Mapping the progress of Air New Zealand’s digital rebuild

As a household name in international air carriers, Air New Zealand is used to punching above its weight, mainly due to being so remotely based; if you draw 1,200-mile line from Auckland, you don’t even get to the east coast of Australia. So meeting challenges to compete is nothing new, but business all but came to a halt during the pandemic in 2020. As lean as things got, that time afforded the opportunity to rebuild by flipping the script: Air New Zealand was going to become a digital company that happened to be an airline, rather than an airline with a digital department.

“Our mission is to build the world’s leading digital airline, and digital in its broadest sense, not just technology, but the experiences we deliver for our customers, the new business models we can put in place, the way we govern the organization, the way we deliver change, and everything in between,” says CDO Nikhil Ravishankar. “At Air New Zealand, everyone starts to engage with digital as an entire airline, so then everyone’s in digital, and the investment to bring everyone’s digital capability up is a good thing.”

Of course, achieving this kind of goal in such a competitive and unpredictable industry requires not just companywide cohesion, but partnerships that help synergize digital and sustainable ambitions to become reality.

“We’re looking for partners who have IP and know-how they’ve built with a global perspective, so we want to have that balance of local investment but global IP,” he says. “It’s hard to get that mix right. But equally, we have a role to play to make sure partners are successful.”

The first place to start is to assess whether the role of a partner is a commoditized and transactional relationship, or something bigger. “An airline should be able to deliver the type of service our customers expect, and we can’t do it alone, so we need world-class partners to work with us and be as passionate about the purpose of the airline as we are.”

A key element of that is to be a company dedicated to sustainability in deed, not only word. And one thing being worked on in that area is to have an electric plane flying cargo by 2026. The order’s already in and there’s a lot of digital work behind the scenes to figure out how to interface with air traffic control, and how the aircraft is maintained and managed in the hangar.

“We think this is just the start of many new propulsion aircraft that start to show up over the next decade and beyond,” he says. “This is a chance to start practicing what an airline of the future could look like. So a lot of our digital agenda overlaps with our sustainability agenda.”

As such, there are a lot of use cases across the airline where emerging digital tools can play big roles, but the general approach is cautious curiosity. “We’ve got a bunch of work underway to build the workbench for advanced AI techniques, so this capability underpins everything we do,” he says. “We’re starting to think of Air New Zealand as a Petri dish for innovation where we can solve some long-standing challenges in the airline industry. And if we can solve those problems here, and productize them right, then we think we can take it around the world and others will be interested.”

CIO APAC editor Cathy O’Sullivan recently spoke with Ravishankar about how Air New Zealand has changed its operating model to uplift digital capability across the organization, and how technology plays a huge role in its sustainability goals. Watch the full video below for more insights.

On establishing a tech foundation: I had an interest in computers from a very young age. I had a chance to study programming at school in India, and my mom encouraged me to take up programming. My first job was tutoring in a university programming department, and then I stayed as a research assistant. While I did that in the late 90s, two colleagues and I decided to set up a startup. We were very excited about it, because we grew up with the internet and we could see the possibilities. We understood Moore’s Law to an extent, and thought people will watch TV on their mobile phones. So we set out to build a mobile TV app business, on 2g networks before the iPhone. We tried to raise money but people thought we were crazy. But we persisted. And Spark, or Telecom New Zealand at the time, were looking for a hero app on the new WCDMA network. And that’s what really what got me introduced to large enterprise. Unfortunately, the startup didn’t go anywhere, but we learned a lot.

On air travel reliance: Air New Zealand is the national flag carrier and it’s something everyone who works at the airline realizes and takes seriously. We’re very proud of that, but we also carry the burden of that responsibility. It’s a gateway into the country, and for anyone wondering why it’s so important for an airline brand in the country, some of it is the tyranny of distance. We’re far away from everywhere else, and the only way in and out is by flight, so the airline is important from a wider New Zealand perspective. About 16% of New Zealand’s GDP relies on air travel, whereas in the US, it’s about 4%. Even in city hubs like Dubai and Singapore, it’s around 12%. So we’re very reliant on connectivity, both internationally and domestically. Sometimes people don’t realize New Zealand is a big country and we only have 5 million people, so you never have the business case for high-speed rail or massive road networks. So in some cases, we’re the lifeline service across the country.

On the organization’s mission: Our purpose is to connect New Zealanders to each other, and New Zealand to the world. So everyone, including those in my team, come to work every day to fulfil that mission. Implicit to that, we have this working ambition to become the world’s leading digital airline, so a lot of my team’s focus is on bringing that to life. The way we’ve looked to attack that is by saying if we want to become that, then we need to stop thinking of ourselves as an airline with a fantastic digital department, and as a digital business that happens to be an airline. So the concept of my team now has been redefined in the way we look at digital. Almost 95% of my team don’t necessarily work directly for me anymore. Eighteen months ago, we decided to rewire the airline, where digital gets fully embedded into everything. So the concept of my team is an interesting operating model.

On resilience: Nearly 95% of our business came to a halt at the peak of the pandemic. We were really flying just to bring New Zealanders back home, and running lifeline cargo services. But there’s a silver lining in that we rebuilt the airline in a way that focuses on three outcomes. One is continuing to be an airline our customers love, and be in the top three in the world when for customer satisfaction. Second is we want to be in the top quartile of best places to work in the region, so we can attract top talent and make it a place people want to work. And third, we’re ensuring we deliver fantastic returns for our shareholders, since an airline business typically tends to be a boom and bust business, and we want to be able to ride those waves in a very sustainable way financially from a shareholder return perspective. So from a digital standpoint, the rebuild focuses on digital dexterity. We’re starting to utilize our digital assets, not just to support the airline and our customers when everything is working right, but building the airline’s digital assets when challenges arise.

On legacy tech: We have our fair share of legacy technology, and the way we approach it is not just to focus on the technology itself, but take a step back and ask what the operating model of the entire airline needs to look like to help address the challenge and ensure we can tackle it head on. And the answer we got to is we can’t be an airline with a digital department. The CEO can’t bring in cutting edge technology while the rest of my colleagues focus on running the airline. We needed to acknowledge we were a digital business, and it needed to become a shared problem. And that’s what we’ve done. So digital now isn’t just mine, but the entire leadership squad’s responsibility. Included in that is all the trappings needed to modernize legacy technology alongside taking advantage of not just digital tech, but the rapidly maturing generation of exponential technology, AI, and so on. So we’re now playing a team sport. And that’s been an incredible shift. Everyone’s involved in modernizing legacy tech, making sure we’re running experiments at the other bookend, and everything in between.