Sky's the limit as ambition takes flight

By JASON COLLIE

The Airways Corporation started life as a world first. And its desire to be at the cutting edge is fuelling its bid to be a major global player.

The New Zealand state-owned enterprise (SOE) was the first fully commercialised air navigation services organisation when it was formed 13 years ago. It took over the operational side of the Ministry of Transport's civil aviation division.

Now, as it controls planes in New Zealand's airspace, it is eyeing lucrative foreign skies and opportunities with overseas partners, including American giant Lockheed Martin.

But there is controversy over what a successful bid for 46 per cent of Britain's national air-traffic system would mean personally for directors and employees of the taxpayer-owned company.

Prime Minister Helen Clark said yesterday: "We want the airspace in New Zealand run competently. That's our first requirement. That's why we have an SOE.

"[The global strategy] is such a huge jump from running the airspace in New Zealand that ministers really do need a very, very full brief."

The answer from local aviation industry insiders is that chasing commercial opportunities overseas will have little effect on air safety here, because Airways will always have its regulatory responsibilities in New Zealand.

Aviation Industry Association executive director Tom Riddell said: "The prime responsibility of Airways Corporation is to provide air-traffic control services in New Zealand.

"From our point of view we would like [overseas profits] to be helpful to hold the cost for operators here in New Zealand. The other alternative way the money might go is to the shareholder - the Government - and that goes into the consolidated fund."

Airline Pilots Association spokesman Adam Nicholson, whose union covers about 90 per cent of the corporation's 300 air-traffic controllers, added: "The Civil Aviation Authority stipulates what sort of service must be provided, and we do not see things as changing or under threat.

"Obviously from an employee point of view you would rather have the chief executive [Craig Sinclair] in head office rather than in London and popping back for board meetings, but that's a shareholder issue."

The two shareholder ministers are Finance Minister Michael Cullen and State Owned Enterprises Minister Mark Burton, who met corporation chairman John Maasland yesterday as the Government tried to find out where its SOE is headed.

The corporation was born in April 1987 as the Government's smallest state-owned enterprise with the brief to provide air navigation and traffic control services to New Zealand and the surrounding oceanic airspace - approximately 34 million sq km.

This year, as part of a two-year restructuring plan, it consolidated its radar centre for domestic services over New Zealand in Christchurch, closing the Auckland office and, in the process, losing about 20 staff who did not want to move.

There are still air-traffic controllers based in the towers at regional airports to maintain visual contact with flights in each immediate area, and the corporation also contracts to service the Royal New Zealand Air Force, controlled from Ohakea Air Base - which would be the backup if there were problems at the Christchurch radar centre. There are also staff at Whenuapai in West Auckland.

The air-traffic controllers make up about half the 600 staff. The SOE made a net profit after tax in the past financial year of $7.4 million, after a loss of $1.3 million the previous year. Its revenue comes from charges to air operators; it does not receive Government funding.

Airways ran into controversy soon after its birth with a new system of charges based on user-pays. Non-commercial users had to pay for the first time, and commercial flights paid according to services used rather than a percentage of earnings from each flight, a system small airlines said was unfair.

Under the previous Government Airways Corp had been a contender for privatisation, but this has been ruled out by the new cabinet.

The board, headed since 1996 by Mr Maasland, is appointed by the Government. Mr Maasland joined the board in 1994 and is also chairman of Herald publisher Wilson & Horton.

Mr Sinclair joined the corporation in 1989.

With finance group manager John Bole and international business manager Paul Woodbury, he was at the centre of yesterday's claims that they would be "sold" to the consortium if the British deal came off.

Last night, Mr Burton said the trio were working as consultants, but if the bid were successful they might be on a five-year secondment. He said he was seeking a guarantee how that would work.

The corporation's consultancy service, Airways Consulting, has provided expertise to aviation organisations in India, Oman, Malaysia, Bermuda, Canada and throughout Asia and the Pacific.

Last September, the corporation revealed an alliance with Lockheed Martin's air-traffic control systems operation in a tender to replace the US Federal Aviation Administration's oceanic system.

This month, it announced a 10-year partnership with the US giant. The deal includes replacing New Zealand's air-traffic management system with a Lockheed Martin system within three years and establishing an Asia-Pacific technology development and testing centre in Christchurch, along with chasing those overseas opportunities.

The Lockheed alliance was announced amid the claims in Parliament by New Zealand First leader Winston Peters that Mr Maasland, Mr Sinclair and the two other executives would gain $30 million if the bid for the British service succeeded - allegations which Mr Maasland says have no foundation.