealand utilises the services of government agency FASCO (Foreign Aviation Service Corporation) which is also used by a number of international airlines including Virgin Atlantic, KLM and Northwest Airlines.

* Salaries and terms and conditions are agreed in conjunction with this agency and are in line with the other airlines operating Shanghai crew bases. The salaries reflect local market relativities, as do the salaries for all our staff in off-shore locations like our crew base in London or staff in locations including Japan, USA and Australia.

* The total gross annual employment cost of a cabin crew member in Shanghai is approximately RMB 236,000 or the equivalent of NZ$46,000 per annum. This includes a base salary, a range of allowances and benefits and social security payments.

* Contrary to media reports of a meal allowance of $55 per day, the meal allowance per day is up to $120, with an additional tax free daily allowance of $55 for supplementary costs.

* While in Auckland, the cabin crew stay at a central-city four star hotel with access to 24-hour room service and the choice of two restaurants from which to dine. The airline is currently introducing a credit card process to enable crew to dine at any establishment they wish up to the $120 meal allowance per day. The time spent in Auckland on layover ranges from 36 hours to four days.

* This package is in line with comparable New Zealand based cabin crew who have a total employment cost of approximately NZ$58,000. While Shanghai crew have a lower base salary, they only fly an average 72% of the flying hours of an Auckland based crew member.

* A Shanghai based crew member works an average 14 days of a 28 day roster. They average 2.5 return flights Shanghai-Auckland per roster.

ENDS

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