They are testing a system that hijacks cell phones on their flights, and charging extortionate data rates along the way.

The proposal is to place a mini cell-site inside the aircraft, and have it connect to satellite.  Any calls or data traffic made during the flight would attract roaming rates which are beyond the standard international extortion:

• Calls will be $3.50 per minute
• Inbound calls will be $2.00 per minute
• Data will be $20,000 per Gigabyte
• Texts will be 80 cents to send

The calls are expensive, but we want calls to be short up in the air, and given the noise of an aeroplane and the discomfort that fellow passengers will project to loud callers I see little issue here.

However beware your teenage daughter texting her mates as you wing your way North – 30 texts will leave you $24 short

But it’s data that is the problem. Let’s look at a sample flight. If you leave your cell phone on then receive a call ($2 if you hang up within 1 minute), send 4 texts ($3.20), check out the news on a few websites  (say 10 pages at 1.2 MB = $240) and update your copy of an iPhone app (say Penultimate at 16.5MB, or $330) then you’ll be up for $775.20. That’s all possible within the space of a few minutes, and it shows the ludicrous nature of those data charges.

Don’t even think about tethering or using your T-Stick or Vodem. If you happened to receive an automatic OSX or Wndows update that was just 100 MB then that’s $2,000 thanks. Getting an updated movie from iTunes syncing across in the background? That’s about 1.5 Gb and a cool $30,000 thank you very much.

This isn’t just a rant as I use a lot of data. The average amount of data consumed on one mobile network in NZ (not sure which one), reported by Akamai, is 481 MB per month. Do that while flying with Air New Zealand’s new system and that will cost you $9,620.

This is not about safety

A decent percentage of pasengers leave their phones on during flights – it’s proof that phones out in the passenger section don’t really impact the flyability of the plane, especially larger ones, and that we’ll never get everyone to switch off. This is not the purpose of the exercise, and many people have realised that there are patches of cellular access on many domestic routes.

Why this matters

Passengers that leave their phones on now risk data being transferred and calls arriving while they are otherwise sitting in their pocket or suitcase.Welcome to an unexpected bill.

Other passengers could see that their phone was working and then start surfing away, thinking that $20 per MB sounds cheap. It’s not – it is  rort.

Vodafone and Telecom will look terrible in this exercise, as they are the ones that have to bill their customers. The customers will complain, the satellite provider will demand their money and Vodafone and Telecom will be stuck in the middle.

The transition moment is important. When does the in-air service take over from ground? Before takeoff? during takeoff? Is there an announcement? If the system was always on then passengers doing last minutes texts and tweets would be unexpectedly stung, and even people outside the plane could be affected.

Above all Air New Zealand has committed to treat us like friends. Friends don’t present each other with bills of this size.

We want to be nice to each other when we fly, and we are increasingly online when we sit down. But these prices are driving us to yak on the phone instead of quietly surfing.

How to solve it

1: Announce the prices each and every flight, and announce them in correct terms – as in $20,000 per Gigabyte.

2: Change the prices to be reasonable. Virgin America charges US$4.95 for all you can eat on flights less than 1.5 hours. I’d pay that. You can even get a $40 monthly pass. I’d pay that too. It’s actually only $19.95 for a 30 day pass for handheld devices, and I’d certainly pay that.

3: Make sure that phones are not automatically roamed onto this system. Customers need some warning before they do anything, whether it’s voice, data or text. The warning should apply to all three configurations so that we are fully informed whether we are using a T-stick, iPhone or regular phone.

I was checking out flights today on Airnz.co.nz, looking to fly to Queenstown:

Ouch – that’s expensive, but at least it is a relatively simple process.

The next screen made me angry though:

Air NZ has added an unsolicited $10 in Domestic Trip Insurance to the bill. They tried this a while ago, and it is back.

There are 3 things about this that turn this happy customer into an unhappy one:

1: It’s deceitful. The quoted price on the search results page did not include the $10, while the second page price did. I’ve  purchased unwanted insurance at least twice recently as a result.

2: It is painful. Before this change I just scrolled to the bottom of the page and clicked ‘continue’. Now I need to look out for the insurance scam and click it off. When I forget then I have to email customer support, who, though they know my Frequent Flyer number and the flight number, insist on asking for a confirmation number as well. This all takes energy and time, on both sides, and is certainly not improving my mood. Meanwhile I cannot set this as a preference in my frequent flyer options.

3: It’s an unnecessary ripoff. The insurance does not cover business travel, where you did not pre-book accomodation, where your travel provider goes insolvent or if the military take over. While the last one isn’t likely soon in New Zealand, I rarely book accommodation and almost all of my travel is for business.

The policy also does not cover electronic equipment, including Laptops and ‘personal electronic devices’, which I am going to take includes phones.

Finally with the ticket class I am buying it’s so easy to change a flight for free on the day (at the airport), and just as simple to to transfer it to another day for just $15. So why would I need insurance for that?

In short the $10 insurance is worthless to me – I am most likely to require insurance after I lose or break some electronic gadget while flying on business to a place where I have not pre-booked my accommodation. I will never get benefit from this so called insurance, and nor will most of the travellers that buy tickets. The high value business travellers in particular are really ill-done by this product which seems to belong in the 1970′s.

I’m sure this is a good money spinner for Air NZ, but it just feels wrong. It is not giving customers what they want. This automatic pre-selection of insurance went away before, and it should go away again and forever. Meanwhile the insurance product itself is of no value to most customers, and needs a serious upgrade.

<update – I just got a reply from AirNZ to one of my customer help enquiries. They now have my feedback.

“I have forwarded your concerns about the insurance your query to our insurance partnership manager, who has confirmed that we are currently undergoing some testing on our New Zealand website where the insurance may be automatically ticked during the process. This is however only a on a trial period at the moment to gauge passenger feedback, and a decision will be made by senior management at the end of that period whether to keep this on an ongoing basis.”>

It’s twice the cost per kilometre to fly on a regional turbojet than it is on a normal domestic jet, while international travel is a bit of a bargain really. There are reasons for this, as the longer routes can amortize costs over more passengers, but the impact remains. That difference between the regional and domestic market is concerning if you live in a small town a long way from the bigger cities.

I sampled used the flexi fares available for 18 February, looking at them on Sunday 16 Jan. Full table under the fold. This was a few months ago, and I’m sure things have changed a bit in the meantime, but the main lesson remains – regional fares are a lot more expensive per kilometre than international ones.

The regional pricing problem is a big one for Air New Zealand. They are often the monopoly provider on these smaller routes, and the next best alternative can also be high cost. Flying from Wellington to Nelson is expensive, but taking a ferry and driving is also expensive, and also takes a lot of time.

In that unpublished post I proposed some answers:

1. Price against buses, trains and cars – and advertise against them as well. Southwest Airlines are famous for this – they offer a cheaper alternative to alternative modes of travel. That does not help Nelson so much with the ferry crossing (probably why the fare is so high now), but why not start comparing prices for families? Indeed – why not offer a family ticket – certain flights only?
2. Sell ten-trip tickets for the same route, so that individuals can start treating the plane like a bus and commute from and to the provinces. You could also offer “book the next 5 weeks” of this flight (at the same time) to receive a lower price category.
3. Give guaranteed a maximum price guarantee for higher status flyers – so that people that travel a lot can get access to cheaper fares (e.g. the cheapest flexi fare) even after they have been sold out to regular folk. Make this apply to all flights, not just regionals and you’d make this Gold Elite flyer very happy.

A guaranteed rate (options 2 and 3) would be good for flyers and for Air New Zealand. Flyers would have certainty around their travel costs, and be able to book closer to the travel time.

Air New Zealand would lock in capacity sales and prices, rather than see travellers buy a combination cheap and expensive fares, and choose not to fly when fares are high. They would receive a nice up-front payment for those 10-trip tickets, and see increased travel from frequent flyers in #3 as they seek to get their money’s worth. There will be a few bonuses as some flyers don’t meet their expected 10-trip flight numbers in time.

So it was with considerable interest that I read Roeland Van Den Bergh’s article in the Dom Post today about plans for a new Air New Zealand product:

• A card costing $1000-1500) that gives discounts of between 20 per cent and 35 per cent on any regional fare.
• Card includes  Koru lounge membership
• Fares earn airpoints

A lot of these flyers will automatically have Koru membership due to the amount that they fly – so I’m not going to put much value on that.
If we say that the average discount is only 20%, and the card is $1500, then flyers would need to spend $7500 each year to make money (discounting the time value). That’s 22 return flights each year between Napier and Wellington at the full flexi-fare rate ($171). If the card cost is $1000 and the average discount were to be 35% then flyers would need to spend only $2857 each year to make money, which is just 8.4 return flights between Napier and Wellington.

So it’s too soon to tell, but there is potential here for Air New Zealand to deliver a very interesting product. I would imagine a 2-tier approach could work well – with higher discounts available for those that spend more up front and fly more.

Other good news is that those Koru memberships may be worth something, as Air New Zealand apparently plans to upgrade some Koru lounges and add more to the regional airports. That’s good news, as the lounges I’ve been to in the regional airports (most recently Napier and Palmerston North) are tiny, essentially un-staffed, and can be more crowded than the airport itself.

At the lower end of the market Air New Zealand will aparently double the number of grab-a-seat deals to regional airports – which will keep the aircraft load factor nice and high.

So it remains to be seen exactly what this product will look like. But it’s a move in the right direction.

Full price comparison table

*The post got a bit unwieldy and I got a bit conflicted.

Yes I know that code sharing gives more flights.

But I also know that Pacific Blue is not Air New Zealand, and when I want to fly on Pacific Blue I book Pacific Blue.

I also know that merging the flights of the two airlines means less competition and higher fares across the Tasman, even if you somehow manage to say that it will “stimulate a new wave of competition in Australasian aviation”

And finally I know that you’ve tried this before Air New Zealand, and failed. It was hugely distracting during those years you tried to link up with  Qantas and I guess you’d rather just not talk about Ansett.

But the worst part of Air New Zealand’s latest attempt to forge a trans-Tasman alliance is that the best airline in the world, has absolutely no need to do so. Air New Zealand eventually out competed Qantas domestically, and the pathetic JetStar is all that remains, and they can do the same with Pacific Blue.

So yes – I’ll be able to use Air New Zealand’s website to book a flight to Perth via Melbourne, flying Air New Zealand and Pacific Blue. And I’ll be able to book to fly from Sydney to Palmerston North (though I am not sure why) using Pacific Blue and Air New Zealand.

But I already book trip like that. Indeed we customers with online access or travel agents have no need for airline alliances any more, as it’s so simple to buy good value one way fares on either airline. So where is the value?

The value is in one place only – and that is in reducing competition on the trans Tasman route, and that’s not giving us a fair go. The third and fourth components to the deal are the ones that hurt the customer:

“3 Revenue generated across all Tasman sectors currently operated by either airline, or which may be developed under the agreement, will be allocated between the two carriers, and;

4. A lounge co-operation agreement that will ensure lounge access to qualifying guests of either airline.”

Revenue is allocated – so there is no incentive to out-compete on price or, scarily, on service. Meanwhile those AirNZ lounges will be filled to overflowing, as will the Virgin Blue ones. That’s not great a customer experience (or an inspiring journey) for anyone.

I hate to think of all of the management time and legal fees that will be committed in this hopefully hopeless cause for code sharing. The ACCC has grown some teeth recently, and you’d think the commerce commission would see this in a poor light as well.

So please Air New Zealand focus instead on out-competing Virgin Blue, and beat them in on the web, in the airfields, and with ever growing strength and confidence in the air.

And never surrender to code sharing on your most important local routes.

Air New Zealand has had this for quite some time.

I like the simple approach, and there are some nice user interface elements.

Looks great doesn’t it? Clearly there has been a good designer involved.

I went ahead and tried to book a flight. However I failed on the first page trying to search for a one-way flight Sydney to Perth.

That’s when I noticed the large “one way” and “return” tabs on the top left. They seem to be on most airline’s sites, but I contend that they should be history by now. If I don’t want a return flight then why can I not just leave the date empty? Alternatively (and additionally) why not give me a click-box?

While we are at it the return date is in a strange place – why not move it over under the outward date?

So I’ve had a go at editing the home page it to remove everything that is not required. What do you think?

You could remove even more if you try. I’m guessing the designer was told what to put in, and that the usability person didn’t have much say.

The results page has also been designed – and is stunning looking.

It’s quite a lot to take in, but I found it easy enough to navigate. It shows all the options on one page – from flight times and durations to seat types and costs.

Click on “select” under a ticket and you come to the buy summary page. It is not too bad:

However once again while it looks nice, some improvement is required. Here’s the really obvious one:

and there is plenty more to do on that page. So let’s look at the next, payment page:

Scary. It’s lovely to look at in one sense, but simply too scary in another. My hypothesis with the site is that it was done by some pretty good designers, but it was not user tested very much, if at all, and it was subject to some constraints by a business person.

But then – I’m just one more user.

Overall – a good launch effort, but the real work starts now in the daily tweaking.

The Puffin approach puts the pilot between two stubby wings, is powered by quiet electrical fans and will be able to almost reach the cruising altitude of a jumbo.

Will. That’s an interesting and all too common word in the world of jetpacks. But NASA say it will fly later this year.

Obviously this is aimed at military applications first – but I want one.

Making people print out a PDF and mail it back to you to register is no longer acceptable. It has not been acceptable for years.

Avis does a bit better, as does Hertz. However although it appears online sign-up to their programs is possible, they each have intimidatingly long forms to fill out.
Avis presents you with a long form in step two of four after selecting your country

and Hertz also presents you with a long form – but as the first of an amazing six steps.

Both sites have a USA feel, and I worried about my privacy given the rabid nature of customer information sharing in that country. So I checked a bit more and that worry was confirmed – here is how you opt-out of receiving email for Hertz:

To request to be removed from our e-mail list, please submit your request in writing and mail to: The Hertz Corporation, P.O. Box 25991, Oklahoma City, OK 73126, U.S.A. Please include your name, your #1 Club number and address.

And I thought printing out a PDF was bad. This is really sinister, and a terrible sign that a multi-national just simply does not understand the local market.

Then there is the disingenuous answer to this question:

Q: Has my personal data been shared with any other companies?
A: Unless you have previously provided consent, your personal data has not been shared with any companies other than Hertz, its affiliates and licensees for marketing purposes.

Of course consent is most likely given automatically during sign-up. I didn’t bother to go through the sign-up process to find out.

Instead let’s check Avis to see how they do it, as we can read their T&Cs in the first sign-up step. They say:

21. Avis shall hold information from the hirer … and the provision of related customer services, including direct marketing and assessing customer satisfaction with products and services of Avis. Avis may use the information for any of these purposes. The hirer is entitled to request access to and correction of these details at any time by contacting Avis.

There seems to be no opt-out from that at all. I’m not even sure that this is legal, as I understand, under New Zealand law. But then if you sign the contract, you sign up to receive the spam.

In the end I signed up to nobody’s program – the big three agencies had a chance to get my loyalty, and they all failed.

How to do it right?

Register first:
A better approach could be to as me to “Register” or “Join” their program, requiring just an email address and password. Once registered then give me a better experience, (e.g. MyRentalco page) and ask me to “complete my profile to get your card” or similar. Once I am joined, I will feel more obliged and safe enough to add the extra information required so that I can get access to all my rental car transactions, and see my points rise.

Fix the Privacy
Let me opt-in and opt-out easily from the various marketing offers. Deliver your messages to people that want them, and they won’t be delivered straight to the spam folder. It’s also compliant with the law around here. This stuff is so basic – why am I even bothering?

Give it to me
I rent cars every two to four weeks. I use the same name, address, credit card and drivers license. Ask me whether you’d like to store my details for next time, track how much I spend and mail me my new platinum card for special frequent drivers.

Localise
It’s great to have one system, but it appears that the locals have little say in how it is presented here. Make a mix of economies of scale and genuine local engagement. As an example I have not seen @AvisNZ, @HertzNZ or @BudgetNZ (or any variations thereof) on Twitter. All of those IDs are available from Twitter, but for a measure of how pointless this all is check out @Avis. I don’t expect they read blog posts either.

Meanwhile my loyalty for now appears to be with Budget. The reason is simple – when you complete booking an Air New Zealand flight they make it easy to book a car with Avis or Budget by pre-populating a form and showing the options. While Budget and Avis have the same owner, their systems are different and Budget’s prices are always cheaper. So there you have it – Air New Zealand is doing Budget’s job for them.

Perhaps Air New Zealand should just start a rental car company?

They have kept their fares low, and use a very simple fare structure. That means reducing some food services, but the lollies remain and, it seems, always will.

They have steadily got the details right – from the economy seats, to the check-in and seat back entertainment. The business class seats still rate, for me, as the best around, offering so much more than the competition.

They grasped the power of Twitter early – taking off with the Airpoints Fairy and several other Twitter identities. The Airpoints Fairy really is an exceptionally good move. You’ll find out a lot more, and a lot faster, by following the twitter accounts than by reading the media section of the Air New Zealand website, which, as of writing, still had no announcement.

While they use Zillion, SellmeFree and Sella instead of Trade Me for their annual charity auction – the point is that they have one, and it is not only a good thing to do but a fun and entertaining promotion of AirNZ services. By the way – Trade Me you really need to suck up to Air New Zealand, starting now, and make sure you land this for 2010.

They have, in post Ansett merger and Qantas code share proposal years, consistently understood that they are there for the greater good, not just corporate profits. This means lower airfares and more travellers. They also focused on improving the business across the board, rather than on government lobbying to maintain a quasi monopoly. They have stopped looking (it seems) for stupid tie-ins with Qantas and purchases of other, poorly run, airlines.

They are blessed with incompetent competition – with Qantas exiting and replacing themselves with the hapless Jetstar. Qantas are a good airline, especially when compared with ones from the USA, but Australian experience shows how much they still have to learn.

They reward their best customers by providing extra legroom at the front of the plane. They did this by adding another row, but taking the inches from the seats at the rear only. While this is not as egalitarian as the Jet Blue practice of rewarding people in the back with more room, it means that as a Gold (or Gold Elite now) status holder I can always get a seat near the front with plenty of legroom. Given that most of the profits would tend to come for the top few customers, this is placing the better service where the profits are.

They continue to innovate, and may even transform international travel (Jan07) with economy class sleeping seats. It will be a little while yet before the new planes arrive, but this has big implications for long haul tourism.

The innovation also applies to operations – not only testing biofuels recently, but also having some planes glide into Auckland airport to save on fuel – back in 2007.

They have delivered a series of great promotions – from the Pink plane to the Sydney Mardi Gras to the Pimp my Plane MTV promotion back in 2007.

Grabaseat – it’s a great idea, quickly executed and continuously improved. It’s a tool to sort of those that care about price from the others, and also to sell excess capacity. Well done.

The naked campaign is stunning, making the foreign press and providing for an entertaining safety briefing. It’s really great when one of the stars is serving on the flight – I’m sure they get a much easier time from passengers.

Their website is very good (not perfect though) and it is New Zealand’s biggest eCommerce website, delivering over $1 billion in sales back in 2007/7.

They launched the brilliant mPass application for the iPhone, and supply premium customers with an RFID tag. Each of these means customers can go directly to the gate, bypassing check-in. The implications for me is zero waiting time for most flights out of Wellington, and much tighter margins on my travel from other airports. Just one of several ways that they have reduced the pain of flying.

And lastly – the staff. The quality of a business shows up in the quality of the front line staff, and without exception Air New Zealand staff have been simply outstanding for me.

Whether it’s the gentle chiding I received recently as I arrived at the gate moments after they had closed the flight, while they quietly did the work required to let me on, or the folks who dealt (not perfectly, but well enough) with my booking a return flight for a year minus a day later than I had wished. It could be the phone number I received from the Perth Koru lounge to let them know next time I was late (it was next time), or the unflappable and always friendly staff on board.

Front line staff this good mean that the environment they work in is good, that their bosses also get it, and that ultimately the leadership team, CEO and board are all get it as well. Everyone I have met that works inside Air New Zealand corporate seems to get it, and seem to really enjoy what they do and who they work for. It’s been a while, it seems, since one of AirNZ’s panicky restructures, and while the current regime cannot last forever, I hope that they have good succession plans for all of the critical roles.

To top it all of, Air New Zealand awarded all staff an extra day’s leave as a reward for winning. There’s a lot in that announcement – not only the fact that the reward exists, but that it happened (embargo notwithstanding) so quickly, and that the large cost of doing so was absorbed, but also that it was aimed at the right recipients – the staff.

Well done Air New Zealand – you have made us proud.