In 2013, Air New Zealand faced a problem that plagues organisations worldwide: decades of adversarial union-management relationships that drained resources, stifled innovation, and created a culture of mutual distrust.
CEO Christopher Luxon called it the “Punch and Judy Show” — a theatrical performance where management and unions played predictable roles, fighting the same battles repeatedly whilst genuine problems went unsolved.
What happened next would transform not just Air New Zealand, but demonstrate a pathway for organisations across every sector to move from conflict to collaboration.
The result? A five-year partnership delivering zero strike days, collaborative solutions to previously intractable challenges, and a systematic methodology now being successfully applied across aviation, healthcare, manufacturing, and public sectors worldwide.
The Starting Point: A History of Adversarial Relations
The Industry Context
Aviation had long been characterised by combative industrial relations:
- Multiple unions representing different employee groups, often with competing interests
- Fragmented negotiations creating complexity and mistrust
- Positional bargaining where each side defended territory rather than exploring mutual interests
- Recurring crises that consumed management attention and damaged customer experience
- Lost opportunities for innovation whilst energy focused on internal battles
Air New Zealand embodied all these challenges. With over 70% of its 11,000+ workforce unionised across multiple employee groups — pilots, cabin crew, engineers, ground staff — the airline had experienced industrial disputes, near-collapse in the early 2000s, and the relationship scars that accumulate over decades of adversarial engagement.
The Catalysts for Change
By the early 2010s, two parallel developments created the conditions for transformation:
From the Union Side: Union leaders were investigating international trends in employee participation and high-involvement workplaces. They recognised that traditional adversarial approaches weren’t delivering the best outcomes for their members.
From Management: Christopher Luxon, who became CEO in 2012, brought fresh perspective on sustainable high performance. He understood that competitive pressure, customer expectations, and innovation requirements demanded genuine workforce collaboration, not just management control.
The convergence of these two perspectives created possibility.
The Transformation: Implementing High Performance Engagement
The HPE Charter (2015)
In 2015, after extensive development work, Air New Zealand and its unions signed a formal High Performance Engagement (HPE) Charter — a landmark agreement that would fundamentally reshape their relationship.
The Charter established HPE as “a mindset, a structure and methods” for fostering strategic working relationships through high-participation, high-collaboration problem solving.
The Core Commitment:
Air New Zealand and the unions are committed to jointly finding better solutions for everyone — the company, employees and the unions — through developing a collaborative relationship with meaningful involvement by employees in problem solving, improvement initiatives and decision-making processes. The parties will make use of analytical tools and systematic processes to increase our likelihood of success.
The 12 Charter Objectives
The HPE Charter committed both parties to pursuing twelve interconnected objectives — demonstrating how partnership could deliver value for all stakeholders simultaneously:
Commercial Performance:
- Competitive market position
- Shareholder returns
- Workplace productivity
- Continuous improvement culture
Employee Value:
- Employment security
- Wages and terms superior to market
- Growth and development opportunities
- Meaningful work and influence
- Workplace health and safety
Broader Purpose:
- Corporate social responsibility
- Skills development across the industry
- Innovation and adaptability
This integration of commercial, employee, and stakeholder interests embodied what we now call The 3Cs Model: Commercial Responsibility, Customer Value, and Culture — working in synergy, not traded off against each other.
The Four Collaboration Principles
The Charter established four foundational principles that would guide all collaborative work:
1. Those Closest to the Issues Help Address Them
Frontline employees possess invaluable insights into operational challenges and improvement opportunities. Effective solutions require their genuine involvement, not token consultation.
2. Transparently Share and Understand Each Other’s Interests
Moving beyond positions (“what we demand”) to interests (“what we’re trying to achieve”) enables creative problem-solving that meets everyone’s underlying needs.
3. Transparently Share Essential Information
Collaboration requires trust, and trust requires transparency. Both parties committed to sharing the information necessary for informed joint decision-making.
4. Seek Consensus Solutions That Address the Interests
Rather than compromise where everyone loses something, consensus means finding solutions that genuinely address all parties’ core interests — making everyone better off.
These principles weren’t aspirational platitudes. They became operational guidelines for every collaborative initiative.
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The HPE Structure: Governance and Problem-Solving Architecture
Air New Zealand and its unions built a sophisticated multi-level structure to sustain partnership at every organisational level:
Strategic Level: HPE Leadership Team
Composition: Senior airline executives and senior union officials
Frequency: Three meetings per year
Purpose:
- Set strategic direction for HPE
- Review overall partnership health
- Resolve issues escalated from lower levels
- Champion collaboration across the organisation
This senior governance ensured executive-level commitment and provided air cover for collaborative work throughout the organisation.
Tactical Level: HPE Working Party
Composition: Management representatives and union officials
Frequency: Monthly meetings
Purpose:
- Oversee day-to-day HPE operations
- Support active improvement teams
- Address emerging challenges
- Monitor progress against objectives
- Coordinate across business units
The Working Party provided the operational backbone, ensuring consistent application of HPE methodology.
Crisis Response: HPE Issue Resolution Team
A standing “fire department” to address serious breakdowns in the HPE process. This team could be convened rapidly when normal collaborative processes weren’t working, preventing escalation to industrial conflict.
Operational Level: Business Unit Steering Committees
Composition: Business unit management and relevant union representatives
Purpose:
- Identify priority issues within their domain
- Establish improvement teams
- Provide resources and support
- Monitor team progress
- Integrate solutions into operations
Steering Committees ensured HPE wasn’t a separate initiative but integrated into normal business operations.
Frontline Level: Improvement Teams
Composition: Joint union-management teams addressing specific challenges
Purpose:
- Apply Interest-Based Problem Solving to defined issues
- Develop and implement solutions
- Monitor results
- Build collaborative capability
Improvement Teams were where the real work happened — frontline employees and managers collaborating systematically on genuine business challenges.
This multi-level architecture ensured alignment from executive strategy through to frontline implementation.
The HPE Methodology: Interest-Based Problem Solving
The engine powering all collaborative work was Interest-Based Problem Solving (IBPS) — a structured four-step process:
Step 1: Define the Issue
Objective: Achieve shared understanding of the problem
- Gather relevant data and perspectives
- Separate facts from assumptions
- Frame the issue neutrally (avoiding blame)
- Agree on the problem to be solved
Key Tool — Active Listening:
- Tune In: Give full attention, observe non-verbal cues
- Clarify: Ask questions to understand completely
- Confirm: Check your understanding is accurate
This step often revealed that parties were solving different problems — alignment here saved enormous time later.
Step 2: Identify Interests
Objective: Surface everyone’s underlying needs and concerns
- Move beyond positions (“what we want”) to interests (“why we want it”)
- Identify fears, concerns, hopes, and requirements
- Understand both shared and differing interests
- Acknowledge all interests as legitimate
Most workplace conflicts aren’t true conflicts — they’re misunderstood interests that can be simultaneously addressed with creative solutions.
Step 3: Develop Options
Objective: Generate multiple potential solutions collaboratively
- Brainstorm possibilities without judgment
- Build on each other’s ideas
- Defer evaluation until many options exist
- Look for ways to expand the pie, not divide it
The best options address the greatest number of interests for all parties. This step transformed dynamics — instead of fighting over predetermined solutions, parties collaborated to invent better answers.
Step 4: Craft the Solution
Objective: Select and implement the best option through consensus
- Evaluate options against agreed criteria
- Test solutions against identified interests
- Seek consensus (everyone can support the decision)
- Plan implementation jointly
- Monitor results and adjust as needed
Consensus Definition: All team members can support the decision — even if not everyone’s first choice — because it reasonably addresses their core interests.
This IBPS process became the shared language for collaborative problem-solving across Air New Zealand.
Implementation: How HPE Launched and Spread
The Development Phase (2013–2014)
Initial Exploration: Union research into employee participation models coincided with CEO Luxon’s push for sustainable collaborative relationships.
External Expertise: Air New Zealand engaged RAI (Restructuring Associates Inc.), a US consulting firm with deep experience in union-management partnership development. RAI had successfully worked with Kaiser Permanente and other major organisations, bringing proven methodology.
Charter Development: Through 2014, parties negotiated and refined the HPE Charter, establishing principles, structure, and commitments.
The Launch (2015)
Charter Signing: Formal commitment by Air New Zealand leadership and all major unions.
Initial Training: Extensive training in Interest-Based Problem Solving, active listening, and consensus decision-making for the leadership team, working party, and initial improvement teams.
Pilot Projects: Six initial improvement teams launched in:
- Airports division
- Regional Maintenance
- Cabin Crew operations
- Engineering and Maintenance
- Health and Safety
- Regional Airports
These pilots tested the methodology, built capability, and generated early successes.
The Expansion (2015–2019)
As initial teams demonstrated value, HPE expanded across business units. The methodology became embedded in how Air New Zealand addressed operational challenges.
HPE wasn’t positioned as a separate initiative but as how work gets done — integrated into normal business operations, not additional to them.
Breakthrough Moments: HPE in Action
The Airports Division Transformation
One of the earliest HPE successes came in Air New Zealand’s airports division.
The Challenge:
- Rising operational costs threatening competitiveness
- Pressure to maintain service standards
- Need for significant productivity improvements
- Staff concerns about job security and working conditions
The Traditional Approach Would Have Been:
- Management-imposed efficiency targets
- Union resistance and grievance procedures
- Protracted negotiations over pay and conditions
- Compromise solutions satisfying no one
The HPE Approach:
A joint improvement team applied IBPS methodology:
Step 1 — Define Issue: Both parties agreed the real problem was “How can we improve competitiveness whilst protecting employee security and conditions?”
Step 2 — Identify Interests:
- Management: Cost reduction, productivity improvement, service quality, competitive positioning
- Employees: Job security, fair compensation, reasonable workload, quality of work life
- Shared: Long-term viability of airports division
Step 3 — Develop Options: The team identified numerous opportunities for operational efficiency that didn’t require job losses or conditions reductions — many suggested by frontline staff who understood the work intimately.
Step 4 — Craft Solution: Collaborative solution design that addressed efficiency whilst protecting employment.
The Results:
- Substantial cost reductions achieved
- Productivity improvements exceeding expectations
- Pay increases for staff
- Working conditions protected through collaborative design
- Enhanced competitiveness securing long-term viability
The 3Cs in action — Commercial goals met, Customer value maintained through quality service, Culture strengthened through genuine partnership.
Regional Maintenance Operations
The Challenge: Operational inefficiencies creating cost pressures and threatening service quality.
The HPE Process: A joint team of engineers and managers systematically analysed workflows, identified bottlenecks, and collaboratively redesigned processes.
The Results:
- More efficient maintenance scheduling
- Improved parts availability
- Better use of engineering expertise
- Enhanced safety protocols
- Cost savings benefiting both company and employees
Engineers knew where the waste was — they’d been frustrated by it for years. HPE gave them structured opportunity to fix it collaboratively.
Health and Safety Transformation
Rather than adversarial enforcement (management imposing rules, unions filing complaints), joint problem-solving created shared ownership.
The Results:
- Improved safety protocols developed collaboratively
- Better reporting and response systems
- Enhanced safety culture
- Reduced incidents
- Greater trust around safety issues
When employees feel heard and involved, safety improves.
Cabin Crew Rostering and Operations
Rostering had been a perpetual source of conflict — management prioritising operational flexibility, crew members seeking predictability and work-life balance.
The HPE Transformation:
- Joint team surfaced underlying interests on both sides
- Collaborative solution development addressed both operational needs and crew preferences
- Implementation jointly owned and monitored
The Results:
- Improved roster satisfaction
- Better operational coverage
- Reduced grievances
- Enhanced crew engagement
The Ultimate Test: Operational Base Closures
Perhaps the most impressive demonstration of HPE’s power came when Air New Zealand needed to close operational bases — traditionally the most contentious issue in aviation.
The Challenge:
- Strategic need to consolidate operations
- Major impact on affected employees and communities
- High potential for industrial action and public relations crisis
- Complex logistics and operational continuity requirements
The HPE Approach:
Early Transparent Communication: Rather than presenting a fait accompli, management shared the strategic drivers and engaged the HPE structure early.
Joint Exploration: An improvement team explored all options, assessed impacts, and developed transition strategies together.
Collaborative Transition Design: Support programmes, relocation assistance, and implementation planning designed jointly.
The Outcome:
- Zero industrial action despite significant change
- Smooth transition maintaining operational excellence
- Employee support through jointly-designed programmes
- Preserved relationships enabling future collaboration
- Community engagement managed constructively
This could have been a catastrophic conflict. Instead, HPE methodology transformed it into a demonstration of partnership value.
Measurable Outcomes: The Evidence of Success
Zero Strike Days (2015–2019)
Throughout the active HPE partnership period: zero days lost to industrial action across all unionised employee groups.
Each strike day costs airlines millions in direct costs, customer compensation, and reputational damage. Five years of zero strikes delivered immense value.
Industrial Disputes Avoided
Issues that previously would have escalated to formal disputes, litigation, or industrial action were dissolved collaboratively through HPE processes before reaching crisis point.
The Issue Resolution Team was available as a safety net but rarely needed — the structure worked.
Operational Performance
The partnership period coincided with:
- Industry-leading customer satisfaction scores
- Multiple international awards for service excellence
- Improved operational efficiency metrics
- Strong financial performance despite intense competitive pressure
- Enhanced employee engagement scores across unionised groups
Sustainable Partnership Structures
Perhaps most importantly, the partnership outlasted external facilitation:
- Embedded governance structures continued beyond RAI consultant involvement
- Internal capability developed to sustain the collaborative approach independently
- Cultural transformation making partnership the new operational norm
- Ongoing committees addressing emerging challenges systematically
Genuine transformation, not consultant-dependent performance.
The Workforce Voice
From Air New Zealand’s internal communications:
HPE has given us a voice in how our work is done and problems are solved. Management actually listens now, and we work together to find better solutions. It’s completely different from the old days.
Initially I was sceptical — I’d seen management initiatives come and go. But HPE delivered real results. We’ve solved problems together that I thought were impossible.
From union officials:
HPE hasn’t made us weak — it’s made us more effective. We achieve better outcomes for our members through collaboration than we ever did through confrontation. But it requires management genuinely committing to partnership, not just consultation.
The HPE Legacy and Evolution
Christopher Luxon: From CEO to Prime Minister
In 2023, Christopher Luxon became Prime Minister of New Zealand — demonstrating how collaborative leadership capabilities developed through HPE methodology can transfer to the highest levels of public leadership.
From HPE to HPtE: Methodology Evolution
The Air New Zealand experience provided the foundation for what became High Performance through Engagement (HPtE) — an evolved methodology now being applied successfully across:
Aviation:
- British Airways (ongoing major transformation)
- Thomas Cook Airlines (prior to company closure)
- Multiple other carriers exploring implementation
Healthcare:
- DHBs addressing clinical and operational challenges
- Union-management partnership in complex healthcare environments
Manufacturing:
- Production facilities worldwide
- Complex supply chain collaboration
Public Sector:
- Government departments and agencies
- Public service transformation
The core principles and methodology proven at Air New Zealand — the Charter commitment, The 3Cs Model, IBPS process, multi-level governance — provide a replicable framework for partnership development in any sector.
Lessons for Your Organisation
Leadership Commitment is Essential
Christopher Luxon’s public support and active participation signalled that HPE wasn’t a tactical initiative but a strategic priority.
His leadership philosophy:
As a business leader, you have a responsibility to lead a company for the future… My job is to make sure that commercials are strong, the customer experience is great, the culture of the organisation is constantly improving.
That articulates the 3Cs — Commercial Responsibility, Customer Value, and Culture working in synergy. Without genuine executive commitment, partnership initiatives become marginalised programmes, not operational reality.
Formal Structures and Governance Matter
The HPE Charter and multi-level governance structure provided:
- Clear principles and shared commitments
- Defined decision-making processes and accountabilities
- Protected space for collaborative work
- Escalation pathways when needed
- Sustainability beyond initial enthusiasm
Informal goodwill isn’t enough — systematic structures sustain collaboration through leadership changes, business pressures, and inevitable challenges.
Methodology and Training Build Capability
Interest-Based Problem Solving training equipped participants with:
- Structured methodology for collaborative work
- Shared language and frameworks
- Tools for navigating difficult conversations
- Confidence to challenge old adversarial patterns
- Replicable process for future challenges
Investment in capability development — not just goodwill — creates sustainable transformation.
Start with Real Problems, Not Theory
HPE succeeded because it addressed genuine business challenges with immediate relevance — airports competitiveness, maintenance efficiency, health and safety, base consolidation.
Tangible results built credibility. Success created momentum for broader application.
Expect and Plan for Initial Scepticism
Union leaders acknowledged that some members were initially sceptical — entirely understandable given a prior low-trust climate. Management had similar doubts.
The key: don’t be discouraged by scepticism. Deliver results that demonstrate value. Let outcomes speak louder than promises. Build trust through demonstrated behaviour, not declarations.
Create No-Lose Constraints
Two critical constraints protected the partnership:
No compulsory redundancies through HPE: Employees could engage without fear that collaborative problem-solving would cost them their jobs.
No changes to terms and conditions as first resort: Collaborative solutions would seek efficiency improvements, not conditions reductions.
These constraints paradoxically enabled better solutions — forcing creative problem-solving that improved outcomes for everyone, not just shifting costs to employees.
Consensus Doesn’t Mean Unanimity
A crucial HPE principle: consensus means everyone can actively support the decision, even if it’s not everyone’s first choice. This enabled progress without requiring perfect agreement — a realistic standard for complex organisations.
Critical Success Factors
The Right Context:
- CEO committed to partnership approach
- Unions investigating collaborative models
- Business pressure creating urgency
- Prior adversarial approach demonstrably failing
The Right Methodology:
- Proven IBPS framework from RAI/Kaiser Permanente experience
- Formal Charter establishing principles and commitments
- Multi-level governance structure
- Systematic training and capability building
The Right Implementation:
- Started with real problems generating immediate value
- Built early credibility through tangible results
- Expanded systematically across business units
- Sustained beyond external consultant involvement
The Right Mindset:
- Both parties genuinely committed to finding better solutions
- Willingness to challenge established adversarial patterns
- Patience to build trust through demonstrated behaviour
- Focus on interests, not positions
What Air New Zealand Teaches Us
If an organisation with decades of conflict, 70% unionised workforce across multiple unions, and complex operational challenges can systematically transform relationships — so can yours.
The depth of prior adversarial history doesn’t prevent partnership, provided both parties genuinely commit to a better approach.
Air New Zealand didn’t succeed through charismatic leadership alone. They succeeded through systematic application of proven methodology: formal commitment structures, shared frameworks, structured processes, multi-level governance, and capability development. Replicable systems beat personality-dependent approaches every time.
The financial and operational case for partnership is overwhelming. Zero strike days alone represents millions saved annually. Add collaborative efficiency improvements, enhanced employee engagement driving customer experience, reduced conflict freeing management time for strategy — partnership isn’t altruism. It’s smart business.
And culture change followed structure and process. Air New Zealand didn’t try to change culture directly. They changed governance structures, decision-making processes, problem-solving methodology, and leadership behaviours. Culture transformation followed as people experienced new ways of working delivering better results.
The Methodology That Made It Possible
Air New Zealand’s five-year HPE journey from 2015–2019 proved that systematic partnership development creates sustainable competitive advantage across every dimension — commercial performance, customer value, and culture.
The methodology they pioneered — now evolved into High Performance through Engagement (HPtE) and The 3Cs Model — has been successfully applied across sectors:
- Aviation: British Airways transformation currently underway delivering measurable improvements in complex operational challenges
- Healthcare: DHBs applying HPtE to clinical and operational transformation
- Manufacturing: Production facilities using The 3Cs Model and IBPS to improve efficiency whilst strengthening employee engagement
- Public Sector: Government agencies transforming service delivery through genuine workforce partnership
Every organisation faces the same fundamental choice Air New Zealand faced in 2013: continue managing conflict reactively, or transform relationships systematically.
Air New Zealand chose transformation.
Explore Further
If your organisation faces union-management challenges consuming leadership time and energy, operational inefficiencies from siloed decision-making, recurring conflicts that drain resources and damage culture, or change initiatives that stall due to workforce resistance — The 3Cs Model and HPtE Strategy can work for you.
Get in touch with Karl Perry via LinkedIn to discuss your specific challenges and how systematic partnership development might help.
Karl Perry – Founder & HPtE Practitioner
Based in London | Working Globally
Karl Perry is currently based in London, supporting the British Airways HPtE initiative and other projects. HPtE methodology has been implemented across aviation, healthcare, manufacturing, local government, and public sectors in New Zealand, United Kingdom, and internationally.