Air New Zealand–Dropping the Ball

I fly a lot. I fly a lot with Air New Zealand. It’s my favorite airline in the world and I consider myself an honorary Air New Zealander (the name that AirNZ uses for its employees). Everywhere I go I evangelize my airline (Air New Zealand is owned, in part, by the New Zealand taxpayer so it is, in effect, my airline).

Given all this it’s a sad day when I’m forced to write a post bemoaning a move that New Zealand’s airline makes.

First I need to say that Air New Zealand has impeccable service – on the rare occasions that they’ve dropped the ball they’ve been quick to make amends. When you consider that I fly around 80 times a year on Air New Zealand flights, the one or two times that an issue has arisen (luggage lost, a suitcase damaged, an upgrade mishandled), Air NZ staff have been very quick to put things right.

They do so (I Assume) in the understanding that their most loyal of customers spend a heap of money with them each year, and that ensuring their loyalty is important to their success as a business. Which brings us to last weeks announcement. It seems that Air New Zealand’s excellent upgrades program is being changed, and many people think that’s not for the better. The new system uses an auction system whereby trvalellers essentially bid on upgrades with the highest bidders having their application accepted. According to the email they sent Airoints members;

we’re changing the way you request upgrades with Airpoints Dollars. From 30 May 2012, Airpoints Standby and Confirmed upgrades will no longer be available and instead you can request upgrades through a new offer-based system called OneUp. With OneUp you will make an offer for an upgrade based on how much you are willing to pay for the upgrade.
On myairnz.com you will be directed through to the OneUp page where you’ll use a sliding scale to choose how big or small an offer you’d like to make. The sliding scale will start at the minimum price that may be offered for an upgrade on the relevant sector.

While it’s a system that totally buys into the “gamification” theory of the world, it’s also one which ignores the fact that most travellers, and especially high frequency travellers, want certainty around their travel plans. Gamification might be nice when checking in to a café on foursquare, but it really sucks when you’re trying to find clarity regarding an upgrade application for a flight at the back end of an epic two week business trip.

On FlyerTalk – the anger at the move was intense, so much so that around 250 comments were left in the matter of a few days, most of them very negative in tone. As one person said;

what about the LOYAL GE & GOLD customers who have earned the right and should have a sense of entitlement, that’s what a loyalty programme is about, rewarding its customers

The issues that travellers seem to have can be summarized as follows;

  1. Limited value in trying to pursue higher tier status as having some certainty about being able to upgrade is the most important value for a frequent flyer program
  2. Airpoints now have limited relative value given the difficulty of redeeming
  3. An auction process creates extreme amounts of stress
  4. Frequent travellers purchase tickets at the last-minute and make last-minute changes. Not being able to upgrade <7 days out hurts these travellers disproportionately
  5. 1 years advance notice for such a major change to the program should have been provided

To their credit, Air New Zealand backtracked less than a week later and sent out an email to all Gold Elite travellers letting them know that the status quo would exist. But with two new conditions;

  1. No more two jump upgrades will be available (no more jumping from economy thru premium to business)
  2. A review of upgrade costs will occur in due time

Kudos to AirNZ for listening, but humbug for coming up with such a harebrained scheme initially and then trying to make it better with a sticking plaster type solution that has enough fine print to make high value customers wary. As one commenter said;

Too little, and too late. It is clear NZ do not understand their customers.

Now a little of this angst can rightly be put down to travellers with way too high a belief in their own importance and entitlement, but judging by the fact that many hundreds of people have responses to the original post, and that the majority of these travellers spend tens of thousands of dollars a year with the airline, one has to wonder.

That and the fact that the Head of Customer Loyalty, Simon Pomeroy recently left after a disagreement about changes to the airline’s high value customers programs [update - see Pomeroy's comments below re his leaving AirNZ] and the seemingly increasing power of financially focused executives in the company has left a lot of people looking for alternatives. In such a cut throat industry as this, can AIr New Zealand really risk a mass exodus of their most valuable customers? Listen well to the words of your customers before it’s too late;

While NZ have reinstated the upgrade benefit for Gold Elite’s , I am not sure in my case that I will continue with NZ.The continual “spin of enhancements” has left me feeling unwanted & this was the final straw.

8 Comments
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  • Too true Ben, sent them an email with the same sentiment – especially hurts when as a non-corporate the choice to fly with them often is because of loyalty, our clients, our charities and often ourselves are picking up the bill!

  • get a life .. its an airline

  • Completely dumb move. But, hey… People put too much into “I love corporation [name here]“, when in fact, corporations don’t have to love anyone back.

    Do they provide a good service? Yes, absolutely, and I had a few hiccups in the last 12 months that were quickly fixed. But even so. They are making so hard for loyal customers to get to higher levels, it’s beyond a joke.

  • Simon Pomeroy |

    Hi Ben. Just wanted to lay out the reasons behind my move from Air NZ. I got approached late last year about my new role and at the time wasn’t looking to leave the airline. The opportunity to go was career driven and was the hardest decision I’ve had to make. There was no personal disagreement with any of the team and I thoroughly enjoyed my 5 1/2 years with Air NZ

  • Ben, I am not such a frequent traveller but agree with your overall assessment of the service quality delivered by Air NZ.

    The new “upgrade” system, however, is a bad joke. I had the pleasure of trying out the gamified system for a roundtrip Christchurch to Orlando and chose to participate in the auction for a Premium Economy seat for the flight back (SFO – AKL). The slider you can use to adjust your “bet” was preset to incredible $400 – it could be moved down to $200, what I instantly did before replying to the mail. Non surprisingly I did not get an upgrade.

    However: I checked at the Gate in SFO and, interestingly enough, was offered a seat in Premium Economy for $600 US.

    This clearly shows that we just see another scheme for pulling out more money and information out of travelers and loyalty members instead of providing a true loyalty program which is a give and take.

    Something similar happened to a friend of mine who is on a loyalty status similar to yours …

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