Disclaimer: This is an example of a student written assignment.
Click here for sample essays written by our professional writers.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com.

Governance Law and Ethics: Air New Zealand Case Study

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 4986 words Published: 28th Feb 2020

Reference this


Introduction Governance and Decision making in Air New Zealand Code of ethical behavior Board composition and performance Board Committees Reporting and Disclosure Remuneration Risk Management Auditors Shareholder rights and relations Conclusion Ethical issues faced by Air New Zealand and recommended solutions Carbon Emissions Waste generation Conflicts Conclusion Bibliography


This research is based on governance and decision making at Air New Zealand. It is a New Zealand based international airline company providing cargo transport and passenger services to customers around the globe. Air New Zealand helps more than 15 million passengers through its services (About Air New Zealand, n.d.). Transport of domestic and international passengers as well as cargo includes primary operation of the company. Air New Zealand is a customer focused company that wants to maintain best position in every area in which they operate by providing best services and delighting customers through its practices (Company profile, n.d.). This report aims at finding out all the major factors affecting governance and decision making at the company for example selection and composition of boards, duties and responsibilities of directors to ensure appropriate governance and best decision making, reporting structure of the organization and the level of disclosure the company is following etc. All these factors will help to identify nature of governance and decision making. The report also aims to find out existing or potential ethical issues with regard to Air New Zealand and to provide viable solutions and techniques to deal with those issues efficiently in order to ensure smooth operations of the company.

Governance and Decision making in Air New Zealand

At Air New Zealand, the board believes that corporate governance is of paramount importance when it comes to overall performance and efficiency of the organization so the company has various policies, rules and regulations in place to make sure that the company is maintaining appropriate governance standards at every level. The company strongly supports NZX corporate governance code and considers that company’s governance practices are consistent with this (Annual Financial Results, 2017, p. 48). These governance practices of Sir New Zealand are explained below: Code of ethical behavior: Air New Zealand believes that appropriate standards of corporate governance can be achieved when board and individual directors itself shows integrity, ethics, honesty and a sound judgment towards values of the organization. The board of Air New Zealand recognizes that each and every director plays a vital role in enforcing ethical standards that company wants to have. Air New Zealand has published various documents like Code of Conduct, Securities Trading Policy etc. to address various important matters specified in NZX corporate governance code of conduct (Annual Financial Results, 2017, p. 48)
  • Code of conduct: It act as a guiding principal for doing what is right ethically and legally. It applies to everyone who work at Air New Zealand whether director, contractor, executive, employee or agent. This code of conduct ensures that people in the company operate safely, reliably and responsible, act ethically with transparency, integrity and honesty, help the organization in protecting people, information and the property, treat everyone with respect and fairly,  most importantly always keep law in mind and doing what is legally right. This code of conduct provides detailed guidelines on how to achieve above mentioned things in various situations (Code of conduct, 2017).
  • Securities trading policy: It identifies and provides information on behaviours which are illegal, risky and unacceptable in security trading by directors or any other associated person. It provides a framework in which people have to take individual responsibility if they want to deal in security trading which helped to reduce the instances of insider trading in the company (Securities trading policy, 2017).

Board composition and performance:

Selection of new director and the replacement of the existing one is the responsibility of the board. The board can take help of experienced consultants identification, recruitment and selection of suitable candidates on the basis of skills, experience and diversity on the board. There are some constitutional requirements that board has to fulfill while selecting new directors like number of directors should range from 5 to 8 where at least three of them should be resident of New Zealand, majority of directors should be citizen of New Zealand etc. Directors of the company are responsible for overall decision making at the company. Audit committee takes all major decision of finance department, People remuneration and diversity committee is responsible for taking decisions regarding remuneration, diversity and management structure, Health safety and security committee takes all decisions to ensure employee safety in every process of the company and all other decisions are taken by board of directors after mutual consent. The operations of the company are performed as per the direction of the board. The directors are responsible for the formulation of corporate strategy and overall decision making. The chief executive officer is the responsible for the implementation of the strategy formed by the board and managing operations of the company. The chief executive officer after receiving approval from the board delegates his/her authority to the senior management, chief financial officer and the executive management (Annual Financial Results, 2017, p. 53). The company requires its directors to bring range of experience and skills to the table so that they can guide, support, mentor, challenge, monitor and inspire management. It’s the responsibility of the board to ensure that level of governance where employees, customers and anyone associated with Air New Zealand feel proud. The company has various educational programs to increase the effectiveness of the directors to support their continuous development. Senior executives of the organization regularly update them on the prevailing issues and practices in the market (Annual Financial Results, 2017, pp. 49-52).

Qualification, experience and skills of current directors are explained below:

    Jan Davson   Rob Jager   Jonathan Mason   Tony Carter     Paul Bingham     Linda Jenkinson   Therese Walse
Qualification B.com, FCA MBA, BE MBA,MA,BA BE,ME,Mphil B.com MBA,BBS BCA,FCA
Customer Experience
Regional Profile
Executive leadership
International Business
Source: (Annual Financial Results, 2017, p. 50)

Board Committees

There are various committees established by the board in order to perform functions efficiently and to achieve good governance outcomes. These committees are explained below: Audit Committee: This committee assists and guides board for discharging its responsibility of financial reporting as well as for compliance and risk management practices of the company. This committee consists of three to seven non executive directors out of which majority should be of independent directors. Most of the members should have good knowledge about finance and at least one should be from finance or accounting background. Currently Tony Carter, Dame Therese Walsh and Jonathan Mason are the members of the audit committee where Jan Dawson is the chairman (Annual Financial Results, 2017, p. 53). People Remuneration and Diversity Committee:  This committee consists of two to seven directors who are responsible for managing issues like management structure, diversity and remuneration at senior executive and chief executive officer level as well as providing suggestions for remuneration of non executive directors. Current members of this committee are Jonathan Mason (chair), Tony Carter and Jan Dawson (Annual Financial Results, 2017, p. 53). Health, Safety and Security Committee: This committee of minimum three non executive directors makes sure that the company is having best practices and effective system in place to ensure the health safety and security of customers, employees, contractors or anyone associated with the company. Rob Jager (Chair), Linda Jenkinson, Tony Carter and Paul Bingham are the current members of this committee (Annual Financial Results, 2017, p. 53). Funding Committee: This committee analyses and guides the board for an annual debt plan.  It also takes care of administrative approvals of transactions on an ad hoc basis. This committee consists of three to four directors and right now Tony Carter, Rob Jager and Jonathan Mason are the members of this committee (Annual Financial Results, 2017, p. 53)

Reporting and Disclosure

The board of Air New Zealand is committed to meaningful, timely and accurate disclosure of financial as well as non financial information. Being a listed company, it is very crucial for Air New Zealand to keep market informed and make sure that securities of the company are valued fairly in the market. The company provides all relevant information like operation updates, change in policy etc. to the public with the help of NZX and ASX (Annual Financial Results, 2017, p. 54). Air New Zealand has continuous disclosure policy which aims at ensuring that the company complies with all disclosure obligations on continuous basis. This policy ensures to provide complete, timely and accurate information to all the market participants and shareholders. It helps to indentify and highlight compulsory responsibilities and requirements with regard to disclosure of material information significant to the company. The company has also formed disclosure committee in order to manage disclosure obligations of the company. The chief executive officer, deputy chief financial officer, general counsel, general manager public affairs, company secretary and investor relations manager are the members of this committee (Continuous disclosure policy, 2016, p. 5). The board makes sure that the financial statements of the company should be prepared as per IFRS (International financial reporting standard) and New Zealand IFRS. The company issues corporate sustainability report every year in which all non-financial information like management of workforce which include health and safety programs for employees, policies for employee engagement and how they manage diversity in the organization, how they are contributing towards society for example their charitable programs, carbon management like policies and initiatives used by the company to reduce carbon emissions, policies and methods used by the company for waste management and how the company is promoting sustainable tourism in the country (Sustainability report, 2017).


Shareholder approval and constitution determines the pool available to pay remuneration of directors. The company uses a strategy in which remuneration of directors and executive are based on three main components which are fixed remuneration, long term incentive and annual performance incentive. Air New Zealand wants to set fixed remuneration due to which Independent non-executive directors are not allowed to receive any incentive based remuneration or bonus and are not entitled to any employee share scheme or executive remuneration scheme. Air New Zealand reimburses expenses like travelling and accommodation occurred during meetings for the company (Annual Financial Results, 2017, pp. 54-63). Distribution of pool determined by the board is mentioned below:
       Position     Fees per annum To 30th June 2017 From 1 July 2017
Board of Directors Member Deputy Chairmen Chairmen $ 95000 $108500 $ 270,000 $ 97500 $ 111,000 $ 270,000
People Remuneration and Diversity Committee Member Chair $10000 $ 20000 $ 10000 $ 20000
Audit Committee Member Chair $ 20000 $ 40000 $ 20000 $ 40000
Health Safety and Security Committee Member Chair $ 20000 $ 40000 $ 20000 $ 40000
Source: (Annual Financial Results, 2017, p. 55) Remuneration of directors is mentioned below:
  Tony Carter (chairmen) Jan Dawson (Deputy Chairmen) Dame Therese Walsh Linda Jenkinson Paul Bingham Jonathan Mason Rob Jager
Board fees $ 270,000 $ 108,500 $ 95000 $ 95000 $ 95000 $ 95000 $ 95000
PRDC (b) $ 10000 _ _ $ 2000 (chair) _
Audit Committee (b) $ 40000 (chair) $ 2000 _ $ 2000 _
HSSC (b) _ _ $ 5000 $ 20000 _ $40000
Other remuneration _ $ 7500 (c) _ $ 5833(d) _ _ _
Total fees $ 270,000 $166,000 $ 115,000 $ 105833 $115,000 $ 135000 $135000
Travel entitlement (a) $ 8420 $ 37570 $ 42705 $100290 $ 96868 $ 50,829 $40259
Source: (Annual Financial Results, 2017, p. 55) In this table – A = It includes travel benefits B = Chairmen don’t receive any committee fee C = Trustee fees D = Overseas travel allowance

Risk Management

As airline industry is so complex that Air New Zealand has to deal with various risks on continuous basis. The whole board and the directors individually receives information on critical risks manage them which includes site visits to ensure that the company is mitigating health, safety and any other risk in the processes of the company. The audit committee is responsible for the overall management of risks and this committee review risk management in the company after every six months. This committee informs the board about important matters regarding risk management (Annual Financial Results, 2017, p. 56). The company has risk management policy with a purpose to provide framework to monitor potential risks on continuous basis which have the capability to impact the operations of the company. This policy aims at creating risk awareness culture in the company where everyone understand and provide sound solutions to manage risks. This policy is applicable on everyone who works at Air New Zealand whether director, employee or anyone associated with the company (Risk Managment Policy, 2017)


As Air New Zealand is a public entity it has to work in accordance with Public Audit Act 2001. Generally the auditor is Auditor-journal but the company can also hire independent auditor to perform the audit process. The audit committee of the company works closely with the Auditor general for appointing or changing external auditors in order to maintain the independence of external auditor and to coordinate the performance of non audit services with the audit independence policy. After every five year, Air New Zealand ensures external auditor to change lead audit partner (Annual Financial Results, 2017, p. 56). Audit committee of the company maintains close contact with external auditor to discuss various confidential and important matters. Air New Zealand has an audit independent policy that aims at maintaining consistency and meeting requirements of ASX listing rules and NZX main board listing rules. This policy ensures independent working of external auditor without safeguarding the credibility and reliability of the company’s external financial reporting (Audit Independence policy, 2016)

Shareholder Rights and Relations

The company has designed shareholder relation program with a purpose to ensure two way effective communications between Air New Zealand and the shareholders. The company provides relevant and important information to the investment community as quickly as possible. The company engages and interacts with the shareholders through various ways which are mentioned below:
  • The company has a website dedicated towards shareholders (airnewzealand.co.nz/investor) to provide financial information, investor presentations, notices of shareholders, current and previous annual reports and other important information relevant for shareholders.
  • Shareholders are provided investor relation email address by the company with which they contact company for any queries or information regarding their investment or any other thing of the company.
  • The company organizes annual shareholders meeting in which shareholders can interact with the board of directors and executive physically or digitally if they can’t attend the meeting physically due to any reason.
  • The company holds investor briefing on continuous basis to update shareholders regarding financial position and strategies of the company (Annual Financial Results, 2017, p. 57)
Air New Zealand has a very good governance structure in place according to the requirements of NZX corporate governance code. The company follows are the requirements of the government which is one of the major reasons behind efficient performance and success of Air New Zealand.

Ethical issues faced by Air New Zealand and recommended solutions

Carbon Emissions: Air New Zealand plays an important role in upgrading the economy of the company through its operations but it also contributes towards climatic changes in a negative way. Air New Zealand is the largest carbon emitter of the country where it emits around 3.5 million tonnes of carbon dioxide every year in the atmosphere. These climatic changes due to emission of carbon dioxide give rise to more issues like flooding, storms and cases of extreme heat in New Zealand (Sustainability Report, 2018, pp. 27-28). There is no regulation or rule imposed by the government of New Zealand regarding percentage or quantity of carbon emissions so the company is free to release more carbon to increase the profitability of the company but this is ethical responsibility of the company to reduce such emissions. This is an ethical issue and not a strategic issue that the company is facing right now. Solution: Air New Zealand should encourage people to carry less weight while travelling. When people carry more weight, it automatically increases the total weight of the aircraft which burns more fuel. More weight in the aircraft means more burning of fuel and more emission of carbon dioxide in the atmosphere. The company should aware and educate people that if they carry less weight then they will contribute towards environment and economy of the country. The company should research on how to use bio fuel in both domestic as well as international flights. Use of bio fuels can help to reduce the carbon emissions to a great extent. The company should find commercially variable solution by using renewable sources of energy. The company should take these initiatives in order to meet their ethical duty towards society and the environment and to deal with ethical challenge that the company faces. Waste generation: Air New Zealand produces waste in abundance. There are various ways through which this waste is generated for example use of plastics for offering food and beverages items at the airport as well as in the flight, almost 20 percent of the in flight food items get wasted and the in flight human waste is another major waste management issue that the company has to deal with. These waste produced by the company are mentioned below:
  • All the beverages provided at the restaurants of the airport and in the flight are offered with the help of plastic cans. The company doesn’t have any other alternative of this due to which usage of plastic is increasing by Air New Zealand.  As everyone is aware about the ill effects of plastic it gives an ethical challenge to the company on how to reduce this usage of plastic.
  • The kitchen of the Air New Zealand which produces food and beverages items for the in flight passengers also produces waste in large quantity. Preparation of those times gives rise to creation of waste materials like vegetables waste, oil waste etc.
  • As the company doesn’t want to face issue of stock over of food items as it will affect their image in front of customers so they carry some extra food items. Almost 20 percent of these food items remain unused and add more to the waste generated by the company due to various operations.
  • Human waste is one of the major issues that the company faces. The longer duration of flights creates more waste of this kind. The company can’t control such waste as this is from customer’s side and not from company’s side (Sustainability report, 2017, p. 52).
Solution: Air New Zealand should try to use other containers made up of glass or cardboard to replace the plastic used in serving beverages at the airport and in the flight. It may increase the cost a little bit but can reduce the wastage of the company to a great extent. The main challenge in front of the company regarding wastage management is the plastic as it has various negative impacts on the environment. With the help of other alternatives the company can minimize the usage of plastic. The company should devise a strategy which will encourage customers to pre-order the products they want to have in the flight. It will give a fair idea on how much food and beverages items will be required during the flight. As 20 percent of flight food left unused so pre-ordering will help to reduce that wastage. Conflicts: This seventy five years old airline has witnessed various conflicts between employees and management or between unions and management. There are hundreds of cases being filed by individual staff facing personal issues in the organization where as battle between unions and the company over some fundamental issues is very common. Many times these conflicts went to higher courts due to which employees had to bear expensive litigation and legal expenses of the company have also increased. In many cases it becomes very difficult to find out which party is at guilt. It affects efficiency and performance level of employees; even it affects their personal lives due to high stress so this is the ethical issue with which the company is dealing as people of the New Zealand are facing various problems due to this issue (Bradley, 2015). Solution: Air New Zealand should start employee feedback program through which employees can raise any issue if they face any in any process of the company. The company should appoint conflict resolution committee which will work just like court and will hear problem of both the parties like employees and management and try to convince them to willingly accept their judgment. This committee will guide and motivate both the parties to take steps in best interest of the company while taking care of their personal needs. It will reduce number of court cases when employees get an opportunity to resolve their problems in the company itself.


The company takes various initiatives to perform better ethically and economically. But still there are various ethical issues that require some attention. Some efforts can help company to deal with these ethical issues. The company should adapt new methods and solutions in order to deal with ethical issues.


  • About Air New Zealand. (n.d.). Retrieved October 10, 2018, from www.airnewzealand.co.nz: https://www.airnewzealand.co.nz/about-air-new-zealand
  • Annual Financial Results 2017. New Zealand: Air New Zealand. Retrieved October 11, 2018, from https://p-airnz.com/cms/assets/PDFs/air-nz-2017-financial-results.pdf
  •  Audit Independence policy 2016. New Zealand: Air New Zealand. Retrieved October 13, 2018, from https://p-airnz.com/cms/assets/NZ/PDFs/audit-independence-policy-may2016.pdf
  • Bradley, G. (2015, July 24). What's it really like to work at Air NZ? Retrieved October 30, 2018, from nzherald.co.nz: nzherald.co.nz
  • Code of conduct 2017. New Zealand: Air New Zealand. Retrieved October 11, 2018, from https://p-airnz.com/cms/assets/PDFs/code-of-conduct-2017-v2.pdf
  • Company profile. (n.d.). Retrieved October 10, 2018, from www.airnewzealand.co.nz: https://www.airnewzealand.co.nz/corporate-profile
  • Continuous disclosure policy. New Zealand: Air New Zealand. Retrieved October 12, 2018, from https://p-airnz.com/cms/assets/PDFs/continuous-disclosure-policy-may2016-v2.pdf
  • Risk Managment Policy. New Zealand: Air New Zealand. Retrieved October 13, 2018, from https://p-airnz.com/cms/assets/PDFs/air-nz-risk-management-policy-aug-2017.pdf
  • Securities trading policy. New Zealand: Air New Zealand. Retrieved October 11, 2018, from https://p-airnz.com/cms/assets/PDFs/securities-trading-policy-may2017.pdf
  •  Sustainability report 2017. New Zealand: Air New Zealand. Retrieved October 30, 2018, from https://p-airnz.com/cms/assets/PDFs/sustainability-report-2017-v2.pdf
  • Sustainability Report 2018. New Zealand: Air New Zealand. Retrieved October 13, 2018, from https://p-airnz.com/cms/assets/PDFs/2018-Sustainability-Report.pdf


Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this assignment and no longer wish to have your work published on UKEssays.com then please: