Air New Zealand to upgrade Airpoints scheme

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By: Wise Marketer Staff |

Posted on August 10, 2004

Air New Zealand to upgrade Airpoints scheme

Air New Zealand has announced a number of enhancements to its Airpoints customer loyalty programme, with the key upgrade being that Airpoints members will be able to book any seat on any Air New Zealand ticketed and operated flight, without restrictions, starting from November 16th 2004.

"Over the past year we've spent a lot of time talking to Airpoints members to better understand how we can improve the programme. One of the key features of the enhanced programme is that Airpoints members will be able to book any seat on any Air New Zealand ticketed and operated flight," said Ralph Norris, Air New Zealand's managing director and CEO.

According to Norris, existing programme members made it clear that they wanted it to be easier for them to claim reward flights with Air New Zealand. Also beginning on November 16th, Air New Zealand's new Airpoints Dollars will replace the original Airpoints as the programme's currency. Able to be used like cash when booking seats, one Airpoints Dollar will be equivalent to NZ$1.

Currency swap At that time, all existing Airpoints balances will be converted to Airpoints Dollars with 75 Airpoints equating to one Airpoints Dollar. Norris said that the conversion will ensure that the vast majority of journeys that could have been taken by Airpoints members with their reward points can still be taken with their new Airpoints Dollars balance.

More than 1 million Air New Zealand customers are Airpoints members, with 780,000 living in New Zealand itself.

"One of the great benefits of moving to Airpoints Dollars is that even the lowest special fares, as well as children's fares, are available in Airpoints Dollars," added Norris. "Companion tickets will also still be available on international flights at the equivalent of a 30% discount on the lowest published fare. So if a seat is available on a flight and members have enough Airpoints Dollars, they can buy it."

Cheaper redemptions According to Air New Zealand, under the new programme currency, some 61% of possible flight redemptions will require fewer equivalent points to purchase the lowest fares, and 15% will require the same number of equivalent points. Overall, the number of Airpoints Dollars required at the lowest published fare to obtain the flight redemptions taken during the past 12 months would be an average of 6% less than the equivalent number of Airpoints required under the original programme.

As an example, a return flight between Christchurch and Auckland costing 20,000 Airpoints would convert to 266.67 Airpoints Dollars. A standard return Smart Saver fare is available from for as little as 172 Airpoints Dollars, representing a saving of more than 94 Airpoints Dollars. Sale fares, which are not excluded from award travel redemption, can provide even greater savings.

Rewarding spend, not mileage Under the original programme, Airpoints were rewarded based on distance flown, rather than the fare paid. An Airpoints member currently paying around NZ$2,400 for a discount economy return flight to London would receive 26,966 Airpoints, rewarding them with a return domestic flight (20,000 Airpoints) or nearly enough for a return trans-Tasman flight (30,000 Airpoints). However, to earn the same rewards, a frequent domestic customer would have to fly return between Auckland and Wellington 14 times at a cost of some NZ$3,900.

"Many customers told us they felt this was unfair, and in a business where we want to reward our most frequent and loyal customers, Air New Zealand agrees," said Norris. "Therefore, from November 16th 2004, dollars spent on travel will be recognised instead of the distance flown."

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