Air traffic control operator Airways' profit is up by 20 per cent for the last six months but the state-owned enterprise is warning of a tough year ahead.
Net operating profit after tax was $16.2 million for the half -year to December 31.
Airways chief executive Graeme Sumner warned that the company is working in the same challenging environment as its airline customers and the rest of the year would be tougher.
"Our full-year result is expected to be significantly impacted by external pressures, including effects of the coronavirus outbreak, as airlines continue to make cuts to services," he said.
• Air traffic controllers land $150k pa, but only if they pass this test
• The job offering graduates $95,000 a year: Air traffic control roles up for grabs
• Unmanned Napier Air Traffic Control tower causes havoc
Airways had expected domestic flight numbers to increase by 4 per cent this year but it was experiencing a decrease of 5 per cent.
"This is the most significant decline in the past decade," said Sumner.
Jetstar pulled out of regional routes at the end of last year and, because of drop-off in demand, Air New Zealand is trimming domestic capacity by 2 per cent in March and April, focusing on Christchurch and Queenstown services to and from Auckland.
It is also cutting services to Asia by 17 per cent and has had to halve the number of flights to Samoa.
Mainland Chinese carriers have scaled back services to New Zealand, some suspending flights altogether.
An airline lobby group, the Board of Airline Representatives of NZ, has called on all government agencies - including Airways - and airports to cut charges or avoid fee increases as airlines battle with fallout from the coronavirus.
An Airways spokeswoman said it was working in the same challenging environment as the airlines and therefore sharing in the risks that the rest of the industry is facing.
''This has to balanced by the need to maintain our level of investment in our infrastructure so we can continue to deliver on our core role of keeping our skies safe.''
The SOE said Airways International, which provides training consultancy and technology solutions to air navigation services providers, airports and aviation training providers globally made a net profit of $6.3m, up 70 per cent on the same period.
The importance of continuing to invest in essential aviation infrastructure cannot be underestimated, Sumner said.
Over the next 10 years, Airways plans to invest up to $400m on airspace technology including digital air traffic control towers, drone management technologies and new primary and secondary radar capabilities.
"Our airspace is changing with new entrants like drones and autonomous flying vehicles bringing enormous opportunities for New Zealand, along with additional complexity and safety concerns for Airways in managing the airspace," said Sumner.
A drone detection system has been was selected for installation at Auckland International Airport.
This system, which has been successfully deployed at overseas airports, includes advanced radar paired with camera technology to identify and track drones in the vicinity of the airfield.
Operational trials will be carried out this year, ahead of a full deployment.
Airways is seeking a change to the Radio Communications Act to allow the use of radio frequency sensing technology for drone detection, and for information about unauthorised drone flights to be passed to other government agencies for enforcement action.
It has also signed a contract with technology provider Frequentis for the design and installation of a digital air traffic control tower at Auckland International Airport.
The digital tower - which uses cameras around the airfield to feed information to a bank of screens - will act as a back-up contingency system for the existing tower as early as 2021, before later being implemented as a full replacement.