You should take your business seriously but you shouldn’t take yourself too seriously, that was the key message from Christopher Luxon, CEO Air New Zealand, as he shared how the 77-year-old airline had achieved 15 years of consecutive profitability and 13 years of positive dividends.
Of course, you wouldn’t expect anything less from an airline, which turned the airline safety video on its head. Flying on Qantas to Sydney, I notice it is doing something similar with its safety video which shows Australians doing their favourite things in their favourite places – but oops, should I compare Australia and New Zealand in the same sentence?
Luxon certainly played the Aussie-Kiwi rivalry card during his talk at the CAPA Aviation Summit in Sydney as he kept belabouring the point that Air New Zealand had just been recognised as the company with top corporate reputation in Australia. “Have I already said that?” he said, as he mentioned it for probably the 10th time.
Christopher Luxon: “Most companies will say they innovated, we just say we nicked it.”
Saying the biggest challenge facing any corporation is how to preserve the core and stimulate change at the same time, Luxon shared the airline’s Go Beyond plan, which outlined its purpose, promise and objective – tenets which he hoped that 77 years from now they would still be talking about.
How to deliver commercial results, an enhanced customer experience and engaged culture is the tricky balance companies have to strike. “Usually there’s a trade-off between the three, so how do you put it all together” to move from great to iconically great, he said.
Clearly something’s working in the airline which has grown 498% in the last five years and flies 15 million passengers annually from a small home base “at the end of the world”.
Luxon said it takes daily discipline of cost control – down 3% in the last year, a simplified fleet strategy – average age 7 years, investments in product – it spent $150m in upgrading its lounges, expanding to new markets – Buenos Aires, Beijing, Osaka, Haneda, Ho Chi Minh City among them and boosting human resource budgets by three times.
“60% of people in New Zealand want to work in Air New Zealand,” he said. The airline employs 11,900 people globally.
New Zealand sits at the centre of the Pacific Rim in the redrawn world map
It also takes audacity. For an “end of line carrier from two rocks at the end of the world”, it’s redrawn the world map so that New Zealand sits at the centre of the Pacific Rim. “There’s a major shift of power in the world and New Zealand sits at the centre of the world now,” he said, with a straight face. “Our Pacific Rim network is now 35% larger.”
With its eye on getting Australians to fly to North and South America via Auckland “because it’s faster”, it found out that only 4 out of 10 Australians knew Air New Zealand flew beyond New Zealand, and so it set out to educate Australians with the video commercial featuring the by-now famous goose, Dave. (See video below)
https://www.youtube.com/watch?v=oLTUz9qk45o
The humorous video, showing the adventures of Dave, clearly won the hearts of Australians. The YouTube video got eight million views and 40,000 shares. More importantly, its Economy Skycouch saw online bookings rise by 374% and it lifted market share – 20% increase in Australians flying to Houston and a 40% lift to Buenos Aires.
At the same time, it is bringing foreigners back to Australia through New Zealand. With 4m Kiwis travelling to Australia and 1.3m Australians visiting New Zealand, Luxon said the two countries had strong ties to leverage.
As for tourism to New Zealand, it now accounts for 12% of its economy. Currently the country receives 3.7 million visitors, a number expected to grow to 4.5 million by 2020. Air New Zealand has 80% market share in the domestic segment.
Luxon also spoke about the airline’s digital strategy, saying it’s mapped out 15 stages of the customer journey (image). “Our chief digital office reports to me and over the next five to 10 year, you will see us transform,” he said as he reeled off the new technologies it was testing – 3D printing, Oscar The Robot, an app with which you can scan passport details and order coffee.
Airband monitoring bracelet given at check-in
One innovation breakthrough it had was in the Unaccompanied Minor bracelet. “Most airlines have given up on that market but we learnt from new companies – Disney, Ritz Carlton, Celebrity Cruises – and we copied the Disney magic band. Now mum and dad do not have to worry about their 9-year-old son getting lost,” said Luxon.
The Airband monitoring bracelet is given at check-in, and it is embedded with a chip which is scanned at stages of the journey, triggering text notifications to be sent to up to five nominated contacts.
“Most companies will say they innovated, we just say we nicked it,” said Luxon.
