Air New Zealand's Process for Narrowing 30 Concepts To the Final Two Seats

Yesterday, we left off with Air New Zealand whittling down its options to 30 different seat concepts after extensive work on the project. Now how did they get to the final two that ended up being announced this week for the new cabin interior? The story involves a great deal of collaboration and ultimately, judgment calls.

Once Air New Zealand had been able to break down its customer base into five different types, it had to figure out how to best serve them all. But first, the airline had to make sure that it was focusing on what is important to the airline.

At the beginning of the process, Ed Sims, Group General Manager for the International Airline at Air New Zealand said there were five core values that stuck with them throughout the entire process. (My comments on each one are below.)

• More control - Give the customer as much control over their experience as possible
• More variety - Fairly self-explanatory
• Greater choice - Not only give travelers control, but give them a good variety of options to choose from
• More New Zealand-ness - As the first and last thing most visitors to New Zealand see, Air New Zealand is a key part of the tourism experience as well as an important identity for all kiwis
• Genuine service - You can have great seats and something that looks good on paper, but the service has to be good and very genuine - ties with the kiwi identity

Air New Zealand decided to engage four of the best structural design firms in New Zealand to review the concepts and come up with something that would work well. But this was no normal project for those firms. Instead of competing for business as they usually would, Ed asked all four to work together to create the final design. This led to serious competition between the groups and a lot of poking holes in other designs. It worked out perfectly and soon they were down to 5 key designs.

So, how would they get it down even further? Time to turn to the public, well, sort of. They were so concerned about keeping this project top secret that they didn't want to open it up to customer focus groups just yet. They also didn't want to solely rely on employees because they might tell them too much of what they wanted to hear.

Ultimately, they hired actors under strict non-disclosure agreements. These people were brought in to try out the seating concepts for up to 6 hours at a time. They brought in noise to simulate flights along with a host of other things to make it as real as possible.

While they originally had been high on the idea of staggered seating, this process killed that plan quickly. While people liked the extra legroom in the staggered seating plans, they said it was too crowded and isolated from fellow travelers. It was resoundingly rejected.

Another concept which they loved in theory but couldn't quite make work was the bed above the seating area. There were problems with accessibility for all different ages and body types. It also added a claustrophobic feeling for some, and it created awkward interactions when people walked down the aisle at eye level of the sleeping passengers. You can tell this is a concept Air New Zealand still really likes and hopes that one day they can make a reality. But it wasn't going to work this time.

After all the customer research, Air New Zealand got down to its two final concepts - one for premium economy and one for economy, and that's what they launched this week.

If all of this sounds expensive, that's what I wondered about as well. I asked CEO Rob Fyfe how they were able to justify this kind of spending. He told me that it costs about $20 million to outfit an aircraft, so to fit the 5 new 777-300s and 8 existing 777-200s, they were talking more than $250 million. The additional costs spent on developing these new concepts was quite small compared to that number.

But ultimately, Rob says it's a judgment call. When they rolled out their business class product five years ago, they had to decide if they really thought they could sell more seats on each flight to recoup the costs. They did, and it's been a tremendous success. So in this case, it's the same thing. Do they think they can get more people to fly Air New Zealand and not choose to go somewhere else entirely? That's the bet they're making. We'll see if it pays for them again.