Thanks for no insurance Air NZ (really)

It’s excellent to see that Air NZ has removed the default opt-in for travel insurance with their website sell process.  They have replaced the opt-in with the big orange button below.

I’ve tested the process and there is no need to deselect the insurance. The amount of space dedicated to the selling of insurance seems a bit over the top, I guess because internal fighting meant trying as hard as they can to retain the revenue. The issue is that this will introduce/retain more pain to the sales process and thus reduce overall flight sales. Experienced travellers will learn to ignore it.

Two previous posts referring to this insurance.

Posted in NZ Business | 2 Comments

“Arrives late for flight, if known”

It’s not rated as secret, but the Transportation Security Agency behavioural observation checklist and form for detecting possible terrorists has been disseminated on the web.

Unfortunately the checklist contains a large number of factors that are arguably simply normal behaviour when confronted by a wall of security, and the list has very low benchmarks for escalation.

I tried filling out the checklist for my own behaviours when flying. I’m not a good flyer – I don’t like crowds, can’t stand queues and loath inefficient systems. New Zealand’s airline systems are amongst the best in the world, but while going through security is usually a minor inconvenience, I can sometimes be a bit annoyed with it all.

The first section of the form is Observation and Behaviour Analysis for Stress, Fear and Deception Factors. I scored myself with 42 points, which is well above the limit for automatic referral to law enforcement officers of just 6 points.

The form starts badly, with the first item “Arrives late for flight, if known” (1 point) almost an automatic tick for me. The next item is “avoids eye contact with security personnel or LEO” (1 point), which, yes, I almost always do in a bid for efficiency at the security checkpoints. I have no interest in talking about my luggage, don’t want them to touch my stuff and lose 3 points with “Does not respond to authoritative commands” when I ignore the question of whether I have checked my pockets (I have). I can also lose points with the  “cold, penetrating stare” (2 points) that my be interpreted when I blankly ignore any inefficient security staff who are holding up travellers.

I also have my own rules about travelling with luggage – I never let it out of my sight, and don’t go through the personal scanner until my luggage is inside the luggage scanner. That loses me points for “hesitation/indecision on entering checkpoint or submitting to screening process” (2 points) and “does not respond to authoritative commands” (3 points) again, and as is becoming clear “displays arrogance and verbally expresses contempt for the screening process” (2 points) is potentially easy to pick up, especially when I am called out by the bomb screening people for the 5th time in a row.

Two of the easier ones for me to earn points are “scans area, appearing to look for security personnel or LEO” (2 points) which I do to figure out which is the shortest and most efficient queue, and “appears to be confused or disorientated” (3 points),  either because I am thinking about more important things or because the security system is new to me and I am seeking to understand what is happening.

The next part is something called SPOT resolution. I counted a score of 17 between the Signs of Deception and Unusual Items that I could carry. The limit for this section before escalation is just one – if you have tow or more then that law enforcement officer is called.

This part of the form reinforces that essentially everyone has to act to get through security. Travellers transiting from a long distance international flight, for example, could easily exhibit Signs of Deception like “delayed response to questions“, “Excessive comments about screening process“, “excessive perspiration” and, for those who forgot to brush their teeth towards the end of the flight “Covers mouth with hand when speaking“. Remember – any two of these and the law officer is called.

I’ve travelled through a lot of borders, and I do know that the best thing to do is to adopt a polite, submissive yet firm, and efficient yet endlessly patient approach. At some borders and security checkpoints you have to be very strict on yourself, and this form shows yet again that TSA security has very low tolerance for non conformance.

But I would strongly suspect that this list is not used, in practise, as rigidly as it is written, especially by experienced officers who are used to seeing, for example, a plane full of Kiwis transiting through LAX. But then again there is plenty on that list for an officer to escalate pretty much any passenger that they want to the next level. If the officers are experienced, well trained and well managed then that’s a good thing, but the reverse is true as well.

Because the issue here is that the “bad people” know about this list, have trained  for getting through security and tested themselves. Getting caught this way (without outside information) seems very rare – while the TSA brags about finding firearms on occasion, they seldom if ever talk about catching people with firearms who had intent to use them.

And there are giant holes in the system. Airline and sea cargo are the biggest gaps, but sadly in the last two years the major cause of (deliberate) aviation disasters appears to have from  actions from someone in the cockpit.

The economic cost of security, and most of it is borne by the passengers and airlines, needs to be appropriate to the size of the risk. I’m not convinced that we are close, even in New Zealand where our security systems are generally efficient. We are unfortunately, largely at the mercy of the US TSA, which drives international conduct. The TSA in turn is largely at the mercy of the US Congress who probably don’t even realise that they are the only ones that can fix this.

Posted in NZ Business

Air New Zealand challenges loyal customers to move elsewhere

Yesterday Air New Zealand suddenly changed their credit card loyalty program, switching from BNZ to Westpac. There are, apparently, “probably over 100,000” customers affected. And I’m one of them.

It’s a privilege

It’s a privilege to have Air New Zealand as our national carrier. For a number of years now they have been at the forefront of the global airline industry, bringing in a series of customer-focused innovations. Above all the front line staff are consistently friendly, sincere and have a can-do attitude.

It’s a privilege to be able to fly at all really. It’s fanciful even that we can choose to commute through the air to and from another city in a day, and Air New Zealand makes that sort of commuting easy. It’s a privilege to live in a society where so many can afford to do so, with Air New Zealand carrying over 1 million passenger journeys in January 2015 alone.

It was inspiring to bear witness to the Air New Zealand turnaround. Back in the early 2000s Air New Zealand was atrocious, but under the leadership of first Ralph Norris then Rob Fyfe it gradually improved. Those leaders put the customer experience at the centre of everything, and as the changes appeared, the staff were increasingly happier and therefore we customers enjoyed the experience even more.

In 2010 I summed it up – Air New Zealand is the best – here are some reasons, finishing “well done Air New Zealand – you have made us proud.”

We care

Complaining about airlines is perennial fun it seems, as most airline travel seems contrived to increase stress levels of everyone in the airport and on the plane. So it does seem a little petty to hold Air New Zealand to account when they still easily exceed the experience on offshore equivalents.

But hold them to account we shall. For it’s not about our own experiences, but about the country, as a great national carrier brings strong economic benefit to us all. Tourists are far more likely to come here, we are more likely to fly to see each other internally and  we are all more likely to travel domestically and offshore for business. The more we fly, the better the wheels of commerce turn, the better the economy does and the more tax we pay. The primary shareholder of Air New Zealand is the NZ government, and they should be contemplating the value of the airline in this way.

Enter the rot. 

For me it was the strawberry jam, when, back in 2011, then new CEO Christopher Luxon talked about switching out the decent strawberry jam for a cheaper alternative, bragging that the new jam was “good enough.” It wasn’t.

But it’s also the insistence on retaining the opt-out $10 insurance per flight, something which the Commerce Commission is finally taking action on. It’s the removal of drinkable coffee, the desperately unhealthy snacks and regional fares that are not fair and the increasingly cramped flights to Australia.

And of course Air New Zealand are still partnered with the execrable United, the only airline in world to consistently misplace my bags and the source of much customer hate.

“We’re making changes to our Airpoints earning credit cards”

Yesterday we learned that the BNZ Air NZ cards are being swapped out for Westpac cards. Apparently “you’ll need to consider a different credit card.

This is a big change and there is a lot at stake here – Westpac CE David McLean is quoted by NZ Herald saying:

“There’s [sic] a lot of customers who from the first of April won’t be able to earn airpoints on their BNZ credit cards, probably over 100,000.


“We know from our research into this type of customer base, that these are people to whom earning airpoints is really, really important.
“They love travel and they want to keep earning it on their spend so they’re going to need to be looking around for a credit card that does help them earn airpoints”
“It’s a really compelling offer and we’re going to compete very, very vigorously,” McLean said.
“We’re very confident we’ll win a large proportion of these customers, but we’re not putting a target on it.”

Air New Zealand’s GM of Loyalty is Hamish Rumbled, and he said “More than 20 per cent of all credit card spend in New Zealand is on Airpoints earning credit cards.”

So 100,o00 people are affected, they are all fans of BNZ (they have the card) and of Air New Zealand, and now Air New Zealand and Westpac are asking them to change loyalty.

How much are these 100,000 customers worth? 

It depends whether they are transactors or revolvers.

Transactors pay their bill each month, and so the bank nets 0.5-1% (I really don’t know) from the merchant fees, along with the annual fee. With these assumptions if you spend $2,000 a month then the bank might net $100-250 per year. But these loyalty cardholders would arguably spend a lot more than the average cardholder, as they have to buy a critical mass of airline tickets for the program to be worth it, so I am going to estimate (or guess)  that the average transactor is worth $500 per year.

Revolvers are much more valuable though, as they hold their credit card debt over each month, and at 19% or so that’s an expensive thing to do. So a revolver holding a $10,000 average balance pays about $1900 a year. I don’t know what the average balance would be, so let’s choose an equally arbitrary $1500 per year average for loyalty card revolvers.

What’s the split between the two? Again I have no idea, so let’s choose to go with $800 per customer, which implies something in the order of $80 million of net return is at stake. Overall I’d be surprised if the potential net value for these cardholder wasn’t in the range of $50-300 million per year.

This excludes the bigger prize of acquiring customers who bring their mortgage (especially) and other business across, worth more thousands per customer per year.

I have no idea how the deal between Westpac and Air New Zealand works, but when we see this much value at stake we can easily argue that Air New Zealand seems to have  chosen the prospect of more money now over customer happiness and loyalty.

Challenging our loyalty

In New Zealand we are lucky to have some very fine banks, standing almost alone in the world in weathering the economic storms of the global financial crisis. I like BNZ, my bank, and have a lot of business with them. I tried and failed with Kiwibank a few years ago, have an account with ASB and have no affinity with the undoubtedly fine folks at Westpac of ANZ.

I want to stay with BNZ. They happen to be in a good customer-centric place right now. So why should I reward them by leaving?

This is a deliberate attempt by Westpac and Air New Zealand to challenge the loyalty of 100,000 valuable Air New Zealand and BNZ customers. Some will move – perhaps to Westpac, or maybe to Kiwibank, ANZ or American Express, who also have Air New Zealand loyalty cards (for now). Others, probably most, will not move and so their Air New Zealand experience will move down a notch, yet again.

So these customers will be challenging their assumptions about their airline loyalty. It’s not that painful to switch airlines for international travel, not nearly as as painful as switching banks.


Not a nice way to do business

The way this news was released was poor. It appeared on the Air New Zealand website and stormed through media well before customers were told. The Twitter exchange below is insightful (start from the bottom):

The allegations are that Air New Zealand was working with Westpac for some time on the deal, and that BNZ was only informed at the last minute. That’s certainly true for at least some customer facing people working at BNZ, who should have known earlier.

If true this is not the nice way to do business, especially for a NZ icon like Air New Zealand, who should be a guardian of our defining kiwi value of fairness.

I threw rocks at BNZ on Twitter, unjustifiably it seems. They say they are responding to this change by moving from regarding with AirNZ Airpoints Dollars to rewarding with New Zealand Dollars (a far more negotiable currency). We have yet to see what else they can conjure up to retain customers. I hope they do it well.

New Zealand is a small place, and we have each one set of ethics. My set makes me react fast to unfairness, and to aggressively fight to help great companies that place customers first continue to do so. That meant a long series of tweets last night about this issue, and this article.

I feel that Air New Zealand board and executive team need to examine the way this played out versus Air New Zealand’s values. Was this fair? Can this be fixed? What’s the next erosion of customer experience?

Times change. Like many I used to choose Qantas over Air New Zealand, and it appears that Qantas is on the rise again, even making an offer, now closed, to Air New Zealand Gold status holders to get the Qantas equivalent for free.

In summary

I’d rather not have to write such tirades.

I’d rather the businesses I choose keep understanding that long term customer centricity has far more value via than short term profit taking.

But Air New Zealand seems to keep falling for these short term profit-centric answers, and this is at the expense of not just long term value for shareholders, but also for the entire New Zealand economy.


Posted in NZ Business | Tagged , | 4 Comments

Join us for the Agribusiness Investment Showcase

NZTE’s Better by Capital team is helping 9 companies prepare for this investor event on 12 March in Palmerston North, just before the Central Districts Field Day in Fielding.

The nine (at the moment) Agri-Tech companies are impressive, ranging from Supreme Biotechnologies, who grow and sell a surprising among of algae, to Engender, who have a process using lasers to separate semen to product male and female calves. I’ve been helping out, as I did for the Agri-Tech showcase last year, and am once again really enjoying discovering the amazing things happening at the intersection of the agriculture and technology industries.

It’s only for larger investors though – people who can and do write checks of $1-500,000 to invest in companies. If you would like to attend or know more, then email the Better by Capital team now.

Posted in NZ Business | 3 Comments

Punakaiki Fund invests in Onceit

Onceit Logo

We are delighted to announce that Punakaiki Fund has invested into Onceit, for a holding of a little over 15%. Onceit sells high end New Zealand designer fashion at insider prices.

Onceit is well known to many, especially in their primary target market of women between 18 and 35 in New Zealand. There are a large and growing number of active members and you can join them at

Onceit’s growth has been strong – they were 7th in the 2013 Deloitte Fast 50, 48th in the 2014 Fast 50, and are still growing quickly in 2015.

The Founder and CEO of Onceit is Jay Goodey, and he and the team have consistently delivered the goods for their customers. This is a business focused on value, and with strong supplier relationships along with continuously improving  packing and shipping processes Onceit consistently delivers on low prices for high quality goods.

We were, to be fair, insiders on this investment. I’ve been a director of Onceit for much of last year, and provided some help before that. I’ve been impressed with Jay and the team’s  professionalism, the growth and maturity of the business, and we see plenty of exciting times ahead.


Posted in NZ Business | 1 Comment

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Some unwritten rules of early stage investing

For those new to early stage investing there are rules and there are unwritten rules. Here for your comment is my take on some unwritten rules. What do you think? Know any more to add?

Founders and Co-Founders

Raise money by first building a great business.

Help other founders – and learn from them too. They are the best source of advice.

You are not worth what your shares and company valuation say you are worth, as that value still needs to be delivered – so stick around and deliver. You may not sell down your shares unless it’s a very small amount in later rounds.

Invest essentially all of your own money and time before asking others for theirs. It’s harder for older folks with families, but extend well into your discomfort zone.

The founders who stick around are the ones delivering the value. Don’t think for a moment that you can sell your shares at investment round rates if you leave.

Over-communicate with investors, and don’t forget to thank them. Disclose everything, especially the bad stuff, at investment time.

Fight hard to land investors who are nice people.  Look after them and protect smaller investors’  interests in later rounds.

Make it easy for investors, after proving the value of the company, with an investment valuation that activates the investors to “invest now or miss out.”


All Investors

Support the company publicly by amplifying their messages. Any success is because of the founder and team, not you.

Be very careful about offering advice – only do so when it is actually wanted. Value the time of the founders, team and other investors.

Keep things simple so that the founders and the next round of investors are not scared off.

Give firm answers fast – decide quickly and then back up the verbal commitment every time.

Don’t play out of your capacity – if you don’t have the available funds to invest the required amount then step aside quickly.

Answer your emails very quickly and be ready to review and sign documents at any time. Do as much of your own legal work as you can, and use lawyers who are responsive.

Be very patient after investing – early stage investing is a five to ten year commitment no matter what was said at the beginning.

Watch out for FOMO (fear of missing out) driving your decisions. Do your own work to ensure it’s a great investment – don’t take someone else’s word for it.


Friends and Family Investors 

You have given your money away and will never see it again. If you get a return be very happy, surprised and say “I was only backing my relative or mate.”

You are supporting the family member or friend because of who they are, so provide no business advice or help unless explicitly asked for.

Sign everything you get handed without complaint. Read the contracts of course, but look only for the big stuff. It’s not your role to question specifics of deals or to hold up deal making.

Early Investors who can lead a round 

Try to make decisions quickly, and let founders know why you will not invest. Be easy work with, respond instantly and don’t be the person holding things up.

Share the offer, if asked, with other investors who also make decisions fast, are likely invest and who have a track record of writing large  cheques.

Make it easy on the founder by focussing conversations on the things that drive or destroy value, not on trying to catch them out with over-zealous due diligence.

Make sure the founders are getting solid legal advice from lawyers with experience in early stage investments. Keep deal terms simple so that legal fees are kept at a minimum, all parties can understand the deal and the next round is easier.

Step away in future rounds when you are out of your league.

Early investors who are, say, <10% of an investment round or under $25,000.

Make decisions fast based on limited information, and sign any bits of paper put in front of you quickly. That doesn’t mean you read the contracts and look for issues, but you don’t have the rights to negotiate the main terms on deals.

Posted in NZ Business | 2 Comments