Revealed at last week’s investor day and launched into market today, Air New Zealand (ANZ) has reformed its Domestic grabaseat fare structure into a new system that could be the first of its kind for any airline, anywhere, anytime.
The choices, shown below, are available to all customers up until the time of departure – delivering an unprecedented level of choice and affordability through the removal of all unbundled options. Arguably counterintuitive, the initiative goes against the airline trend of unbundling that has allowed airlines to collect revenue to make up for the shortfall in fare yields as competition drives down fares.
But the true value of Air New Zealand’s new product is the value it allows a traveller to put on time. Its flexitime fare gives corporate travellers the choice of changing on to any flight the day of departure as long as there is a seat available. It’s a smart move. I’m sure you’ve travelled for work knowing you were travelling back that evening, but not when, and then being forced to wait because your fare class wasn’t available on an earlier flight.
“We asked Kiwi’s what they wanted…the same answers came up again and again – flexibility, affordability and choice.” – Air New Zealand CEO, Christopher Luxon
Last year American flirted with rebundling some fees into its base flexible fares aimed purely at corporate travellers, but has resisted moving further. In a market with little room for capacity growth, Air New Zealand’s product seeks a new competitive edge over struggling Jetstar. It makes a well-placed bet on who stands to benefit from lower fares, and who will pay more.
As companies reign in corporate travel spend, its new fares put it in a position drive not only revenue in the corporate space, but also volume, something that has been long reliant on leisure travel. Price reductions across the board also trade off the risk of corporate travellers buying cheap and diluting yield.
In an industry reliant on ancillary revenue to deliver a profit, ANZ is bucking the trend in its move to rebundle. It’s only a matter of time before others realise the value of time.