AT42101: A Case of New Zealand and Saudi Arabia Navy: Managerial Economics In Aviation Report, PU, Singapore

MANAGERIAL ECONOMICS IN AVIATION

Individual Report

“Government and Business: A Case of New Zealand and Saudi Arabia Navy”

Please refer to the THREE articles.

• Is capitalism dying or just in isolation during the coronavirus pandemic?
• ‘Stealing Thunder’: Why Air NZ should have got ahead of the Saudi crisis
• Those wondering why our Prime Minister was so willing to countenance breaking the Air New Zealand-Saudi contract should wonder no longer. Jacinda Ardern has sniffed the wind and smelled Joe Biden’s aftershave

Questions to answer:

• What is the type of good or service that Air New Zealand was offering to the Saudi Arabia Navy?
• How would you justify this good or service that Air New Zealand was offering to Saudi Arabia?
• Has Covid-19 helped the situation, please explain? IV. Given the uncertainties and asymmetric information, how would you have undertaken this decision by Air New Zealand differently?

In your response, you are expected to apply relevant economic concepts and academic citations to support your case.

Those wondering why our Prime Minister was so willing to countenance breaking the Air New Zealand Saudi contract should wonder no longer. Jacinda Ardern has sniffed the wind and smelled Joe Biden’s aftershave

Capitalism is changing. Twenty years ago, the sole obligation of a capitalist enterprise (other than abiding by the laws of the states in which it operated) was to generate a return on its shareholders’ investment. So entrenched was this notion that it was specifically referenced in the legislation giving effect to the free-market reforms of the 1980s and 90s. Not anymore. In today’s climate, the interests of shareholders are expected to give way to the moral convictions and/or objections of journalists and politicians. The pursuit of profit now comes second to the quest for ethical perfection.

The current furore engulfing Air New Zealand’s commercial relationship with the Saudi Arabian Navy illustrates the many problems associated with mixing money and morality.

A quick Google search established that, in the words of the Sanctions Scanner website, “there are no formal international sanctions implemented against Saudi Arabia”. Following the gruesome assassination of the journalist, Jamal Khashoggi, in 2018, the US Congress briefly considered imposing unilateral sanctions, but nothing came of it. (In matters relating to “The Kingdom” nothing usually does.) Put simply, there was and is no legal impediment to Air New Zealand entering into a commercial relationship with the Saudis. The company saw an opportunity to make money for its shareholders – and took it.

Is capitalism dying or just in isolation during the coronavirus pandemic?

Home Affairs Minister Peter Dutton was one of the first to cross the line. After reports began circulating that organised bands of hoarders, possibly even crime syndicates, were plundering regional supermarkets in search of toilet paper and other essentials, he took to the radio waves.

“We do have some people I think that are profiteering,” he told 2GB’s Ray Hadley a fortnight ago, during one of his regular spots.

He went on: “They’re hoarding, not for their own consumption, I think they’re either sending some of the products overseas or they’re selling it in a black market arrangement in Australia.”

‘Stealing Thunder’: Why Air NZ should have got ahead of the Saudi crisis

OPINION: Last month Air New Zealand was heavily criticized in the media for the company’s maintenance work for the Saudi Navy.

Air New Zealand was the target of public outrage because the company was viewed as helping the Saudi Navy with its operations. These operations included a naval blockade of Yemen which has contributed to a humanitarian disaster in that country. Even the New Zealand Government, Air New Zealand’s majority shareholder, was highly critical of the company.