A change in altitude
Air NZ chief customer and sales officer Leanne Geraghty tells Grant Bradley a hail of feedback, some hard to hear, has driven a deep rethink as the airline hits revival mode
Whilst there’s been a year of challenges and difficulties, there is so much opportunity that lies ahead.
Leanne Geraghty
Flying into a pandemic means a day can be a long time for an airline. A year can seem like half a lifetime. 12 months ago the axe was hanging over thousands of Air New Zealand workers, its executive was in the throes of being radically restructured, it was opening up many lounges for the first time in months, and it was tentatively re-entering the regional business market.
Now, chief customer and sales officer Leanne Geraghty says the airline is into the revival phase of a years-long recovery, looking forward to July domestic bookings running stronger than pre-pandemic levels, and demand for Rarotonga is hot enough for the airline to work on ways of putting more flights. It is also working on myriad ways of taking on what it knows will be a surge in competition.
The airline is far from out of the woods, nearly two decades of profits and dividends now replaced by heavy losses, and in the midst of what last July was set out as an 800-day survive, revive and thrive programme.
Geraghty, known widely as “LG,” has been in the executive role for the past eight months and knows there’s a long way to go — this week’s snap Melbourne lockdown the latest disruption to contend with. But there’s a shift in gear.
“The opening of Tasman and Cook Island bubbles was a pivotal moment for the airline, and it does mark the move for us from survive into the revive phase in the rebuilding of the airline. We’re incredibly pleased that those bubbles are up and operating.”
On the Melbourne pause, she says that comes with flying through Covid19.
“We went into the Tasman bubble expecting . . . there would be ups and downs. Operationally where we’ve become quite accustomed to the pauses — the most disruption obviously comes to our passengers unfortunately.”
The airline would continue freight flights to Melbourne.
Last year, once out of the emergency phase of the pandemic where the airline had to maintain skeleton services safely, it has taken a long, hard look at itself and been listening to feedback from its customers.
Geraghty, who was born and spent her childhood in the inland New South Wales town of Gilgandra, joined Air New Zealand in 2004.
Since then there’s been a period of largely consistent and at times rapid growth. That stopped suddenly last year and if there’s one positive from the pandemic it has been the opportunity for deeper introspection.
“We’ve had an inordinate amount of feedback, some of it’s been really positive, some constructive, some really hard to hear, but we’ve actually taken all of that on board.”
The airline took a hammering from its tough line on non-refundable tickets, difficulty customers had contacting it and its slow response to explaining what it was doing.
It not only faced blowback from customers but its majority shareholder. The Government with a 52 per cent stake on behalf of New Zealanders, has explicitly and forcefully spelled out what it expects of the place the airline has within the economic and social makeup of the country. “There are clear expectations from the Government around our core purpose as Air New Zealand to connect New Zealand to the world and across the country and that, obviously, weighs in on what we do,” she says.
The Government has provided a $900 million backstop loan, subsidised wages during lockdowns and continues to provide financial support for the airline’s cargo operations.
Geraghty says there is a lot of interaction with the Beehive.
“As a business trying to shape the business to deliver on customers’ expectations, deliver on our shareholders’ expectations, not only the Government but the remainder of our shareholder base.”
Before moving to Auckland six years ago, she led the highly effective sales and commercial push into Australia where Air New Zealand still punches well above its weight.
Just prior to joining the executive she was group general manager airports, and was responsible for more than 1800 staff and operations across 50 airports internationally.
“It’s been an interesting transition, but it’s been actually an exciting one because it, you know, whilst there’s been a year of challenges and difficulties, there is so much opportunity that lies ahead.”
The last time Air New Zealand came out of a financial crisis — its near-collapse in 2001 — it emerged with customer-centric strategy under Sir Ralph Norris to “fly people not planes”.
Right now there’s an echo of that. “I very much looked at this as a time for us to really take a deep look at how we interact with our customers, the propositions and offers that we’re providing in market, and making sure that as we rebuild, we’re coming back with really strong products and offerings that align with what customers want,” says Geraghty.
It’s been a time to “reimagine” what the airline can be and it has launched a new brand campaign, “We fly for you,” she says.
“And basically, it’s the way in which we bring our organisation’s promise of manaaki (showing respect and care) and taking better care than any other airline for its customers.”
Geraghty says it puts a line in the sand and publicly says the airline is putting customers at the core of everything it does.
“People, and our products and the service offering is the key differentiator for us and that holds us to our commitment of delivering to our customers.”
Air New Zealand is introducing a series of new measures including:
A $400 cap on domestic sectors
This has been quietly rolled out over the past few weeks and guarantees passengers won’t pay more than $400 for a non-stop flight no matter what fare type or when it was booked.
Previous maximum listed fares were closer to $500 and its website shows that its longest non-stop domestic flight, from Auckland to Invercargill, booked at very short notice does cap the direct flights at $400 although two-sector indirect flights are more.
“We’re really conscious about airfares obviously because we get a lot of feedback on that. In the past 12 months we have actually sold 39 per cent of our seats for under $100.” That amounts to 3.7 million seats.
A $100 cap on groups which miss domestic flights
Geraghty says families do get caught out and miss check-in cut-off. The airline used to charge $100 per person to amend the booking at an airport but that would be changed to $100 per booking group.
“If you’ve got a family of six . . . $100 previously would have been $600. We know that’s quite significant for some people [so] we’ve made that change.”
A fare discount subscription scheme
A 1000-customer Gotta Getaway trial is under way where for a $95 annual fee you’re offered short-notice discounts of up to 50 per cent on domestic fares. Up to three additional members can pay $50 to be part of your group.
Passengers must stay for a minimum of two nights at the destination and be those who have flexibility to travel, although Geraghty says it’s not just retirees who applied to join the trial. “It’s a trial but it’s really an opportunity for us to help people travel and to stimulate people to travel to parts of New Zealand that they may not have otherwise done or to take an extra trip on top of one that they may have previously decided to do.”
New food and drink options on domestic flights
This week a group is trialling new food and beverage options on six sectors, including wine in individual bottles instead of fee pour during Koru Hour flights. Tea, coffee, cookie and corn chip options are also up for review following the seven-week trial. Geraghty says complimentary food and beverages would remain although the airline was “open to exploring other options as well”.
Fast Bag trolleys are coming back
Popular with business travellers to the regions, the system has been refined, says Geraghty. While passengers will now have to check bags in they will be able to retrieve them on the tarmac for a fast getaway from the airport, which research had found they regarded as most important.
Geraghty also updated the airline’s new way of dealing with compassionate refunds, with a team set up last month to consider them. Around 3000 people have applied for them since and close to 90 per cent of them have got their money back on financial hardship or medical grounds.
The airline also allows passengers with fares in credit to manage them online and so far 400,000 people had used it to redeem fares. The airline is redesigning its loyalty scheme to better reward high-value customers and that’s work in progress, as is the long-awaited redesign of its Business Premier cabins and seats, due to be rolled out in its next fleet of Boeing 787 Dreamliners.
Demand outlook
While domestic demand as well as that for Rarotonga is strong Geraghty is more downbeat about transtasman, where she says it is in line with expectations. Following the announcement of the quarantine-free bubble Air NZ and its only rival on the route, Qantas, poured capacity into it but quickly reduced that to meet more subdued demand, especially out of New Zealand.
However, she says it is showing signs of following the pattern of the strong recovery of domestic, described by chief executive Greg Foran as the airline’s citadel, providing a solid rump of about a third of the airline’s revenue.
Geraghty said after the surge in passengers visiting friends and relatives (VFR) on domestic, leisure travellers came next, then business customers and this was showing up on the Tasman in the past two weeks.
As for the return of long-haul international flights — that’s anybody’s guess.
Big-spending tourists filled the lucrative premium cabins and then took domestic flights and were critical in building up revenue to close to $6 billion under her predecessor, Cam Wallace.
She says — with a touch of weariness — that planning is being done daily for a long-haul restart.
“One thing I will say is that we have continued to fly across that whole 12-month period, obviously enabled through the support of the Government and the cargo schemes, so long-haul is an important element for our business. We continue to look at vaccination programmes — we look at what governments are saying in terms of border openings.”
It is hoped there could be longhaul flying by the end of the year or early next year when border restrictions ease. “But we’ve kind of given up guessing and we just keep working through the scenarios as they come through.”