Why Air New Zealand's Bunk Beds Can't Fail

A senior executive said he hopes the airline's six economy class bunk beds (soon to come on two airplanes) can break even. But he has a broader definition of success than revenue.

Dear readers,

I like any good-natured airline rivalry. Recently, I have been amused by the backroom sniping between Qantas and Air New Zealand about which airline is taking a more innovative and appropriate approach to the passenger experience¹. Qantas, a much larger airline, is spending a fortune to acquire a dozen low-density and extra-long-range A350-1000s, planning to outfit them with a wellness zone (“a dedicated space for movement and premium refreshments,” according to this press release) so it can fly to Europe and New York from the east coast of Australia. Air New Zealand is thinking decidedly smaller; it will add economy class bunks to two Dreamliners to fly some existing routes.

It shouldn't surprise anyone that the airlines have different approaches. Air New Zealand, which barely can make it to New York with its range-limited 787s, probably couldn't afford an ambitious project like the Qantas plan. But executives claim they have no interest in following their bigger rival to Europe with a bespoke airplane. Instead, they're focused on a smaller but still notable cabin element that I think we can all admit is very innovative — the Skynest: six sleeping pods for economy class passengers that resemble an airline’s crew bunks. The first configured airplane should arrive from Boeing next year, with New York slated as the first destination.²

I'll get to writing about Qantas's long-range plans at some point (I hope after I fly on one of the first flights from Sydney, because I'm an aviation geek at heart.) Today, I want to discuss Skynest. I like the idea, even though it's more of a trial and marketing scheme than the real thing — after all, Air New Zealand only has committed to putting pods on two airplanes. I know some competitors enjoy poking fun at this tepid introduction, saying the airline shouldn't make such a big deal out of a product that few people will use. But I don't think there's anything wrong with the limited approach. Air New Zealand is an undersized airline with slim margins. Let's be honest: it would be more nuts to install this unproven thing on every airplane. The airline just wants to determine if there's a market for it, while basking in the glow of the media attention.

I spoke to Michael Williams, Air New Zealand's chief transformation and alliances officer, earlier this month at the IATA AGM about why Skynest is the right move, even though he admits he has no idea if the economics will work.

Here are highlights of that discussion.

Will it make money?

Probably not — that is Williams’ honest answer.