Aviation, tourism and energy writer for the Business Herald

Big challenges as skies get bigger for Airways

Former Air New Zealand executive Ed Sims found himself relegated to the back of the plane when he joined Airways NZ - then hit airlines with the biggest price rise they had ever faced.

The 15 per cent increase in the price of air traffic control services over three years didn't go down too well.

"For a long time, when I was flying from Auckland to Wellington, I found myself magically in seat 23E," he says. "That's what I love about Air New Zealand, they're small enough to think about the detail and to reinforce a message, which I thought was genius actually."

Now Sims faces a bigger challenge - introducing new ways of working as technology threatens the jobs of a highly skilled and powerful group: air traffic controllers.

When he moved from Air NZ to Airways in 2011, the state-owned enterprise was suffering from under-investment in the wake of the global financial crisis.

"We were under-capitalised, and we were behind the technology and modernisation curve, and if I was going to take a position that I believe our airline customers wanted us to take, then one of the first consequences was to put our prices up."

The government also agreed to accepting lower dividends for three years.

Over the past five years Airways has nearly tripled its capital investment from $13.4 million to $35.4m a year. Profit has quadrupled from $4.8m to $23.2m on revenue that is up by more than a third to $205.1m.

In May, it announced a 4.7 per cent decrease in fees over the next three years.

"You make some big commitments to your shareholders and to customers based on trust, and hopefully it's well founded," says Sims.

The organisation - whose prime aim is keeping aircraft separated in the air and on the ground - now has an even bigger remit in its area of 3 million sq km of airspace.

It now has much more responsibility just a few hundred feet above the ground, as the number of drones being used for recreation and commercial use surges.

It is also having to keep watch well beyond its usual altitude range, as Nasa tests high-altitude balloons from Central Otago and Rocket Lab prepares for a series of test and then commercial launches from the world's only private pad on the Mahia Peninsula, south of Gisborne.

But it's the drones that have Sims worried.

"If we followed the mandate that we get from the CAA (Civil Aviation Authority) and ICAO (international Civil Aviation Organisation) globally, we would manage what we call the control zone from 1000 feet to 45,000 feet - we think we've got a much broader responsibility to manage all airspace."

While Airways wants to be "an enabler" of drones because of their commercial potential, Sims would like to see a register for the craft, putting him at odds with another government agency.

Photo / Grant Bradley
Photo / Grant Bradley

While there have been two recent near "proximity incidents" involving drones in New Zealand, they are more frequent in the United States, which has moved to compulsory registration.

"I think that's a really positive move," says Sims. "The CAA are of a view at the moment that they don't see compulsory registration necessarily as being a prerequisite of safety; we take a different view."

Drones are coming down in price and capable of being flown up to 5000 feet.

"The increased prevalence of low level and recreational use, which will develop into commercial use - we're encouraging people to educate themselves about their obligations as recreational users."

Airways wants to enable New Zealand to be a leading drone pioneer, and that's why it created a set of rules in conjunction with Callaghan Innovation and the CAA.

"We think that unless we've got regulation and registration that's keeping pace, there's a danger that it will be quite stop-start."

Airways has cleared Nasa's high-altitude balloons and this year will ensure the East Coast's near-empty airspace is clear for Rocket Lab. Sims says this work at high altitude is about maintaining the country's sovereignty while embracing the opportunities for a space industry.

We were under-capitalised, and we were behind the technology and modernisation curve, and if I was going to take a position that I believe our airline customers wanted us to take, then one of the first consequences was to put our prices up.

A Brit, Sims worked for Virgin Atlantic before moving to Air New Zealand, ending his career there as head of the airline's international operation, and wining credit for some of the product innovations that helped win awards and good feedback from passengers.

At Airways, he has 792 staff, just over 600 of them operational staff earning more than $100,000, and about 130 of those on $200,000-plus. The top paid executive among 18 - presumably Sims - is paid between $650,000 and $660,000.

Sims is seen as one of aviation's charming guys, but he's going to need plenty of that charm to sell the enormous workplace changes facing air traffic controllers.

There's the prospect of job transformation and the threat of job losses. Small regional towers could face cutbacks as radar technology dating back to before WWII is phased out.

Jonathan Brooks heads the controllers covered by the Air Line Pilots Association and says there is nervousness among his members.

"I would say the automation is coming. We're all aware that tech is going to take over jobs at the moment and we do feel threatened by that," he says.

The profit imperative was driving the SOE and Sims' focus, he says.

"The books have looked quite good. There's more bigger, heavier planes."

Photo / Grant Bradley
Photo / Grant Bradley

But this means the job is more demanding than it has ever been, says Brooks.
Processes for driving change are also worrying his 370 members, although there were more signs of genuine consultation over the next year.

"Our members are extremely talented. Very few people in the population can do this job," says Brooks. "We want to be involved in the change [process]. If we simply get told, that's where we can come into conflict."

Brooks says the high performance engagement model introduced at Air New Zealand has empowered staff and is a good one.

"To be honest, I think Ed has been a bit reluctant to go down that path."

Sims acknowledges that bringing staff with him is the biggest challenge he faces.

"Staff are somehow nervous that our role as a SOE contradicts our role of keeping New Zealanders safe. They can sometimes believe that we are focused on revenue or focused on profit to the detriment of our essential purpose," he says.

His shareholding ministers had "thankfully" never seen that contradiction.

Staff numbers have grown by 75 during the past five years, and more revenue through the business means more spending on safety-led technology.

But cost savings are demanded by airline customers, who Airways invited to have a good look at how staff work.

Sims says his organisation is exploring extending the concept of "Airways Light", where fully validated flight controllers could be replaced with a flight information service that might be a lower cost service.

I would say the automation is coming. We're all aware that tech is going to take over jobs at the moment and we do feel threatened by that.

"We do that currently at Kapiti Airport in Paraparaumu and are looking at other airports with low volume."

Information supplied to airlines, when requested in low traffic areas, allows pilots to determine their own separation standards.

"It doesn't mean that we don't have a person in the tower - yet."

Airways is still in discussions with CAA about safety caps.

"The third stage then is saying 'do you need a person at all; can you move to remote tower technology? Could you control Invercargill from Dunedin?" Other low-volume towers under the microscope include Gisborne and Woodbourne near Blenheim.

But old and new technology can clash - and did dramatically last July when the system crashed and for a few minutes control screens around the country went blank.

Pilots had to rely on radio to communicate for a time and aircraft were grounded until the problem was dealt with.

"I guess it's the issue of introduction of digital technology into a more conventional analogue-based system and how successfully you can integrate those new digital systems," says Sims.

"When two technologies meet, sometimes you get unexpected consequences, what we call a data storm that triggered the system to shut down in the way it should have rather than continuing with false data.

I suspect this growth probably is not sustainable long term. There's a direct correlation between the [oil] price per barrel and New Zealand's attractiveness as a long haul destination - sooner or later it will level out.

"That would have been a much worse outcome and we'd have been less in control of that."

Sims was in Wellington at the time and immediately convened a crisis meeting.

"I didn't at any stage feel there was any risk of compromising passenger safety because I know how our procedures are drilled - that comes from previously having 10 years with Air New Zealand whose own crisis management procedures are incredible," he says.

Over the past year there has been an 8 per cent increase in flight volumes, as more international airlines are attracted to New Zealand and domestic movements grow.

Delays per flight have nearly doubled from two years ago, to 22 seconds in the past year.
While other countries measured those delays in minutes, he says it is still a backward step, caused by the sheer volume of traffic making it difficult to perform maintenance and new construction work on runways.

"I suspect this growth probably is not sustainable long term," he says. "There's a direct correlation between the [oil] price per barrel and New Zealand's attractiveness as a long haul destination - sooner or later it will level out."

Ed Sims

• Age: 53
• MA from Oxford University
• Joined Airways in July 2011 after 26 years in the tourism, aviation and retail industries including Virgin Atlantic and Air New Zealand.
• Chair of the Civil Air Navigation Services Organisation

- NZ Herald

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