Innovation Opportunities at Air New Zealand

1. Introduction

Purpose of the Report

The report explores the aspects and functions of the Innovation Opportunity at Air New Zealand using relevant and pertinent innovation mechanisms, methods and techniques.

Organisation and its Innovation Opportunity

Air New Zealand, New Zealand's national airline, runs a worldwide network of passenger and freight services to, from and within New Zealand. Air NZ takes pride in calling itself the sociable, warm, hospitable and down-to-earth bunch, who live and work with a set of Kiwi values, and approaches anything with real enthusiasm, servicing nearly 17 million commuters a year across the globe. Air New Zealand's convoy of over 100 aircraft and around 12,500 employees based across the globe contributed to a consolidated operating revenue in the financial year 2018 to $5.5 billion.  The “koru”, a spiral shape of an unfolding fern leaf, a New Zealand Maori character which appears on the tail of all its aircraft signifies new life, regeneration and hope for the future, standing by the belief that Air NZ keeps innovating itself to provide its customers a better way to fly. Air New Zealand was recently named the world's best airline for 2020.  The award was conferred upon it for a sixth time by the Airline Excellence Awards, run by AirlineRatings.com, a website that ranks airlines on safety and onboard experience. As per the website, Air New Zealand was chosen as the overall winner for 2020 due to its 'multi-award-winning onboard innovations, operational safety, environmental leadership and motivation of its staff' (Smith, 2019). Air New Zealand's focus on out of the ordinary thinking and innovation has put in on top of its competitors. From humorous wallpaper in its lavatories to striped purple socks in its amenity bag to innovations like Skycouch in the economy or the business class seat that reclines during take-off and landing or check-in through kiosks, to a travel debit card connected with the frequent flyer scheme, to Oscar-the very helpful bot, Air NZ has gone a mile further to provide a richer experience to its customers being the first in many of its offerings.

Another feather to this was the introduction of the AIRBAND – a bracelet empowered with NFC that allows parents to track their young one’s journey when travelling solo. A revolutionary wristband provides a practical purpose for the young kids who travel alone– it keeps track of kids and informs parents of their trip hence enhancing customer experience.

Content of the report

The report will track the innovation journey of Airband through various phases viz, strategic advantage being achieved through this innovation, scope and triggers of the innovation opportunity analysis of the innovation through frameworks. It would also critically investigate the aspects of level, timing, degree of innovation, and platform and stage of innovation.

2. Innovation Opportunity

What is the innovation is about?

Air NZ introduced the Airband in November 2015 targeting solo travelling kids in the age group of 5 to 11 and raising the customer service experience for the guardians as it equipped them with a tool that provided the information about the entire journey of their kids, and most importantly peace of mind. This innovation is the first of its kind in the airline industry (AAP General News Wire, 2015). The Airband is a wristband ingrained with a chip that is scanned at crucial stages of the journey to sends out text notifications to parents or guardians. As Carrie Hurihanganui, General Manager - Customer Experience at Air NZ quotes “We look at where pain and difficulties could perhaps originate and brainstorm ideas including the use of technology to find a solution which seamlessly work" (Fahy, 2016). Air NZ recognized the need for a smooth experience for the kids and their caregivers when the kids travel solo and hence brainstormed on this idea of the wristband, taking cue from the wristband used by Disney’s Magicband. With the creation of the Airband, the airline identified and created a novelty product, which was first of its kind in the aviation sector.

Strategic advantage being achieved through this innovation

While looking for inspirations to enhance customer experience, Air New Zealand also focuses on what they call “latent opportunities” (Fahy, 2016) and one of those was young passengers (age group 5 to 11) travelling without their guardians or caregivers and the trauma undergone by both parents and kids during the journey. Air NZ thus came up with a chip-enabled bracelet which they called Airband and that gave children flying solo and their parents a big sense of relief. The NFC or near-field communication-enabled wristband sends notices to five people when the kids progress through key phases of their air journey.

This innovation gave Air NZ the first-mover advantage as it is the online airline to have launched such a service offering.

Changing the context of the innovation

Air NZ is known to have been innovating in the digital space over the years, and the Airband is a classic example of this type of innovation. Air NZ uses the hospitality industry as a yardstick to measuring customer experience (IATA Global, 2018) rather than the airline competitors for they believe the hospitality sector has much more to offer in that domain of service.  Hence, its innovations resolve around customer experience offerings

Innovation scope and type

With the emergence of digitization, the scope of innovation has grown far and wide usually targeting product and services which either reduce cost or enhance customer experience. It can be an improvement of an existing service or emergence or introduction of a new one to support the company’s mission and eventually raise market share. This innovation is radical in its approach as the company introduced a product new to the aviation industry.

Trigger(s) of the innovation opportunity

Each industry focuses on the devising new products or innovating new ones to stay ahead of their competitors and carve a niche for themselves in the customer experience domain. Disney’s Air NZ CEO Christopher Luxon strongly believes in this philosophy of genuinely focused on improving all facets of the customer journey. Any innovation is not only beneficial for the customer, it is also commercially viable for the airline (Silk, 2019). This innovation emerged on the need for providing the parents mental satisfaction and reassurance whilst their kids flew alone. Coupled with technological advancement and taking inspiration from a similar kind of product in the entertainment industry, AIR NZ created this innovative product.

Innovation networks

Innovation Networks are just ways in which knowledge in the complex world is designed, built and implemented. Air NZ does not believe in replicating its competitors when it comes to innovation, they rather look towards technology and firmly believe that its good to look out for ideas and then bring them inhouse and brainstorm. (Freed J. , 2015). The idea and development of Airband was an inspiration from the existing technology already in use at Disney, which Air NZ took inspiration from and created a product to tackle a challenge their young customers and their guardians were facing.

3. Analysis of Innovation Opportunity

4Ps innovation framework

The innovation of the Airband is the first-ever in the airline's industry and gave Air NZ a strategic advantage over the other competitors. Evaluating it on the 4P’s framework, this innovation can be positioned as follows:

1. Product Innovation – Airband, as a product is a new one in terms of the degree of innovation. It is a radical innovation as no other airline is using it to track unaccompanied kids and brings in an awesome customer experience with a sense of security and reassurance.
2. Process Innovation- The innovation process here in again radical as it is the first time that any airline has thought of a tracking device which also sends notification to the guardians.
3. Positioning Innovation- This innovation placed a tool in the hands of their young travellers to aid in their guardian’s peace of mind This is quite radical in nature as Air NZ is the only player to introduce this to market.
4. Paradigm Innovation- By this innovation, Air NZ has carved a niche for itself in the customer experience domain by being the first entrant, hence it is apparently a radical innovation.

Degree of innovation

This innovation is radical in its degree.

Platform & families of innovation

The Airband is a product, not a platform, and the design had inspiration from Disney’s magic band. Air NZ is, however, looking at using this for further usages for its consumers in future (Press Release, 2016)

Level of innovation

The Airband was a new offering different from the core line of business of the airliner, hence it is an architectural innovation, though the idea was adopted.

Timing of innovation

Both Product and Process innovation is in the transitional stage of the lifecycle.

Core competencies of the organisation

Air NZ is primarily an airline company and the digital services innovations are a big portion of its customer experience space.  They have a big team looking at Innovation with the head of innovation who believes that innovation flourishes in constraints and they ensure that they adapt their working and technological advancement to suit and deliver to customer expectations.

Five dimensions of search strategy

A clear understanding of what the innovation process is and what it entails needs to be clearly understood. The various search strategies involved are explained below:

• What - while exploring opportunities to enhance customer experience, air NZ’s innovation team came across a rather prevailing and unaddressed issue of unaccompanied young fliers and the fear associated with it, leading to the introduction of the first of its kind Airband, hence making the innovation pull, radical and exploratory.
• When - It is in the mature stage of the innovation and the company might look at different value adds it can provide in future.
• Who - the idea or inspiration of the innovation came from outside and was then built internally on a different technology.
• Where – It was a bundles innovation taking cue from an existing and successful product.
• How – the airline’s focus on digital innovation paved the path to this new product.

4. Conclusion

As Tom Staggs, the chief operating officer of the Walt Disney Company puts it, if we want our customers to make memories, we will have to think out of the ordinary” (Kuang, 2015). Similarly, Air NZ strongly believes that paying attention to feedback and keeping customers at the centre is crucial to the way they do business (KPMG, 2018). Air New Zealand's dedication to excellence in all areas of its operation begins at the top with excellent leadership and one of the best aviation management teams to a workforce that continues to deliver on the vision of the airline and on the promise of its customers. Their focus on resolving issues through technology has helped them improve the flying experience of their customers and they strive to do it in the future as well. Talking about the innovation of Airband, a product that was developed to help resolve a pain area has become a revolutionary innovation receiving awards and appreciations from customers. In terms of architectural innovation, the Airband is a radical invention and first of its kind in the aviation industry. The innovation was not only a novelty product in the airline segment but also proved advantageous for the airlines as it was never explored by any other competitor, giving it an edge over them. The innovation was exploratory and revolutionary and that is evident from the awards it gathered. As per the words of Andrew Flannery, the head of Flight Centre's Australian corporate travel business, “Air NZ held the innovation flag high with it's out of the box thinking” (Freed J. , 2015). In was indeed a breakthrough Innovation which is evident from the feedback received from parents about how to feel they are cared for and they are quoting this to their friends, in a way doing the marketing for the airline. (Freed J. , 2014). This is very welcoming for Air NZ as they deliver to its promise of customer experience which is at the centre of its operations. In the end, it is not significant to say that Air NZ recognizes the importance of innovation and especially technical and digital innovation and by bringing futuristic or emerging technologies past pilot projects, it aims to march forward not only against its peers but from other industries as well.

5. References

• AAP General News Wire. (2015, Nov 24). NZ:Air NZ unveils kid-tracking technology. Retrieved from http://ezproxy.eit.ac.nz/login?url=https://search-proquest-com.ezproxy.eit.ac.nz/docview/1737493908?accountid=39646
• Fahy, B. (2016, August 16). Top flight: Air NZ's sky-high innovations. Idealog, 1. Retrieved from https://idealog.co.nz/tech/2016/08/top-flight-air-nzs-sky-high-innovations
• Freed, J. (2014, Jul 14). Out of the ordinary. The Australian Financial Review, 1. Retrieved from http://ezproxy.eit.ac.nz/login?url=https://search-proquest-com.ezproxy.eit.ac.nz/docview/1749181357?accountid=39646
• Freed, J. (2015, Nov 28). Tech-savvy Air New Zealand leaves rivals in its jet stream. The Australian Financial Review, Melbourne, 8. Retrieved from http://ezproxy.eit.ac.nz/login?url=https://search-proquest-com.ezproxy.eit.ac.nz/docview/1736670399?accountid=39646
• IATA Global. (2018, Aug 20). A thirst for culture: Christopher Luxon, Air New Zealand. IATA. Retrieved from https://www.airlines.iata.org/ceo-interviews/a-thirst-for-culture-christopher-luxon-air-new-zealand
• KPMG. (2018). 2018 KPMG New Zealand Customer Experience Excellence Report. Retrieved from https://home.kpmg/nz/en/home/insights/2018/06/customer-experience-excellence-report.html
• Kuang, C. (2015, Oct 3). Disney's $1 Billion Bet on a Magical Wristband. Wired, 1. Retrieved from https://www.wired.com/2015/03/disney-magicband/
• Press Release. (2016, Nov 16). Air New Zealand Airband™ Innovation of the Year. Retrieved from https://www.airnewzealand.co.nz/press-release-2016-air-new-zealand-airband-innovation-of-the-year
• Silk, R. (2019, May 29). Air New Zealand CEO says innovations are good for business. Travel Weekly, 24. Retrieved from https://link.gale.com/apps/doc/A497444137/ITOF?u=per_eit&sid=ITOF&xid=d9087355
• Smith, C. F. (2019, Nov 25). Best Airlines 2020: Airline Ratings Names Air New Zealand Top Carrier . Airlineratings.com, 1. Retrieved from https://www.airlineratings.com/news/airline-ratings-names-best-airlines-2020/