I’m still a little unclear on all of the implications of Air New Zealand’s changes to its rewards program. Here is one summary.

Air New Zealand has unveiled a revolutionary change to its frequent-flyer scheme, becoming the first major airline in the world to give rewards based on ticket price instead of distance flown.

(Side note, America West used to do this. Independence Air currently does this.)

An unpopular feature of frequent-flyer programmes such as the Air NZ airpoints scheme is the difficulty in redeeming rewards for flights. This has been changed, with any seat on any flight available for airpoints users.

…

Air New Zealand, backed by a supplied auditors report from accountancy firm PricewaterhouseCoopers, says that 61 per cent of all flight redemptions will require fewer “equivalent airpoints”. A further 15 per cent will need the same, while the rest will need more.



“Overall, the airpoints dollars required to obtain flight redemptions will be 6 per cent less than the equivalent number of airpoints required under the old programme,” it says.



On November 16, all airpoints will change and all airpoints will be converted to the new airpoint dollars. Air NZ wants customers to think of them like cash in a bank account, ready to be used when buying their fares.

…

Winners and Losers



Winners



* Business travellers, who fly on expensive, more flexible tickets and often redeem them for cheaper seats on family holidays.



* Transtasman travellers will earn dollars at a higher rate than points are earned now.



* People who use the internet to book their trips.



Losers



* Those in the provinces, who will now no longer get a free flight to one of the main centres when redeeming airpoints for a trip overseas.



* Those who don’t travel much. A new annual fee of $30 is being introduced for all members, which is waived if a commercial fare is bought in the previous 12 months.



* Those who travel on short domestic sectors (less than 300km) but want to redeem them on longer domestic sectors.



* Those who fly on the cheapest fares on longhaul international routes.

My own take is that this should make redeeming miles for coach tickets easier but that it’s overall a huge devaluation. If points are used based on the price of a ticket, it will be alot pricier to redeem for awards in premium classes of service.

The biggest question I have (selfishly) is how this will affect award redemption by members of Air New Zealand’s partner programs. If their own frequent flyers don’t face capacity controls, will they maintain a separate set of award controls just for their partners? And how generous will those be (or not be), knowing that they don’t have to satisfy their own flyers with their award seat set-asides? On the other hand, since I expect it to be harder for Air New Zealand frequent flyers to redeem points for business class awards that may make it easier for United Mileage Plus members like myself to do so.

Of course, Air New Zealand may just continue to offer parallel capacity controlled awards that partners and Air New Zealand members can redeem. That’s the implication I draw from the Air New Zealand website, because it seems there are special reduced-price awards for long-haul travel on Air New Zealand that are bookable only with points and not dollars.

I always have my eye on award flights to Tahiti, Auckland, and Sydney, so I’ll be anxiously awaiting more information as it develops.