Air New Zealand bought Ansett, underinvested, and let Australia's second airline fail

Ansett Australia was one of the country's two great domestic airlines, a name Australians had flown for half a century. In the late 1990s it came under the control of Air New Zealand, which first bought a half stake and then took full ownership, betting that it could turn the Australian carrier into the centrepiece of a trans-Tasman airline group.

The bet was never properly funded. Ansett ran up years of losses while its new owner underinvested in its fleet and operations; its planes aged and its service fell behind the rival Qantas and the new low-cost entrants. Air New Zealand, itself a small airline, did not have the capital to modernise the carrier it had bought, and the losses kept mounting.

By September 2001 there was no turnaround left to fund. On 12 September 2001 Ansett was placed into administration, and within days it stopped flying. About 16,000 people lost their jobs, and stranding passengers and unpaid creditors piled up behind them. The failure nearly dragged Air New Zealand down with it: the parent was left in such financial distress that the New Zealand government had to step in and recapitalise it.

Ansett is a case about the difference between owning a business and resourcing one. Air New Zealand acquired a major airline but never gave it the investment to compete, and when the market turned it chose to let the airline fail rather than pay to fix it — a decision that cost thousands of jobs and almost cost the parent its independence.