Air New Zealand's Secret Weapon: War Dances and Happy Customers

(MoneyWatch)  In the last decade, Air New Zealand transformed itself from an unloved stepchild to a beloved part of the Kiwi family. In the process, it also turned around financially. The last fiscal year which ended June 30, 2009, for example, saw the airline post a $145 million profit. Few airlines made money amid the fuel price spike in 2008, but Air New Zealand was one of them. A big part of that success was, strangely enough, not due to cost control or revenue focus. Air New Zealand shows that sometimes that schmaltzy stuff about building a strong culture really works.

In the past, Air New Zealand listed aimlessly. The airline faced extinction after September 11, when its Ansett subsidiary imploded. The government of New Zealand stepped in to keep its flag carrier alive. Today, Air New Zealand is majority-owned by the government, but run independently.

Rob Fyfe joined the company in 2003 and took the reigns two years later. Since then, Air New Zealand has had an impressive turnaround. It is now a profitable, award-winning airline with high employee morale. Some of that had to do with the usual airline basics -- finances, schedules, revenue management, and marketing. But there's more to it than that.

Fyfe realized that Air New Zealand was important to the country: Most visitors see the airline at the beginning and end of their trip. If it does its job right, it leaves a favorable, and lasting, impression not only of the airline but of New Zealand. So Fyfe set out to embrace New Zealand -- not just to fly in and out of it.

About two years ago, he named Andrew Baker, who had been with Air New Zealand for 20 years, much of it as a Flight Service Manager, as the new Cultural Ambassador. It was Baker's job to bring New Zealand to Air New Zealanders around the globe, to make sure they could feel the unique cultural influence of New Zealand -- even if they were halfway around the globe.

As an indigenous New Zealander, or Maori, Baker was able to highlight multiple pieces of the culture from his experiences, and he has really taught Air New Zealanders more about who they are, how the airline is a part of it, and why it's so important. When I visited Air New Zealand in Auckland two weeks ago, one of the days was set aside as a cultural day. They took us on a bush walk, showed us Maori traditions, and then we had a traditional meal. The airline sees this type of thing as an integral part of the airline, and they want everyone to be a part of it.

One of the most visible pieces of this connection is the airline's Kapa haka, a group which performs traditional Maori dance. When Air New Zealand won Air Transport World's Airline of the Year award, Fyfe stepped up to the podium in a suit and tie. But soon after, he was shirtless, joining in the haka. See for yourself:

Now, that may seem like a gimmick, but it's not. Rob Fyfe is like Southwest's Herb Kelleher in that he'll do anything to build the culture. It's clearly working; morale has improved significantly in tandem with customer satisfaction.

Just about everyone I spoke to in New Zealand had a favorable impression of Air New Zealand. I shouldn't have been surprised, but I remember how much people hated America West in Phoenix. Northwest faced its share of anger in Minneapolis. United and Chicago? Yeah, they have a love-hate relationship.

But Air New Zealand spent so much time and effort integrating its Kiwi identity that it has become beloved at home. What does this mean financially? Well, when a new competitor comes in (such as Jetstar from Australia), it means people still feel some loyalty to Air New Zealand (instead of running away screaming). That keeps people coming back, and it makes employees feel more a part of the company. And that, in turn, generates very tangible success.