|Quoting aerorobnz (Reply 195):|
Exactly right also. while I want NZ to revise/simplify their S2S product I do believe that the market has shown that NZ method has been more successful.than VAs. The issue was never that some markets didn't need business,it was that the fleet needed to be te same, and that OOL/CNS/ADL couldn't justify businesson any flights and SYD/BNE/MEL could only justify on some flights but not others. Quite rightly, NZ realised that the chance of selling 18 extra Y class was a better chance than trying to sell the remaining 6 biz seats at a discounted price.
With all due respect, that was nonsense at the time and it is nonsense now. The mathematical modelling is absurd.
A320's were configured 8J 144Y.
The airline claimed that on Auckland flights they sold on average 4J tickets and that on other flights they sold an average of 1.5 excluding upgrades etc. (Which is ironic, considering that upgrades are commoditised by the airline).
Their international A320s are now configured 168Y.
A simple dummy booking shows that on the Tasman the cheapest sale Business Class ticket is priced at 2.5 times the price of the cheapest Economy ticket. And that is deeply conservative - the usual level is 4 times dearer.
From this you can extrapolate several things.
1) Every Air NZ
A320 Tasman flight which sells fewer than the previous 144 Economy seats (now a 86% loading) has gained nothing from the new configuration but has lost on Business Class sales.
2) In order for a non-Auckland flight to be more profitable than under the old configuration, its revenue from Economy class sales must be greater than the old 144Y 1.5J
sales level, which with J at 2.5 times the Y fare means that it needs to sell 148 Economy seats (88% loading). And that is probably too generous, as presumably the additional sales are the lowest yielding most price sensitive ones.
3) In order for an Auckland A320 flight to be more profitable than under the old configuration, its revenue must be greater than the old 144Y 4J sales level. With J selling at 2.5 times Y, that means that the minimum sale level must be 154Y, or a 92% loading.
And even those figures are deeply conservative. Bundled fares effectively charged everyone for alcohol, catering and baggage whether they consumed them or not. A la carte pricing lowers the yield for many if not most of the passengers.
So when people applaud Seats 2 Suit as the profit driver rather than the sidelining of Pacific Blue as a competitor, remember those three figures for the Tasman:
1) Any A320 taking off with fewer than 144 passengers is losing out compared with the old configuration.
2) Any A320 from Auckland with fewer than 154 passengers is losing out compared with the old configuration.
3) Any A320 from any other NZ
port with fewer than 148 passengers is losing out compared with the old configuration.