Good Morning, Cafe Patrons.
I am serving up a special, extra strong shot of travel caffeine today, as I think we all need something potent to help clear our minds of what has been a truly befuddling week in the Australian air travel industry.
Virgin Blue was left hanging at both the US and Australian altars with two of their brides-to-be - Delta and Air New Zealand - as the US Department of Transportation rejected their proposed tie-up with Delta, and the Australian Competition and Consumer Commission did the same with their Air New Zealand proposal. In both rejections, the hypocrisy seems quite evident as not only has the US DOT has approved a similar (but much larger) British Airways / American Airlines trans-Atlantic partnership but the ACCC in Australia actually approved the Virgin / Delta deal last year.
Ironically, on the very same day the US DOT rejected the Virgin / Delta marriage another Australian Government entity, the International Air Services Commission, approved a continuation of what now amounts to a duopoly on the Australia-South Africa route by extending the codeshare agreement between Qantas and South African Airways. This duopoly is thanks to V Australia (owned by Virgin Blue) recently pulling out of the AUS-SA route, leaving those two aforementioned code share partners the only direct services between the two countries.
Both regulatory bodies cited various anti-consumer sentiments in denying the partnerships, but in my mind (both as a corporate and consumer purchaser of travel) I certainly don't think either body was representing my interests. Why isn't the ACCC weighing in on the South African/Qantas code share for instance, instead leaving it to some other governmental body to ascertain the impact on the consumer? Isn't the 2nd "C" in ACCC all about the consumer?
Perhaps Virgin and Delta should hire the lobbyists that BA and AA used when petitioning the US DOT on their alliance across the Atlantic, as they obviously spun their message correctly whereas Virgin and Delta seemingly did not. Regardless, I can't fathom how the DOT could justify BA/AA getting in bed together but have decided with Virgin and Delta to, um, keep things virginal apparently.
Same for the ACCC here. They claimed that a Virgin and Air NZ partnership "...would lessen competition and increase the likelihood of ‘‘coordinated conduct’’ on the trans-Tasman route." Apparently the US DOT doesn't think the same logic applies over there, as I'm sure there will be a fair bit of "coordinated conduct" between the Brits at Waterside and the Yanks at DFW.
And just to add more insult to injury, Qantas has now stated publicly that they have a beef with Virgin's proposed partnership with Etihad. Let's not even bother with discussing the merits of airlines objecting to other airlines' plans, shall we? Of course Qantas now has issues with Virgin's plans, but does anyone have any issues with Qantas' codeshares through to Europe with BA/CX, etc? Sorry, I just said I wasn't going to go there...!
Now, I'm not advocating that all governmental bodies charged with consumer protection around the world should operate under the same guidelines when it comes to regulating things like air travel. However, I would hope that they would operate with at least the same logic. And I for one find all these rulings illogical. After all, if there is any industry on this planet that is excellent at trying new ways to fill a void in a particular part of the market, it's the airline industry (see: Southwest, Ryanair, AirAsia...and yes, even Virgin Blue circa 2001.)
If Virgin and Air New Zealand do link up and decide to start doing anti-consumerish type things like charging $1500 one-way across the Tasman, I'm sure Qantas, Tiger, Emirates or any number of future upstarts will be ready to step in and bring that consumer back with lower prices or better service or whatever will woo the customer. So why do we need endless bureaucracy combined with a lack of common sense dictating the market?
Perhaps one day I will be paying $1500 one-way across the Tasman, standing up for the entire flight, and paying a fiver to use the toilet thanks to "coordinated conduct." And if that day happens, Cafe Patrons, I may have to charge extra for that lid on your morning cuppa...
EXTRA SHOT FOR THE DAY
I'll be in Hong Kong all next week through Friday, and thanks to a jam-packed schedule and some "renovations" I'll be doing on the Cafe, we'll be closed next Friday, September 25th. I'll be back open on October 1st with a whole new look - come check it out!
Image courtesy www.commons.wikimedia.org
Showing posts with label Air New Zealand. Show all posts
Showing posts with label Air New Zealand. Show all posts
Monday, September 13, 2010
Thursday, May 27, 2010
I Told You So...Didn't I?
At the risk of saying I told you so to Qantas and other airlines who recently announced they were cutting back on premium products...ah, why bother stating the obvious?
IATA's recently published Premium Traffic Monitor shows that "The number of first and business class airline passengers in March increased 10.8 percent worldwide, marking a fourth consecutive month of growth and the largest year-over-year increase measured for any month in at least two years. As business confidence and world trade have turned up sharply business travelers have returned," IATA said, while noting particularly strong growth in Asia.
Sure, there still are some trouble spots (indeed I am talking about Europe - can you say "Greeced" lightning?) and the Kangaroo route from Australia to the UK is not faring all that well, but for the most part premium demand is up. Way up.
And yes, these numbers are coming off of an abysmal 2 year stretch where no one seemed to be turning left when boarding an aircraft.
But who are we to believe - a few airlines, corporate buyers and travel agencies saying the days of premium travel are dead? Or numbers coming from the association made up of actual airlines themselves which would seem to indicate otherwise?
In previous editions of the Cafe I've lamented what I saw was the too-quick reaction by Qantas and Air New Zealand to start ripping out premium products as they said the demand for them was plummeting. If IATA's numbers are to be believed, the only thing plummeting will be those airlines' profits if they continue to pull back on premium services.
To be fair to Air New Zealand, their trimming of premium products is mainly across the Tasman. Depending on how Trans-Tasman flights are classified by IATA the numbers could be confusing as "Within SW Pacific" shows a negative March '10 vs. '09 but a higher YTD '10 vs. '09; yet "SW Pacific" is showing huge growth of premium traffic - 19.9% growth in March '10 vs. '09 and 26.7% growth year-over-year.
The Barista, is, of course, happy to pour his words in to a double espresso and swallow them quickly if I end up being wrong...but for now I'll stick with the "I told you so" to the airlines who were throwing out the premium passenger with the gently scented bubble bath water. Not sure which airline will offer on-board bubble baths first but I wouldn't put it past a few of them....
(Thanks to IATA: www.iata.org/economics and for the full report go to http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Mar10.pdf)
IATA's recently published Premium Traffic Monitor shows that "The number of first and business class airline passengers in March increased 10.8 percent worldwide, marking a fourth consecutive month of growth and the largest year-over-year increase measured for any month in at least two years. As business confidence and world trade have turned up sharply business travelers have returned," IATA said, while noting particularly strong growth in Asia.
Sure, there still are some trouble spots (indeed I am talking about Europe - can you say "Greeced" lightning?) and the Kangaroo route from Australia to the UK is not faring all that well, but for the most part premium demand is up. Way up.
And yes, these numbers are coming off of an abysmal 2 year stretch where no one seemed to be turning left when boarding an aircraft.
But who are we to believe - a few airlines, corporate buyers and travel agencies saying the days of premium travel are dead? Or numbers coming from the association made up of actual airlines themselves which would seem to indicate otherwise?
In previous editions of the Cafe I've lamented what I saw was the too-quick reaction by Qantas and Air New Zealand to start ripping out premium products as they said the demand for them was plummeting. If IATA's numbers are to be believed, the only thing plummeting will be those airlines' profits if they continue to pull back on premium services.
To be fair to Air New Zealand, their trimming of premium products is mainly across the Tasman. Depending on how Trans-Tasman flights are classified by IATA the numbers could be confusing as "Within SW Pacific" shows a negative March '10 vs. '09 but a higher YTD '10 vs. '09; yet "SW Pacific" is showing huge growth of premium traffic - 19.9% growth in March '10 vs. '09 and 26.7% growth year-over-year.
The Barista, is, of course, happy to pour his words in to a double espresso and swallow them quickly if I end up being wrong...but for now I'll stick with the "I told you so" to the airlines who were throwing out the premium passenger with the gently scented bubble bath water. Not sure which airline will offer on-board bubble baths first but I wouldn't put it past a few of them....
(Thanks to IATA: www.iata.org/economics and for the full report go to http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Mar10.pdf)
Thursday, March 25, 2010
Ditching Premium Seats Across the Ditch
Air New Zealand this week announced a new strategy built around a simplified pricing structure for Trans-Tasman fares, complete with a simplified on-board product offering.
Translation: Business Class is out, modified (or perhaps "glorified" is a better word) economy seating is in.
The new 4-tiered product and pricing approach is apparently as follows: the lowest price gives you a seat, a coffee or tea and access to entertainment; next highest price gives you the previous plus checked bags; 3rd highest adds a meal and drinks and the most expensive option features lounge access and a confirmed empty seat next to you. How luxurious.
According to Air New Zealand, they are on average only selling 1 Biz Class seat on any given Trans Tasman flight, so the thinking is that perhaps a 3-ish hour flight is not long enough to justify the higher cost of a Business Class product. So they're going to change their cabins to swap out Biz Class seats for Economy seating, but with the above mentioned flexible configurations and on-board amenities to choose from in order to determine the price for the seat. And, they hope, convince those seeking a more up-market product can be achieved with a standard Economy seat - with "perks."
From a creativity standpoint, I think this is admirable and followng on their announcement a few weeks ago of their Skycouch "lie-flat" long-haul Economy product it reinforces to me that the Kiwi carrier continues to push the creative envelope that Qantas seems to not even want to open. That being said - will this idea really fly?
First challenge: making sure corporate travel managers can figure out what level(s) of this new fare structure and related onboard product fits into their travel policy. Obviously if a company's current Trans Tasman policy is business, which of the 4-tiered product is an appropriate replacement? The 3rd-highest priced option with free drinks and a meal, or the most expensive option which provides those features plus lounge access and a blocked adjacent seat? Believe it or not, some companies still have an "International Flight = Business Class" policy which now will have to be re-thought should that company fly Air New Zealand. Or perhaps this may backfire and Air New Zealand customers my decide just to switch rather than deal with re-working their policy. Interesting...any corporate travel managers out there in the Cafe' care to comment?
Next Challenge: Convincing road warriors that this is a "premium" product. Yes, AKL-SYD isn't exactly the Kangaroo Route, but there are indeed plenty of business travellers who think that having to carry their passport (at least for now - soon NZ and Australia will eliminate that hassle of immigration...yeah!) means they're entitled to a Business Class seat. To most of them, the size of the seat is more important than whether the one next to you is empty, and especially if there's no incremental legroom in the new product then I'd predict this approach will fall flat with Business Travellers used to bigger seats.
Last Challenge: avoiding nose removal for facial spite. This move by Air New Zealand, although at the moment seems prudent due to GFC hangovers and a continued challenging operating environment, adds to the trend of carriers pulling out of premium products citing what they see as an irreversible trend in premium traffic. Qantas and BA both recently have stated they are changing aircraft product offerings as they don't see a near-term recovery in corporate premium purchasing. However, this could be short-sighted, as several corporate travel managers and a TMC leaders have commented to me lately that since the start of 2010, carriers that feature premium products prominently (try saying that 5 times quickly) like Singapore, Emirates, Etihad and Virgin Atlantic are enjoying quite full Biz Class cabins and in fact getting seats on top routes require booking a month in advance. Perhaps this is perception rather than reality as the airlines' recent financial reports do seem to be quite glum. But let's not write off premium traffic just yet, as my recent travels have seen full cabins, business people anxious to get out on the road, and a First Class lounge at LAX which had to ask people to remove their bags from seats in order to fit all the people in. No lack of premium demand there...
Translation: Business Class is out, modified (or perhaps "glorified" is a better word) economy seating is in.
The new 4-tiered product and pricing approach is apparently as follows: the lowest price gives you a seat, a coffee or tea and access to entertainment; next highest price gives you the previous plus checked bags; 3rd highest adds a meal and drinks and the most expensive option features lounge access and a confirmed empty seat next to you. How luxurious.
According to Air New Zealand, they are on average only selling 1 Biz Class seat on any given Trans Tasman flight, so the thinking is that perhaps a 3-ish hour flight is not long enough to justify the higher cost of a Business Class product. So they're going to change their cabins to swap out Biz Class seats for Economy seating, but with the above mentioned flexible configurations and on-board amenities to choose from in order to determine the price for the seat. And, they hope, convince those seeking a more up-market product can be achieved with a standard Economy seat - with "perks."
From a creativity standpoint, I think this is admirable and followng on their announcement a few weeks ago of their Skycouch "lie-flat" long-haul Economy product it reinforces to me that the Kiwi carrier continues to push the creative envelope that Qantas seems to not even want to open. That being said - will this idea really fly?
First challenge: making sure corporate travel managers can figure out what level(s) of this new fare structure and related onboard product fits into their travel policy. Obviously if a company's current Trans Tasman policy is business, which of the 4-tiered product is an appropriate replacement? The 3rd-highest priced option with free drinks and a meal, or the most expensive option which provides those features plus lounge access and a blocked adjacent seat? Believe it or not, some companies still have an "International Flight = Business Class" policy which now will have to be re-thought should that company fly Air New Zealand. Or perhaps this may backfire and Air New Zealand customers my decide just to switch rather than deal with re-working their policy. Interesting...any corporate travel managers out there in the Cafe' care to comment?
Next Challenge: Convincing road warriors that this is a "premium" product. Yes, AKL-SYD isn't exactly the Kangaroo Route, but there are indeed plenty of business travellers who think that having to carry their passport (at least for now - soon NZ and Australia will eliminate that hassle of immigration...yeah!) means they're entitled to a Business Class seat. To most of them, the size of the seat is more important than whether the one next to you is empty, and especially if there's no incremental legroom in the new product then I'd predict this approach will fall flat with Business Travellers used to bigger seats.
Last Challenge: avoiding nose removal for facial spite. This move by Air New Zealand, although at the moment seems prudent due to GFC hangovers and a continued challenging operating environment, adds to the trend of carriers pulling out of premium products citing what they see as an irreversible trend in premium traffic. Qantas and BA both recently have stated they are changing aircraft product offerings as they don't see a near-term recovery in corporate premium purchasing. However, this could be short-sighted, as several corporate travel managers and a TMC leaders have commented to me lately that since the start of 2010, carriers that feature premium products prominently (try saying that 5 times quickly) like Singapore, Emirates, Etihad and Virgin Atlantic are enjoying quite full Biz Class cabins and in fact getting seats on top routes require booking a month in advance. Perhaps this is perception rather than reality as the airlines' recent financial reports do seem to be quite glum. But let's not write off premium traffic just yet, as my recent travels have seen full cabins, business people anxious to get out on the road, and a First Class lounge at LAX which had to ask people to remove their bags from seats in order to fit all the people in. No lack of premium demand there...
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