Network Effects Strengthen Our Economic Game

networkI really enjoyed attending Project16 this week. Offering a nice blend of business, philosophy and creativity, the event attracts an esoteric mix of thought leaders from the United States and bakes them with a sprinkling of local influencers, thinkers and doers. What I like about the event is that it challenges our thinking and helps build connectivity by creating a diverse set of connections. That’s important for an island nation that lies a long way from global markets.

It was also a relief that most speakers generally avoided trotting out the usual slogans such as “number eight wire” and “punch above our weight”. Self-congratulatory (but outdated) language such as this should be forever confined to the 20th Century. We also need to move away from parochial attitudes to economic development. It’s no longer acceptable to be championing specific regions or cities as the centre of gravity. Wellington is no more the “centre” for film production than Auckland is the king of software. Yes, we do have regional strengths, but we can leverage these better by working together.

Economic development is not a zero sum game. But everyone can win through collaboration. Rather than trying to compete individually for capital and talent with mega-cities of Asia-Pacific such as Hong Kong, Sydney and Los Angeles, we need to be building relationships and making deals regionally that are more competitive. For example New Zealand tech startups are now accessing capital in Asia. The Sydney “fintech” scene is doing the same. We could set up more “sister city” relationships that have a meaningful economic basis, rather than a political or ceremonial objective. Deal-making should be driven by identified opportunity, rather than through meddling by governmental agencies.

For this reason, pundits who predict that extending Wellington airport will thrust the region onto the global stage are mistaken. Apart from the technical and economic reasons I already outlined that militate against this silly idea, we actually need to switch the thinking towards complex networks, where much greater value is created through diversity. That means it’s also totally fine (and indeed desirable) for air transport links to hub through Auckland, Sydney, Adelaide or Melbourne.

Paul Spence is a commentator and serial technology entrepreneur, a co-founder of iwantmyname (a New Zealand based global Internet venture) and a mentor with Startup Weekends. You can follow Paul on Twitter @GeniusNet or sign up for a free weekly digest of startup, tech and innovation related events curated by him through New Zealand Startup Digest.

No Public Funding For Runway White Elephant Please

777lotrThe debate over whether or not public money should be invested in the extension of Wellington International Airport’s (WIAL) runway is starting to heat up. Despite project studies only being released to the public this week, city councils across the region have already indicated they will provide financial support towards the $330 million cost. At present central government has said it will not support and some local body councillors are already starting to feel uneasy about the overall proposal.

The Wellington City Council (minority shareholder in the airport), Wellington Chamber of Commerce and WIAL have been enthusiastically promoting the supposed “economic benefits” of the project. But the real reason the extension is needed is because the current length is sub-standard even for short-haul jet operations. WIAL is essentially asking taxpayers and ratepayers to co-fund capital works. Given that WIAL parent company Infratil earned a staggering $453 million last year and reportedly has a $1 billion war chest, why are public funds needed at all? Surely WIAL can make it’s own business case and access funding itself?

Adding 300 metres to the runway will not make it safe for wide-body aircraft.  “Long haul” flights are not coming to Wellington any time soon and here’s why. Firstly, medium haul, mid sized airliners are actually being phased out across the Asia-Pacific region as we speak. My understanding is that the last Qantas 767 has already gone and Air NZ has a small number remaining with limited lifespans. Asian airlines no longer operate these types. Air Asia and Jetstar withdrew A330s from Christchurch and Auckland, because they could not make a profit. In any event, an A330 would not be able to operate fully laden, even from an extended runway. Truly “long haul” aircraft such as A380, A340 and B777 are unlikely to be operated because of weight and size limitations.

The 787 Dreamliner is often touted as the saviour of long thin air routes. Again, it will not be possible to economically operate this aircraft out of WLG, even with a longer runway. Extending the runway will not remove the nearby hills. Aircraft take-off restrictions are governed by the climb performance under instrument flight conditions with a failed engine at the takeoff point. Long haul operations (10-16 hours) require huge fuel loads and substantial take-off weights. Take-off performance is a function of aircraft weight, engine power and ambient conditions, NOT runway length. Aircraft will be payload limited even with the runway extension in place. This is a really important point that most commentators and the media have missed.

There are many other reasons why investing in a runway extension is a bad idea. Not the least of these is that the airlines refuse to commit. You can be sure that Air New Zealand is not going to undermine it’s cosy hub and spoke operation that is based in Auckland and it’s not clear that any Asia or U.S. based airlines are at all interested. Some passengers complain that travel via Auckland or Sydney is onerous. But can you name any city under 500,000 population in North America that has direct air links with London or Hong Kong? Hub and spoke operations are the norm elsewhere in the world. There are many other investments that Wellington can make as a city and a region in order to promote economic development.

Unsurprisingly, there is zero information on the WCC or WIAL websites about the public consultation process. But the media are reporting the following information. There will be three public open days where people can meet one-on-one with the experts who prepared the reports. The open days will be held at Chaffers Dock Function Centre on December 2 from 12pm to 3pm, at SPCA Fever Hospital in Mt Victoria on December 3 from 5pm to 8pm, and at the Brentwood Hotel Conference Centre in Kilbirnie on December 5 from 12pm to 3pm.

Postscript: There is now a dedicated website providing links to information from the consultants who were paid by the project supporters to provide reports. The site also contains information about public presentations and how to make a submission.

Paul Spence is an ardent supporter of regional economic development, a commercial pilot licence holder and a technology sector company director based in Wellington.

Back In The Air

FLT_nzle_smallBeing made redundant and then putting in the hard yards building a new online business put my lifelong love affair with aeroplanes on hold for a few years. But I’m very pleased to report that I’m finally back in the air again and loving it!

Aviation is something that gets into your blood, so it was hard to give it away. But sometimes life gets in the way and we have to refocus priorities for a period of time. It was sad to be grounded, because flying provided me with so much inspiration. Growing up with aviation has given me skills and knowledge that transferred over into to my business life such as practical approaches to leadership, planning and risk management. Being airborne also allows you freedoms and perspectives that many people never get to experience in their lifetimes.

So it was with a great sense of accomplishment that I recently flew some of the iwantmyname team to Lake Station aerodrome, near the township of Saint Arnaud on beautiful Lake Rotoiti in New Zealand’s South Island (see photo). A lot of good memories came flooding back – along with my self-confidence. I recalled many adventures from my younger days when I was a part-time commercial pilot, building flight hours on days off from my “real” job as an aviation meteorologist.

Consequently I’m enjoying greatly, the rather ominously named, Worst Place To Be A Pilot TV series. But for a quirk of fate, I very nearly headed down the same career track myself. It’s a steep learning curve for the young aviators introduced in the show, as they launch their flying careers in one of the most unforgiving environments on the planet. I’ve visited several of the featured locations in Indonesia and can totally relate to the situations illustrated.

That recent trip down south was the culmination of a lot of hard work and reminded me to confront challenges head on and never, ever give up on ambitions in life.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet