Air NZ does it again

October 24th, 2014 at 3:00 pm by David Farrar

Another viral smash video from Air New Zealand. Really well done.

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Air NZ fares

September 1st, 2014 at 3:00 pm by David Farrar

The Herald reports:

Kiwis wanting to travel to some regional centres are faced with an 18-hour bus ride – or forking out hundreds of dollars for an Air New Zealand flight. And, in some centres, it is cheaper to drive a car-load of people than buy a single airfare.

The Herald has compared the cost of Air New Zealand, Naked Bus and private car prices between North Island regional centres and Auckland or Wellington after Air NZ faced criticism this week for the price of its regional airfares. It found travellers could be paying more than 10 times more for the convenience of flying.

Let’s look at their data.

The Herald comparisons were for travellers trying to fly after, or as close to, 5pm on Friday September 12 and returning on Sunday afternoon.

Flying from Auckland to Tauranga return would cost $438 or $1.07/km, while taking a bus would be just $47.97 or 12c/km, according to prices listed on the companies’ websites.

Those times are basically peak times. Yes they cost $438 at peak times. But leave earlier each day, and the cost is only $238.

Personally I would drive Auckland to Tauranga as the drive time is around the same as fly and airport time.

A return flight between Wellington and Palmerston North was $326 or $1.15/km while the same trip on a bus was just $33.97 or 11c/km.

Again if you avoid peak times can be as cheap as $178 return.

But time is money. If your time is not valuable, then a bus is a good idea.

An Air NZ spokeswoman said the business offered close to a million regional seats for under $100 each year, up 400,000 seats in the past five years.

If you want cheap fares, then don’t fly at peak times.

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About time Air NZ

July 5th, 2014 at 9:00 am by David Farrar

Air NZ reports:

Air New Zealand customers will be some of the first in the Asia Pacific region to be able to use their handheld portable electronic devices in non-transmitting mode for the entire duration of their flights following approval from the New Zealand Civil Aviation Authority.

From 16 July the airline will allow the use of handheld portable electronic devices including tablets, smartphones, e-readers and mp3 players during all phases of flight provided the devices are in flight mode. Previously customers could not use their devices during the taxi, take-off and landing phases of flight.

Yay. No more having the Kindle off for almost half the flight.

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Abbott’s Qantas dilemma

February 28th, 2014 at 12:00 pm by David Farrar

The Herald reports:

The disastrous results and huge job-shedding announced by Qantas yesterday is battering at the door of Australian Prime Minister Tony Abbott, who must decide what the Government will do for the ailing national airline.

The decision will test his resolve and the Government’s mantra that “the age of entitlement is over” as he comes under furious fire from Labor, the Greens and unions, which have accused him of plans to tie federal assistance to an attack on wages and awards.

I guess they just think taxpayers should subsidise Qantas.

The airline’s A$252 million ($270.5 million) pre-tax half-year loss, and its plans to shed the equivalent of 5000 jobs – meaning the final tally of sacked employees will be even higher – add to the series of Australian corporate icons hammered since Abbott won power in September last year.

These include the end of the local automotive industry with the loss of Holden, Ford and Toyota. The Government has repeatedly said companies must stand or fall on their own.

He’s right.

“We’re determined to help Qantas,” Abbott told Parliament. “We’ll help Qantas by guaranteeing a level playing field [and] by saving Qantas some A$270 million in carbon tax costs over two years … This is a Government which is determined to keep faith with businesses which have made investment decisions honestly and fairly on the basis of government policy. Second, this is a Government which will do its best to ensure, as far as is humanly possible, a level playing field between the domestically produced and the imported product.”

Transport Minister Warren Truss blamed much of the airline’s problems on the carbon and mining taxes, high wages and award conditions, and said fewer jobs were needed with new technology.

Air New Zealand uses technology well. The check in system is almost entirely automated, and the number of staff they have there now is probably 20% of what it used to be – and with far fewer queues.

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Qantas to shed 5,000 jobs

February 26th, 2014 at 7:00 am by David Farrar

News.com.au reports:

QANTAS is gearing up to axe 5000 jobs and sell its terminal at MelbourneAirport to prove to the Abbott Government it can make the tough business decisions required to obtain federal assistance.

The airline may also take the razor to its budget offshoot Jetstar, slashing jobs and routes, as it lobbies the Government to provide it with a lifesaving debt guarantee.

Job cuts, previously forecast to be 2000, are now expected to be closer to 5000.

They have around 33,000 employees so that is a massive one in seven or so to go.

With the airline already forecasting a loss of $300 million, a radical overhaul of operations is being finalised, with the company determined to show real reform in order to secure the debt guarantee it has been seeking from Treasurer Joe Hockey.

Their revenue is $16 billion so the loss is only around 2% of revenue. However many of their costs such as depreciation and fuel can’t be reduced. They have 50 million passengers a year so to break even need to reduce the cost per passenger by at least $6.

Air NZ in 2012 made a $70 million profit on $4.5b revenue so close to a 2% profit on revenue. With 12 million passengers that is a profit of around $6 a passenger.

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Half the passengers will definitely pay attention to the safety video!

February 13th, 2014 at 2:00 pm by David Farrar

The controversial new safety video from Air New Zealand. I predict around 60% of passengers will pay close attention to the safety video!

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Air NZ and Singapore Air

January 17th, 2014 at 10:00 am by David Farrar

The Herald reports:

Kiwis can expect cheaper flights and more choices as a result of a deal between Air New Zealand and Singapore Airlines, which is also expected to boost local tourism.

The deal announced yesterday, which is subject to regulatory approval, will enable Air NZ to resume flights to Singapore for the first time in eight years.

It will also have access to the Singaporean carrier’s huge regional market and much of its worldwide network.

It will take more than half of the flights operated by Singapore Airlines to New Zealand and revenue would be shared between the airlines from all flights on the route.

Singapore Airlines will operate its larger Airbus A380 on flights to New Zealand for the first time.

A good agreement for both airlines. It is noticeable that Air New Zealand is doing so well, while Qantas is struggling so badly that it is looking at selling its airpoints scheme.

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Labour’s privatisation history with Air New Zealand

November 20th, 2013 at 4:00 pm by David Farrar

Labour are insisting the exact right share of Air New Zealand for the Government to own is 73%. Or alternatively they are saying it is only acceptable for the Government to increase their shareholding in Air New Zealand, not dilute it.

Well consider their history with Air New Zealand.

  1. Labour privatized it in 1989 – selling it to Singapore owned Brierleys and Singapore Airlines.
  2. Labour bought 80% of it in 2001.
  3. Labour agreed to sell 22.5% to Qantas in 2002 – 2004
  4. Labour never reinvested the dividends so that’s why the share is down to 73% in 2013. It has been a creeping privatization since 2001. 

National has sold 20% to New Zealanders. The Clark Government tried to sell 22.5% to Qantas, who are not only foreigners (not that I care about that) but would have destroyed trans-Tasman competition!

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Air NZ airpoint changes

November 20th, 2013 at 11:00 am by David Farrar

Stuff reports:

Air New Zealand has revamped its Airpoints loyalty scheme making it more attractive for shorter flights, while also adding an exclusive by-invitation-only membership tier for its highest spending passengers.

Air New Zealand’s head of customer loyalty Mark Street said many fares will earn higher points, particularly on short routes. But fewer points will be earned on some cheaper fares.

“But overall we expect Airpoints members to earn several million more Airpoints Dollars each year,” Street said.

I’m suspicious. Almost without exception in the past, any changes to their airpoints scheme has resulted in frequent flyers getting done over and losing value.

It will be nice if this is not the case this time, but I remain suspicious until we see exact details.

There’s also good news for members of the renamed Elite membership tier (previously Gold Elite) who will receive an additional complimentary upgrade each membership year for use specifically on short haul routes across the Tasman and to the Pacific Islands.

This is in addition to the existing two free ”recognition upgrades” redeemable across the whole Air New Zealand international network.

Now that is useful, and welcome. Probably makes commercial sense for Air NZ also as they probably get very few people using upgrades on the shorter routes, so giving some complimentary ones away to elite flyers probably is almost no revenue cost – but some extra good will.

The airline’s top spending passengers will be invited to receive an exclusive Elite Priority One annual membership which will come with additional benefits to be revealed in the New Year.

The programme update follows a nine month review and a marketing push by rival Qantas in New Zealand, using a replica Mars Rover to entice travellers to join its Frequent Flyer programme.

This might explain the changes, and why perhaps this time they are actually beneficial to frequent flyers. Competition is good.

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Herald on Air NZ sale

November 19th, 2013 at 2:00 pm by David Farrar

The NZ Herald editorial:

According to the Labour Party leader, David Cunliffe, the timing of the Government’s selldown of shares in Air New Zealand is arrogant. Describing it as astute would have been far closer to the mark. Shares in the airline have been trading at a five-year high and investment advisers have voiced their enthusiasm for them. What better time could there be for the Government to reduce its holding in the national carrier from 73 per cent to 53 per cent?

That is a good question. Unless you believe that 73% is the exact right amount of shares for the Government to hold. Which is like believing in astrology.

One can make a principled case for 100% or for 51% (or for 0%) but to insist it must be 73% is daft.

The selldown has been criticised because it is being done just before a referendum on the part-sale of state assets. That complaint is misplaced. The focus of the Government’s mixed-ownership model strategy and, therefore, the referendum has always been the part-sale of the state’s three power companies, not an airline that the government acquired essentially by accident. Air New Zealand is very much an ancillary part of that strategy.

The referendum question also includes Solid Energy. It is a very badly worded question. Because if you think the Government should sell off the power companies and Air NZ, but should not sell off Solid Energy (because we won’t get 10 cents for it) then you should vote no I guess. Likewise if you think the Govt should sell more than 49% of any of the five companies, then again you arguably should vote no.

Green co-leader Russel Norman has gone so far as to suggest the selldown could lead to reduced regional services or higher fares.

I wish there was a competition for the most financially illiterate comment of the year, so I could nominate it.

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Dann on Air NZ sell down

November 19th, 2013 at 7:00 am by David Farrar

NZ Herald Business Editor Liam Dann writes:

The sale of the Government’s Air New Zealand shares shouldn’t be lumped in with the political scrap over the sale of state owned enterprises (SOEs) as it has been by opposition parties.

Air New Zealand is already a private company. It is publicly listed which means anyone can buy shares and the company must abide by NZX market regulations around disclosure.

Air New Zealand, in its current form, was never a state owned enterprise. The Government investment was a bailout which came about of necessity when the company went to the brink of collapse in 2001.

However much you feel the blame for that failure can be attributed to its private ownership structure at the time, that structure is not being copied here.

This is not, as the opposition says, history repeating.

Today we own a 73 per cent stake by the end of tomorrow we’ll own 53 per cent. So what? The numerical change doesn’t alter the control that Government has as majority shareholder.

Why is 73% the magically correct number? If Labour is against selling down to 51% then why don’t they announce a policy to buy 100% of Air NZ?

The taxpayer has done well from the investment – but when you look around the world at the performance of airlines you’d have to say this is a rare bonus.

Airlines are highly competitive risky businesses. There is no compelling reason for that risk to be all or mainly state owned.

Claims that the airline may now charge higher prices and neglect regional routes are ludicrous. 

Bat shit crazy.

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Stupid claims

November 18th, 2013 at 9:00 am by David Farrar

The Herald reports:

Opposition parties are warning of damage to the national interest, higher fares and even a second taxpayer bailout after the Government put another slice of Air New Zealand on the block.

Higher fares because the Government will own 53% instead of 73%? No one with a shred of financial knowledge could make such a claim. It’s financial illiteracy at its worse.

Green co-leader Russel Norman said it could lead to reduced regional services or higher fares.

Won’t he be a great Minister of Finance!

Air New Zealand already is a mixed ownership model. Labour and Greens are the worst sort of conservative – they claim the status quo is preferable despite any rational basis for it.

According to Labour and the Greens 73% is the exact right proportion of Air New Zealand to own. Not 82% (or they would have policies to increase it) or 64% or 51%. It must be 73%.

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Air NZ and Team NZ

August 8th, 2013 at 11:00 am by David Farrar

The Herald reports:

Air New Zealand is a supplier to New Zealand’s America’s Cup arch-rivals Oracle.

The airline is listed on the United States yachting syndicate’s website as a supplier with 28 other companies, some of them international firms but most from America.

Why wouldn’t they be? I expect Air NZ to supply services to anyone willing to pay.

Emirates Team New Zealand are on course to race Oracle for the Auld Mug and support for a rival outfit by the airline – which is mainly taxpayer-owned – is puzzling an avid fan of New Zealand’s challenge.

“It’s strange to think that the national carrier of New Zealand is helping the competition, let alone the New Zealand Government holding a majority stake in the company,” said supporter Kurt Bennett.

So we have a story based on one fan’s puzzlement?

Air NZ is not helping the competition. They are not training the crew up. they are providing seats on planes.

The Government also owns about 73 per cent of Air NZ, which because of exclusivity arrangements would be prevented from joining Emirates in backing the New Zealand challenge.

Exactly. So how is this a story?

Mr Bennett said he understood that but did not think it was appropriate for a company such as Air NZ to support another country, let alone the direct competition to Team NZ.

They are not supporting another country. They are providing a service.

Air NZ said it was not a sponsor of Oracle, just a supplier, but did not provide details of the nature of the deal. “It’s worth noting that Emirates Team NZ and Oracle are both users of Air NZ services. Oracle and Emirates have people based in New Zealand and Air NZ is the only carrier to offer direct services between New Zealand and San Francisco,” a spokeswoman said.

Maybe Mr Bennett thinks Air NZ should ban all foreigners from their flights, in case any of them are sportsmen or sportswomen who compete against NZ atheletes?

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Rodney writing at his best

June 2nd, 2013 at 1:00 pm by David Farrar

Rodney gets better week after week as a writer. Today in the HoS:

Air New Zealand’s rejection of would-be cabin crew member Claire Nathan because of the ta moko on her forearm highlights how New Zealand is developing and unfolding in new and exciting ways.

No longer must we think through the consequences of our actions. This is very liberating. For Nathan, her dream was to work serving the diverse customers who fly Air NZ. In the past she would have had to think through personal decisions that might affect her chances of a job. Like having a tattoo on her arm.

Not any more. She can have her tattoo and Air NZ is wrong to object.

The second great development is that you don’t have to suffer the consequences of your decisions in embarrassed silence. You can trumpet poor treatment in the media and instantly become the victim.

The third is that we are quick to spot any hint of racism. Nathan is Maori. Maori traditionally had tattoos. Therefore, Air NZ is discriminatory and racist. We have yet another opportunity to prove again that we are ever-vigilant in battling the scourge of racism.

As I said choices have consequences.

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NZ Herald on tattoos

May 30th, 2013 at 12:00 pm by David Farrar

The NZ Herald editorial:

Air New Zealand has been widely criticised for turning away an aspiring stewardess with a moko in the skin of her forearm. In response the airline says it is reviewing its policy. It will be weighing up whether the woman’s complaint has done more harm to its public image than tattooed cabin attendants might do to its business. In other words, it must assess whether the tolerance people profess in public truly represents their feelings. …

Nobody outside Air New Zealand is in a position to question its commercial judgment. Critics do not depend for their salaries on the airline’s success in a competitive international market. Air New Zealand managers have the best incentive to assess the true reaction of most people to tattoos and the company’s decision on whether to maintain its ban on visible tattoos will be a reliable indicator of how society really regards this fashion among younger people today.

Many of their critics have accused the company of hypocrisy since the rejected tattoo was a Maori motif and Air New Zealand brands itself with a koru. They missed the point. The aversion of many people to tattoos goes deeper than the subject drawn, it is the act of deliberate and permanent disfigurement as they see it, that they find appalling.

I think this is the key issue. It is nothing to do with the design. People have every right to get a tattoo, but it may affect the sort of jobs you can get. It’s the same with hair styles. If you like to have a mohawk, don’t be too surprised if you don’t get employed as a receptionist or air hostess. Likewise, if you like facial piercings, then again don’t be surprised if some jobs do not come your way.

Now the difference is you can change your hair style, and remove piercings. But tattoos are not easily removable. True. But that is not the fault of the employer. That is a decision the person with the tattoo made.

Around 20 years ago I probably found tattoos off-putting, but now actually like really cool body art. One friend has probably quarter of her body covered with amazingly lovely art. Definitely not something I’d ever ever do though.

Maori and Pasifika patterns are more attractive than most of the insignia commonly carved into skin and Maori motifs are now often imitated in other parts of the world, not always to the pleasure of their cultural proprietors. It may be that faux ta moko already help promote New Zealand in other places. If so it could be greatly to the advantage of Air New Zealand to have genuine examples of the art on some of its front-line staff.

But the company has not seen it that way, or not until this week. Its reassessment, when it comes, ought to be doubly respected because Air New Zealand not only has the incentive to make the right decision, it is not a conservative company. It is more adventurous than most in its presentation of itself, notably with pre-flight safety films that are not afraid to challenge passengers’ expectations and sense of humour, not to mention their patience

It is an issue for them. I reject that it is a race issue. It is not about the design. As for Miss Nathan, I see Jetstar has offered her a job, so she can still fufill her dreams of being an air hostess.

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Tattoos not suitable for some jobs

May 28th, 2013 at 12:00 pm by David Farrar

The Herald reports:

Claire Nathan says she had her dreams of being an air hostess dashed after Air New Zealand turned her away because of her ta moko.

Ms Nathan applied for her dream job in January, but last month, the national flag carrier terminated an interview when she declared the traditional Maori motif on her lower arm.

Last night, she told Maori TV show Native Affairs how the interview initially went well, until it came to filling out a form that asked if she had any visible tattoos.

“I thought, ‘This is interesting. I wonder why they are asking me that. Maybe it’s because they want to know if I have a ta moko.’

“I thought that they would be quite proud to have someone with a ta moko working and representing New Zealand. [But it's] not the case. [It] was the total opposite.”

Ms Nathan said she was told tattoos that could not be covered by the uniform were unacceptable.

People make a choice whether to get tattoos. I think many tattoos look cool, but if you want a job in certain roles you need to think about whether having a visible tattoo will be hinder you in that.

If someone was covered with skull and crossbones tattoos, then you would not expect to see them in certain frontline roles.

Now of course a ta moko is very different to the above example. But here’s where I have sympathy for Air NZ.

Do they become the tattoo police and decide on an individual basis which tattoos are allowable, and which are not? I’d guess that would land them in even more trouble.

She said it was a double standard from an airline whose logo is a koru.

Heavily tattooed singer Gin Wigmore has appeared in Air NZ ads, as have numerous inked All Blacks.

There’s a world of difference between someone appearing in a television advertisement, and someone being in a customer service role.

I’m sure Air NZ do not mind how many tattoos staff in non front line roles have.

Ms Nathan said she never thought her ta moko – depicting her heritage and her two children – would limit her career choices.

Well of course it would. She made a choice.

Air New Zealand said last night that tattoos were seen as “frightening or intimidating” in many cultures.

“Naturally we want all of our customers to feel comfortable and happy … and this has been a key driver of our grooming standard which, like many other international airlines, prevents customer-facing staff from having visible tattoos.”

As I said, I think many tattoos look great if done well (would never have one myself though). But Air NZ is a company that lives or dies on customer service, and their rule isn’t an anti moko rule – it is an anti visible tattoo rule.

You can argue that they should show some flexibility, but then they have to start inspecting individual tattoos and telling prospective staff whether they approve of their individual designs. Imagine the nightmare that would cause!

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Herald says good time to sell Air NZ shares

April 29th, 2013 at 3:00 pm by David Farrar

The Herald editorial:

Air New Zealand’s soaring fortunes were confirmed last week when it flagged that its annual earnings would more than double this year. Normalised pre-tax earnings would be between $235 million and $260 million if current market conditions and the trading environment persisted, it said. Air New Zealand’s share price immediately shot up 8c to $1.52, signifying a 10 per cent rise this year. …

As it is, Air New Zealand may well hold more appeal, especially for the mum-and-dad investors the Government aims to attract. The airline industry has always had an allure despite the vast sums of money that have been lost in it, and the national flag carrier has a special place in the hearts of New Zealanders.

It has faced a multitude of problems in the past few years, including high fuel prices, landing fee increases, earthquakes in Christchurch and Japan, and discount competition. Yet it has managed to not only survive but to achieve a profitability more commonly associated with budget operators while maintaining a high standard of customer service.

A strong management team, headed by new chief executive Christopher Luxton, provides reason for confidence in the future, including a strong response to the challenge that will arise from the transtasman alliance between Qantas and Emirates, which awaits only the Transport Minister’s go-ahead. Jetstar is also talking of expanding its domestic network to regional centres, flying routes that it says are a “big profit play” by Air New Zealand. Balancing these threats to some extent is the benefit that the national carrier will undoubtedly gain from the Government’s $158 million boost for promoting tourism.

There are also practical reasons to encourage the Government to promote Air New Zealand. It is already listed on the stock exchange, so a prospectus will not be required. The selldown of the Government’s 73.4 per cent stake to 51 per cent will be more straightforward than those of the power companies. There will be no repeat of the late rewriting of Mighty River’s documentation.

If ever there is a time to sell shares in Air New Zealand, this appears to be it. Investors wary of the unpredictability of the airline industry may not touch it, but there is considerable appeal for mum-and-dad investors. It could offer succour as the Government licks its wounds.

I agree. The Government doesn’t even have to do it in one go. They can just release parcels of shares when the price is high.

I look forward to hearing intelligent arguments from opponents as to why the Government should own exactly 73.4% of Air New Zealand – not a share less or a share more. Tell us why it should not be 51% or why it shouldn’t be 95%?

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Air NZ looking at South China visa scheme

December 6th, 2012 at 10:00 am by David Farrar

Grant Bradley at NZ Herald reports:

The Government says its fast-track visa scheme will be considered for other airlines besides China Southern, which already uses it, and Air New Zealand, which is in discussions to use it.

It isn’t actually a fast track. There is no priority given for processing. There are no different requirements. The only change is the sort of document you have to attach to prove you are not a penniless who has less than $4,000 cash is a frequent flyer status showing you have flown 40,000 kms in the last year rather than a bank statement.

A spokesman for Immigration Minister Nathan Guy yesterday said the discussions between Air New Zealand and Immigration New Zealand were in their early stages.

“Similar arrangements with other airlines will be considered to increase tourism and trade with China.”

Excellent. South China took the initiative and proposed the arrangement, as they saw it as a good way to get more wealthy tourists flying here on their airline. Of course you’d allow any other airline that sees benefit to do the same.

China Southern Airlines gold and silver frequent flyer card holders no longer have to produce evidence of sufficient funds to support themselves, as long as they can show their flight records over the previous two years.

They would still need to get a visa, and still need to meet health and good character checks.

A minor and trivial change.

It is worth recalling that this is about getting more tourists to NZ, not immigrants. Tourists are great for our economy. They incur almost no expenses in terms of health, education or welfare and spend considerable amounts of money boosting the tourism sector economy, and tax from both corporate profits and GST. The more (especially) high spending tourists we get, the better for the economy and jobs.

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Air NZ seat charges

November 21st, 2012 at 9:00 am by David Farrar

Matthew Backhouse at NZ Herald reports:

Air NZ customers will also be able to book preferred seats, for a cost, allowing them to choose seats with good locations, extra leg room or more personal space.

Ms Hosking said 70 per cent of customers could already select their seats for free, and the new service would allow the rest to pay to select a seat in advance.

The Air NZ website has details.

If you are flying domestically then it costs $5 to select a seat, or $10 to get a superior seat. Not clear what a superior seat is.

International flights to Australia or the Pacific see the preferred seats increase to $20.

Long haul international flights will cost you nothing to select a standard seat, $30 for a preferred seat and $75 for an exit row seat.

From a market point of view, this makes sense. The exit row seats are highly valued, so people will pay more for them.

What I would like is to be able to pay to guarantee no one sits next to me on a long haul flight, so long as the flight is not full.

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Air NZ axes HK to London

November 6th, 2012 at 12:00 pm by David Farrar

Stuff reports:

Air New Zealand is axing flights between Hong Kong and London in a bid to recover profits.

The service will be cut from March next year after a review found it was not likely to become profitable in the foreseeable future, the airline says.

Aaargh, this means if you want to fly to London on Air NZ, you need to fly via the US. A pity, as I much prefer flying via HK.

I wonder if at some stage Air NZ will scrap LA or SF to London also, and concentrate on Asia and Pacific only?

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$29 fares

October 21st, 2012 at 7:00 am by David Farrar

The Herald reports:

Travellers will soon be able to fly between Auckland and Wellington on late-night flights for $29.

Air New Zealand’s new “Night Rider” service will start on November 5, undercutting its budget competitor Jetstar and offering regular low prices in contrast to the airline’s current Grabaseat fares.

Jetstar said its own low fares were behind the cheap prices, and a commentator says the move is part of a strategy by Air New Zealand to keep planes full.

The airline is facing increased competition from Jetstar, which will next month start flying the main trunk with an extra aircraft.

Air NZ chief executive Rob Fyfe made the fare-cut announcement yesterday, saying it was the first time an airline had offered fares for $29 for an entire plane, and he expected the new flights to be a hit with travellers.

This will be popular for many who are budget travellers, and found the cheap fares always sold out so quickly. So long as people have a place to stay, it means they can fly down late at night for less than the taxi fare to the airport.

It is interesting that the marginal cost of fuel and staff for a domestic flight is small enough to allow for $29 seats. In one sense no surprise that the larger costs are non-marginal such as depreciation and maintenance.

This is a benefit of having domestic competition. Will be interesting to see what Jetstar does,

I’m disappointed though that frequent flyers who use the late night service will not be allowed to access the Koru Club. This sets a potentially disturbing precedent for another rollback of value for frequent flyers.

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Armstrong gets Jetstarred

September 4th, 2012 at 2:00 pm by David Farrar

Dave Armstrong writes:

It was meant to be a family reunion commemorating the death of a beloved relative. Air tickets were booked and the two sisters, both working their guts out in part-time jobs to put themselves through university, arrived at Wellington Airport on Sunday morning in plenty of time for their flight to Auckland.

But then they were Jetstarred. All Jetstar flights to Auckland that day had been cancelled. Fog? A crack in the tail of the plane? A terrorist alert at Auckland airport? After much obfuscation the reason was given – “engineering problems”. Sometimes an indicator light fails and passengers patiently wait a few minutes before take- off for the fault to be fixed. But every Jetstar flight that day cancelled due to a single engineering problem? What happened – did a wing fall off? …

Realising the reunion could be missed, tears flowed, friends were called, credit card numbers were yelled over the phone and eventually the girls got to Auckland. Everyone said: “Thank God for Air New Zealand even if it does cost an arm and a leg to fly at short notice”.

If this was a one-off incident I would simply dismiss it as one of the perils of air travel, but the same family got Jetstarred the same way three months earlier. Around the same time my niece tried to return from Australia for a long weekend. By the time her delayed Jetstar flight actually left Melbourne it was so late she would have had to turn around again on arrival in Auckland so she spent what little was left of her weekend telling her Facebook friends she would never fly Jetstar again.

My policy is to never fly Jetstar (inside NZ, they seem fine in Australia) unless there is no other flight available. I also have a standing policy that if an organisation wants me to travel to speak at their conference, that they must not book me on Jetstar.

But there is one reason I am grateful to Jetstar. Every time a Tory argues that the private sector does things more efficiently than the public, I say “What about Jetstar and Air New Zealand?” and the conversation turns to the weather.

Air NZ is of course a great example of the Mixed Ownership Model :-)

I would point out that Air NZ have consistently had good service – both as 100% privately owned, and as a MOM.

Have you ever tried flying to Gisborne at short notice? It’ll cost you slightly more than going to Samoa and slightly less than Perth. Because Air New Zealand has a monopoly on most regional routes, they charge like wounded bulls. Is this an example of a state enterprise using its monopoly to rip off people in the regions? Possibly, but it could also be what happens when private investors buy part of a state asset. The state may want to provide an affordable service but private investors will be looking to maximise profit – even if it means gouging Gizzy.

I think it is simply just because no one else wants to fly to Gisborne. The problem is not what percentage of an airline is owned by the state (SOEs act just as commercially as the private sector), but the lack of competition. And I say you are more likely to get fairer competition when the Government that sets the competition rules does not own one of the companies involved.

What would be wonderful is a state airline with the level of service that Air New Zealand provides, but that is also affordable to those on low incomes and in the regions. You may be right to think that I’m dreaming, and that it will only happen when pigs can fly Jetstar.

Having checked the Air NZ website, there are some pretty decent fares from Wellington to Gisborne. You can fly up there for $89 and back for $109 if you book well enough in advance.

When I fly to Auckland, I often find the four taxi trips costs me more than the return airfare!

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You bastards

March 6th, 2012 at 3:00 pm by David Farrar

Hayden Donnell reports at NZ Herald:

Air New Zealand is being accused of driving away its most loyal customers with a recent overhaul of its air points rewards system.

In changes set to kick in on May 30, frequent flyers using their Airpoints to book flights on the national carrier will have to bid against each other to get seat upgrades.

Bids can only be placed a week or more out from a flight, with the airline telling people whether their offer has been accepted between three and seven days before departure.

Under the airline’s previous system, Airpoints users could a get an upgrade if they paid a fixed price before a flight and a seat was available.

The changes have sparked outrage among frequent flyers, with many threatening to shift their support to rival airlines.

And I am one of them. This is the last straw. I spend a huge amount flying with Air New Zealand – both domestically and internationally. Due to their loyalty programme, I always try to book Air NZ – even if not the cheapest option. Hence I have been Gold Elite or Gold for the last decade or so.

Over that time Air NZ has continually downgraded the value of their airpoints and loyalty programme. Time after time after time they have degraded it. However there was one aspect left that made it worth staying on for – long haul upgrades.

I can not afford to pay more higher than economy class to travel overseas. However I regularly use airpoints to purchase upgrades so that I can escape cattle class.  Now Air NZ is destroying the benefits of having gold status with them.

I’m a member of Qantas also, but at the lowest tier level. I’m now going to make Qantas my priority airline for bookings, unless Air NZ gives frequent flyers an incentive to use them. Business class travel is quite simply unaffordable for people who pay for their own travel (unless very well off), and frequent flyer points have been the only way that it becomes affordable.

Despite that, entrepreneur Ben Kepes said Australian airline Qantas could capitalise on the discontent created by the changes to spark an exodus of Air New Zealand frequent flyers.

The self-described “Air New Zealand evangelist” said the way the OneUp system had been implemented diminished his view of the carrier.

“It’s definitely left a bad taste in my mouth.

“It’s a bad look when people are starting to say ‘what are my options with other airlines?’…I would be surprised if there wasn’t a mass exodus from Air New Zealand.”

Mr Kepes said the bidding system would add unnecessary stress to frequent flyers’ seat upgrade applications.

He claimed the changes compromised Air New Zealand’s reputation for great service to high value customers.

It is a pity. The staff are great, and are excellent ambassadors for the airline. It is the company letting them down.

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Air NZ on Labour

October 29th, 2011 at 1:28 pm by David Farrar

The Herald reports:

Air New Zealand is accusing Labour of trashing its “beloved” koru symbol in advertising opposing Government plans to sell shares in state assets, including the airline.

Chief executive Rob Fyfe has written to Labour leader Phil Goff complaining that the election advertisement, which is screening on television and the back of buses, “denigrates and debases a symbol that we cherish and one I believe all New Zealanders cherish.”

Labour has a very casual approach to using other people’s intellectual property.

There is also an irony in Labour trying to trumpet Air NZ as the poster boy for their strategy against asset sales, because it is the Air NZ model of mixed ownership which National is seeking to extend.

Is Labour campaigning on buying out the 25% of Air NZ the state does not own? Of course not. So are they saying that 75% is the perfect size of the state’s shareholding and that 72% is evil and wrong? How ridiculous.

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Unusual advertising for Air New Zealand

September 12th, 2011 at 2:00 pm by David Farrar

Photo from The Press.

I wonder how much Air New Zealand paid for the advertising!

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