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Qantas may be in big trouble, but Air New Zealand is playing down any suggestion that it’s rubbing its hands together with glee and moving in for the kill.
Yesterday’s announcement of a significant profit downgrade, major job losses and capacity cuts for Qantas will have little effect on Air New Zealand, according to general manager marketing Steve Bayliss.
He says that instead of expending valuable time and energy watching what its rivals are doing, the airline is focusing on something much more important: pleasing its customers.
The intensity of the battle with Qantas, particularly for the transtasman market and domestic routes, is reflected in two major Air New Zealand advertising campaigns running at the moment.
One offers a chance to win trips to Vancouver by booking Air New Zealand flights to Australia; the other offers the chance to switch Qantas Frequent Flyer points to Air New Zealand Airpoints.
But Mr Bayliss denies the airline is focusing its attention closer to home due to struggles in long-haul markets; he says there are still flyers out there for those who make attractive deals.
“We’ve seen a general increase in our volume of retail work in the last few months,” he says.
“Right now for most consumers, assuming you haven’t lost your job, which at this stage most haven’t, your disposable income won’t have changed, and in some cases it may have actually increased.”
Because of this, “people are still willing to spend but they’re more cautious in doing so.”
This is why promotions like the ones Air New Zealand is running are so important at the moment, Mr Bayliss says.
“Getting a great deal is the trigger for most of these people. We can still fill up planes and our passenger load factors are good. We’ve just got to be constantly in front of them.”
While the recession is having a huge impact on airlines, Mr Bayliss says it is just the latest in a long line of challenges for the “turbulent” aviation industry, such as SARS, 9/11 and the recent fuel price hikes.
The challenge, he says, is to adapt quickly to these external shocks and other changes.
“We have a strategic advantage because of our size and because of the nature of Kiwis; we back ourselves to adapt quicker than other folks.”
This includes refitting aircraft servicing long-haul routes to include more Premium Economy seats (between Business class and Economy class), at the expense of a few economy seats, as a response to customer demand.
“We’ve modelled the price premium and demand for Pacific Premium Economy and been constantly overwhelmed by the response,” he says.
“We fly some very long sectors and it’s attractive for people who can’t afford Business or First Class.”
Air New Zealand has a “unique” profile in that its flights are generally either very long or very short, with few of the seven-eight hour flights common for European characters.
For short-haul flyers on-the-ground services such as check-in facilities and waiting lounges are important, whereas for long-haul flights the focus is on providing for people while in the air.
“We need to show our customers we’ve thought about the kind of journey we’re taking.”
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