Air NZ axes local business class

Friday 3rd May 2002

Air New Zealand has given Qantas a gift-wrapped opportunity to cannibalise its most profitable customers by dumping domestic business class.

The decision, part of a massive cost-cutting exercise which will also see the ditching of meals and entertainment, spells doom for the domestic carrier on its main routes.

Business commentators are already predicting an exodus of customers to Air New Zealand's Australian competitor, which has explicitly stated that it wants to kill the little Kiwi battler.

Dumping business class and adopting a no-frills type service on New Zealand's main routes is part of the strategy to lower the overall cost base and return the airline to sustainable profitability.

The upside is that Kiwis can expect cheaper flights between Auckland, Wellington, Christchurch and Dunedin.

It will still retain a full-service business shuttle on its Auckland to Sydney and Melbourne routes.

Air New Zealand will also restructure its air points loyalty programme in a strategy that trades off a loss of traditional services against price.

But many are predicting professionals will forego sitting in homegrown cattle class for the business comfort of Qantas.

Air New Zealand chief executive Ralph Norris said: "The mystique of aviation in the past has gone and it is now ... [a] product which customers want to be value-driven.

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