Aviation, tourism and energy writer for the Business Herald

Airways hopes to grow overseas

Airways boss Ed Sims says working at Air NZ gave him an insight into how airlines think about air traffic control organisations. Photo / Mark Mitchell
Airways boss Ed Sims says working at Air NZ gave him an insight into how airlines think about air traffic control organisations. Photo / Mark Mitchell

Airways Corporation chief executive Ed Sims knows what it's like to be on the other side of the fence.

The former boss of Air New Zealand's long-haul division said he knew from personal experience what airlines thought of paying the bills to the air traffic controller.

"I know from painful experiences that airlines want their cost re-allocated," Sims says.

"They're very mindful of profit margin and of what they believe to be a fair return on investment from an air traffic controller like ourselves."

Sims has been in the top job at the state-owned enterprise for a year, after a 10-year career at Air New Zealand in which he is credited with leading the revamp of the airline's long-haul operation.

"It gave me a great insight into how airlines think about air traffic control organisations and in some ways that gives me a better understanding of the complexity of the operations because in some ways they take the provision of services for granted," he says.

Airways' primary role is to keep aircraft separated on New Zealand's domestic routes and in the 30 million sq km swathe of oceanic airspace surrounding the country.

Last year it charged airlines $133 million for doing the job and Sims is keen on boosting other sources of revenue.

"You're never going to get rich being part of a food chain with an airline at the top," he says.

Before he joined the corporation he explained to its board he did not see it as a "steady state" management job.

He emphasised that the big, high-growth opportunities lay overseas.

"If they wanted someone to come in and manage essential infrastructure then I probably wasn't the right person but I did say to them I saw great growth potential in a lot of the international markets while not undermining the primary purpose - keeping planes separated and managing the air space."

He says that as a former customer he saw Airways as an excellent provider of technical and operational services and expertise, but fundamentally it was not a great business model.

Revenue from other sources last year was just over $19 million but Sims says this could treble over the next eight years.

"I could see an opportunity to be far more profitable so we could ease the burden of growth on our existing customers but still maintain the high standards of safe operation."

Before he arrived Airways had an internationally recognised pedigree of pioneering work in designing flightpaths to help airlines save tens of millions of dollars in fuel costs.

Its Aspire project in 2008 routed aircraft between Auckland and San Francisco to create the "perfect" flight.

During three years working with Air New Zealand it has saved the airline between $30 million and $40 million in fuel on main trunk routes and cut the average delay by three minutes to 23 seconds by streamlining operations from the time aircraft are pushed from an airport gate to being allocated a pier on arrival.

He put the business case to the board in March and was given the go-ahead to start recruiting internationally.

Airways employs 730 staff, it is advertising for 14 new people and Sims said an extra 300 roles could be created if the growth potential overseas was realised.

Although the organisation had set up overseas to train staff and sell its services, Sims said there was room to do much more.

"The organisation hasn't always focused on markets where there is the biggest opportunity," Sims says.

When he joined it had activities in the United States, Europe, the former Soviet states and Southeast Asia.

He has honed the focus on three "particularly dynamic" aviation markets - the Middle East, China and Southeast Asia. "Let's not be too peripheral and concentrate on those three," Sims says.

In the Middle East congestion was a major problem with one pinch point costing an airline $100 million in fuel a year.

In Saudi Arabia, Oman and the United Arab Emirates the corporation hoped to sell more of its training and airport consultancy services. Its training techniques have halved classroom time for Saudi controllers to nine months.

Airways did not want its staff in towers overseas. "We're not a hired hand, an outsource mercenary operation - we've got a good track record on dealing with congestion."

Airways has signed a memorandum of understanding to train up to 500 controllers in Beijing, where weather, staff shortages and military control over most of the air space cause serious delays. It hopes to finalise the deal within six months.

In Southeast Asia the boom in low-cost carriers was putting pressure on airports in Indonesia and Malaysia and opportunities lay in software provision supporting implementation of major air traffic control systems and airport consultancy work.

Sims is also keen to push the Aspire model on to other routes for Air New Zealand.

'I'm charging my staff to say if we can do that successfully in San Francisco why couldn't we do it to Los Angeles, Narita, Tokyo and Shanghai."

Sims says having been in airline executives' shoes allows him to empathise with them.

"In airlines the business tends to come to you because you're a conduit and because you have an established service presence," he says.

"I think the excitement for me is this is old fashioned going out and grabbing business by the scruff of the neck.

"I'm having to work a lot harder - and inevitably in a smaller organisation you're far closer to the balance sheet."

In control
* Airways Corporation controls all air movements within NZ's 30 million sq km of controlled airspace - over 1 million movements annually.
* Manages air traffic control towers and two radar centres. It has towers at 7 international airports, 15 regional airports and 3 military bases.
* Former Air NZ long-haul boss Ed Sims now heads the corporation and hopes to increase revenue from overseas ventures.

- NZ Herald

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