Air NZ upgraded domestic service

The introduction of Koru Hour by Air NZ on its domestic Boeing 737 services heralds the end of the fully low cost model for its domestic market. It launched Express Class back in 2001 partly to arrest costs, but also to be pro-active competitively against what was seen as the imminent arrival of Pacific Blue.

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Express Class saw the airline do away with inflight meals (which were served on all routes with aircraft that had cabin crew) and business class. The public indicated that it preferred paying lower fares than getting food on a short flight, and with the exception of MPs and the occasional super wealthy individuals, business class on domestic flights largely comprised of free upgrades and connections by those to and from long haul international business class flights. I once experienced the absurdity of it all consuming, just, a 3 course hot breakfast from Wellington to Christchurch in domestic business class. Express Class meant that only tea/coffee and mineral water would be offered with a cookie. This looked remarkably like what Air NZ once offered before the arrival of Ansett NZ in the mid 1980s.

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Express Class was a stunning success, largely by shifting the entire sales model from travel agents and call centres to the internet. The public could compare fares online and book at minimal cost, and with the added bonus of self service checkin at the airport, it significantly reduced costs for the airline, and improved service. Meanwhile, the cuts in fares dramatically increased demand for domestic air travel. The effect was significant enough that it effectively killed off competition in the form of the Northerner between Wellington and Auckland, and forced bus companies to cut their fares.

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However, the premium end of the market has felt somewhat neglected. One of the positive changes was that food in Koru Club lounges was significantly improved, to offset the end of catering on board, but the airline felt the backlash from an announcement late last year that it would be adding a row of seats to its 737 fleet and reducing the leg room in almost all rows to a standard level. With the planned Qantas alliance dead and buried by competition authorities, Air NZ feared that it could face being cherry picked on both sides by Qantas and Pacific Blue.

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Pacific Blue's entrance could rival Air NZ for low cost traffic, whereas Qantas was quite capable of appealing to the premium end of the market with upgraded product. Air NZ's decision to adopt Koru Hour is its first step to secure the business market which it largely has to itself. It is an enlightened move.

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Koru Hour is described on the website as follows:

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All weekday 737 and A320* flights between Auckland, Wellington, Christchurch Dunedin and Queenstown in the mornings before 9am, and evenings between 5pm and 8pm are KoruHour flights. Start the day with great tasting Gravity plunger coffee, OJ, muesli or a muffin and a complimentary newspaper. For evening flights wine, beer and L&P are added to the beverage service and are served with a selection of Kapiti cheese, crackers and grapes.

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So in effect, a light breakfast on morning business period flights, and drinks and snacks during the evening. A light snack service is also offered during the day and late.

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"During the day, after 8pm, and all weekend, a selection of great tasting snacks are being introduced - healthy dried fruit, savoury Cassava chips and sweet NZ lollies as well as tea, coffee and water."

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So what? Well for business travellers, the convenience of a light breakfast on board means a lot, especially those without Koru Club access, and adding some drinks in the evening will add to the product seeming to be better than Pacific Blue's low cost approach. Smart travellers will compare one way fares of all airlines and choose whether to sacrifice service for price, or whether they can get a better deal on Air NZ with better service.