Air New Zealand Air Points - Annual non-flyer fee!

I just received my promo info and noted the 'non-flier fee' section. Apart from being really really irritated by this as a theory (didn't the rest of the world abandon this long ago?) the whole concept seems to be shooting themselves in the foot with a very short sighted grab for money.

So the message NZ is sending me is if I am the sort of person who doesn't fly every often but does earn miles from credit card spending then they aren't interested in me and would be happier if I switched to QF since I am not dedicated enough (since QF will be maintaining a simpler system with no annual fee if you don't fly).

And if I happen to move or I travel a route that NZ has bailed out of then tough - pay up a fee!

And when (or should I say if) I do happen to fly on NZ I will of course credit the miles to another Star carrier (so NZ will be paying the other carrier for my miles reducing their profit and rewarding the other Star carrier for keeping a reasonable system).

Given than a carrier earns income every time they sell their miles to a partner it seems bizarre that NZ would cut off such lucrative income streams in so short sighted a move.

So, it really seems that NZ management are trying everything they can think of to destroy the airline and hand their business to QF on a platter - which is probably the point after all, run the business into the ground so that the merger that was called off will be the only option for survival.

I disagree with you on this one and feel the $30 fee is reasonable. Having said that, I think it should be waived for *G and of course flights flown on NZ but credited to another airline should be counted.

> So the message NZ is sending me is if I am the sort of person who doesn't fly every often but does earn miles from credit card spending then they aren't interested in me and would be happier if I switched to QF.

Exactly. Why would NZ be interested in having 'ghost-customers' like that? With cards like AMEX paying 2 airpoints per dollar I don't think this is lucrative for the airline at all (I'm sure Amex pays NZ but suspect this may not cover the actual costs of the miles - someone else here will undoubtedly know more). As much as I dislike it (cc miles are a very nice bonus indeed), it makes business sense.

I frankly don't see how this policy would 'destroy the airline'and don't think NZ are showing any signs of deliberately wanting to do so. Their new scheme looks designed to benefit premium travellers and to greatly reduce benefits for non-frequent or (discount) economy travellers. The $30 charge for inactive accounts is part of this approach.

> And if I happen to move or I travel a route that NZ has bailed out of then tough - pay up a fee!

I don't think this is fair. NZ has added more routes in recent times, rather than cut back on them.

Exactly. Why would NZ be interested in having 'ghost-customers' like that? With cards like AMEX paying 2 airpoints per dollar I don't think this is lucrative for the airline at all (I'm sure Amex pays NZ but suspect this may not cover the actual costs of the miles - someone else here will undoubtedly know more). As much as I dislike it (cc miles are a very nice bonus indeed), it makes business sense.


Actually the reason AMEX has a higher points to $ spent ratio is due to the fact that its merchant fee is far higher than Mastercard/Visa - the merchants accepting the card are more than paying for the extra miles. No airline would participate in a CC program in which it lost money in fact it is widely recognised that mileage payments from partners are one of the most profitable components of any airlines business.

The whole point of the existing systems was to earn money now (from partner payments) in return for the promise of reward travel using spare capacity and to predispose flyers to using the one carrier even if it wasn't the absolute cheapest (ie loyalty effect).

I still maintain that this is a bad move. Discouraging infrequent flyers and putting an apples to apples comparison of the value of the points earned just seems like bad business all round.

Example in point: I just did a search on travel.com.au for SYD-AKL Sep 5 RT Oct 5 and the results were ($AUD excl taxes - this is the list price for point of comparison some of the fares have no available seats):

Polynesian - $308
Lan - $310
Aerolineas Argentinas - $336
Emirates - $349
Qantas - $358
Air New Zealand - $378

The NZ fare would 'earn' 60 Airpoints dollars so at best IF you fly enough to avoid paying annual fees and you fly often enough to earn enough dollars to redeem then the 'net' fare cost is $318 so Polynesian and Lan are cheaper and you (probably) get QF points for their flights included in the fare. IF you don't fly every year then after 2 years (or 3 with online payment) you will loose the value of those airdollars earnt regardless of any non-NZ flying activity you may have had that earnt miles while if you fly ANY of these other airlines your miles will stay intact for at least 3 years and any other activity with any partner will keep them alive longer.

So as it stands for people who don't pay attention to frequent flyer programs NZ looses out because everyone else is cheaper (and that's even without routing via less popular cities to fly on Pacific Blue).

For people who pay attention to frequent flyer programs but don't fly often NZ looses out to the others.

And for people who fly alot and pay attention to FF progs the general view is that the NZ program just got alot less attractive (and alot more volatile).

I fail to see how anyone could seriously have sat down and looked at this whole program and thought it would result in NZ being in a better situation.

I don't think you'll earn ANY airbucks for the AUD$378 NZ fare. If I remember correctly, you'll have to pay at least $500 for a fare that earns miles on NZ. However, with the QF fare in N class you would earn 100% miles. It's a no brainer for me: Simply will never fly NZ to AKL again as long as there is another airline flying the same route. Now, when it comes to other routes, it might be more difficult to avoid NZ, but for SYD-AKL we've got plenty to choose from.

So as it stands for people who don't pay attention to frequent flyer programs NZ looses out because everyone else is cheaper (and that's even without routing via less popular cities to fly on Pacific Blue).

For people who pay attention to frequent flyer programs but don't fly often NZ looses out to the others.

And for people who fly alot and pay attention to FF progs the general view is that the NZ program just got alot less attractive (and alot more volatile).


Completely agree with Andrew on this summation (well, aside from alot = a lot, and loose = lose :) )

Whereas I had a soft spot for Air NZ's staff and service, in comparison to the Red Rat, these changes seem to be incentivising me to stay away... so what else can I say?

I'm not too sure what the rationale behind the changes were, so as to change the overall concept so much, but even Qantas got rid of their infrequent flyer annual fee a couple of years' back.

Like NZ say, the focus is to keep the revenue generating passengers for the airline. This implies it's no longer enough to just fly the alliance.

It wants to keep high-revenue passengers. NZ have a virtual monopoly on the domestic market, where the majority of its members are. This exercise reduces its airpoints liability.

It seems the priorities are:

1. Keep high-revenue earning passengers
2. Reduce airpoints liability

The rest of them (who put price in front of miles), well, let's just give them something to not totally p*ss them off...

If I'm NZ, will I do the same? Probably...

Crikey - that's quite the rant there Andrew.

You missed one consideration though in your analysis of fliers; those people who aren't too worried about spending a few more dollars to fly with an airline they perceive to have a better product. FF miles may or may not be a consideration.

So if you personally want to save money to fly Pacific Blue or Polynesion go right ahead, but I won't. And if you're upset about a $30 annual fee to keep your Airpoints alive when you're not even flying the airline then you might have a point, but not a very good one.

IMHO

Leaving aside the rest of the discussion for a moment, I was pleasantly surprised to note from the brochure that arrived in the mail the other day that even a single paid NZ flight in a non-airpoints earning class is enough to exempt you from the annual fee. Even a $53 smart saver from WLG to (where else? ;) ) BHE would be enough to do it. That seems quite reasonable. I also noticed that they mention the ability to create household accounts, which is a major step forward. That would mean only one person in the household would need to fly in any given year in order to avoid the fee.

Crikey - that's quite the rant there Andrew.

You missed one consideration though in your analysis of fliers; those people who aren't too worried about spending a few more dollars to fly with an airline they perceive to have a better product. FF miles may or may not be a consideration.


Yes I suppose it is a bit of a rant.... and I take your point about quality of carrier however in the example in point QF is cheaper and gives full miles and I have never had a quality concern about them.

I guess in the end time will tell if this 'quality over quantity' approach to flyers works to NZs advantage or not which in the end will be the only real test.

I imagine that *G, *S and Koru members will be exempted from the fee. Otherwise it would get quite interesting for nonactive KoruLife members. Pay the fee or renounce the membership, or can you put 'life' on hold? ;)

Mark

One of the brochures (I can't remember if it was from Air NZ or Global Plus) says that Global Plus card holders are exempt from the fee. Of course, we pay a minimum of $55pa for the "privilege" of having the card, so it isn't a free ride.

Simply will never fly NZ to AKL again as long as there is another airline flying the same route.

Air New Zealand has the best legroom - the rest of them can stuff their points down the back of their cramped seats. :D

You should be glad this program is not going the way of AEROPLAN. Up here, AC is more interested in turning their FF program into something for everyone who DOESN'T FLY, and thus give more attention to earning miles on the ground than in the air. AEROPLAN has become their top money-earning subsidiary, so they want to keep the cash cow part at the expense of the FF part. We wish AC would be as concerned out its own customers as it appears to be with those who patronize various businesses, use specific credit cards and the like. So I do tend to agree with the idea of charging those who earn their miles/points through every means but flying NZ or its STAR partners.

So the message NZ is sending me is if I am the sort of person who doesn't fly every often but does earn miles from credit card spending then they aren't interested in me and would be happier if I switched to QF since I am not dedicated enough (since QF will be maintaining a simpler system with no annual fee if you don't fly).

Why are you so sure that QF will not copy some aspects of airbucks changes?

Why are you so sure that QF will not copy some aspects of airbucks changes?

Because QF make a decent profit and did not need to be bailed out by the government when the going got tough ;)

Mark

It seems the priorities are:

1. Keep high-revenue earning passengers
2. Reduce airpoints liability


That would make more sense if programmes weren't reciprocal. If you fly NZ, you can either credit the points to Airpoints or to another Star partner. If to Airpoints, it doesn't actually cost NZ anything yet and they may never get spent. If to another programme, they presumably have to pay the other airline.

Encouraging people to close their Airpoints accounts and credit to UA or LH instead seems like a good way to increase your liabilities to me.

That would really depend on how much they pay, and also how much NZ get paid for awards on NZ metal.

Does anyone really know the murky (science?) of interairline payments?