Altitude aims high with inside jobs

BY ROELAND VAN DEN BERGH

Air New Zealand's specialist aircraft cabin design firm Altitude is on the cusp of stepping into the big time of building complete interiors for private jets. Altitude is pitching for its first "green build" of a large private jet which could arrive at its Christchurch base within a year.

It will be a big step up for the firm, which has so far focused on refurbishing existing large Boeing business jets based on the popular 737. Altitude general manager Mike Pervan says the business was separated from Air New Zealand's engineering division in 2008 to take advantage of a global shortage in designers and installers of interiors for exclusive private jets.

A separate Altitude unit in Auckland designs and sells custom-made cabin furniture like stowage units, galleys and bars to airlines.

The business has played a major role in the development of Air New Zealand's all-new interiors revealed last month, which feature the world's first economy seat that converts into a bed for two and premium seats with a similar look to business class seats arranged in a herringbone layout to provide more personal space.

The cabins will debut on a new fleet of Boeing 777-300ER long-haul aircraft due to arrive from the end of this year, and on the next generation 787-9 Dreamliners expected in 2013.

The Altitude business is part of Air New Zealand's strategy to diversify its revenue by developing and selling intellectual property, reducing its reliance on income from its passenger services.

Altitude's 70 staff cut their teeth on refitting Air New Zealand's long-haul fleet in 2005, designing and supplying the closets and bar units for the Boeing 747-400s and new Boeing 777-200ERs.

At the time, Air New Zealand turned to its own designers and engineers to create an innovative customised look for its cabins to provide a point of difference not available from existing interior manufacturers.

The sculpted furniture also had to be lighter to help reduce fuel burn on the airline's ultra-long routes.

"We got to the end of that [project] and we had this amazing capability that we had developed," Mr Pervan says. "The only way to really expand and maintain this capability is to go out into the global marketplace."

Traditional aircraft interior design is driven by the need to meet rigorous safety standards, which stand in the way of innovation, Mr Pervan says.

"You end up with something that is a bit overweight and a bit clunky looking." As a result most airliners fly with uniformly drab, grey box-like galleys and stowage lockers.

Altitude has refurbished five Boeing business jets in the last two years. In the process they have turned to the luxury yacht industry to learn some of the tricks of the trade including lightweight construction techniques, specialised wood-finishing skills and how to create the perfect leather stitching demanded by their customers.

Today Altitude is one of just eight significant aircraft interior specialists in the world, and the only one in the Asia Pacific – the fastest growing region for big business jets.

"So we are really well placed just because of our location and also because of the relative neutrality of New Zealand." Competitors include Lufthansa and other major companies in Europe and the United States.

The pressure is now on from customers and competitors to start building complete cabins from scratch for privately owned Boeing and the Airbus A320 equivalent.

"That is going to be really exciting. It would be building the entire aircraft interior" including everything from the seats and state of the art entertainment systems to air conditioning and waste water systems.

"The interior goes in and we have built a third of the airplane, that's cool," Mr Pervan says.

Customers include billionaire businessmen, governments and to a lesser extent corporations which favour smaller private jets.

Despite the global financial crisis the world's wealthiest tycoons never lost their appetite for private jets.

Boeing has a backlog of 26 business jets and eight business jet versions of the bigger 787.

Demand for the jets means owners face a wait of up to three years before taking delivery of their luxury flying condos. "The industry is saying they are struggling to keep up with the volume," Mr Pervan says.

But Altitude won't be rushed, and will make the step up when it is confident it can deliver to expectations, and avoid some of the pitfalls that caught out some in the luxury yacht industry.

"There is a lot of pressure on us, but we want to do it right. We are moving into this in a deliberate and sustained way of growing our business." A large business jet costs about US$65 million (NZ$94m) and is delivered unpainted and with little more than floor boards and insulation blankets lining the fuselage.

"Pilots can fly them around, but you can't use them," Mr Pervan said.

A custom-made interior adds another US$20m to US$25m to the price tag and takes the better part of a year to complete. A fitout typically includes lounge, dining and meeting areas, a double bedroom with ensuite and seating for up to 12 people.

Unlike luxury yachts which are used mainly for pleasure, large private jets serve as a mobile home and office, equipped with sophisticated electronics and communications systems.

They are used to fly between businesses interests and investments anywhere in the world, free from the restrictions and security hassles of commercial airline travel, Mr Pervan says. Owners are intimately involved in the design process and make regular visits to check on progress.

Air New Zealand is the launch customer of the 787-9, the larger version of the 787-8 which made its maiden flight in December, after more than two years of production delays.

The experience of developing the cabin for the 787s means Altitude will eventually look to also win work for the business jet version.

"Not long after Air New Zealand gets the 787s, we would like to take on one of those," he says.

A private 787 would take up to two years to complete with the cost almost matching the purchase price of the empty aircraft.

Altitude has also worked with Boeing to develop a utility jet based on the business jet which can be reconfigured from a VIP transport into a variety of other roles, including a troop carrier, cargo transport or flying hospital, within hours. The BBJ-C will be marketed mainly to governments looking for a multi-role aircraft.

But while the business jets are the glamour part of Altitude's business, the experience in building cabin furniture for commercial airliners has the potential to be a bigger earner.

"The scale of the opportunity in some ways is just as large, if not bigger, because instead of doing one airplane we can do large fleets," Mr Pervan says.

Altitude has positioned itself to design and supply interiors for the 777 and new generation aircraft like Boeing's 787 Dreamliner and the 747-8, the latest version of the classic jumbo jet.

Airlines are increasingly looking to differentiate themselves through the on-board environment, especially in their premium cabins.

Virgin Blue's long-haul offshoot V Australia called on Altitude to design an inflight bar for its Boeing 777, complete with stools.

Boeing has awarded the company with a contract to supply first-class bars and closets for the first 20 747-8s to be delivered to Lufthansa next year, with an option for 20 more.

"Every airline that we deal with has got quite unique features that they are looking to imbue into the bits that they can change, which is really not that much. It is the seats and the furniture that goes around them and the in-flight entertainment system, and after that it is pretty standard," Mr Pervan says.

The drive to improve the comfort of flying is also trickling further down the cabin. A year ago the focus was on premium cabins, but on long-haul flights the economy passengers are increasingly being provided features that were previously the preserve of those sitting at the front of the plane, like self-service bars or Air New Zealand's new "skycouch" economy seat that converts into a bed for two.

"That is good for us. The more pieces we can get per aircraft the bigger the business can get," Mr Pervan says.

A normal airline order is for a set of four or five high-end closets for the front of the plane, one or two bar units, and some specialised furniture that goes around either premium economy or business class seats. While the private jet furniture is made in New Zealand a lack of the necessary production capacity means airline furniture is made in the US.

"It is the nature of New Zealanders, we are good at creating intellectual property but when it is large volumes quite often the capital infrastructure is just not in place," he says.

The aim is to gradually increase production to delivering 50 aircraft sets of furniture a year from about 10 at the moment.

If Altitude can become a catalogue provider to Boeing and Airbus it could lead to orders for equipment on a thousand planes, "then you are really cranking".

- © Fairfax NZ News