In an unprecedented move, Air New Zealand is completely revamping its Airpoints loyalty program. Beginning Nov. 16, members will no longer earn points, but dollars – and the number of Airpoints dollars a member earns will be based on the fare paid. Existing points will be converted to dollars at the rate of 75 to one.

But perhaps the most important change is in terms of availability – capacity controls and blackout dates will be eliminated entirely.
We spoke with John Whittaker, manager of the Airpoints program, to see exactly what’s going on way down under.

InsideFlyer: In a nutshell, what’s happening to the program?
Whittaker: There are two core changes to the program.

The currency of the program is changing from Airpoints to Airpoints dollars. We’ll have two currencies of dollars. One will be New Zealand Airpoints dollars and one Australian Airpoints dollars. On the 16th of November everybody’s account balance changes from Airpoints to Airpoints dollars, a simple change of currency.

The other core change is that the Airpoints dollars can be used to buy every seat on every flight. So instead of having a restrictive number of reward seats, everything we have on sale you can buy using Airpoints dollars. In theory, all the seats on the entire aircraft could be sold using Airpoints dollars.

And instead of earning points you earn Airpoint dollars. The number of points you earn is based on the fare you paid rather than the distance flown. We have an earning table based on the origin and destination of the flight and the fare paid. Most people will earn 8-12 percent of the fare they paid.

IF: So the new award table will stay the same?
Whittaker: Yes, in the long term the table could change but it won’t change very often.

IF: How would you explain the new benefits to your members?
Whittaker: Airpoints dollars can be used on every flight on every seat – there are no restrictions. The other key benefit is that the number of points that are required for award travel has fallen on our domestic routes.

IF: How will upgrades work under this new program?
Whittaker: The old program had stand-by upgrades. The new program will have confirmed upgrades, which cost a little more, but you have the peace of mind before you get to the airport.

IF: Will the elite program stay the same?
Whittaker: The qualification criteria are changing. The new program is based on Airpoints dollars from flying. We are allowing re-qualification under either the old criteria or the new criteria for the next year and a half.

IF: Have you had any feedback from the Star Alliance partners?
Whittaker: The relationship with Star is the same; just the currency table has changed.

IF: Any changes with credit card partners?
Whittaker: The relationship with the American Express Membership Rewards program will not continue beyond the end of this year. But the Global Plus American Express card, offered by the Bank of New Zealand, has been introduced.

IF: What percentage of reward seats will be available for fewer dollars now?
Whittaker: When customers convert from Airpoints to Airpoints dollars on Nov. 16, 61 percent of the awards purchased last year will cost fewer points. Fifteen percent will be purchased for the same number. And 24 percent will cost more than last year. In the aggregate, it will cost six percent less.

So you’re getting the choice of award seats for less or no blackout dates and guaranteed 100-percent access if you want to use more Airpoints dollars.

IF: There’s a new customer service booking fee – $25.00 for a one-way domestic trip, right?
Whittaker: Fifteen dollars one-way domestic, $25.00 one-way international, which is avoided if booked online.

IF: Since you’re moving to having no capacity controls, do you anticipate a short-term period of high demand for award seats?
Whittaker: It’s possible, and we are comfortable with that. The whole objective of the new program is to allow our members to use their Airpoints dollars whenever they want to buy any fare we have available for sale. However, if customers are planning to use their reward around the 2004 Christmas holidays, I recommend they book now under the old program because when the new program launches on Nov. 16 the cheapest seats are likely to have already been sold.