David Mangold Tiffany Lau Emily Nguyen Xiang Zhang Lakers David Mangold Tiffany Lau Emily Nguyen Xiang Zhang

How Success is Measured If the bids offered are higher than the amount Air New Zealand would have charged for seat upgrades Profits from the higher bids must exceed the revenue lost from customers that will switch to a different airline Factors: Airline sets a minimum bid Accuracy of the sliding scale Customer preferences

Will Air New Zealand Succeed? Pros Could gain more revenue and attract more customers that think they would get a better deal People would be attracted to this marketing scheme because it is unique to Air New Zealand Takes into account tier statuses from the Loyalty Program

Will Air New Zealand Succeed? Cons Frequent flyers tend to be business people Business people don’t want to deal with the hassle of bidding Negative backlash from HR who work in conjunction with business professionals to plan business trips Low flexibility regarding upgrade options will deter customers The value of Airpoints is upgrades, but by introduction of OneUp program, Air New Zealand takes the one and only good thing about Airpoints away Difficult to plan trips because turnaround time to find out flight status is 3-7 days Will need more customer support What happens to large parties? Program only appeals to non-frequent fliers Frequent flyer programs usually upgrade for free No, Air New Zealand will not succeed

Comment – Auction Fan Suggested have the 10 highest bidders pay the highest unsuccessful bid Some merit to this suggestion; this way everyone will pay the same amount for the same service (in this case seats) If there is a minimum fee, the airline could maintain their current revenue levels but there is also the possibility of gaining substantially from this program Customers will feel a sense of fairness because they are all paying the same amount for the same seats but still paying less than they even bargained for Suggests to keep the “minimum upgrade fee” low, possibly zero: airline will not generate extra revenues Could be a problem though if people bid extremely high in the hopes of getting somewhat discounted seats What if they were not even willing to pay the amount they set their bid at and are stuck with a price that they still aren’t happy with?

Comment – Frequent Flyer “I seriously hope that this initiative is treated with the scorn and contempt it deserves!! What a disgraceful way to treat loyal customers!” There is a very large possibility that there will be backlash from loyal customers Frequent fliers would probably expect to be able to upgrade without having to bid for a spot Air New Zealand could lose frequent fliers to other airlines that offer free upgrades or upgrades that have a low price for frequent fliers

Comment - Deweese3 Busy professionals; don’t have time for such nonsense Frequent fliers tend to travel for business, not pleasure Most executives would probably not appreciate having to fly coach if their offer was outbid Potential to make a lot of money for Air New Zealand if businesses give a very high bid to outbid everyone else Bidding would be bad for business trips that are decided on within days of the flight; travelers would not have time to bid at least seven days beforehand