Air New Zealand plugs the gap: left by Tourism's funding cut

Friday 19th January 2001

GEOFF BURNS: 'Tourism New Zealand has done a good job with what it has but it has not been able to engage the customer in the branding process'

By Graeme Kennedy

Air New Zealand is spending more time and money on international marketing to fill the gap left by Tourism New Zealand's funding cut and its commitment to the 100% Pure branding campaign.

Under the National government Tourism New Zealand was given $55 million, boosted by dollar-for-dollar funding of up to $20 million to match industry contributions for off-shore joint ventures.

However, a TNZ spokesman said, the organisation no longer participated in joint ventures and total funding under the Labour government had dropped back to $55 million for overseas promotion of an industry which earned the country $4.6 billion in foreign exchange in the year to September.

And with the low New Zealand dollar exchange rate, TNZ can buy less offshore exposure and is concentrating on the 100% Pure campaign, unable to afford participation in trade and consumer strategic marketing.

Air New Zealand manager for international markets Geoff Burns said the airline had always been TNZ's major support partner and the industry's largest joint- venture spender, but with less government funding for work with the overseas tourism trade it now had to do more itself.

Air New Zealand's budget for international marketing operations, including 400 staff overseas, is now several times greater than TNZ's funding and is growing.

"Tourism New Zealand has done a good job with what it has," Mr Burns said. "But it has not been able to engage the customer in the branding process - that's where the joint venture was so effective.

"They don't have the resources now to do branding and tactical marketing as well and the industry has to do that.

"We acknowledge there was a gap in consumer understanding of New Zealand and a brand campaign was needed to raise awareness but New Zealand is so small it is just a drop in the bucket.

"Since the joint ventures disappeared we have had events like the Olympics which have raised regional awareness but less funds are going into tactical promotion for work with the trade and consumer off-shore."

Mr Burns, a member of the government's Tourism Strategy Group, said Air New Zealand did not have unlimited funds and was finding ways to do more with new technology to reach agents and customers who were now doing more work themselves on the internet in selecting tourism destinations.

"We are growing that side of it quickly but are still at a transition stage on how to link what they are doing on the web through to making a booking," he said. "They are still going to the trade to make their bookings and we are trying to bridge the gap between consumers doing work on their own but not having the confidence to make bookings on-line.

"Travel agents overseas are less experienced in selling New Zealand than other destinations and we have got to get a lot more detail online to give customers more experience rather than trying to upskill every travel agent."

Mr Burns said Air New Zealand was spending more resources on customer relationship management and as a small player in the global tourism market was trying to improve information and raise awareness with a range of web-based programmes.

They include a growing year-old data-base of 20,000 visitors containing tourism data and special offers which the carrier hopes will be used for repeat visits or recommendations to friends and relatives - Mr Burns said about 34% of visitors came here following referrals.

Similarly, he said, Air New Zealand was continuing its foreign media visit programme where journalists were brought here to write articles or make television programmes about tourism opportunities.

Mr Burns said the media programme worked like customer referrals from friends and family and helped stimulate people to visit as well as providing more information about the country alongside brochures and website.

"We are enhancing the database a lot, by segmenting it and getting out messages more relevant to different people in different markets," he said.

"We've got to focus on the markets we want travellers from - if TNZ was asked to develop new markets it would dilute its existing efforts. There is still a low awareness of New Zealand in the US and although there is a lot of capacity on that route we are increasing 10% this winter.

"There would be a big impact in that market, bringing in US dollars if we could improve our share.

"And New Zealand could be a bigger player in Japan which is a $500 million market for us, although we are big only in certain niches but growing. We are doing well there, performing better than Australia where their market dropped 16% over the past few years and ours fell by 12%.

"Japan is starting to improve again and remains very profitable, but many Japanese go only to Australia and we want to sell to those who have been there but not come here.

"Air New Zealand-Ansett and Qantas need to be clear on what New Zealand has to offer international tourists but they can do that only if they make a profit carrying them across the Tasman - where no-one is making money."

Mr Burns said Air New Zealand was becoming more specialised in the way it dealt with the overseas travel trade, segmenting it through distribution channels rather than geographically by supporting specialist wholesalers that sold and promoted New Zealand and Australia and bypassing those agents that did not.

Integration with Ansett Australia and providing the largest Australasian airline network meant the company had a bigger travel portfolio to sell overseas, he said.

"International marketing is so important to us - it's got to work," he said. "The joint ventures worked really well but New Zealand also needed a brand campaign and as a small country could TNZ do both?

"The industry likes the branding campaign and supports it but we need stronger public sector partnerships to build tourism as the important industry it is.

"We would like to see a more structured relationship between TNZ and the industry and we need to find a way we can work together to best leverage the funds we've got between us to make the money work more effectively. There needs to be a model developed to more easily do joint promotions - and that is one of the issues I am sure the Tourism Strategy Group will be looking at."

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