Yesterday I wrote about Air New Zealand’s new Skynest, an economy class concept where you can reserve a bunk bed for four hours. In the post, I clarified that the pricing is not US$495 (£370) as people are expecting, but rather NZ$495 (US$283/£215), which is a huge difference – I can definitely name times I’d be happy paying US$283/£215 to lie flat for four hours (when otherwise sat in a 17-hour flight in economy), though £370 is a bit steep.
Well, apologies for adding to that misinformation, guys. Today I learned that Air New Zealand’s Skynest is not consistently priced at NZ$495, or US$495, for that matter. It doesn’t even alternate between the two depending on which flight you take. Rather, it’s always priced at 495 in the currency of the point of sale. I’m not sure if this is a pricing team oversight or whether they intentionally did this, though it’s certainly a messy way to price the Skynest product (to be fair, the only currencies I can get it to price in are New Zealand dollars, US dollars, and Australian dollars).
Air New Zealand’s Skynest is 495 Dollars In Whatever Point Of Sale You’re Flying From
Yesterday I wrote that Air New Zealand’s Skynest is priced at 495 NZD, and even did a dummy booking from Auckland to New York to demonstrate that this was the case.
A friend pointed out to me that Air New Zealand’s Skynest is priced at US$495 when you’re booking out of the U.S. website from a U.S. point of sale (you can’t use the U.S. website to book a flight out of New Zealand, and vice versa). Sure enough, when I made a dummy booking for the New York to Auckland flight, a four-hour session for the Skynest came up to US$495, not NZ$495.
Okay, so a Skynest from New York to Auckland for four hours will cost twice as much as Auckland to New York, for the same duration? To be fair, as an industry we’re not new to dynamic pricing, and an ancillary doesn’t have to be charged identically for different routes, even between the same two destinations.
But wait, there’s more. What if I wanted to book a connecting flight from Sydney to New York via Auckland, out of an Australian point of sale? The Skynest pricing then comes to 495 AUD/US$352/£263 (so you’ll be paying more for the Skynest compared to those that originated from New Zealand, assuming you’re pre-booking).
On a similar note, if I wanted to book a roundtrip between Auckland and New York, a Skynest is NZ$495 even if I just book one on the return segment, which means I’d be getting a cheaper Skynest than people booking out of the U.S..
So far, I haven’t found another point of sale where this applies, so your Skynest price will be in the same order of magnitude regardless of your point of sale (in other words, you can’t pay JPY 495 for a Skynest for example, as you can’t price an Auckland to New York flight out of the Tokyo point of sale).
However, it’s still worth noting that the most expensive Skynest sessions will be worth 75% more than the cheapest ones, due to different currency valuations. Yep, this means that someone on a New York to Auckland flight will be using the Skynest in the same four-hour session as someone who paid almost half of what they paid for this ancillary service, depending on whether they bought a roundtrip ticket out of Auckland or a one-way ticket out of New York.
Air New Zealand’s four-hour Skynest sessions will be priced depending on point of sale
As far as I’m aware, those redeeming miles for an economy ticket will have access to Skynest pricing based on their point of origin. For example, someone who redeemed a ticket from Darwin to New York via Auckland will see Skynests priced at AU$495.
Now, we’re no stranger to dynamic airline pricing – two people sitting next to each other on an airline will rarely have paid the same price. However, we’re usually more likely to see this concept apply to the base fare, and less so for ancillaries. For example, I can’t think of an airline that charges a seat selection fee for the same seat, that varies based on point of sale.
The value proposition is significantly different based on currency
While we’re generally used to ancillaries being priced with slight differences based on currency conversion and point of sale, this is one of the most significant point-of-sale based differences in ancillary pricing that we’ve seen in the industry. US$495 is 75% more than NZ$495, and that creates a significantly different value proposition for the same four-hour session.
NZ$495 is US$283/£215, which is perhaps slightly below what I’d expect for a buy-up to premium economy. If you struggle to sleep in premium economy (I don’t, but many do), you might consider a session in a lie-flat bed when you’re otherwise flying economy to be more valuable. US$495 is a significantly different price – that’s NZ$848/£370, for the same four-hour slot. While still nowhere close to business class pricing, this is comfortably in the price range of a premium economy product when added to the economy base fare, and at this point I might seriously consider just flying premium economy instead.
The Australian dollar amount sits somewhere in the middle, but I think you get the point.
NZ$495 for four hours in Skynest is reasonable, though US$495 will make me want to just buy up to premium economy instead
This will be a significant technical limitation once the Skynest rolls out on more routes
So far, there are three points of sale that all have different Skynest pricing depending on currency. If you book out of Auckland (or anywhere in Polynesia or Micronesia, where they use the New Zealand point of sale) it’s NZ$495, it’s AU$495 if you book out of Australia, or it’s US$495 if you book out of the U.S..
This can’t be straightforward once the Skynest flies to other destinations, especially in Asia, where everyone uses a different currency. For example, surely the airline isn’t expecting to price Skynest out of Japan or Korea in a similar way – KRW 495 is US$0.33, which isn’t happening. I wonder what the airline’s approach will be going forward?
- Was this a careless mistake, and was NZ$495 meant to be the price for a four-hour slot regardless of point of sale?
- Or will the airline price Skynest dynamically per flight according to supply and demand?
- Will the airline have a fixed price for each point of sale? Will this be pegged to NZ$495, or will this differ based on general supply and demand per route?
- How will this work if selling at the gate, or onboard – will the airline price more cheaply or more expensively, based on passenger behaviour and how likely they are to buy up last minute?
Ambiguous Skynest pricing will be operationally challenging down the line, unless they either go dynamic or standardise the fare
Conclusion
Sorry for the erroneous post about Skynest pricing earlier – it’s not NZ$495 across the board, but rather is 495 dollars in the currency of the point of sale, regardless of where it is. Right now Skynest is only sold between Auckland and New York, and is only sold out of the New Zealand, U.S. and Australian points of sale, so the currency fluctuations are significant though not problematic depending on which point of sale you purchase your ticket from. This means that especially for those booked on roundtrips or connecting, different passengers will have access to different Skynest pricing for the same four-hour slot onboard a flight.
However, as Skynest is rolled out across more routes, this is bound to be a problem. I’m curious to see where the pricing difference was just a mistake from the pricing team, or whether they genuinely intend to price differently depending on origin and destination.
What do you make of this complex Skynest pricing?
