Anybody in New Zealand who has a credit card will be well aware of the intense competition over the last few years for credit cards aligned with Air New Zealand’s Airpoints program. ANZ and Kiwibank have been aligned with Airpoints for a number of years, and in 2015 BNZ were dumped as a partner and replaced by Westpac who have aggressively marketed their cards over the past year. Simply by spending money on your credit card you will earn Airpoints Dollars and Status Points.
What most people don’t realise is how those Airpoints Dollars and Status Points are actually funded. It’s not your bank being kind - ultimately it’s you, the consumer who is funding these, in what can only be described as a huge “money go round” funded by credit card interchange fees.
In December 2015 the European Commission announced a major restructuring of credit card interchange fees, and last week Australia also announced changes to credit card interchange fees. These are currently under review in New Zealand, and I’ve heard from a few sources that pretty much identical changes will be announced in New Zealand by the end of the year.
When you use a credit card to pay for a product or service, the retailer or company you’re dealing with has to pay a fee for credit card processing to their bank or company processing their credit card transactions. This fee will depend on the size of the retailer, the number of transactions they process, and the type of card you have. For the vast majority of businesses in New Zealand this will range from around 1% up to 3% depending on whether they have opted for blended or non blended transactions (blended allows a retailer to pay the same % for all card types rather than paying a different rate for each card type), the type of merchant they are, and the type of card used. This fee includes all processing fees and the credit card interchange fee. Many retailers and companies now charge a credit card fee to recover these costs, and those that don’t simply build it into their cost of doing business. Retailers hate credit card charges which can be a significant cost of doing business, and customers hate having to pay credit card surcharges. At the end of the day as a customer you’re ultimately paying this fee, regardless of whether it’s a surcharge or built into business costs.
So what is an interchange fee? That’s a very good question, and rather than trying to reinvent the wheel I’ll simply copy the following few paragraphs from Wikipedia which sum things up pretty well :-
Interchange fee is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card based transactions. Usually it is a fee that a merchant's bank (the "acquiring bank") pays a customer's bank (the "issuing bank"); however there are instances where the interchange fee is paid from the issuer to acquirer, often called reverse interchange.
In a credit card or debit card transaction, the card-issuing bank in a payment transaction deducts the interchange fee from the amount it pays the acquiring bank that handles a credit or debit card transaction for a merchant. The acquiring bank then pays the merchant the amount of the transaction minus both the interchange fee and an additional, usually smaller, fee for the acquiring bank or independent sales organization (ISO), which is often referred to as a discount rate, an add-on rate, or passthru. For cash withdrawal transactions at ATMs, however, the fees are paid by the card-issuing bank to the acquiring bank (for the maintenance of the machine).
When you use your credit card to purchase something, your bank generates revenue from you by way of interchange fees. These fees pay for processing, marketing and upkeep of the credit card platforms, but they are also a huge source of revenue for banks. Many people assume banks make their money from interest from people not paying their credit cards off in full, but revenue from people paying their cards off in full each money is very significant. If you spend $25,000 per year on your credit card your bank will easily be making a minimum of several hundred dollars per year just off the interchange fees they receive from your transactions.
Interchange fees in New Zealand are public knowledge and displayed on all bank and credit card websites -
Now that you understand interchange fees, you’ll now understand how banks can offer airline frequent flyer points on their cards. Banks such as ANZ, Westpac, American Express and Kiwibank who are all affiliated with Air New Zealand Airpoints buy Airpoints Dollars, Status Points and Koru lounge vouchers for a fixed price from Air New Zealand. They’re keeping a % of the interchange fee for themselves as profit, and giving you a % of this interchange fee back to you in the way of Airpoints Dollars and Status Points.
In recent years banks have heavily started pushing Platinum cards over regular or Gold cards. Ever wondered why? It’s because the interchange fees on these premium cards are nearly double those on a regular card or a Gold card. Simply by giving you a new card your bank is actually making more money from you every time you purchase something, and companies accepting your Platinum card are paying a higher fee than another customer using a regular credit card or Gold card if they’re not on a blended rate plan.
By now you’ll probably see why interchange fees have become a big money go round. At the end of the day you’re paying a surcharge to simply get a percentage of that surcharge given back to you. It’s an issue that competition regulators and central banks around the world take issue with, and something they’re now doing something about. In 2006 in New Zealand and Australia both the ACCC and Commerce Commission took action against the credit card companies in what can now be seen as a dismal failure for both competition regulators. Their legal action has backfired and ultimately sent fees upwards.
In 2006, the New Zealand Commerce Commission issued proceedings against Visa and MasterCard, alleging that interchange fees constitute price fixing and result in a substantial lessening of competition. Shortly before the court case was due to start in Autumn 2009, the suit was settled out of court; the "no surchage rule" was prohibited, allowing retailers to pass on the cost of MasterCard and Visa transactions to the customer, and card issuers were allowed to set their own interchange fees, within a maximum limit set by Visa or MasterCard. All issuers of MasterCard cards in New Zealand announced they would be charging the maximum rate. The Commission released a report in 2013 reviewing the outcome of the settlement, showing that many merchants were paying higher fees for accepting credit cards than before the settlement.
In 2015 the European Commission announced a significant clampdown on credit card interchange fees to improve transparency in the marketplace. Interchange fees were slashed to a maximum of 0.2% for debit cards and 0.3% for credit cards.
In Australia this week the Reserve Bank of Australia announced the outcome of it’s long awaited review and has slashed interchange fees to a maximum of 0.8%, a drop of over 50% from the rate of many premium cards today. It has also announced that flat rates for credit card surcharges (such as those charged by airlines) will be outlawed and all credit card surcharges must be a percentage component, and cannot exceed the true cost the retailer pays for credit card processing.
Interchange fees are currently under review in New Zealand and it’s expected that we’ll see similar changes announced by the end of 2016. This will be a significant win for retailers who will see processing fees drop, but it’s going to be a very difficult time for banks. They’ve sold customers on Airpoints cards and earn rates that will simply no longer be sustainable, and it’ll be realistic to see earn rates on Airpoints Dollars and Status Points cut significantly, potentially slashing earn rates by at least half.
Likewise for Air New Zealand there will be plenty of change for their business – selling Airpoints Dollars and Status Points to banks is a multi million dollar business for the airline that will be significantly disrupted as banks give away far fewer Airpoints Dollars and Status Points. Assuming that flat rate credit card surcharges are outlawed in New Zealand, Air New Zealand will also see it’s credit card surcharge replaced by a percentage fee, something that will no doubt be both loved and hated. Right now if you’re a passenger buying a $39 airfare you have to pay $4 (nearly 10%) to pay that airfare with a credit card, a fee that means the airline are profiteering from you to subsidise a business class customer who’s paying $17.50 (.35%) on their $5000 Business class airfare. Air New Zealand deny that credit card surcharges generate a profit and that they “all average out” at the end of the day. Such a change will ensure that all such charges are fully transparent to customers and that Business class customers pay the true cost of their credit card payment and are not being subsidised.
Such changes are going to be equally liked and hated by customers but at the end of the day it delivers transparency to the payments process. If you’re addicted to points then it’s time to enjoy the ride while it still lasts, because its likely to end very abruptly in the not too distant future.
IMPORTANT UPDATE: As of the 6th April (the day after this went live) Air NZ have had a “policy change” that now means these new P class fares CAN NOW be upgraded like other classes of fares. This means that F class (Grabaseat) fares are the only revenue fares that can’t be upgraded.
If you’re a frequent flyer like myself you’ll enjoy the benefits of upgrades when travelling on Air New Zealand. If you’re Airpoints Silver, Gold or Elite you’ll receive Recognition Upgrade(s) that can be used to upgrade to the next booking class, ie from economy to premium economy, or from premium economy to business premier. For those who don’t have Recognition Upgrades, AIr NZ operate a PlusGrade platform known as OneUp that allows you to bid for an upgrade, or if you’re Airpoints Elite you can upgrade by purchasing an Elite Standby Upgrade.
All of these upgrades are available on regular paid booking classes. For travel to the US these classes are as follows -
Economy - K/G/S/L/T/W/V/Q/H/J/M/B/Y
Premium Economy – A/O/E/U
Business Premier – J/Z/D/C
For the past few years Air New Zealand have been promoting cheap international flights on their Grabaseat website. Many of these flights (particularly to North America) are in a special promotional fare class known as F class. Bookings made in this class are non upgradeable, meaning you can’t use any form of upgrade to escape economy class. It’s important to note as well that F class airfares are ONLY available from the grabaseat booking engine, they can’t be booked on the main Air NZ website, or a travel agent via GDS.
From the Air NZ website :-
Airpoints Upgrades are not available on all Air NZ operated and Star Alliance operated Flights. For example, Airpoints Upgrades cannot be requested for Companion Tickets, travel industry fares, prize and promotional Tickets, grabaseat™ greenlight fares and Flights booked in certain discounted or low cost booking classes, including F class..
Over the past week Air New Zealand have been offering some pretty good deals to the US with fares as low as $899 return. These fares have been available from the Air NZ website along with travel agents via GDS.
What Air NZ have failed to mention is the introduction of a new booking class – P, which is being used for these flights, is non upgradeable. If you book a P class fare you can’t use a recognition upgrade, OneUp, or Elite standby upgrade. Don’t go hunting for this mentioned anywhere because you won’t find the rule – it’s not listed anywhere. Your fare simply can’t be upgraded on the Air NZ website, and a call to the call centre will confirm this. There is also no mention of this in the fare rules so a travel agent booking this would also be unaware of this new restriction.
Purchased a Fitbit from Dick Smith and not yet received it? Don’t run to the news media because they won’t help you.
Unless you’ve been living under on another planet for the last few months you’ll know that retailer Dick Smith is in the process of being shut down after being placed into receivership in early January.
In mid January media reported cases of people who had prepaid for Fitbit devices at Dick Smith during their Boxing Day sale and were promised new stock when it came in.
Followed the next day by a follow-up story http://www.stuff.co.nz/business/industries/76183887/Fitbit-investigating-after-Dick-Smith-fails-to-front-up-with-tech
And a few days later by another follow-up where Fitbit and retailer Harvey Norman had partnered to offer a FItbit to any customer who took their Dick Smith receipt to a Harvey Norman store up until the 29th February http://www.stuff.co.nz/business/industries/76244606/dick-smith-customers-to-get-fitbits-from-harvey-norman
Yesterday Stuff ran yet another story with a customer who had prepaid for Fitbit devices and had been trying to get them from Dick Smith without any luck. http://www.stuff.co.nz/business/industries/77698320/dick-smith-store-selling-fitbits-did-not-honour-prepaid-customer
The Stuff journalist clearly had enough time to contact Dick Smith, contact a lawyer and contact the receiver but clearly didn’t do something as simple as contacting Fitbit for comment, searching the Stuff archives, or simply using Google which would have lead to the January announcement along being carried by a number of news sites and forums along with a number of discussion forum threads on this very issue.
While it’s unfortunate for the customer to be in this situation, it poses the question of why the Fairfax journalist did such a poor job of researching the issue when a successful resolution for the customer could possibly be so easily achieved.
If you’ve in this situation of having paid for a Fitbit at a Dick Smith store and are yet to receive it it’d pay to contact either Fitbit or Harvey Norman to discuss your options. Don’t contact Stuff because they’re not going to help you.
The news media has been full of horror stories about Jetstar in recent months - and those stories will continue as Jetstar have finally released their official on-time figures for December and January
In December 2015 Jetstar’s NZ on-time performance (% of departures within 15 minutes of the scheduled time) was 64.4%. Compare this to Air New Zealand who sat at 90.8% for the month for jet services and 84.5% for regional services. January was no better for Jetstar, with on-timer performance figure only increasing to 65.2%.
It’s no secret that the wheels are falling off Jetstar’s New Zealand operations, and this further adds to the pain. There were days leading up to Christmas where flights to Sydney were cancelled multiple days in a row due to aircraft being unavailable, and compound delays of over 7 hours on their 6 daily services between Wellington and Auckland. Trying to run aircraft with extremely high daily utilisation means that delays are hard to recover from, and their current schedule simply can’t cope. Their problems aren’t just not meeting the 15 min timeframe, they’re that delays are routinely 3+ hours once aircraft are delayed.
Sure competition is great, but right now Jetstar are not competition for Air New Zealand. They’re the laughing stock of the airline industry. Sure their prices may be cheaper, and if you’re willing to arrive at your destination +/- 2 days they’re probably an OK option.. For those who want to arrive on time, they’re a risk not work taking.
Jetstar long claimed they were NZ’s most punctual airline, and Air New Zealand was mocked by many for targeting this in marketing campaigns as a lie. The stats don’t lie however, and they should be incredibly embarrassing for Jetstar and their industry partners.
I’m luckily enough to be in Las Vegas for CES, and hoping to write something at the end of every day to sum up some of the cool stuff I’ve seen.
Today marked the opening day of CES ,however I’m luckily enough to have a media pass so have been to a number of events and keynotes on Monday and Tuesday. What follows is just a few notes and observations followed by a few photos. I’m just writing these as brief notes.
My day started with a guided tour of the LG stand. I’m not aware of any other NZ media here at CES and so I was with a few Australian media. LG were big on two things – TV’s and their IoT solution called SmartThinQ where huge. IMHO LG really lead the TV market right now (assuming you can afford it) with their OLED solutions. OLED took centre place, along with the new WebOS3 which is the operating system used on their TV’s. All the usual apps are there, but WebOS3 brings enhancements for SmartThinQ – where is their IoT (Internet of Things) solution. Imagine if every appliance in your home cold be connected, and controller, from your TV or from an app. This isn’t a dream, it’s reality. Everybody is doing IoT here and it really is the latest buzzword. Everybody is talking about “open standards” but the reality is there aren’t any. Everybody is building their own systems and hoping to get other vendors on board – welcome to the TV app market all over again.
TV’s are a big deal. 4K is becoming the norm, but HDR is now where it’s at. If you don’t know about HDR it’ll probably pay to Google it – but in an environment like CES it’s hard to tell who’s really telling porkies. I visited Sony, Samsung, Panasonic and LG and listened to every single one of them trash the other. In an environment where TV’s are clearly optimised to show the differences between HDR and non HDR content it’s really hard to gauge where things are at. My personal view however is that LG’s OLED is still ahead of Samsung’s much walked about Quantum Dot technology.
LG also displayed their new 98” 8K OLED. I have nothing else to say about this but wow. Estimated RRP when it hits the market this year is somewhere around US$40,000.
Drones are huge. They’re not just huge, they’re HUGE. They’re everywhere. Drone technology is advancing so rapidly that anything you buy is pretty much obsolete by the time you walk out of the store. 360 video and personal tracking (such as filing you skateboarding or mountain biking) are where it’s at. Just don’t ask about battery life.
I attended the Intel keynote last night, and had a good look at what Intel have on display. It’s safe to say it’s amazing. Intel Curie (it’s embedded mobile) is going to change the way we watch and engage with live sport. Intel have partnered with Red Bull for extreme sports to really show off – real-time analytics showing performance, G forces, speed and movement are going to change the world. The potential for Curie was also show off with their partnership with Oakley delivering sunglasses that act as a personal trainer,
I also got the chance to have a look at a Tag Heuer smart watch (disclaimer – I own a Tag Heuer so am a fanboi!) and really only have one thing to say – OMG. It leaves every other smart watch for dead in terms of styling.
Retro was back with turntables. Panasonic have re-launched the Technica brand with turntables, and many other manufacturers also had them on display. Headphones were also everywhere, but I’ll hopefully get to spend some more time tomorrow.
Panasonic had their Panasonic Aero IFE systems on display – I know Air NZ announced earlier in the year they;re looking at some of their API’s to allow access to view and bookmark movies that will be on your flight before you fly. Hopefully they integrate this into the Air NZ app at some point.
And lastly 802.11ad finally hit the market with routers being announced. 802.11ad will deliver up to 2.4Gbps of real world WiFi throughput, however the 60GHz band means an AP in every room will be essential!
That’s it from day . Hopefully I’ll update this again tomorrow.
I'm attending with a media pass so will have access to some behind the scenes stuff that the general public don't. My plan is to hopefully have a blog post up each night with some of the best things I've seen that day.
Since there are a lot of you here who will never get the opportunity to go, I'm keen to help out others. If there is a product or company you'd like to know more about, post a question or suggestion in the thread http://www.geekzone.co.nz/forums.asp?forumid=48&topicid=189462 or post a comment here. I'll see what I can do (no promises).
Stuff today reported what was almost an obituary for Snapper. While it may have come as a surprise to some, it was hardly news. The real story is the one behind the scenes.
Before we look into the bigger issue, lets take a look at the history of Snapper. Infratil subsidiary NZ Bus own and operate bus services in Wellington, Lower Hutt and Upper Hutt under the Go Wellington, Valley Flyer and Runciman’s brands under contract. By 2006 their existing card based ticketing solution was horrible and cash fares were a nightmare to deal with. They needed a solution, and that solution was a contactless smartcard. Infratil also had just the man to launch a product, and with that, Snapper was born. The company was headed up by Charles Monheim. Monheim, who had headed up Tfl (Transport for London’s) Oyster Card ticketing system from 2001 to 2006 had the perfect skillset required to launch a new ticketing system.
Snapper opted for a system based on the Korean T-money platform, with the actual Snapper “card” bring a JCOP (Java Card Open Plaform) application that resides on the card. This platform had been in use in Korea for a number of years and had a number of advantages over other solutions, particularly competing MIFARE based solutions at the time that were dealing with ongoing issues with the encryption on cards being broken rendering the cards open to being compromised.
Snapper hit the ground running in July 2008 – literally. Problems arose with buses that didn’t yet have readers, and the accuracy of billing for some journeys was a nightmare that took quite some time to solve. Over the coming months however the issues were sorted, and as we now look at the product 7 1/2 years on from the launch it’s safe to say it’s fulfilled it’s purpose of delivering a solid contactless solution for Wellington bus customers.
Within months of it’s launch in 2008 it was clear Snapper were out to play hardball. Attempts to convince both Mana and Newlands bus companies to offer the product failed – in part because both took issue with the link between Snapper’s owner Infratil, and NZ Bus. As Snapper would have access to full details of passenger numbers and routes the fear was they would then provide this to NZ Bus who could potentially then tender against Newlands or Mana to operate services. This lead to the GWRC (Greater Wellington Regional Council) also privately having concerns about expansion of Snapper – what would happen if NZ Bus lost the tender for bus services but controlled all the ticketing? What conflicts of interest are there when both share the same parent? They’re all issues that have plagued Snapper since the launch, and to an extent still plague it today.
2008 also marked the announcement by ARTA (Auckland Regional Transport Authority) of it’s plans for a new integrated ticketing solution for Auckland across all buses, trains, and ferries. NZ Bus owned several bus companies in Auckland so took the initiative to launch Snapper into the Auckland market, promising that they could deliver a full solution and have it in place before the 2011 Rugby World Cup at a fraction of the cost of other suppliers. Unfortunately for Snapper several key members of the ARTA had some well known personal grievances with NZ Bus, which in turn meant Snapper was on the out, before it was even in.
It was around this time that the NZTA (New Zealand Transport Agency) stepped into play pledging to help fund integrated ticketing in Auckland, providing they had a say in the solution and day to day running. Their plan was to build a system for Auckland that in time could then be rolled out to other cities in New Zealand achieving economies of scale that would somehow “save” money. Snapper dug their heels in – they had a system in place and were gaining traction with micropayments but the NZTA wanted none of this. A deal was done with French giant Thales to provide the bulk of the backend systems for the ticketing solution and terminals for trains and ferries. Terminals for buses would be available from two vendors, with Snapper pledging their system could be made compatible meaning their terminals would stay.
I don’t need to write about the disaster that evolved over the next year or so. Thales struggled to deliver on time, the AIFS (Auckland Integrated Fare System) which was key to the actual billing of journeys was a joke, and Snapper along with the other bus terminal vendor (who’s name completely escapes me right now) had trouble making their terminals compatible because they had a) nothing to test against because AIFS wasn’t built, and b) because the specifications kept changing. We all now know the outcome – Snapper pulled out of Auckland, Thales took over all bus terminals, and in 2012 HOP was launched with the cost blowing out to somewhere in the vicinity of $100 million. Since that day it’s either been plagued by problems or the best solution to ever hit the market - depending solely on the side of the fence you want to sit on. Needless to say both parties believed in some very different things – Thales, NZTA and ARTA were very much about building closed, proprietary systems. Snapper were all about building open systems. It really is no wonder heads clashed with such differing views.
The involvement of the NZTA in Auckland was critical. Their involvement resulted in the creation of NITIS (national integrated ticketing interoperability standard) along with the concept of a centralised system for overall management, but with individual clearing houses for each city or town that wanted to jump onboard. This clearing house concept is quite important here – unless fundamental changes are made to the clearing house model you will not be able to use an Auckland issued HOP card in any other region, or use (say) a Wellington HOP card in Auckland. The NZTA also don’t want their solution used for anything but public transport. Both approaches differ significantly to what Snapper believed in, with Snapper pushing it’s use in taxis and parking along with micropayments.
While it wasn’t clear to many at the time, the future for Snapper became a little less uncertain after HOP went live. With the NZTA committing to funding integrated ticketing outside Auckland on the condition integrated ticketing solutions were fully compliant with the NITIS specifications (something Snapper wasn’t) . Here in Wellington our slightly backwards GWRC still saw no need for integrated ticketing across all buses and trains and saw it as a solution looking for a problem, despite the fact the advantages of integrated ticketing across buses and trains are just … logical.
Move on to 2015 and integrated ticketing is finally on the cards at GWRC, with plans to have a solution in place towards the end of the decade. GWRC really only have one option for a solution, and that’s piggybacking on top of HOP. Deploying Snapper across the rest of the trains and buses in Wellington would cost a fraction of the cost of jumping onboard NZTA’s solution, and no doubt start raising all sorts of questions all over again about why HOP cost so much money not just on a solution, but a backwards solution.
10 years ago the concept of a piece of plastic to pay for public transport was a great one. It replaced cash and was reloadable. As we enter an era of smart devices and contactless payments in the form of Visa’s Paywave, Mastercard’s Paypass, Apple Pay and Samsung Pay the game has changed. Carrying around another piece of plastic to pay for a public transport journey feels backwards. Oyster card usage in London has plummeted this year with the adoption of Paywave, Paypass and Apple Pay to pay for all public transport journeys. Passengers no longer need to worry about carrying around an extra card and topping it up, and for tourists it makes using public transport incredibly simple.
The sad aspect of such advances is that the NZTA don’t believe in such things. Their concept of a closed model means HOP users are unlikely to see solutions such as this anytime soon. It’s highly likely you’ll see a mobile phone app but that’s hardly groundbreaking stuff – Snapper did that 3 years ago with their touch2pay solution which was the first of it’s kind in the world. Simply tagging your smartwatch against the reader to tag on and tag off may be the way of the future in some countries, but New Zealand won’t be one.
All of this poses one big question. With all of the talent we have in New Zealand, how did we end up with the NZTA spending $100 million to build a solution based on French technology that doesn’t fully meet the needs of public transport users? The hardware isn’t the complex part, it’s the software that is. The clearing house and interchange model used by HOP is very inefficient, and issues such as online top-ups taking 3 days show the downsides of the current solutions.
Is it time to for Wellington to simply tell the NZTA were to stick HOP and build our own open standards solution for public transport ticketing?
Anybody who knows me will know I’m a bit of a travel junkie - I love planes, and I love travel. I have flown around 50 plane flights per year over the past few years, with at least 2-3 trips to the United States every year, and typically flights to Australia every few months. All of this means a lot of time spent on planes, and in particular a lot of it spent on Air New Zealand planes. Despite their many failings including a very flawed Airpoints loyalty program and the extreme cost cutting attitude of the current executive team, I am still a very loyal customer.
Unless you’re flying on a low cost carrier, the expectation of most people flying on a plane these days if some form of in-flight entertainment (IFE) system, whether this be the more common seat back screen, or the airline supplying tablets to customers. Onboard WiFi is becoming increasingly common and is the way of the future, but until bandwidth issues between planes and the ground are eliminated this is still a few years away from becoming the norm - the seat back screen isn’t going anywhere fast.
Airlines both love and hate seat back screens. With the exception of newer generation systems launched in the last year or so which have made huge advances, IFE systems are typically expensive, power hungry, heavy, bulky (ever noticed the big boxes sitting under your economy seat taking up all your leg room?) and 300+ screens emit a huge amount of heat in the cabin that needs to be cooled. Without an IFE system however, passengers would baulk at flying on a plane for 12+ hours with absolutely nothing to do.
All of this brings me to my recent flights with Air New Zealand. Out of my last five long haul flights I’ve had the IFE system for my seat fully functioning on only one of those five flights. The other four flights have ranged from minor issues right through to a totally non functioning screen on my flight back from Vancouver last week. If I was to look back even further I’d estimate that system issues requiring seat reboots for my seat or individual seats around me where I’ve heard customers reporting issues, or full mid-flight system reboots occur on probably 30% of all flights. All of this poses one big question – why are these expensive systems so bad? If a TV manufacturer launched a TV that simply decided not to work some days, required reboots half way through your favourite TV show, randomly become non responsive, or suffered loss of audio sync, there would be outrage. People would be demanding their money back.
Air New Zealand use Panasonic Avionics as their IFE vendor. Across their fleet Air New Zealand operate three different IFE platforms – older generation Panasonic eFX systems on it’s A320 and 767-300 fleet, newer generation Panasonic eX2 systems on it’s 777-300 fleet, and the latest generation Panasonic eX3 systems on it’s 787-9 Dreamliner and 777-200 fleet (of which all aircraft flying have been newly refitted at the time of writing this from an older Thales system). The architecture of these individual systems varies greatly due to massive technology advances in the 10 years since the EFX system was new, and the launch of the eX3 system has seen Panasonic move from Linux to Android as it’s core operating system powering the IFE system. Tales of instability issues on the eX3 platform are well known – Air New Zealand had Panasonic engineers flying on 787 Dreamliner flights at one point so they could fix things when they broke.
Earlier this year Air New Zealand deployed new software updates to the eX2 systems on the 777-300 fleet to deliver a similar user interface (UI) as that used on the newer eX3 systems. As the eX2 screens aren’t multi point capacitive they can’t support swiping unlike the eX3 screens, but the look and feel is now similar. This software update immediately caused the in-flight maps to break and caused general instability issues across the fleet. As aircraft couldn’t easily be taken out of service to work on the issue many of these planes simply flew around broken for weeks. I flew through to London in June via Los Angeles in Business Premier and had pretty much an unusable IFE system on both flights on two individual planes. While the in-flight service managers (IFM) on both flights were extremely apologetic, I got the feeling from both that they were increasingly frustrated at the faults and felt that members of the IFE team on the ground were seemingly in denial that such issues existed.
Last week I flew to Vancouver for a quick week long holiday and got to experience the new eX3 system on a new 777-200 refit. On the way over the system worked flawlessly. On the way back the system was totally broken for both my seat and a number of other seats in the plane. Multiple seat reboots and help from the engineering on the ground was unable to solve the issue. Short of a full system reboot that would take down the entire aircraft for around 15 minutes (something crews will only do as a last resort due to the massive inconvenience it causes to all passengers) there was nothing that could be done. I sat there for 13 hours with no IFE and unable to use my laptop due to the incredibly crammed seats in economy class. While I managed to cope (and a generous Glenmorangie from the super friendly IFM at least helped me sleep!) the passenger behind me showed the level of expectation that many passengers have for an IFE system – he wanted (or should I say expected) to be upgraded to a seat that worked in Premium Economy or Business Premier. Needless to say that didn’t happen.
All of this poses a few big questions. Why are Air New Zealand’s IFE platforms so poor? Who is at fault? Panasonic for building poor quality products or Air New Zealand for poor implementations? More importantly why do flight crews believe that ground staff aren’t listening to their complaints and fault reports?
Am I just the unluckiest customer ever when it comes to issues? Or do other people see the same problems? I’d be interested in your comments.
Anybody who knows me and has read my numerous blog posts about Uber will know I’m a fan. I’ve used Uber in a number of countries and love both the concept of the product, and the product itself.
In the last month I’ve used Uber to get from my office in Wellington to Wellington airport. Both times I’ve been charged $25, and on both occasions the fare estimate was significantly less than this. After spending a bit of time looking into this it seems that Uber charge a flat $25 rate to get from Wellington Airport <-> Wellington CBD according to the Uber website, but make no mention of this anywhere in the app. For areas in the city (such as my office) where the estimated fare is in the $16 - $21 price range depending on the time of the day, you’re automatically charged $25 for the journey. As much as I like Uber, I don’t like being ripped off, and Uber have ripped me off. Twice.
Lets have a look a few random locations around Wellington
And the Uber website
I asked @uber_nz about this on Twitter, but it seems they’re not the most prompt when it comes to engaging on social media.
In the meantime you may want to be wary of being overcharged. There are a number of taxi companies that only charge $20 flat rate to get from the CBD to the airport.
I love flying. I also love Air New Zealand. As a HVC (high value customer) I fairly regularly get customer surveys and I normally take time to fill these in. Over the last year or so the line of questioning in these surveys has become incredibly bad, and it really worries me that business decisions are probably being based on data from surveys where the questions are so poor that any such data probably has no meaningful real world value.
The most recent survey sent out on Tuesday night takes things to a whole new level. This survey attempts to look at regional flight offerings, grabaseat and people’s feelings towards Jetstar. A couple of spelling/grammar mistakes in the survey can be overlooked, but the actual questions posed by the survey make me seriously wonder whether anybody from Air New Zealand or TNS (who conduct the survey) bothered to actually ask themselves whether any of their questioning made sense.
Multiple questions refer to grabaseat being an airline. Multiple questions also seem to ignore the fact grabaseat is not a standalone booking site and merely uses the main Air New Zealand booking site for all flights. Every flight listed on the grabaseat site is also shown on the main Air New Zealand site, as this is what is used for the actual booking.
Since when did Grabaseat become an airline?
Once again Grabaseat is referred to an airline (if you excuse the grammar). I’m not quite sure how you’re supposed to answer any of these questions in the context they’re posed!
I hope nobody said they searched for flights on a mobile phone that isn’t a smartphone!
Any Air New Zealand HVC knows that the recent slash & burn cost cutting across the airline has delivered great profits while cutting many customer benefits and services. It also looks like it’s resulted in the culling of staff who understand how to write a customer survey.
It’s very clear that Air New Zealand face some very significant challenges from Jetstar in their home market over the next year. After bleeding money for the last few years Qantas are profitable again, and have declared war on Air New Zealand for meddling in the Australian market with their stake in Virgin Australia, something that has resulted in a fairly significant financial hit for Qantas on their home turf. They’ve decided to take revenge in the best way possible - deploying additional Jetstar resources into the New Zealand market in an attempt to hurt Air New Zealand on their home turf. I wrote about this a few months ago and still believe Jetstar have left this far too late, but it’s clear this will still have an impact on Air New Zealand. Qantas don’t care if Jetstar is never profitable in New Zealand (and it probably never will be) – if they can hurt Air NZ they’ll consider that a win.
Air New Zealand should focus on what they’re good at. Writing customer surveys clearly isn’t one of those things. If you want feedback from your HVCs then creating more focus groups and engaging with customers in real life is the way to get the feedback you’re after. I know I’d be more than happy to give plenty of feedback and comments as to how Air NZ could improve many of it’s products, services and brand if you were to only ask. I’m sure plenty of my friends who fly far more than my lowly 40-50 plane flights per year would also be more than happy to offer their services also!