25 January

With the first month of 2013 rapidly coming to an end it’s difficult to even think that we've not spoken to you for nearly a month and who says New Zealand goes on holiday during this period!!!!
 
Clearly our present Government has not. A number of changes to be announced next week bring both stability in one sense and change in another. The Hon David Carter has been a great supporter of the ag aviation industry, particularly in his willingness to engage with us during difficult times. He has been replaced by an equally impressive minister - Nathan Guy. Nathan's first exposure to the wider industry was as Associate Transport Minister responsible for Aviation. During his period we launched the AIRCARE accreditation programme. As someone recently remarked you couldn't get a better pairing than the Hon Steven Joyce and Minister Guy for endorsing and launching the programme.
 
Stability comes from the continued engagement of Ministers Joyce, Brownlee and Groser in the key economic development, trade and tertiary education portfolios. It’s really pleasing to see the focus coming very clearly on the growth agenda because this is where "One Industry" is firmly focused. John Nicholson has spent the last week in Indonesia and Singapore developing a series of strategic insites and critical contacts within market and the broader SE Asia region. Interestingly, the Philippines and Myanmar are not rated as starters for real potential markets.  On his return we have some debriefs for those interested. One thing we're considering is developing webinars for members on market development opportunities and key issues of the day.
 
"One Industry" has been emerging as a key focal point. This year it will intensify. It’s very clear that the Government wants to work with a unified and focused industry. We accept there will be shades of difference and it’s about how we work through these. However, the point I want to make is that working diligently with Government and its officials is starting to gain traction.
 
An example of this is the quite intense discussions held with key officials over CAA charges. We are confident that there will be change. For some time we have thought that the present model is not sustainable. This is partly due to the fact that it funds inefficiency, particularly highlighted by the charge put on the renewal of a pilot’s medical certificate. Over and above the excessive rate of the charge, the service provided doesn't make any particular sense particularly when there are other more efficient ways of delivering the levels of assurance the Director requires. We also think that the medical certificate is more of a public benefit than a personal benefit. The best way of thinking about this is that the true personal benefit is a class two medical whereas the public benefit is a class one.
 
While these debates may sound pretty peculiar to most, they are at the core of the pricing model we have in this country. Interestingly, these were not traversed at all last time around. While we do not detect any particular desire on the part of some in Government to address these issues, ultimately the whole illogicality of why, for example, the Maritime prices its services relative to CAA, become indefensible.  There are others in Government who are uncomfortable with the present model and see change as inevitable. A further driver of course will be that the key driver for the most recent changes, the removal of the "cross subsidisation" between hourly rate charges and levy, will be seen as a nonsense argument. My prediction is that the cross subsidisation of today is almost as great as it was prior to the change in hourly rate charges. All this says to me is that the most efficient way of operating the CAA is to utilise their personnel on a variety of tasks.
 
We understand their skill shortages, particularly in engineering and rotary, are no different today than they have always been so the argument that the new premises would act as an attractant must be seen for what it was - that's not to say the shift into central Wellington is anything but positive from a communications perspective.
 
The culture in CAA has being changing dramatically. Industry is reporting to us and we are seeing ourselves real tangible evidence of the change. The automatic recourse to rule making as the preferred solution simply is not there. A swing to increasing consideration of exemption applications is evident. Don't expect these to be granted without some real rigor being applied but the previous prevailing attitude of "no exemptions" has disappeared.
 
We're also seeing a very strong shift to voluntary compliance. While this has always been a part of the tool kit, it’s played a minor role. With an ever increasing risk based approach there is a very real understanding that there is not one solution. Whatever you do must be focused around ensuring there is no harm to your people, others you work with from time to time and the environment. It is the first time I have heard the term duty of care used repeatedly. The essence of this is the basis of the AIRCARE programme. It’s about giving the industry more tools so that you are well equipped to exercise "a duty of care".
 
Unlike in the past where this duty was largely driven by Regulators you will see this duty being driven by the customers. This is most evident when the customer has very little real knowledge of our operating world other than the actual attendant risks of gravity, speed, metal, and human flesh and bones - no apologies for getting so gruesome.
 
Our Regulators of the future will be cash strapped. Governments are going to stay focused on controlling debt and channeling money where it is available into health, education and social support.  For aviation around the globe this means that the industry must step up and fill the void - it is not an optional extra but a must have. 
 
Early on in this year we will recommence discussions with Government on ensuring we have appropriate policy settings for training the right level of skill into the industry. All our modeling suggests that the numbers training as pilots is on a steeply diminishing curve and by 2015 we will probably have so few instructors that we won't have the skilled resources to do the training. Not only does this represent a severe threat to our ag industry but also right across the general connectivity of air transport. It also impedes our ability to access the international training market.  My personal view is that we don't have the right training and experience building model in our sector for either pilots or engineers.
 
While may are predicting more of the same for the aviation industry in 2013 we see a number of greening shoots, some in New Zealand but largely overseas. We have a larger New Zealand presence at Heli expo in Los Vegas in early March. In conjunction with NZTE we’re putting on a New Zealand Function where we will have the movers and shakers of the global helicopter community present along with our own industry. Later in the year we will be leveraging their opportunities; then the America's Cup presents the opportunity to show case New Zealand's aviation industry in the key US market.
 
The Defence Industry Association is taking the lead by representing the New Zealand industry at Avalon and I know a number of members will also be attending 'that important show’. This weekend we have the International air show in Auckland. It’s a very different type of show, being an entertainment event, but again it puts some of New Zealand's technology on display.
 
To end we know you like to catch up with some of the comings and goings and we're always interested in finding our more. Barry Malloch, ex CAA, is in the process of relocating to Jakarta and has offered up the potential for a friendly key contact in the capital. Dave Rollo, ex Airways, is another good contact in Asia based in Singapore and working for IATA; Samantha Sharif, ex CANSO DG, is permanently back in New Zealand as is Troy Forsyth who worked for AIA while completing his Aviation Management degree at Massey and then worked in Australia, Asia and Europe for aligned aviation companies. We're also told that "Rocky" aka Ken Mackenzie is making steady progress on a return home to Gore. Pam and Ken - our thoughts are with you and your family.
 
Don't forget next week is the deadline for comments on CAR 61. Our view is tending towards the rule drafting starting again with more focus on modernisation and less on customisation of the New Zealand environment. If you have any thoughts please let us know.
 
Also don't forget conference is much earlier this year in June. All the booking information is up on the web click here. We especially want to hear from trade displayers and potential sponsors click here

Until we speak again take care and stay risk aware Red boots

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What's coming up?

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John Key's first speech of 2013 read more

New Zealand Apprenticeships to boost skills & support jobs - Steve Joyce read more

Air safety officials probe 787 battery maker read more

Your January 2013 Tourism & Hospitality Newsflash! read more

AIA members deals