Hamilton to Osaka – A comparison of airlines

Interested in Japan? Thinking about going on a holiday? Well let’s look at the total cost for various airlines to get from Hamilton New Zealand, to Osaka Japan.

To summarise, Jetstar is the cheapest with around @ $1080, Air Asia @ $1743 with the core flight between Christchurch and Kuala Lumpur being only 31% of the total fare, and Air New Zealand at $1936.

A couple of caveats before we start, we’re assuming one 20Kg bag to be checked in. We’ll try to compare as similar as possible, but there are always differences, i.e. whether you choose to buy a meal or not on a low cost carrier. We’ll be looking at the total return fare from Hamilton New Zealand to Osaka Japan, including getting to major airports, i.e. Auckland and Tokyo. I’ll pick the lowest cost mean where available. We’re looking at a travel period of one week in May 2011.

First off is Air New Zealand.

Air New Zealand has a flight between Auckland and Osaka for $1932. For your money you’re getting:

  1. 23Kg checked in luggage;
  2. 7Kg carry on luggage;
  3. Meals;
  4. Video entertainment;
  5. 11 hours, and 35 minutes flight from Auckland to Osaka;
  6. Choose your own seat;
  7. Blanket.

We’ll also have to get to Auckland from Hamilton, so add another $34 for the Intercity bus from Hamilton to Auckland International Airport.

All up you’re looking at $1936 with Air New Zealand.

Next is Jetstar.

Jetstar charge $847. For your money you’re getting:

  1. 7Kg carry on luggage;
  2. $10 credit card fee included;
  3. A 17 hour journey, including a stop in the Gold Coast.

Optional extras include:

  1. 20Kg of checked luggage (an additional $91.24);
  2. Choose your seats (an additional $8 if you didn’t purchase the luggage option above);
  3. Food for $70;
  4. Entertainment for $24;
  5. Comfort pack $14;

Which add up to roughly $199 worth of other things if you want them. Don’t forget the $34 to go from Hamilton to Auckland.

All up you’re looking at $881 (by yourself with 7kg of luggage) or $1080 (with roughly the same extras as Air New Zealand) with Jetstar.

Air Asia X

Welcome Air Asia to New Zealand! First there’s $34 to get from Hamilton to Auckland Airport, and then $158 with Jetstar to go from Auckland to Christchurch with bags (and two hours of your time).

Air Asia charge $429 to go from Christchurch to Kuala Lumpur (including credit card fee), with the following extras available:

  • 20Kg of luggage for $40;
  • Comfort kit for $20;
  • Meals for $34;
  • Pick a seat for $20;

So now you’re in Kuala Lumpur for $429 (for yourself and 7Kg) or $543. At the moment there’s no connecting transfer between Christchurch and Tokyo, so you’ll have to book another flight. Air Asia charges $780 for a flight with luggage and meals from Kuala Lumpur to Tokyo Haneda Airport. And then it’s $228 (and three hours) to catch the train from Tokyo to Osaka.

All up, you’re paying $1743 with Air Asia.

So to summarise, Jetstar is the cheapest with around @ $1080, Air Asia @ $1743 with the core flight between Christchurch and Kuala Lumpur being only 31% of the total fare, and Air New Zealand at $1936.

Air New Zealand was most expensive, but least amount of hassle, with a direct flight. Jetstar offers similar levels of service, but a connection at Gold Coast, for about half the price. Air Asia was super cheap from Christchuch to Kuala Lumpur, but the costs went up getting from Auckland to Christchurch, Kuala Lumpur to Tokyo, and Tokyo to Osaka by Bullet Train.

AirAsia.com launches flights Christchurch to Paris for $1336 return!

Great news for New Zealand, AirAsia.com have launched fares from Christchurch, with these sorts of regular return prices:

  • Christchurch – Paris: $1336 NZD
  • Christchurch – Mumbai: $942 NZD
  • Christchurch – Bali: $560 NZD
  • Christchurch – Jakarta: $606 NZD
  • Christchurch – Medan: $507 NZD
  • Christchurch – Kuala Lumpur: $423 NZD
  • Christchurch – Taipei: $755 NZD
  • Christchurch – Bangkok: $597 NZD
  • Christchurch – London: $1567 NZD

Though there are some additional costs you may be used to getting for free:

  • Comfort Kit – $10 NZD
  • 15Kg baggage – $15 NZD
  • 20Kg baggage – $20 NZD
  • 25Kg baggage – $35 NZD
  • 30Kg baggage – $55 NZD
  • Meal – $25 NZD
  • Pick your seat – $10 NZD
  • Pick your seat with extra legroom – $45 NZD
  • Credit Card Fee – $12 NZD

So really when you see those $1336 fares to Paris, include 20Kg worth of baggage both ways, meals on all four flights, your seat on all four flights, and the credit card fee, and you’re looking at $1528 NZD.

Or you could book the next available flight on Cathy Pacific for say, $2223 NZD. Only $695 cheaper…

However, there are always some other caveats to think about:

  • These flights are from Christchurch. Great if you live there. If you don’t, then you’ll have to get there. $158 NZD with Jetstar from Auckland;
  • The flights land at Paris Orly Airport, however that’s only €9.85 and 40 minutes of your life.

To summarise, great deals Air Asia, welcome to New Zealand, can’t wait to travel with you!

How Air New Zealand is taking on the Low Cost Carrier by … becoming one?

From http://www.airnz.co.nz

Air New Zealand is taking Low Cost Carriers like Jetstar and Pacific Blue head on by … emulating them. They’re now offering a full range of service from:

  • Seat
  • Seat + Bag
  • The Works
  • Works Deluxe

Let’s explore these options in more detail.

Seat and Seat + Bag compete head on with Low Cost Carriers. We’ve all seen seat only deals on Jetstar. Well, this is the same thing. Great for people who don’t have checked in luggage and who don’t mind purchasing food on the plane. Same with Seat + Bag. These services provide a subsection of entertainment (not movies though), and Tea, Coffee, and Water for free. You don’t get to choose your seat either.

A Seat only fare between Christchurch New Zealand and Sydney Australia is only … $34 NZD. That’s fantastic. There are airport charges and taxes (equal to $55 NZD) on top of that, but still, $34 NZD to the airline for the flight, amazing.

The Works provides Movies, Meals, and a Seat Request. This is for $30 NZD more than the Seat + Bag option. Since these are for short haul flights only, spending $30 for a meal and a movie doesn’t seem like amazing value for money, if you can hold on for three hours to Sydney.

Finally, Works Deluxe adds another 23KG checked bag, Premium check-in, and lounge access where available for another $100 NZD on top of The Works. With the extra bag costing $20, really you’re getting premium check-in and lounge access for $80. Do note that some airports such as Wellington International Airport offer lounge access for $30NZD, so you’d have to ask yourself is premium check-in worth the extra $50?

However, for some people it will be, as will picking a movie and their seat. And to differentiate their product in such a clear easy manner is great innovation from Air New Zealand, well done! And especially for people who may say, sure, I’ll head over on a Seat only deal, but once I’ve got the souvenirs I’ll come back on a Seat + Bag deal, I think that’s wonderful flexibility.

Ultimately travellers are becoming more knowledgeable and understanding of what they want from an airline, and considering the fundamental similarity of the product between carriers, this type of differentiation is the best method for Air New Zealand to stand out from the pack.

Can GDS survive?

Global Distribution Systems are in a position a bit like the music industry – they sit awkwardly between providers of the service, ‘Airlines’, and consumers of the service, ‘Customers’.

And while the woes of the music industry haven’t quite caught up to the GDS industry, they will. Here’s why, and what GDS systems will need to do to stay relevant.

Back in the good old days, there was a real problem for customers to book a flight on an airline. How would they access the airline’s systems? Short of going to the airport, this was an issue. But then GDS stepped in, and provided a centralised computer network that airlines could plug into, and more importantly, travel agents could plug into. Now customers could walk to their local travel agent, and book a flight. Fantastic.

But then the Internet came. And first it wasn’t a big deal, but these days it’s a game changer. I can’t imagine any credible airline these days that doesn’t offer online purchasing of tickets. It wouldn’t make sense. It would be one of the lowest cost channels for a customer to directly purchase the lowest possible fare.

And so what should a GDS do? Well let’s examine who needs a GDS.

Airlines somewhat need a GDS. Sometimes a passenger wants to fly to a destination that isn’t offered by an airline. A GDS could make the first leg of the journey with a particular airline, and then use another non-competing airline as the second leg of the journey. That’s a value add for the airline, as they’re getting a booking they normally couldn’t fulfil by themselves. If you check out Air New Zealand’s website @ http://www.airnewzealand.co.nz, you cannot book a flight from Auckland to Manila. That’s not to say there are no possible routes, just no possible all Air New Zealand routes. A GDS can deliver this.

In addition to this, a GDS provides a marketing service to airlines. An airline may only have the web infrastructure to suit a particular country or market segment, i.e. being translated into the appropriate language, and meet the appropriate cultural norms. A GDS can do this, and deliver a consistent experience for the customer regardless of the airline being offered. This means Air New Zealand doesn’t need to code a website in Korean, and doesn’t have to understand what would be appropriate and inappropriate ways to present information.

Having said this, airlines can change. What’s to stop Air New Zealand creating a web service to their booking system that Air Philippines couldn’t take advantage of, and start offering Air New Zealand routes to complement their existing Air Philippines routes? This ensures the customer stays on the Air Philippines webpage, and is offered a service that meets their requirements. Everyone wins.

And airlines are starting to offer sites in other languages and cultures as demand increases. Check out http://www.airnewzealand.com for the Air New Zealand American home page. The cost of them offering multiple languages may be cheaper than going through a GDS.

Do customers currently need a GDS? I don’t think they care to be honest. Sure, they can use Expedia to book a flight from multiple airlines, and it would meet their criteria, but often you find it cheaper to book directly through the airline. And if an airline is holding its best fares for their own website, this puts GDS sites at a distinct disadvantage.

So what’s a GDS to do? Here are my two ideas.

Focus on providing brokering services for companies that cannot afford their own booking site. Small hotels, small airlines, small tourist businesses may not be able to justify creating their own booking site. Why can’t they leverage your infrastructure and experience in providing services directly to the customer?

And secondly, provide an experience to the customer. Think about the experience as the journey, not the destination. The destination is the customer has purchased a reservation. The journey is that they went through a personalised experience that treated them like a friend, and recommended tours, packages, and hotels that would meet the requirements of the customer. GDS companies must really go beyond the basic reservation experience a single airline can offer, and really think about offering a seamless end to end experience for the customer.

It’s a bit like the difference between using a Windows mobile phone and an Apple iPhone. The Windows mobile phone can run any applications you like, and multiple applications, but the experience of finding those applications, paying for them, installing them, and using them is variable, and sometimes horrible. An iPhone offers a consistent world-class experience for all applications regardless. Be the Apple of the GDS industry, and you will succeed where your competitors will fail.

Creating a better fare search engine than bing.com

An interesting point was raised on an aviation group on linkedin.com, regarding an airline charging fees for carry-on luggage. As airlines, especially low cost carriers, consider moving towards the lowest fares possible by removing every possible extra for the passenger, we come into a problem of how do we find a fare that meets the requirements of the customer?

From http://www.flickr.com/photos/mykreeve/133074711/

Tourist Ben

If we consider our tourist persona, Ben, this is a guy who has some specific requirements for a fare:

  • He wants a fare that includes himself (obviously);
  • He wants a fare that accommodates his backpack of 22kg;
  • He wants a fare that accommodates his carry on bag of 7kg;
  • He wants a fare that accommodates his guitar;
  • He wants a personal entertainment system where possible;
  • He prefers a window seat.

What we’ve done is more clearly defined the requirements of Ben in terms of fares he’s searching for. By more clearly defining these requirements, we could do a more powerful search that actually meets more of those requirements, than just finding the initially cheapest fare available, but could actually turn out to be the least suitable fare for Ben once all those other requirements have been taken into account.

To summarise, as airlines strip away functions of a fare to the bare minimum, fare search engines have failed to take into account this, and are often just searching for the cheapest minimum fare, without taking into account a passenger’s actual requirements.

Creating an internal brand for Non-revenue customers

Airlines have non-revenue customers, which are people who get special deals by being an employee, or associated with the industry, such as Travel Agents. These customers return a reduced amount of revenue to the airline, and in some instances, return no revenue. So what can we do to increase revenue?

Once again, let’s turn to personas.

From http://www.flickr.com/photos/toestubber/457592892/

Jasmine, the Hostess

Meet Jasmine. Jasmine is a hostess with an airline. She travels around the world on long haul flights, and is pretty accustomed to being in hotels with nothing but carry on luggage.

As an airline, what do our systems need to do to ensure that she can take a flight?

  • We need to find out where she wants to go
  • We need to find out if a seat is available
  • We need to find out when she wants to go

Now as the revenue from the customer decreases, so does our profit. So we really only have two options to make money from Jasmine flying:

  1. Reduce costs
  2. Increase fares

So let’s focus on reducing costs first.

We could create conditions on fares that reduce the amount of time Jasmine needs to interact with a person:

  • She can only book online
  • She can only take carry on luggage
  • She can only choose flights taking off within the next day that have a load less than 60%

All of these conditions reduce the amount of effort required from the airline for Jasmine to go on a flight.

From here we need to focus on increasing fares. How can we do this? The same way low cost carriers do. And hence the idea is born:

An internal low cost carrier brand for non-revenue passengers to turn them into revenue passengers

By creating our own internal Jetstar or Air Asia X, we can then look at how those Low Cost Carriers extract revenue from their customers, all through little experiences.

For Jasmine we could say:

  • If you pay cost + 10%, we could upgrade you to Business Class
  • If you pay cost + 10%, we could let you select a particular seat
  • If you pay cost + 10%, we could let you select flights 48 hours away rather than just 24 hours way
  • If you pay cost + 10%, we could let you jump the queue to get a flight versus other customers

All of these methods allow you to extract additional revenue from that non-revenue customer, and turn them into another customer, who is satisfied by getting a better deal than the public, and is delivered awesome innovative service from the airline!

Bookings for one

I was talking to a friend of mine who has become quite well paid and famous for taking someone he was passionate in, and concentrating on it. And in the same vane, I’ve decided I want to focus on Airline Innovation, something I hold dear to my heart.

The first idea I want to elaborate is bookings for one. When I say bookings for one, I’m really focusing on market segmentation and understanding our customers. So let’s think of some typical single travellers:

  1. A Solo Traveller on their Overseas Experience, going to a specific location but not really knowing anyone;
  2. A Business Traveller on a regular travel excursion, who isn’t really looking forward to travelling;
  3. A Solo Traveller heading somewhere for personal or family reasons, and is thinking about things other than travelling;
  4. A Solo Traveller heading on an impromptu holiday or quick get a way, and is really excited about the whole experience.

So we’ve created four personas. Let’s flesh these out a little more.

From http://www.flickr.com/photos/ssandars/4687521/

Hi Lisa!

Our Solo Traveller on their Overseas Experience (OE) is called Lisa. Lisa’s 18, and from Hull, England. She’s on her gap year between high school and university and has decided to head to Australia and New Zealand. While everyone wants to head to Australia, she’s decided to head to New Zealand because she knows a New Zealand exchange student here, and has heard the weather here’s great!

Well let’s think about what she cares about:

I’m heading to New Zealand, but I don’t know much about the place. I know some family there, and I’ve seen roughly what to do in Rotorua and Queenstown, but I’m a little apprehensive about what to see there, do there, and make new friends there.

Awesome, thanks Lisa.

So as an airline, what can we do to make Lisa’s experience a great one with us?

  1. What if we knew about other people around Lisa’s age and demographic that are also flying to New Zealand? Perhaps we could get these people to get in contact with each other and share their experiences? While some airlines allow customers to talk to each other on the plane, that’s not a great place to break the ice. Perhaps we could create a community site to say to Lisa “Hey, you’ve told us you’re heading on your OE to New Zealand. We know of three or four other people who are doing this as well on your flight. Would you like to be able to talk to them to share your experiences and feelings with them?” Of course there are privacy implications to this, but what we’re really trying to do is link strangers together who are sharing similar experiences. This happens in backpacker dorms and Internet forums throughout the world, so why not shift that to our site where our knowledge of the customer can provide a better experience than some other forum?
  2. Another aspect of travelling on an OE is building up to the experience of the OE. There’s a lot to think about and plan for. Perhaps we could contact Lisa occasionally over a long period of time (maybe as soon as she registers as doing an OE) and help her plan and build up the experience? We could tell Lisa about getting ready for visas, great things to see and do, things to look out for, planning for safety, useful things to take over, things she’s likely to see on the plane, and great deals from our partners for items that’s going to make her experience better. This way the airline becomes more than just a transportation service, it becomes a travel experience. In addition, we can create really good deals with partnership companies that provide value to Lisa by giving her the opportunity to purchase items that would suit her destination, and also provide those partnership companies a really strong channel with which to sell their products. It’s win-win-win for everyone.
From http://www.flickr.com/photos/ori/3165813156/

Hello Jarvis.

Alright, let’s look at our business passenger. His name is Jarvis, and he’s an Accounts Executive. He’s 30, and hails from Vancouver Canada. He’s a regular business class passenger, but as the recession has hit, corporate travel has now shifted towards Economy Class. He travels a lot, has an Airpoints account which is regularly accessed, and is well versed with airport lounges.

Well let’s think about what he cares about:

I’m heading to New Zealand on a business trip. Third time this year. It’s such a long journey, I’m really starting to get sick of it. Getting to the airports so early, killing time shopping in duty free, I just want to be there, and to get on with my job. The whole travel experience is just another part of my job.

Well at least Jarvis is honest.

So as an airline, what can we do to make Jarvis’s experience a pain-free passionate experience?

  1. Acknowledge that Jarvis does a lot of travelling with us, regardless of the particular class. So perhaps we need to create a frequent flier programme for people who do a lot of economy class flying, and create them a ‘business class-lite’ experience. Perhaps we could remember that Jarvis’s favourite meal is Hawaiian Pizza and let him know in advance that we can make sure we have this available for him on his flight.
  2. One other industry that has a lot of similar competitors is telecommunications. One method they use to reduce ‘churn’ or customers swapping from one carrier to another is by creating a secret value for each customer called ‘retention’. This value increases the longer a customer sticks with a carrier, and the more a customer spends with that carrier. That retention account is then used to spend rewards on the customer, such as random upgrades to business class, or priority seat selection, or a special one off discount, or perhaps even two for the price of one.
  3. Another method telecommunications carriers use is long term contracts with penalties for breaking them. If people are commuting, perhaps we need to consider commuter discounts, which allow people to book 10 or more flights for the same time over a recurring period, such as a week, or month, and then provide them a value discount, or a free upgrade, or a better selection of entertainment, or better food, or a free upgrade to a Skycouch, or some other reward method to say, you’ve paid in advance for 10 flights. For committing to us in advance, we’ll reward you as such.
From http://www.flickr.com/photos/waldenpond/2055325320/

Reluctant Shanti

Next lets consider the reluctant solo traveller. Her name is Shanti, and she is coming to New Zealand to visit relatives who moved here a long time ago.  She’s not really keen on flying, and doesn’t enjoy it a lot. This is her second flight overseas, and has taken a while to save up for this. She misses home.

Well let’s think about what she cares about:

I’m heading to New Zealand to visit the relatives. I haven’t seen them in ages. It’s taken me quite some time to save up for this, and I’m unlikely to do this again any time soon. I wouldn’t consider myself in a tourist sense, really just someone who wants to see my newborn nephew.

A challenge for an airline is to connect with this passenger. So once again, what can we do to make Shanti’s experience a memorable experience?

  1. Shanti is a reluctant passenger focused on the end goal, which is meeting the relatives. But perhaps we can interest and excite her on other things she could see and do on this once-in-a-lifetime experience. If we know roughly where she’s going to be, and for how long, perhaps we could tell her about experiences she could do within the timeframes she has available? If she’s told us of her interests then we could find those experiences in another country to really say “This is the time to go and check out these things to experience what the world has to offer”.
  2. If we knew Shanti’s food and entertainment preferences, we could make sure that she had something familiar on her flight, so that she finds the flight comforting, rather than focusing on any particular negative experiences such as the crowds of the airport.
  3. Do we know where Shanti is ultimately going? She might be going to a destination that is served by a competitor, and not one served by us. That’s OK, as long as we know that, then perhaps there is information we could tell her about her destination, or how to get there, or connections she needs to make to make her experience relatively stress free. Airports and travel is a stressful experience for people who aren’t used to it and fear it – correspondingly we must provide as much information and reassurance as necessary to make sure that the experience is as painless as possible. Perhaps we need to provide more information or even a concierge service that guides people through airports?
From http://www.flickr.com/photos/mykreeve/133074711/

Tourist Ben

Finally, there’s our impromptu tourist, Ben! Ben grabbed a super cheap discount flight at the last minute. Ben’s a guy who watches Grabaseat religiously, has a bit of cash available, and a bit of annual leave at work. In other words, Ben’s flexible, and ready to travel anywhere with a day’s notice.

What’s on Ben’s mind?

I love travelling! I love the experience of planning travel, of thinking about the destination, of going through customs, and most of all, sitting in that seat, and feeling the acceleration of the plane and knowing we’re taking off and landing in some exotic destination. I don’t really care where I’m going, I just want to travel!

That’s awesome Ben! So how can we as an airline make Ben’s experience even better?

  1. Ben’s a person who is highly comfortable travelling, and researching. Perhaps we can give Ben lots of insider information about some of the best things to do to where he’s going with a limited amount of time, or on a certain budget. By coupling with local businesses in that location, we could provide Ben with a local experience better than what he could discover himself through his own research, which saves Ben time, gives those companies a new customer, and ensures that Ben sticks with us for his random flights. Win-win-win.
  2. We could create a special type of standby fare to a random destination for when seats are available, which should work for a traveller who is more interested in the travel experience than the destination. That way we can steer passengers from popular to less well known yet just as interesting and engaging destinations. This way we can better balance our load to various destinations, including increasing revenue to less profitable routes.
  3. We could provide a destination online that allows Ben to easily look at other people’s travel experiences to that location, and share his experiences to others who are interested in going there. That way we get a community of interested people who all have one thing in common – their love of travel and of that destination.
  4. We could provide Ben with some incentives or rewards for creating content that we could use in promotional or marketing materials, essentially turning passengers into brand ambassadors, all for a lower cost than a formal marketing campaign.

So to summarise:

  • Solo travellers are an important part of the market to focus on;
  • We can create communities to make travel a more social experience to solo travellers;
  • Each solo traveller has different wants and needs which must be catered differently;
  • Small improvements could make all the difference between a customer choosing our airline, or our competitors;
  • Making personas is a fun experience and great for brainstorming!