Air New Zealand’s rare loyalty miscue—UPDATED

I fly a lot. I fly a lot with Air New Zealand. It’s my favourite airline in the world and I consider myself an honorary Air New Zealander (the name that Air NZ uses for its employees). Everywhere I go I evangelise my airline (Air New Zealand is owned, in part, by the New Zealand taxpayer so it is, in effect, my airline). So, 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 week’s announcement. It seems that Air New Zealand’s excellent upgrades programme is being changed, and many people think that’s not for the better. The new system uses an auction system whereby travellers essentially bid on upgrades with the highest bidders having their application accepted. According to the email they sent Airpoints 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, 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 summarised 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 programme

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. One year’s advance notice for such a major change to the programme should have been provided

To its 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 continue, 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 Air NZ 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 responded 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 programmes (see update below) 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 NZ really risk a mass exodus of its most valuable customers? Listen well to the words of your customers before it’s too late:

While Air 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 and this was the final straw.

UPDATE: We received an email from Simon Pomeroy saying: “Whilst I appreciate you have taken a blog posted by Ben Kepes at Diversity, you will note on his blog that he amended this assertion due to a wrong assumption over my leaving the airline. I enjoyed 5 1/2 years with Air NZ. I was approached last year about an exciting new challenge externally. At the time I was not looking for a new role or to leave the airline, however, decided that the opportunity for my career and family was the right one. I left Air NZ in February on good terms with all of the executive and senior management team.”

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