More like Air NZ
flogging a dead horse instead of using its brain.
To understand the utter stupidity of this, we have to review the problem.
Air New Zealand has Tasman loads between 60 and 65%. That would not be a problem with normal yield management, because the pointy end would come to the rescue, as would the fact that 10% of passengers are higher-yield long-haul passengers to/from Australia to/from the USA, UK and Europe.
Unfortunately, however, Air NZ
has dumbly elected to try to run an LCC operation on the Tasman, with a stripped down product and the cheapest fares not earning points. And that pseudo-LCC product resolutely refuses to make a profit, because of course the frequencies needed to make routes to Sydney, Melbourne and Brisbane work mean that all planes are only 2/3 full, not least because the LCC-like passengers are highly seasonal leisure passengers who don't take the multiple weekday services needed to keep the premium passengers flying SYD
etc. In contrast Pacific Blue is a real LCC but every seat earns points regardless of the fare paid.
And worse still, the pointy end doesn't work out either. Whereas Emirates and LANChile charge around $1000 return Trans-Tasman in Business Class, Air NZ
offers an (empty) Premium Economy cabin at that price with derisory catering, while Business Class goes for around $1800 and up, and consequently can't compete on price.
So the model isn't working, which is why Tasman Express was stripped down further as Zeal320 which in turn still doesn't make a profit.
But why is Fyfe intending to flog a dead horse even further?
There actually is an alternative. Compete not just on price but on quality for that price, as follows:
1) Offer points at a full-earning rate even on discount economy (say 30 Airpoints dollars each way).
2) Offer real meals in Economy class for an extra $10 per sector at the time of booking.
3) Reduce lead-in Premium Economy fares from around $1200 return to $800 return, and increase point earning in that class to around 60 Airpoints dollars each way.
4) Reduce the cheapest (less flexible) Business fares below the magic $1000 return level, at the current points earning rate.
Businessmen would still need flexibility and pay the higher fares. But the airline would finally start to sell some of the empty Premium Economy and Business seats which the 777 and 747 aircraft currently have.
Let me repeat one last time. A pseudo-LCC model on the Tasman cannot work, because LCCs rely on leisure passengers to fill the planes, and leisure passengers will leave loads as low as they are now.
Forget just cutting costs. It's time to compete with other carriers offering MORE extras for the same money on the same routes, whether it is Pacific Blue giving Velocity points on every economy seat or Emirates selling full Business Class on the same routes for the same cost as Air NZ
Premium Economy class's slice of quiche or a pie.