Newsroom Exclusive

CAA board member resigns after airline grounding

The deputy chairman of the Civil Aviation Authority has resigned after an airline he's a significant shareholder in learned its competitor was about to be suspended before that airline knew itself.

Peter Griffiths' resignation, confirmed after a Newsroom investigation, follows disquiet in the aviation industry about an airline owner sitting on the board of the organisation that regulates safety and aviation rules.

Three airlines that compete with Griffiths' company have been subject to CAA action since he bought his stake in Great Barrier Airlines in April.

In the latest instance, on September 8, Griffiths told Great Barrier Airlines that rival operator Sunair was being grounded several hours before Sunair was notified. 

Griffiths and the aviation regulator’s board say it was “error of judgment”, and have apologised to Sunair.

The resignation follows a complaint to CAA chairman Nigel Gould by Sunair chief executive Dan Power last week, and approaches to the CAA by Newsroom.

The CAA has apologised to Power, but Gould told him there was “little benefit to be gained from any further scrutiny” of the incident.

Gould now says the deputy chairman’s decision to step down and an internal debrief of the circumstances are sufficient to address the issue.

Power says the matter is far from over.

While Griffiths’ resignation was appropriate there was a clear conflict of interest within the CAA, he said.

“The chairman needs to do some homework to ensure that there are no more conflicts and there are no undue influences being exerted,” he said.

“I personally at this point have no confidence in the organisation.”

The Sunair incident has brought wider concerns about the CAA among airline operators to a head.

Since Griffiths acquired his jointly-held 25 per cent stake in Barrier Air in April, three competing airlines including Sunair have been the subject of CAA action. In May Coromandel scenic flight and charter operator FlyStark was suspended for three months, and FlyMySky, which also flies between Auckland and Great Barrier Island, is currently the subject of a CAA special audit.

Sunair was told officially that its Air Operator Certificate and the Certificate of Airworthiness for its fleet were being suspended over maintenance record issues at around 7pm on Friday, September 8.

However, earlier that day a Sunair employee who had just landed at Kaitaia Airport heard about the impending suspension from a Barrier Air staffer.

Sunair and Barrier Air are direct competitors on several upper North Island routes. Tauranga-based Sunair services Hamilton, Rotorua, Gisborne, Ardmore, Whangarei, Whitianga and Great Barrier Island. As its name suggests, Barrier Air also flies to Great Barrier Island, as well as offering a range of scheduled and seasonal flights between Auckland, North Shore, Kaitaia, Tauranga and Whitianga.

Last year Sunair beat Barrier Air in a competitive tender for the profitable Whangarei to Kaitaia ‘doctor run’, providing charter services to the Northland District Health Board. The contract had previously been held by Barrier Air.

“In a nutshell what we’ve got here is a (former) board member with an interest in our biggest competitor, and the recent awarding of the contract just shows you how close the competition is."

- Sunair chief executive Dan Power

Newsroom understands Barrier Air approached the DHB around the time of the suspension offering its services. CAA says Griffiths’ intention in telling Barrier Air about the Sunair grounding was to offer assistance and minimise disruption to Sunair customers. He did not realise the suspension was not yet in place when he passed on the information, the CAA said.

But the situation raised many questions, Power said.

“In a nutshell what we’ve got here is a (former) board member with an interest in our biggest competitor, and the recent awarding of the contract just shows you how close the competition is,” he said.

FlyStark founder Ray Stark also believes Griffiths’ shareholding in Barrier Air was inappropriate given his position with the CAA.

While Stark acknowledges one of his pilots made a mistake by not immediately reporting it when the wing of an aircraft scraped a hangar at Ardmore Airport in May, he says the CAA’s reaction in grounding his operation was “aggressive”.

“It took me three months to get back (in the air). It just went on and on.”

He recently placed an order overseas for two new aircraft, but is not sure about going ahead with the expansion of his business now.

“I don’t know whether I can do this, because that investment is at risk because of the CAA, they could just walk in tomorrow and shut me down for any reason.”

CAA says the wingtip damage to FlyStark’s aircraft required a maintenance inspection before the next flight, which did not happen. The operator was suspended for two weeks while this was done, but claims FlyStark elected to extend its suspension.

It says Sunair’s suspension followed an audit of its maintenance records. The findings highlighted a number of anomalies and omissions that called into question the reliability of its maintenance and created reasonable doubt about the airworthiness of its aircraft.

The regulator says Peter Griffiths’ shareholding in Great Barrier Airlines and in a Kaikoura operator, Wings over Whales, were both recorded on its conflict of interest register. As a board member Griffiths was not involved in regulatory decision-making, and there were advantages in having people in governance roles with industry experience, it said in a statement.

“On balance, providing that conflicts of interest are managed correctly and board members do not act on information held then the benefits of having some sector knowledge/involvement on the board outweighs the risks,” it said.

Meanwhile Sunair was working hard to get back in the air as quickly as possible, Power said. The disruption to the doctor run was a particular concern, he said.

"Our withdrawal from the market is causing a lot of hardship.

"We provide regional air transport to what one could call remote places, essential air services which no other operator appears to want to take on the financial challenge of doing, and we've been doing it for 30 years," Power said.

In relation to another matter Transport Minister Simon Bridges said earlier this month that the CAA took its obligations under the Privacy Act seriously.

"I have full confidence in the systems the Authority has in place," he wrote in a letter to industry body the General Aviation Advocacy Group.

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