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United’s Labor Negotiations Platform Explains What It Wants for Employees
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Air New Zealand CEO Rob Fyfe Discusses the Airline’s Clothes-Free Ad Campaign
I sat down with Air New Zealand CEO Rob Fyfe to discuss the airline’s latest ad campagin, which has become a global phenomenon.

I had the pleasure of speaking with Air New Zealand CEO Rob Fyfe this week on a wide variety of topics. Though his latest claim to fame might be that he’s the hottest businessman in New Zealand (no need to bother Googling, that’s him at left), he should also get the award for being one of the most successful businessmen in New Zealand. Air New Zealand has a very strong product and it continues to profit despite the downturn. We talked about this, the success of the airline’s new airport concept (which allows customers to arrive as little as 15 minutes before departure), and more in the interview.

The first half of our discussion centered around the airline’s latest, highly successful ad campaign where Rob and other employees took their clothes off. You can read that piece of the interview over on BNET. Here’s the second half of our conversation.

Cranky: So how is the new airport check-in concept working out domestically?

Rob: It’s going really, really well. There are a couple of challenges and we knew those challenges would be there because we’re asking people to change their behavior quite significantly. The big pluses, the kind of hero-aspect of the new proposition, is for our regular travelers [aka frequent fliers] getting the RFID tag on the back of their phone. It’s a little tag that’s an inch by a half an inch. You see people walking around displaying this almost as a badge of honor, like a membership in an exclusive club.

The benefit of that particular device sitting on their phone is what it means for the regular travelers domestically. We have far less complex security frameworks here in New Zealand than you have in the US, so that customer can now arrive at the airport and go directly through security. As long as they’re at the gate 10 minutes before the flight, all they do at the gate is they put this tag on the scanner, the device prints out a seat number, and they need no boarding pass, no e-ticket receipt. It typically means getting to the airport 15 to 20 minutes before flight departure.

Cranky: Wow, that’s unheard of in the US.

Rob: Yeah. And if you’re traveling with bags, that same passenger just puts the device on the kiosk, it automatically checks them in and prints out the bag tag. They take it over and put it on the conveyor belt. There’s no requirement to have any human interface, albeit we have plenty of help and assist staff to assist our passengers that are unfamiliar with the system. That same tag also gets you into the lounge. You swipe the tag and it says that you belong to the lounge. It also alerts our system that you’re at the airport and will be on time for your flight.

For regular travelers, it works really, really well. The challenge we’ve got is that it’s a re-education process for people – those people who now have to put their bag on the conveyor themselves, for example. It’s getting that kind of familiarity. You used to take that bag to the counter. Now the counter doesn’t exist anymore, so you just take that bag an extra couple of steps. It saves time.

The other challenge we find is connecting long haul passengers connecting into domestic flights. They have a lot of bags, but they come in relatively small numbers. We just make sure that they get the help they need.

Cranky: So there aren’t any changes you want to make to the system. It’s just an education issue?

Rob: Yeah. The system is working really well. It’s just an education process. At first we took the ticket counters away and we kept all the staff. In time, we would expect that through attrition, we would reduce the number of people there as passengers become more familiar with the process.

Cranky: Let’s talk long haul a little. How is long haul demand holding up lately?

Rob: Demand is down everywhere for us. Long haul demand is down 15% but capacity is down as well so our load factors are comparable year-on-year. The airline is still operating profitably. We reported a profit for our first half which was to the end of December 2008. Our second half we’d expect to be much more strongly profitable than the first half was. Part of the reason for that is although demand is down, Air New Zealand is predominantly a tourist airline so we don’t have the strength of business demand that other carriers have. The loss of the high-yielding business traffic is certainly causing a number of airlines to experience much stronger revenue reductions. The key for us is you just have to move quickly to adjust capacity.

Cranky: I have to ask you specifically about one of my favorite routes – LAX to London. I’ve flown your airline on that route before, and it’s been great, but it’s a funny route since you aren’t a British or American carrier. How is it doing? Is that something that you would consider cutting in a down economy? How important is London?

Rob: It’s a very important piece of the network for us. We’re predominantly an inbound carrier. About 70% of our traffic is inbound to New Zealand. After Australia, the UK is our second largest source of inbound tourists to New Zealand, so it’s very important for us to have it. We fly to London from both Hong Kong and LA. The LA route is the stronger of the two – probably because we get good support out of LA. Loads are quite good, albeit the yields are down. But like we say, we don’t have quite the same dependency on premium traffic that other carriers have.

Cranky: It’s anecdotal, but I know several people with smaller companies who don’t have corporate contracts who prefer to fly Air New Zealand to London every time.

Rob: We get great support from those who aren’t aligned with corporate agreements. We also get great support from the Hollywood movie industry.

Cranky: Thanks for taking the time to talk.

Rob: Absolutely.

Can you imagine getting to the airport 15 minutes before departure and walking right on to the plane? If anyone has experience with the new airport concept in New Zealand, leave your thoughts in the comments down below.

You know what time it is, kids? That’s right, it’s Ask Cranky time! (I need to get out more often.) There have been some great questions coming into the inbox lately. Please keep it up, as I’m always more than happy to answer them.

I’m traveling from ROA->SFO in June and SFO->BOS a week later in on UA, and I bought a ticket last week for $456. Today, that same fare, on the same flights is $95 less. That makes no sense to me. Are the UA systems watching minute-to-minute demand for the legs of that trip and ramping up the price as the demand goes up? As demand goes down, do the prices the go down? How can they plan any sort of revenue stream for this? I understand the need to maximize their income, but part of the problem, as I see it is that the flying public sees stuff like this and doesn’t know how to plan. Would the the airlines just be better off just setting a seat price and sticking with it?

Bob from Virginia

Ah yes, the fare question. It’s something that comes up a lot but rarely is there a satisfactory answer. There is definitely a lot of voodoo involved. Actually, it just involves a dart board and some beers. (I kid, I kid.)

The reality is that those working in the world of revenue management understand the way pricing works, but those on the front line who are dealing with customers most often aren’t really given that information very well. So it does end up with this sort of “black box” aura to it. In reality, it’s two forces working together that cause the changes you see.

There is pricing and then there is revenue management. Sometimes they’re handled by the same person and other times they’re separate. The pricing guys (what I used to do) set all the fare levels and put them in separate fare “buckets” that are usually not seen by the public. (You can see them, but it probably won’t mean much to most people.) The revenue management guys and their fancy systems then decide how many seats to sell in each bucket on every flight.

Usually not much changes until you’re about 3 months out from departure. Then these system kick into gear and start figuring out how many seats to sell on each flight using all different kinds of factors. This will adjust as time goes on. For instance, if the system sets a limit and then sees that a flight is booking faster than predicted, it may clamp down on the number of cheap seats out there because demand is higher than expected. On the other hand, if it’s really slow to sell, the system may open up more cheap seats to stimulate demand.

On your ticket, you could have seen one of a few things.

• It’s possible that it was simply a pricing change. Either a sale fare came out or a regular fare was changed for a variety of reasons, and that’s why you found a lower fare.




• On the other hand, it could have been a revenue management change. Maybe the system realized that the higher fares weren’t selling very well so it opened up the lower fare buckets and the price the public sees went down.




• You could also have just been a victim of circumstance. When you bought, there may have been no seats in the lower fare class available, but someone could have canceled their seat and the cheap fare opened up again without any input from the airline.

For most airlines, the goal of maximizing revenue doesn’t take into account the impact on the customer of rapidly changing fares. More transparency would be nice, and some airlines have moved that way. But previous attempts to simplify the system have failed. American tried it in the early 1990s with only four fare types, but that blew up into a massive discounting brawl and fell apart. More recently, Delta tried it as well with Simplifares, and that quietly disappeared.

Some airlines, like Southwest, have prided themselves on transparency, but over the years they have become less and less transparent like the rest. The airlines that just post a fare and stick to it are usually the ones that end up out of business because they can’t compete.

After some fits and starts, it appears that Jet America (or JetAmerica, they write it differently in different places) is actually going to get up and running. You can stop checking the calendar. It’s not April Fool’s Day. This airline is actually planning a Toledo base.

I honestly couldn’t make this sound any worse if I tried. The CEO is John Weikle, one of the original founders of Skybus. He has slightly tweaked the plans laid out when the airline was going to be named Air Azul. Now, the flights from Rockford are gone, as are the BWI connectors. And instead of infringing upon JetBlue’s trademark, they’ll now infringe upon Alaska’s trademark. Alaska still owns the trademark for Jet America to provide charter airline services. And yes, this is a charter operation for now.

Assuming that doesn’t cause them problems, flights begin on July 13 between Newark and Lansing, Melbourne (Florida), South Bend, and the mighty Toledo. It looks like the Toledo hub starts growing on August 14 when flights to Minneapolis begin with the arrival of the second aircraft.

How the heck is this going to work? Four of the six airports involved will pour in more than $3m in the first year to kickstart the service. Can you guess which two won’t be paying? Yeah, exactly. Minneapolis and Newark hardly need to pay for this, but the others are desperate to build service.

My understanding was that Rockford was willing to waive some fees to get them in there as well, so why did they drop it? One article has Weikle saying, “Lansing and South Bend stayed on the roster because they were close to Toledo, so it would be easier to shuttle planes between them.” Oh yeah, always a good idea to fly to cities because they’re close to each other. Yikes.

The idea is to offer more Allegiant-style flying where you only fly a couple days a week to most cities. The plane spends every night in Toledo and then flies out to different places each day. The most frequent is to Newark which happens every morning but Saturday. South Bend, on the other hand, only sees two flights a week from Newark.

The schedule is really funky. There were a lot of typos in the schedule, but most I could figure out. Assuming that the flight from Melbourne to Toledo should take the same 2 and a half hours that the southbound flight takes (and not the 1 and a half hours in the schedule and on the reservation system), they’ll only be utilizing their aircraft for 9.75 hours a day.

Even that doesn’t show the true utilization during the day, because the schedule has a lot of wasted ground time. No turn is shorter than an hour and some, including Lansing in the middle of the day, are over two hours long. Could this be to accommodate the guaranteed delays they’ll face out of Newark? No, they’ve already built that in to a schedule For example, the afternoon flight from Newark to Toledo is blocked at 45 minutes longer than a late night flight on the same route.

This strategy may work for Allegiant where their fixed costs are low, but you generally don’t want to see brand-spanking new airplanes sitting on the ground for that long. It’s hard to pay for them that way. This may not matter for now under their lease agreement, but if they truly plan to be operating their own airline within two years, this is hardly the right precedent to set.

Maybe they’ll do better with their second plane. After all, CEO John Weikle admits that they’re only running the first plane like this because of all the incentives they’re getting. But the second airplane that comes in August will have a morning flight from Toledo to Minneapolis and then a late night return. It seems to me that they’re setting up Minneapolis to look a lot like Newark once the second plane comes around. The press release (which could be one of the worst press release ever assembled) says that future focus cities could include Rockford, Cincinnati, Columbus, Dayton, Greensboro, Pittsburgh, St Petersburg (Florida), and yes, Charleston (West Virginia).

Tickets are supposed to be on sale now at jetamerica.com, though at last check, the site was down due to a database error. This could be one of the most disorganized efforts I’ve seen in a long time.

It’s safe to say that I never expected to be able to ride in a Zeppelin in my lifetime. Actually, I didn’t even know they still made Zeppelins until recently, but sure enough they do. There are three of them flying in the world, including one that’s been based at Moffett Field, south of San Francisco since late last year. It was that Zeppelin that came down to Long Beach for a week, and I had to chance to take a ride.

This is not your father’s (or grandfather’s) Zeppelin. Chances are that when you think of Zeppelins, you think of the spectacular fireball that engulfed the Hindenburg many years ago. Fortunately, today’s Zeppelin NT (for New Technology) has been designed to avoid that problem. Instead of highly flammable hydrogen, Zeppelins are now filled with inert helium. Smart move. They’re also filled with state-of-the-art equipment. It’s even fly-by-wire.

Today, Zeppelins aren’t used for long haul transport either. The flight down from Moffett Field took 8 hours – longer than it would have taken to drive. So Airship Ventures, the company that spent $14m to bring this ship to the US, uses it primarily for flightseeing tours, and it’s a spectacular experience.

On our flight, the Zeppelin cruised at about 1,000 feet above the ground going a mere 35 to 40 mph, though it can go as fast as 77 mph and as high as 7,500 ft. As you can see at right, it provided some incredible views of Long Beach. The slow speed means that you can even stick your head outside one of the two windows during the flight. Here I am filming myself doing just that:

It’s also a pretty quiet ride, unlike in a blimp. See, there is one big difference between a Zeppelin and a blimp. Today’s Zeppelin has a semi-rigid structure whereas a blimp is just a balloon. So on a blimp, the engines have to be on the gondola and that makes for a very loud ride. But on the Zeppelin, the engines can be mounted on the structure, and that makes it much more pleasant.

As you can see, it’s not a huge cabin. You won’t find bunks for the long haul, but you will find comfortable seating with windows all the way around, including a fantastic bay window in the rear. (There’s a window in the lav as well.) There is room for 12 passengers onboard, and the front two seats are facing backwards. That’s where I was sitting when I took this shot.

The ride is mostly smooth, though you do feel some light buffeting from the winds. It’s a pretty subtle feeling though – no big changes in altitude – just a little swaying.

It is truly an incredible way to see a city from above – I hope the Long Beach Chamber of Commerce got onboard to take some pictures. It is, however, not cheap to ride. Flights start at $375 per person for 60 to 90 minute flights and go up from there. Is it worth it? I’d say it’s worth doing once, even at that steep price. It’s such an incredibly unique perspective.

The other people onboard were clearly impressed as well. One couple asked if they could do a private tour with appetizers and drinks for friends within the next few days. (They were going to try to squeeze it in.) And Airship Ventures confirmed that most of their flights throughout the week they were here in Long Beach were full.

See my photos of the Zeppelin over Long Beach on Flickr
See my videos of flying in the Zeppelin on YouTube