Only 2 per cent of passengers were buying the current works deluxe - which provided a path to full flexibility and included an empty neighbouring seat option and up to two checked-in bags.
Under the new scheme, the cost of upgrading from a basic seat to worksflexi (which has refundable fares) is $100.
New flexibility means the change fee is waived (although a fare difference will apply), and refundable fares.
The previous works deluxe fare was a $140 upgrade from a basic seat and passengers had to pay even more for flexibility.
Entry-level seat fares will come with inflight entertainment, (which is switched off for the most basic fares currently), the option to buy a bag for $30, a snack and a tea, coffee, water or juice.
The next level, theworks, has a checked-in bag, full beverage service and meal for an additional $40 on top of a seat fare.
The value of add-ons
Seats to Suit was introduced in 2010 and was a game-changer for the airline, which was facing hot competition on the Tasman routes.
In effect, this allowed Air New Zealand to match low-cost carriers on headline fares on price by cutting back the standard offering and getting them to pay at different levels for bags, entertainment and food.
Air New Zealand general manager short haul Jeremy O’Brien said it was reconfiguring bundles in response to customer demand.
“This is the biggest modification we’re had to the programme. We’re hoping that it’s going to generate overall greater revenue, but that will be driven by making some of those more inclusive bundles more attractive. So it does cost us a little bit more,” O’Brien said.
“Our modelling tells us that we’ll be likely to be able to generate the revenue to cover the increased costs of providing snacks, drinks and the other parts of it.”
Basic airfares were higher than before the pandemic.
“And so people’s expectation of value is significantly up as well,” O’Brien told the Herald.
Customers now expected at least a snack for the ticket price.
“We believe it is something that we needed to do in terms of continuing to give good customer service and give good value for money even at that entry level price point.”
After the pandemic, passengers wanted more flexibility and were prepared to pay for it.
“We believe full flexibility will be something that customers really buy into. All of the research we did, that was the number one thing that came through.”
Air New Zealand’s main competitor, Qantas, keeps it simple on the Tasman. Every passenger gets a checked-in bag and a meal.
O’Brien said the rationale for Seats to Suit hadn’t changed.
“Yes, Qantas has full service and is a core competitor. But we’re also conscious that we’ve got airlines like Jetstar out there as well and the seat product allows us to compete at that value end of the market for those customers.”
Key changes to Air NZ’s Seats to Suit include:
- All customers will now have access to the full in-flight entertainment offering, a snack or a meal, tea, coffee, water and juice
- New flexibility fares include worksflexi, premiumflexi or businessflexi, allowing a fully flexible (change fee is waived, fare difference will apply) and refundable fare option
- The seat+bag product will be discontinued but customers who purchase a seat fare will be able to add one bag for $30
- Now that everyone receives a snack or a meal, the purchasing of inflight bites on board will be discontinued. Customers will still be able to purchase a range of beverages
- Customers will no longer be able to purchase vouchers at the airport to buy items on board. All transactions will take place in-flight and customers will need a Visa, Mastercard or Amex card - or they can use Airpoints
Summary of the new prices
seat - base price (add a bag +$30)
theworks +$40 (from seat fare)
worksflexi +$60 (from theworks)
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
