Editorial
Turbulence ahead
Is customer pressure really behind Air New Zealand’s move to
become a budget airline on international short-haul flights?
Regardless of whether the Air New Zealand transtasman partnership deal with Virgin Blue is allowed to go ahead, New Zealanders will have to come to terms with a depressing inevitability: the “quality” airline we have been so proud of is going determinedly downmarket on its Australian and Pacific routes.
Even without the profit fillip of the Virgin Blue deal, Air New Zealand is downgrading those short-haul services this year, offering a slate of Jet Star-style no-frills options. The downgrade, which will effectively see the introduction of four “classes” of economy travel is, like the Virgin deal, liable to help keep fares down, although it is doubtful it will make them cheaper.
The airline says its new fare options are in response to customer demand. But customers are not known to demand less legroom, baggage restrictions and other privations, even in return for cheap fares. On the contrary, they’ve become accustomed to cheap fares along with the usual basics of air travel, including a simple meal, albeit these days just a cheap shepherd’s pie on the transtasman route.
The downmarket shift clearly has more to do with optimising profits and preparing for the possibility of the alliance than it is has to do with customer wishes.
If Air New Zealand plane-shares with Virgin Blue, the airlines must harmonise services. It is inevitable Air New Zealand will downgrade to fit with Virgin, rather than Virgin upgrading its service.
Neither airline would admit this, but such a change is implicit in Air New Zealand’s new fare deals starting in August. That deal involves “reconfiguration” of the cabin – ie, cramming more seats in – and options to fly with no check-in baggage, meals or movies.
This is hardly the end of the world. As travel industry experts point out, New Zealanders have come to regard transtasman and Pacific flights as domestic outings rather than international trips. Spending up to four hours in a huddle without food or the latest Hollywood movie is no great hardship.
However, while regulators on both sides of the Tasman are considering the alliance over the coming months, the airline owes it to passengers to be more open about where Air New Zealand intends to place itself in the global market.
The budget image is in conflict with the airline’s more prestigious advertising and innovations. It has announced it will have more comfortable – but 2cm narrower – economy-class seats in its new Boeing 777 aircraft and it is upgrading its Premium Economy seating. The airline has also gained favourable world attention for its cosy whole-row economy-class sleeping option for travelling couples. And Air New Zealand of course proudly trumpets winning what chief executive Rob Fyfe calls the “Oscar” of the airline industry after it was named the airline of the year by the influential Air Transport World magazine.
In contrast, the move to an era of “carry your bags on board and bring your own Big Mac” has arrived rather quietly, as did the decision to add an extra seat to each row in the economy section of the new Boeing 777 aircraft.
These are moves that threaten to cloud Air New Zealand’s image as a premier airline.
The public can rightly ask: is Air New Zealand on a path to become a mostly budget airline, and will that come at the expense of the quality service, superior food and wine, safety and courtesy that it offers at the high-margin non-budget end of its business?
Air New Zealand’s bums-on-seats approach, which includes the potential for its customers to find themselves packed aboard a Virgin Blue aircraft, may well deter those loyal patrons who expect quality and service. This will be especially so for its lucrative business travellers. The airline has previously cunningly rebranded its old first class as “business class” to allow corporate executives and politicians to enjoy the pleasure of “lie-flat” beds without the accusations of money wasting previously associated with such luxury. Now it is putting the pinch on those same clients and other frequent flyers. Under the new no-frills system they will be deprived of the extra few inches of legroom they are currently given in seats at the front of the economy section in return for their loyalty when they fly cattle-class.
It is a risky path for Air New Zealand. TVNZ took a similar path when its chief executive, Rick Ellis, decided it must change from Rolls-Royce to Toyota Corolla.
TVNZ has since struggled to retain its audience, with many loyal viewers feeling dissatisfied with what they are being offered. It is a cautionary tale for Air New Zealand.
