Last month, Air New Zealand announced a $336 million pre-tax loss for the last financial year. There are plenty of legitimate explanations: soaring fuel prices, grounded aircraft, rising maintenance costs and an increasingly expensive aviation system.
But the airline’s new strategy raises an interesting question.
Te Pae Hou – Our Future outlines three strategic priorities: Customer First, Targeted Growth, and Resilient and Future Fit. My recent experience suggests these may require some careful balancing.
In June, I achieved a personal – unwanted – record: disrupted returns to Wellington on three of the four Fridays in the month!
Nobody can blame Air New Zealand for Wellington’s weather, nor even for a fire in the terminal that breaks out as you’re on final approach.
What interested me was the striking contrast between two of these experiences. They left me wondering whether two different cultures are competing within our national airline.
Three years ago, I wrote about what I saw as a shift in Air New Zealand’s strategy. Under then Chief Executive Greg Foran, the emphasis appeared to be moving from the distinctive customer experience which had long inspired deep loyalty to our national airline, towards cost, efficiency and operational performance.
My June experiences brought that question back.
On the first Friday, after two unsuccessful and very bumpy approaches into Wellington, we diverted to Christchurch to refuel. By then, we’d all spent more than 2½ hours strapped into our seats.
While on the ground, we heard that Wellington had reopened. Our hopes rose.
Then came the announcement: we were returning to Auckland and would be rebooked the following day.
From the customer’s perspective how did that look? Everyone on that flight had boarded in Auckland expecting to arrive in Wellington. Wellington, we’d heard, was open again and lies close to our route north. Yet about 140 passengers were flown back to where they had started, losing their Friday evening, many of them incurring an unexpected night’s accommodation.
Perhaps there were sound operational reasons. Airlines are complex systems and passengers don’t see all the constraints.
But that is precisely the point.
When operational requirements collide with customer needs, which takes priority?
Whatever the reason, we’d all have welcomed some explanation. We received none.
Three weeks later, I saw the other Air New Zealand.
Another storm had closed Wellington Airport and I was automatically rebooked from Friday, to Sunday morning. After watching seats on flights earlier in the weekend appear and disappear on my iPhone app, I phoned Air New Zealand.
The customer service agent — let’s call her “Rosie” — eventually found me a seat on the last flight on Saturday. I was grateful; she had saved me one unwanted night in Auckland.
Ten minutes later, my phone rang.
Rosie again.
She’d had a spare minute between calls and, without my asking, she’d kept looking. A seat had appeared on Saturday’s 8.00am flight and she had grabbed it for me. Would I like it?
Did she need to ask?
Rosie hadn’t merely processed my request. She had understood what I really wanted – to get home for the weekend – and had taken responsibility for delivering it.
That was the Air New Zealand many New Zealanders grew up feeling unusually loyal to.
And there lies the strategic challenge.
Air New Zealand is pursuing substantial further cost savings as it tries to restore profitability. That need not conflict with Customer First. Good operational performance and good customer service should reinforce each other.
But, under pressure, priorities reveal themselves through choices.
The last year’s loss for the airline cannot fairly be blamed on poor customer service. Many of its causes are beyond its control.
Yet Air New Zealand won’t cost-cut its way back to greatness.
Its competitive advantage has never simply been flying aircraft efficiently between airports. Competitors can do that. One of its great assets has been something harder to replicate: people like Rosie, empowered to understand what a customer needs and motivated to do something about it.
So perhaps the real test of the new strategy is simple.
When Customer First and Resilient and Future Fit pull in different directions, which one wins?
Air New Zealand’s frontline people know the answer they’d prefer to give – as, I suspect, do most of their passengers.
Do their bosses in head office agree?
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