Lance Wiggs

Love it or hate it - it’s great to be in a city where folk are brave enough to build something like this.

Nice one Infratil.  What a great way to arrive into New Zealand.

That’s the only conclusion I can make from an Amex survey that shows Airfares to Europe have increased by 28%, while others in the industry says they have dropped.

Score one for protectionism, and minus several ranks of the economic freedom index for New Zealand, after the Government intervenes to prevent a Canadian fund from buying into Auckland airport.

When the market drops by 2% after a new protectionist law is created it should be obvious to everyone the impact of ham-fisted interventionist Government policy.

This law means that the Government has reserved the right to change investment rules on a whim, and so the risk of investing in New Zealand has just risen substantially. Foreign investors will apply a higher risk rating to NZ, and so will demand higher returns for their investments. That means less foreign money coming in, and ultimately, lower growth.

Is this what the govenrment is promoting? Lower growth?

There are plenty of ways to protect “strategic assets”. Changing the investment laws is amongst the worst of them.

The USA’s Transportation Security Agency has a blog - and it is a pretty good one as well. Check it out. The TSA are the folk that man the security checkpoints and examine your. They have a great post talking about theft by TSA officers, and a page about shoes.

There’s a right way and a wrong way to get 13 people off your flight and on to another one.

The right way is to have an auction, where  you gradually increase the incentives to deplane, starting with an additional free flight (which was the end offer by Clueless Pacific Blue), and adding flights, cash and hotel rooms until the next passengers take the bait. Then you pay everyone that chose to deplane the same amount - which is whatever the last person to accept an offer got.

It’s mments like these that define the difference between lousy and great companies. If the staf had got it right, it would mean not just that they were well trained, but that they were allowed to use common sense and to do ‘the right thing’. Any CEO worth his or her salt would immediately back up those staff, as long as customer satisfaction came first. As it is, I’ll never fly Pacific Blue now unless I am forced to.

Simply put - if you screw up you put it right, and “it’s the putting right that counts”. I have recurring nightmares about that last phrase after years of LV Martin ads across different media.

What can you say - is there any other airline in the world doing this sort of stuff?

Air NZ’s grab-a-plane promo is an excellent idea with superb execution. It won’t last forever, so I’ve grabbed some screenshots.

Here’s the ad:

Continue reading ‘Fantastic Air NZ promotion’

Great: AirNZ runs a giant charity Auction each year

Dumb: using Sellmefree as the vehicle.

Here, for example, is 2 month’s worth of Business Class travel for two people. It was added 3 days ago, and should be attracting a bunch of traffic.

The value of this to the right buyer is big. It costs about $8,500 to fly return to London. If you and someone else had to fly return to London twice in two months next year then the value is about $34,000. If you wanted to add some other flights, then it would be even more.

But the auction is flawed.

First - the text of the auction states that the travel is for 3 months, not two, and although there are three questions checking. with replies, that the original text still stands.

Secondly the auction is on SellmeFree. Last time I checked AirNZ was a publicly/Govt owned company, and so has no corporate reason to use SellmeFree.  Here’s why using sellmefree is stupid:

- The traffic to Sellmefree is tiny - this great auction has, after 3 days, just 1137 visitors, and that’s after Mauricio linked to it

- The banding and user interface is horrible  - the photos don’t scroll, the page is ugly and there is no co-branding of the AirNZ material. Look at the view - would you be happy as an AirNZ marketer?

- But most of all, nobody buys on Sellmefree. There is trivial active membership compared to that other site, and, well, people just don’t trust Sellmefree. There are just two bidders so far on this auction, and the price is shamefully low. Moreover there are only 4 questions to what should be an entertaining auction, and three of those are the same.

I cannot fathom that this comes from the same people that delivered Pimp my Plane and the Pink flight of Fabulosity. I can only make an educated guess that the folk who do the charity stuff are not at all connected to the very cool folk who do the domestic marketing stuff.

Time to get a cluestick and make that charity stuff work for you Air NZ.

It’s simple.

First - Use the giant NYTimes as your blog vehicle, and be part of an existing blog

Second- Be a well known and followed writer - Pico Iyer

Third - Pick a topic we all love to hate - Airlines

and finally - start your blog by telling a bunch of Americans that we are in a Golden Age of Travel.

It helps if you are a diminutive Indian chap living in Japan, and so travel on international airlines almost exclusively, while your audience suffers the horror that is US domestic travel.

If you are considering traveling to the USA, or through the USA, or even on a USA flag carrier, just go ahead and read the comments on that blog entry. When you have finished examining those hells, go ahead and change your flights.

Oh - and don’t even think about upgrading out of it on a US flag carrier, instead  switch to single class Jet Blue or Southwest.

Expedia - the world’s largest travel agent, and a site I used a lot, err, last century, has finally arrived in New Zealand. Here’s a quick review.

That’s a mere 11 years after being founded by Microsoft in 1996 - nice to know we are important. It’s a classic case of the big boys discounting our small market, and allowing the likes of House of Travel and th airlines to take the market.

Anyway - is it worthwhile using Expedia.co.nz?

Well - for internal flights it looks like Expedia does better than the airline sites:

versus AirNZ:

plus

That’s $178 from the airline combo, and $145.91 from Expedia. Impressive. Very impressive - are Expedia operating on loss-leader margins?

But what about House of Travel (I hear you ask). It’s not a site I use, so I ran the same test.

On the one hand I got a cheapest fare of $157. (Less than Q+AirNZ, more than the $145 of Expedia).

On the other, actually choosing the same flights though gave me the same price as the airlines.

and on the other other hand - hitting Continue killed the process. (each time)

So - back to Expedia. As we could guess, the site is still very much skewed to the US traveller:

She’s not from here

Those aren’t our top hotel destinations

We don’t care about Honolulu (not at $2227)

Those aren’t our top rental car destinations.

So Expedia seems to lump us with Hawaii in some sort of ‘US South Pacific’, but hopefully the site will be tweaked as use becomes clear.

Overall - I fully expected the site to be totally US centric, and it is, but I certainly did not expect the cheaper fares that we see here. It’s a very interesting entrant to NZ market.

So Singapore airlines is going to have 14 first class suites, and an enhanced business class (also on their 777’s) on their A380 which will be plying the Sydney to Singapore route. That’s cool, and perhaps the quietness of the plane may tempt some of the corporate jet crowd back to commercial.

Luxury cabins, however, still do not solve for the increasing mess that is airport security and waiting time.

But what is very cool is the mere 2.9 litres per hundred passenger kilometres that the A380 consumes. That’s more efficient than my F650 motorcycle, which topped out at a staggering 3.3 l/100 km in Canada, North of the Arctic circle. Of course the motorcycle can carry two, but then again it cannot ride across oceans.

Lots more pictures after the fold… Continue reading ‘Green luxury flying’

That’s the second part of the tree on page 7 of the NZ Institute report. It shows total annual benefits of $165-$335m in increased exports from decent broadband allowing better telepresence. Telepresence I guess is defined by the authors as basically video conferencing with big screens and higher resolution.

To work it out the authors have basically said we’d get 5-10% increase in overseas sales productivity, which is applied to new sales activity 20% of the time, and as a result we wll sell and export more stuff.Now this is a really tough thing to work out, and credit to the NZ Institute for giving it a go. The validity of the answer lies, as it always does, in the numbers on the right hand side of the tree. Let’s go through them.

Current Exports: $3,200m

Continue reading ‘NZInstitute BB report: Telepresence growth benefits are limited’

Excellent marketing from Air NZ - who once again demonstrate that there are some very smart people that are being unleashed within their domestic team.

Air NZ held a fashion shw in the sky, complete with Rachel Hunter in attendance. Here is one of the eight models strutting one of 30 designer’s ware.

Meanwhile America’s SouthWest, who have the stock market tricker symbol LUV and a history of scantily clad flight attendants, are getting justly panned for embarrassing a girl with an overly short and tight ensemble. Here she is - what do you think?

Who would ever have believed that Air New Zealand would one day be braver than these guys were in 1973 - here is the graduating class of flight attendants. Check out those hats:

I can’t help comparing Air NZ and Telecom. They face very similar circumstances, and yet are reacting very differently.

Both are ex Government owned, now private. Air NZ is quasi-private of course.

Both have a public-good role - to provide a network to the population.Both have a profit motive, and both benefit from quasi-monopoly position in the market.

Both have ability to add essentially infinite supply.Both can price at pretty much however much they want, as their cost base is fixed.

Both have very inelastic demand for their services at high prices. Business people will take a flight or make a phone call no matter what the price, even individuals have a minimum level of phone calls and flights, no matter the price (within reason).

Both have very elastic demand curves for their services when the price is cheap. $10 txts get huge traffic, Grab-a-seat fills planes.

Both are reliant on the strength of their marketing to promote use of their services.

How the two companies reacted to these market conditions is, however, very different.

Both have tried to maintain their monopoly through a variety  back-room lobbying, mergers (e.g. AirNZ & Qantas, AirNZ & Ansett). Telecom succeeded for a longer time, while AirNZ’s latest bid for a Qantas tie-up failed.
But Air NZ also worked on improving their business, to the point where they are now an excellent airline versus their international and domestic peers.

Their strategy of dropping prices and filling seats is a winner - something that will see them through tough times as well as good. Air NZ has also invested in leading-edge products - with the best business class in the world.

I would say that Air NZ has only really got going in recent years, once they shook off the Ansett debacle, and once they started to ignore the prospect of a Qantas tie-up and focus on the customer.

Meanwhile Telecom placed most of their senior executive energy into protecting their monopoly, through government lobbying, stonewalling and treating customers poorly. They continuously under-invested in the basics, and finally are getting dragged kicking and screaming by the Governemnt into belated investment.On the business side Telecom put the price of basic services like phone rentals up, sold the crown jewel Yellow Pages and launched the sad site that is Ferrit. They also doubled up on dubious Australian investments, and bought Gen-i for what was likely far too much.

Compare their marketing efforts. Go on. Which marketing do you enjoy watching? Which websites do you enjoy using? Which marketing is relevant to you?

But in the end both are making good profits.

One has a P/E of 15, and the equivilent industry in the USA has a P/E of 20 - so the market rates them as not quite as good as their US peers.

The other has a P/E of 5, and the equivilent industries in the USA have P/E’s of 24 and 32 (depending on how you define the sector) - so the market rates them as well beneath their US peers.

That second one is Air New Zealand, as they are one of the few airlines out there that makes good money. That drives their P/E down, but if that is sustainable then they are a fantastic bargain.

My take? Buy Air New Zealand, and sell US Airlines (not Southwest or JetBlue) and sell Telecom. It’s basic stuff - good businesses do better in the long run than bad ones, and you don’t need years of research to tell you that..

Then again, the new Telecom CEO has a chance to turn things around. The first 6 months will be telling - if long term insider heads roll and departments and companies are sold and closed then Telecom may turn around.

They’ve mentioned this before about this before… and now it looks like AirNZ is going to try it.

Economy class bunks. From 2010.

“One concept showed berths stacked three-high in a herringbone layout along the sides, and another row stacked down the middle of the cabin. 

This is something that will allow tourism to NZ to accelerate beyond belief. I’ve been harping on about this for years. Bring it on.

Chicago’s OHare airport is ripping out pay phones and replacing them with power sockets, chairs and counters. Bless them - I’m sick of wandering around (usually american) airports looking for power sockets.

Disposable income for “Managers” is largest in Saudi Arabia, small in the USA and generally better in third world countries than first world. No real surprise there - the lifestyle of 3rd world executives is pretty lush, but you trade that off against the general environment in some instances.

Telecom under-invested and we all suffered as a result. Great work by OECD (and TUANZ, NZHerald) to unveil what we all knew in numerical form. It should be pretty easy to show total return to shareholders versus investment to show the flawed Telecom strategy versus foreign peers.

XBox 360 4th quarter sales were 700,000 units, versus 1.8m the year before. No thanks to the Wii or hardware failures, and the division dropped over $1bn of real money.

Funny money is getting closer to real money. Oh for the days when NZD=USD. But by the way the aussie and loonie are also doing pretty well. It’s all about commodity based currencies, and commodities are doing well these years.

NZD-USD

AUD-USD

CAD-USD