Aviation's golden age yet to come: Sims

Airway Corcorporation chief executive Ed Sims. Photo / Mark Mitchell

Consolidation in the airline industry will be accelerated by fuel prices and the aftermath of the global financial crisis but the golden age of aviation is yet to come, says new Airways Corporation chief executive Ed Sims.

Sims was formerly group general manager international at Air New Zealand, finishing with the carrier on the day in December its first new Boeing 777-300ER aircraft took off from Seattle fitted with the lie-flat Skycouch economy seat.

"When that [777-300] plane came I had a very strong sense that, having been with the airline for almost 10 years, that was the last chapter I felt really needed to be delivered before I felt I could move on ... knowing I'd left a reasonable job behind me," he said.

The betting was on Sims, 47 and originally from South Wales, next touching down in a senior airline role overseas, perhaps as a chief executive.

"I did spend a long time looking at opportunities in the US, the UK, Asia and Australia," he said.

"When I did look at both the impact of the global financial crisis on some of those economies ... the disparity in terms of the quality of life, but also the long-term opportunities in some of those markets for growth, then I came full circle ... to saying, actually, the reason I came to New Zealand 10 years ago is because I genuinely feel there is more opportunity in this part of the world than in many others."

Sims had learned an enormous amount from Air New Zealand chief executive Rob Fyfe.

"The only opportunity for me [at Air New Zealand] really was to be in the consideration set for Rob's job and certainly when I took the decision that I took in the middle of last year, Rob was giving me every indication he was enjoying the job and was going to be there another 18 months to two years."

One reason for joining Airways was for the company to be part of the tourism spearhead, he said.

"I think we've got an infrastructure on the ground here that's as safe as any other nation in the world and quite possibly more forward-thinking and more dynamic. It's certainly my intention to be sitting alongside Trade and Enterprise, Export New Zealand and Tourism New Zealand helping them promote that message."

Consolidation in the airline industry was inevitable. In the shipping or hotel sectors market leaders had global shares of 30 to 35 per cent, Sims said.

"Then you look at the airline industry with 300 registered players, let alone all the new generation of low-cost carriers, an industry where the market leader has a market share of 6 per cent, then it simply doesn't stack up in terms of profitability or the long-term survivability of many of the smaller players.

"I've been firmly in the camp that consolidations, or at the very least smarter joint ventures that may or may not lead to mergers, are likely to be the pattern of the future."

There had been talk of consolidation for the past five to 10 years but the time-scale would be shortened by the possibility of rising fuel prices and the the global financial crisis fallout, with the prospect of double-dip recessions.

"The real challenge, I think, for airlines and for the aviation industry is better forecasting of capacity relative to the traffic that's actually going to fly tomorrow as opposed to the traffic that's going to fly in 10 years' time."

But the glory days for aviation were yet to come, he said.

"I can see no limits on people's appetite for air travel. I think it's just becoming more part of the way in which people do business."

Sims took up his role as the boss of the state-owned enterprise this month.