Air NZ investors not buying cuddle class hype

 "Honey, I told you, keep still, or I'm going to knee you in the thigh again ... "


The glam pictures of Air New Zealand’s skycouch seats, populated by snuggling models, were on every news site you looked yesterday.

So were the airline’s predictions of a boom in premium economy revenue, and a “lucrative” sideline licensing its design to Boeing.

But Air New Zealand didn’t attach any numbers to its rosy predictions, and investors seemed unconvinced.

The airlines’ ordinary shares (NZX: AIR) started the day at $1.20, then descended in altitude to finish the session at $1.19.

Certainly, your correspondent can’t wait to try the new skycouch. It looks like a great way to contain kids, or snuggle with a sub-175cm partner. And the new on-demand food and drink service for business class - also announced yesterday - will be close to every journalists’ heart, and others.

But neither is it obvious that the new arrangement will spur the “dramatic growth in premium economy travel” that Air New Zealand predicted yesterday.

Initially there will only be a single Boeing 777-300 aircraft equipped with the new skycouch configuration - occupying the first 11 rows of economy - and that won’t arrive until November (it will fly between Auckland and LA).

Eventually, the airline will have four 777-300s, and mid-way through next year will also begin to retrofit its older fleet of eight 777-200s with the skycouch. A full long-haul fleet upgrade is scheduled by 2012.

One does wonder if - at a time when economy often seems packed as airlines trim schedules to match tepid demand - it makes sense to sell the third seat in 11 rows at half price.

And also whether, given its licensing its design back to Boeing to sell to all-comers Air New Zealand can maintain its unique point of difference for long (licensing is still a sensible move, given the design is probably not patentable), 

Still, for now it’s gaining international publicity.

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