Welcome to our first newsletter of 2014. Prospects for the New Zealand’s economic performance in the year ahead are being rated up there with the best performing global economies and possible our best since pre GFC.
This week we are continuing our series of guest commentators this time Neil Miller GM of Super Air.
It seems a little strange, being a newbee to the industry, and having been Manager of Super Air for only nine months, to be asked to contribute some thoughts on our great industry that is steeped in so much amazing history.
Whilst for anyone new there is always much to learn, for me its not all that foreign as I have spent twenty six years across all facets of the fertiliser industry so I can say I know a bit about the "fine" products that many of us deal with on a daily basis. I believe that, while each sector or industry has its own unique features, the factors that contribute to the fundamentals of successful, long term, sustainable businesses are common across all. In the chemical manufacturing industry I learnt that SAFETY is number 1! I am sure there are no surprises there for aviation? Secondly, over the long term, we all have to generate sufficient revenue stream to be SAFE, cover our costs, maintain and replace the important assets that generate the revenue and have what ever we desire left over to use ourselves (in many different ways). Its clear that sufficient profit has a very wide range of meaning to different people, and that’s fine, after all we are not all Dolly Sheep.
I often blame the annual accounting/financial reporting processes for creating an environment of short sightedness to long term business planning. It causes us to use recent historical results (last couple of years or so) to generate a picture of what we think we need in the near future (the budget!) to make a profit. The trouble is human nature takes over and turns me into a massively over optimistic gremlin! What I mean by this is - "OK I planned and wanted to make a profit this year, but it turned out to be a real hard one - but I'm not concerned as next year is sure to be much better". But as the age old saying goes "tomorrow never comes" and there is a real risk that we get to the life cycle end of an engine or airframe, or both, and we have never really struck that point with enough in the kitty to replace it, let alone take something for ourselves.
I prefer to use what I call the "whole of life cost" process to help identify where the matrix of volume and charge-out rate meets to BREAK-EVEN. That is, accounting for all costs, annual and fixed, over heads, long term replacement of lifed items etc. So, where does each of my productive aircraft have to sit in terms of both productive
(chargeable) hours and revenue per hour to break-even for the year?
By looking at the equation this way around I am automatically including the long term replacement costs back into the annual equation each and every year. So now everything above the zero line is mine to truly do what I want with it, but only after meeting all short and long term investment requirements. Unfortunately the scary outcome of this type of approach can be that it can highlight some things we may not have wanted to make so obvious, for example, "I don't seem to have enough demand (productive
hours) to achieve the right end result" or "I am not charging anywhere enough" or more likely a combination of both of these.
So for a controversial parting shot from the newbee (being confident it won't apply to everyone!), when I look into "whole-of-life" type analysis I will invariably see very profitable units, but I believe there are a lot that are not, and on average there is an excess of hardware (capacity) nationally to serve too little demand. In some cases, even significantly increased charge-out rates will not help to reach the long term zero line where volumes are too low. But before all this remember the number 1 - be SAFE out there.
End comment – as an industry we would like to express our farewell and condolences to the family of Alex Loughlin and Ann Drake the wife of Paul who is a VP of the Canterbury Aero club.
Member "must knows"
Protecting and Enhancing your interests
Telling Our Story
Value ADD for members
Member "must knows"
New Intern at AvNZ
My name is Cho Chan, from University of Massachusetts Lowell and the new intern at Aviation New Zealand. I will be here for about 3 months until the end of March and expect/anticipate to receive my degree a Bachelor of Science in Business Administration this May.
Currently I am project managing a number of projects for Aviation New Zealand. One being the Training and Development Division’s work plan for the coming year, another is building a presence for NZ aviation in the relevant social media in China. Determining what are the most appropriate media from an aviation viewpoint and then developing a presence along with developing and providing content. I am fluent in both Chinese and English, so this will help in achieving this task. The third project will be assisting with the development of the programme agenda for your aviation conference in July.
The aviation industry is new to me and I am very excited to learn all about it. What I gain from this experience will hopefully open new doors for me and lead me to a greater future. As part of the programme I am on we get the opportunity to travel around New Zealand and enjoy the country so our paths may very well cross.
New product – Lift pod
– now manufactured in NZ click here
NZFOREX – specialist FX dealers members offer
NZ Dollar update & outlook Join US for
You are invited to join NZForex for a conference call following the RBNZ’s much anticipated first meeting of 2014. Shortly the central bank’s OCR decision, Chief Currency Strategist Jim Vrondas will discuss:
- The rate decision and what it may mean for interest rates going forward
- The recent strength in the NZ Dollar - can it continue?
- Upcoming key data releases and the outlook for the currency market in 2014, including cross rates (AUD/NZD, NZD/GBP, NZD/JPY & NZD/EUR)
Time: 1:00pm (NZDT)
Duration: 30 minutes
Thursday, 30 January - register: https://www3.gotomeeting.com/register/933031830
– this is about a director’s liability in the event of death in a place of work. Hearings have been taking place this week in the Invercargill District Court and we’ll try and obtain a copy of the decision for you when available - possibly 3 to 4 months time. Contextually this is a Maritime NZ case but its the first prosecution that we are aware of against a director. Interestingly she is defending herself which probably means the case is unlikely to be particularly valuable either way.
– this submission represents members’ views of both the unmanned aerial vehicle community and our more traditional manned operating community click here
. A meeting is scheduled with CAA on 12 Feb for members.
DoC’s decision on Noise abatement requirements - click here
The decision has a long history behind it but is steeped in a view that aircraft should be prohibited from use or overfly of conservation lands. This remains a key objective of some ‘political organisations’. Our goals are to operate responsibly, and work with DoC and those organisations so that we have the ability, in the future, to change perceptions.
We appreciate that some felt a “do nothing” scenario was a better approach to the “noise” around noise but our view is that the “noise” is not going to subside unless we proactively address the issue. Proactively addressing the issue requires a community of interest and it is commercial operators who make the big dollar investment and it is the commercial operators who have the most to loose – we do our very best to protect members’ businesses and this means proactively addressing risk.
We happen to capture our noise programme under the AIRCARE™ brand. However AIRCARE™ itself is about brand values and it is those brand values which we know are important to protecting our future and New Zealand’s international reputation.
Regulatory Review of Aviation Safety Australia
– we’re carefully monitoring this review because this may present the single most significant opportunity we have had to have a single aviation market between the two countries. Essentially we’ve had no change to the relationship for 12 years now and the rest of the world has significantly moved on, with mutual recognition becoming common place and regulatory integration achievable where there is a political will.
Protecting and Enhancing your Interests
3 February 2014 National Airspace and Air Navigation Plan submissions due
the first phase of submissions on potential changes to the Civil Aviation Act will close. MOT will then circulate a consultative document, post consideration by Ministers.
7 March GD on Colour Vision
- submissions now due 7 March. Delay due to research on CAA's policies of earlier decades.
What are we talking to CAA about
our expectations is the Regulations Review Committee won’t make any decisions on the Industry’s complaints until perhaps April/May but irrespective of their decision, the issues raised are not going to go away. Our complaint all along is the division between public, private and common good lies at the essence of who pays for what. Get this wrong, as the 2011 review did, then industry shoulders a disproportionate burden.
Integration of Industry wide training programmes and their formal recognition –
CAA delivers excellent training programmes. We are talking about building on these and developing a structure. Why is this important? Having enough highly qualified people improves productivity, improves growth and creates wealth.
latest advice from CAA is that the medical/licensing systems are being integrated into an overall business system improvement plan. Over and above the question of whether devolution is a more cost effective option to a business system – and this is a governance decision, there’s plenty of other grounds to sit down and work with CAA. For example should section 2 A of the CA Act be abolished?
Rules and interpretations :
Licensing and medical certificates -
- LIB 4 definition of a crew member – its pretty pleasing to report major agreement on the issue and at some point the LIB will either be removed or substantially amended to reflect our concerns. It is possible that we may revert to the previous definition of crew member which has a lot of synergies with the new HSE legislation
- CAR 135.505 – CAA now has an excellent grasp of all of the issues including costs and are addressing the issue from the perspective of reviewing their policies
- CAR 147/141 – the Ministry of Transport is the lead agency on this one and is working on a guest editorial where they will go through the changes proposed.
from a risk management perspective, is it sensible for New Zealand pilots to be able to have their license recognised in Australia and vice versa but not their medical certificate? To our way of thinking, if the occupational license, which is about addressing the operating risk is recognised, then why not the medical certificate? How many pilots are having “medical events” relative to “operational events” – the risk analysis simply doesn’t stack up. Remember also it may be the same doctor here in NZ issuing both a New Zealand and Australian certificate – surely the body is the same body!!!!!!
Telling Our Story
Conference 2014 – Napier “pilots in perspective” our event key dates:
NZAAA 20-22 July
AvNZ AGM 23 July 10.00am
Young peoples aviation expo 23 July
All other divisions PM 22 July to 24 July
Wrap up gala event 24 July
Venue – Napier War Memorial Convention centre
Hotel bookings click here
Trade bookings click here
Sponsorships click here
for product or product launch email us directly. Unless you are a sponsor or involved in our trade display there will be an up front charge of $750 plus GST to speak for 15 minutes.
AIRCARE™ - DoC’s decision on noise was accompanied by a letter from the Minister of Conservation Nick Smith. Minister Smith’s stance is very different from every previous Minister of Conservation we have dealt with over the last seven years on environment, amenity and safety threats.
We would be interested in your views on whether as a sector we should develop industry codes to address environmental, amenity and safety threats because in his view AIRCARE™ won’t be taken seriously unless the Industry supports it.
As we say this is a very different view to that expressed by all previous Ministers of Conservation and all other agencies including CAA. click here
AIRCARE™ recent developments
– an amended V6 of the accreditation rules is available. Effectively, this reduces costs for multi base sites; removes the requirement to hold an AoC i.e. any operator can now become AIRCARE™ accredited if they so wish; and addresses potential concerns around non reporting of environmental incidences.
Big congratulations to Aspiring Helicopters and Heli A1 on being reaccredited – both now hold AIRCARE™ accreditation for three years. This is a massive achievement as it signals they join the “elite club”. We’ll be talking much more about the performance of AIRCARE™ in future as some of the statistics are starting to highlight interesting result.
Building the profile
We often talk about the ‘smarts’ in New Zealand aviation
and how we undervalue some things the industry achieves. Great to see that Air New Zealand has licensed its economy skycouch technology to China Airlines. They will be introduced to the Air China B777-300ER fleet from September this year. Such successes rub off on the whole industry.
We run a monthly column in Airwaves in Australia
. The December issue featured the NZ rotary industry and we’ve had good feedback on it. February features the GA MRO industry in New Zealand and March will be about NZ aviation innovation. If you’ve got an innovation story you’d like us to include, let us know before our editorial deadline, which is mid-February.
Aerial spraying of the lower Buller Gorge
for Old Man’s Beard. DoC has issued a RFT which closes on 14 February, contract to be awarded 14 February and services to begin 1 March. Minimum 4 seat capacity helicopter equipped with minimum 250L spray mix capacity, front mounted nozzle and spray boom and GPS equipment to record and map spray activity. GETS reference 41232 and DoC reference NWSI-SV/13/14/02. For more info, contact Scott Freeman– firstname.lastname@example.org
Project Manager Samoa
required for World Bank Pacific Aviation Infrastructure Project. This World Bank project is gathering pace. EOIs from a potential project manager close on 30 January. World Bank reference number WB323-01/14 and Contract Reference Number SAA/PST/D38. For more info, contact Magele Hoe Viali, General Manager, Samoa Airport Authority: email@example.com
Kiribati Airfield Civil Works –
Resurface Runways and Markings, Tarawa, Kiribati. This is part of the first major World Bank Project approved for the South Pacific (Kiribati, Tonga and Tuvalu). World Bank reference number WB196-01/14 Project ID: P128938, Borrower/Bid No: MCTTD/ICBW/K-A15.3.
Bids close 11 March. A bid security of Aul$280,000 is required.
For more info, contact: Anne-Marie Bishop - firstname.lastname@example.org
Value add for members
Aviation Safety Supplies Ltd
have released a new product, a low cost Iridium Tracking Device
For more info see http://www.beacons.co.nz/iridium-tracking-device-xidc104368.html
Get a GO FUEL fuel card and get *8 cents per litre discount off pump price on Petrol and Diesel
Just click here
and complete a form or call direct and we’ll complete it for you
Get going - go to gofuel.co.nz
N3 Trade Card click here
- if you are a member and you haven't got your card let us know. The savings more than offset membership costs.
OTHER Aviation NZ members deals