Post by flyjoe180 on Jan 19, 2008 14:40:22 GMT 12
Air New Zealand's has ambitious plans to earn big money from niches like cabin design, pilot training and biofuel. Roeland van den Bergh talks to chief executive Rob Fyfe.
Air New Zealand engineers are quietly working on top-secret aircraft at the Woodbourne air base as part of a new strategy for the airline to boost revenue.
Unmarked Boeing 737 aircraft are flown direct from their United States factory to the air base near Blenheim as little more than shells.
Two months later they emerge from the hangar at Air New Zealand's engineering subsidiary Safe Air, fitted out with luxurious private jet interiors for their super-wealthy owners.
Each fit-out of the Boeing business jets, based on the 737-800 passenger plane, costs up to US$20 million (NZ$26 million), including lounge, dining and meeting areas, a double bedroom with ensuite and seating for up to 12 people.
That is above the US$30 million purchase cost of the aircraft, which is designed to fly much further than the airline version.
Air New Zealand chief executive Rob Fyfe says the business jets are part of a strategy for Air New Zealand to develop and sell intellectual property gained in the normal course of its business, and also to take advantage of a global industry skills shortage.
There is an array of capabilities associated with the aircraft business that has untapped intellectual property ranging from seat design to training pilots, engineers and specialist management staff, Mr Fyfe says.
"There has got to be more value that can be created from that knowledge ... than just on board our own aircraft."
Many of the interior components for the business jets are custom-made in New Zealand, including bar units, luxury sofas and entertainment systems, Mr Fyfe says, drawing parallels with the highly regarded super yacht manufacturing industry.
Parts of the cabin are designed to be easily converted from a business layout to a leisure format, depending on the trip requirements.
Mr Fyfe will not identify the customers, who make regular inspection visits to ensure the workmanship meets their exacting standards and play an intimate role in the design process.
Air New Zealand has become one of fewer than 10 companies in the world capable of doing such specialist work. Some of the skills were learned from refitting the interiors of its own long-haul aircraft with the new business-class cabins, which included designing and making the storage units and snack counters.
The interior design team of about 30 engineers is the sixth-biggest in the world, allowing it to compete against the likes of Germany's national carrier Lufthansa.
The huge popularity of the Boeing business jet - which has a five-year waiting list - especially among buyers in the Middle East, with growing demand from Europe and the US, means larger outfitters of cabins are fully booked, providing an opportunity for smaller operations like Air New Zealand to pick up the overflow, Mr Fyfe says.
In future there may be opportunities to spread out into the elite market for much bigger flying palaces such as the 747, 787 and even the Airbus A380 double-decker.
Over the next five years specialist niche engineering services and intellectual property sales could earn Air New Zealand between $100 million and $200 million.
That could reduce the dependence on income from passenger services from about 80 per cent to about 60 per cent of total revenue, Mr Fyfe says.
Two business jets have been completed since August, but further work is on the back burner while designers and engineers focus on an even bigger opportunity - leading the design for the cabin of the next-generation Boeing 787-9 airliner.
Air New Zealand's status as the launch customer for eight of the 787-9 model provides an invaluable opportunity to develop seats and cabin designs that can then be sold to other airlines, Mr Fyfe says.
The 787-9, due to be delivered from 2011, follows the smaller 787-8 model, which has been delayed by six months because of production problems.
THE 787 is the first passenger jet with a carbon-fibre fuselage and it boasts significantly lower fuel use than the 767 it replaces.
"We are really looking to push the boundary to herald a new generation of interiors," Mr Fyfe says.
That includes a new seat and entertainment technology concept. The airline is even looking at the possibilities of a bed seat in economy class.
The airline paid significant royalties to Virgin Atlantic for the rights to use its award-winning business class bed-seats fitted to the current fleet. But the development of the 787-9 cabin is expected to make Air New Zealand a seller of such intellectual property rather than a buyer, Mr Fyfe says.
The airline might even be forced to design and manufac\ture its own seats.
The big seat-makers are already struggling to keep up with demand to equip the huge number of aircraft on order and might not want to take on the small jobs from Air New Zealand.
That could in turn prove a boon for New Zealand seat designers and manufacturers.
Another opportunity has been opened up by the acute worldwide shortage of skilled staff, which has resulted in airlines competing vigorously for people.
The International Air Transport Association estimates that 17,000 pilots a year will need to be trained to fly the thousands of aircraft on order worldwide and cope with a retirement bubble.
Mr Fyfe wants to take advantage of the skills shortage by developing an international training infrastructure in New Zealand for pilots as well as specialist engineers and management staff, possibly in joint ventures with other training providers, over the next 10 years.
"We have great success with attracting Asian students down here. Why couldn't you learn to be a pilot in New Zealand or train to be an engineer and go and work somewhere else in the world? The aviation industry as a whole has huge opportunities for New Zealand."
New Zealand has the advantage of uncluttered skies, and as a relatively small airline with an innovative culture, Air New Zealand can respond quickly, Mr Fyfe says.
Investment in training facilities and engineering infrastructure are low compared with the cost of aircraft.
"We are always looking to do something less capital-intensive to increase value and revenue in a very capital-intensive business."
Air New Zealand has also joined with plane-maker Boeing and engine-maker Rolls-Royce in the race to find a viable biofuel to power aircraft and reduce the dependence on oil, which some tip will rise to a crippling US$150 a barrel.
An Air New Zealand Boeing 747-400 will make a test flight early next year with one of its four engines powered by a biofuel mixed with standard jet fuel. No passengers will be carried on the flight.
Mr Fyfe says he is confident that Air New Zealand will be using a blended biofuel on commercial flights within his tenure as chief executive.
Research into biofuel is moving into the second generation of development of more efficient fuels.
One of the most promising is the oil-rich seed of the jatropha tree that grows in warm and moist climates and has an energy density and characteristics close to those of petroleum.
India's commercial crop of jatropha seeds is already big enough to power Air New Zealand's domestic fleet, Mr Fyfe says.
Algae-based fuel, like that being pursued by Aquaflow Bionomic Corporation in Blenheim, also shows promise, but more work needs to be done to make it economic.
No one company in New Zealand has the resources to take on all the research and development for a new biofuel, Mr Fyfe says.
"We have to work out how to work collectively as an industry and as a nation to figure out how we can bring our resources together and potentially take a leadership position.
"There is enormous value if we ever get the breakthrough here."
www.stuff.co.nz/4352302a13.html
Air New Zealand engineers are quietly working on top-secret aircraft at the Woodbourne air base as part of a new strategy for the airline to boost revenue.
Unmarked Boeing 737 aircraft are flown direct from their United States factory to the air base near Blenheim as little more than shells.
Two months later they emerge from the hangar at Air New Zealand's engineering subsidiary Safe Air, fitted out with luxurious private jet interiors for their super-wealthy owners.
Each fit-out of the Boeing business jets, based on the 737-800 passenger plane, costs up to US$20 million (NZ$26 million), including lounge, dining and meeting areas, a double bedroom with ensuite and seating for up to 12 people.
That is above the US$30 million purchase cost of the aircraft, which is designed to fly much further than the airline version.
Air New Zealand chief executive Rob Fyfe says the business jets are part of a strategy for Air New Zealand to develop and sell intellectual property gained in the normal course of its business, and also to take advantage of a global industry skills shortage.
There is an array of capabilities associated with the aircraft business that has untapped intellectual property ranging from seat design to training pilots, engineers and specialist management staff, Mr Fyfe says.
"There has got to be more value that can be created from that knowledge ... than just on board our own aircraft."
Many of the interior components for the business jets are custom-made in New Zealand, including bar units, luxury sofas and entertainment systems, Mr Fyfe says, drawing parallels with the highly regarded super yacht manufacturing industry.
Parts of the cabin are designed to be easily converted from a business layout to a leisure format, depending on the trip requirements.
Mr Fyfe will not identify the customers, who make regular inspection visits to ensure the workmanship meets their exacting standards and play an intimate role in the design process.
Air New Zealand has become one of fewer than 10 companies in the world capable of doing such specialist work. Some of the skills were learned from refitting the interiors of its own long-haul aircraft with the new business-class cabins, which included designing and making the storage units and snack counters.
The interior design team of about 30 engineers is the sixth-biggest in the world, allowing it to compete against the likes of Germany's national carrier Lufthansa.
The huge popularity of the Boeing business jet - which has a five-year waiting list - especially among buyers in the Middle East, with growing demand from Europe and the US, means larger outfitters of cabins are fully booked, providing an opportunity for smaller operations like Air New Zealand to pick up the overflow, Mr Fyfe says.
In future there may be opportunities to spread out into the elite market for much bigger flying palaces such as the 747, 787 and even the Airbus A380 double-decker.
Over the next five years specialist niche engineering services and intellectual property sales could earn Air New Zealand between $100 million and $200 million.
That could reduce the dependence on income from passenger services from about 80 per cent to about 60 per cent of total revenue, Mr Fyfe says.
Two business jets have been completed since August, but further work is on the back burner while designers and engineers focus on an even bigger opportunity - leading the design for the cabin of the next-generation Boeing 787-9 airliner.
Air New Zealand's status as the launch customer for eight of the 787-9 model provides an invaluable opportunity to develop seats and cabin designs that can then be sold to other airlines, Mr Fyfe says.
The 787-9, due to be delivered from 2011, follows the smaller 787-8 model, which has been delayed by six months because of production problems.
THE 787 is the first passenger jet with a carbon-fibre fuselage and it boasts significantly lower fuel use than the 767 it replaces.
"We are really looking to push the boundary to herald a new generation of interiors," Mr Fyfe says.
That includes a new seat and entertainment technology concept. The airline is even looking at the possibilities of a bed seat in economy class.
The airline paid significant royalties to Virgin Atlantic for the rights to use its award-winning business class bed-seats fitted to the current fleet. But the development of the 787-9 cabin is expected to make Air New Zealand a seller of such intellectual property rather than a buyer, Mr Fyfe says.
The airline might even be forced to design and manufac\ture its own seats.
The big seat-makers are already struggling to keep up with demand to equip the huge number of aircraft on order and might not want to take on the small jobs from Air New Zealand.
That could in turn prove a boon for New Zealand seat designers and manufacturers.
Another opportunity has been opened up by the acute worldwide shortage of skilled staff, which has resulted in airlines competing vigorously for people.
The International Air Transport Association estimates that 17,000 pilots a year will need to be trained to fly the thousands of aircraft on order worldwide and cope with a retirement bubble.
Mr Fyfe wants to take advantage of the skills shortage by developing an international training infrastructure in New Zealand for pilots as well as specialist engineers and management staff, possibly in joint ventures with other training providers, over the next 10 years.
"We have great success with attracting Asian students down here. Why couldn't you learn to be a pilot in New Zealand or train to be an engineer and go and work somewhere else in the world? The aviation industry as a whole has huge opportunities for New Zealand."
New Zealand has the advantage of uncluttered skies, and as a relatively small airline with an innovative culture, Air New Zealand can respond quickly, Mr Fyfe says.
Investment in training facilities and engineering infrastructure are low compared with the cost of aircraft.
"We are always looking to do something less capital-intensive to increase value and revenue in a very capital-intensive business."
Air New Zealand has also joined with plane-maker Boeing and engine-maker Rolls-Royce in the race to find a viable biofuel to power aircraft and reduce the dependence on oil, which some tip will rise to a crippling US$150 a barrel.
An Air New Zealand Boeing 747-400 will make a test flight early next year with one of its four engines powered by a biofuel mixed with standard jet fuel. No passengers will be carried on the flight.
Mr Fyfe says he is confident that Air New Zealand will be using a blended biofuel on commercial flights within his tenure as chief executive.
Research into biofuel is moving into the second generation of development of more efficient fuels.
One of the most promising is the oil-rich seed of the jatropha tree that grows in warm and moist climates and has an energy density and characteristics close to those of petroleum.
India's commercial crop of jatropha seeds is already big enough to power Air New Zealand's domestic fleet, Mr Fyfe says.
Algae-based fuel, like that being pursued by Aquaflow Bionomic Corporation in Blenheim, also shows promise, but more work needs to be done to make it economic.
No one company in New Zealand has the resources to take on all the research and development for a new biofuel, Mr Fyfe says.
"We have to work out how to work collectively as an industry and as a nation to figure out how we can bring our resources together and potentially take a leadership position.
"There is enormous value if we ever get the breakthrough here."
www.stuff.co.nz/4352302a13.html
