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Air New Zealand CEO weighs in on rising COVID cases, travel demand, and staffing woes

Air New Zealand CEO Greg Foran joins Yahoo Finance Live to discuss the travel industry and how the recent uptick in cases is affecting demand, along with how the airline is weighing the idea of offering beds in its economy class.

Video transcript

RACHELLE AKUFFO: While demand for travel is picking back up in the US, passengers are still facing air travel problems. According to Bankrate's summer travel survey, the company finding that 8 in 10 travelers have experienced travel troubles so far this year. The higher travel costs top the list of issues, along with other inconveniences, like long wait time, poor customer service, and flight availability. Dave.

DAVE BRIGGS: Well, flight frustrations not limited to the United States by any means. Travels rebounding around the world, and with it, late flights. Cancelations are also spiking. With us now is the CEO of Air New Zealand, Greg Foran. Greg, thanks so much for being here. How has travel bounced back there? And given the COVID surge or spiking, how are you managing?

GREG FORAN: Yeah, look, it's come back very strong, and we're being very sensible about how we're managing through this latest COVID surge. We are seeing more Omicron in New Zealand, and with that, customers in some cases are deciding that they don't want to travel. So that's putting a little bit of capacity back in, so other people can travel. But certainly, it's come back strong, and we're being pretty measured about how we deal with it.

RACHELLE AKUFFO: And in terms of staffing, how is COVID affecting that? Obviously, a lot of pressure for some airline staff and people on the ground, as well as air traffic control in the US struggling. What is happening for New Zealand Air?

GREG FORAN: Yeah, look, very similar. You know, what we're seeing is the whole supply chain around aviation gets impacted. So it's not just airlines. It's aviation security. It's air traffic controllers.

But certainly, in terms of our own staff, we're very conscious of doing what's right by them. We're seeing about a doubling in the amount of those staff that are impacted by Omicron, and that's having some impact on cancelations. Over this last weekend, we've had to deal with the beginning of holidays here in New Zealand.

So that's seen an uptake in travel. We've had some reasonably inclement weather, and then Omicron, so cancelations did increase from where they were. We've been generally pretty good, running around less than 2% of flights.

But over the weekend, it got up to about 8% of flights. Now, having said that, that still means that by far and away, the majority of our customers got to where they needed to on time, and with all their bags. So generally, you know, I think we'd be doing a pretty good job.

DAVE BRIGGS: A lot of your customers, Greg, are excited about the changes coming to coach-- not just in New Zealand, but customers here who've probably never even flown your airlines-- a lot of buzz about the Sky Nest. Tell us what that is.

GREG FORAN: Yeah. Look, we've been working on this now for a number of years. And we're having a look at everything that we do on the aeroplane. We want to come out of COVID better than what we went into the situation.

And we're also aware that customers, particularly when you're either coming to New Zealand or leaving New Zealand, you're up for a pretty long flight. So we want people to have a good sleep, and we also want them to sleep easy, knowing that they're doing everything they can for the environment and sustainability.

So we've had a look at what we do at the front of the plane, and also the back of the plane. And we've got some innovation coming there with something called a Sky Nest. And that's the ability for someone in economy, or even premium economy, if they want, to take the opportunity to rent a lie-down flat bed for a period of the flight.

So over the next two years, we'll be getting this product developed out further, getting it on our planes sometime 2024. And for those long-haul flights-- say, you're flying from New York to Auckland or Auckland to New York, you're in the plane for 17 or 18 hours. You'll have an opportunity a three- or four-hour block to go and actually lie down and get a decent sleep for three to four hours.

RACHELLE AKUFFO: And that's music to a lot of people's ears. A lot of people-- I'm 5'9". Leg room is usually not my friend on some of these planes. Is this something that people would have as an add-on that they would purchase with their ticket, or is this something they'd be able to do on the fly?

GREG FORAN: We'd want to be able to do it both, to be honest with you. We want to have a seamless interaction with our customers as possible. So if there is room available and not all those, if you like, time slots have been taken up, then we'd certainly want people to be able to do that while they were on board, or they could book it ahead of time.

Now, we also offer, as part of the suite of opportunities, when you fly with Air New Zealand, something called a Sky Couch. And that allows you to take a row in economy, and if you like, the leg rests come up. And that effectively turns into a bed as well.

So that's been a successful product we've had now for almost 10 years. So this is an extension of that and another wonderful opportunity to fly Air New Zealand, get a good night's sleep, and sleep easy.

DAVE BRIGGS: When will we see the Sky Nest? How much will it cost? And how do you address concerns over cleanliness, given we are still unfortunately in this pandemic?

GREG FORAN: Yeah, look, it's about two years away. That's sort of the cycle it requires to get planes retrofitted. So we're looking towards mid-2024 to have that product on our long-haul fleet.

In terms of pricing, that's something they're working out now. We'll develop that through in terms of the rest of our pricing schedule. And your last point about cleanliness-- absolutely.

We'll be very, very careful to make sure that this product is maintained right through the flight, and there'll be ample time between, if you like, when someone is using that bed to when the next person looks to use it for a complete changeover of all the materials on there. So we're getting all of that organized, as we speak.

DAVE BRIGGS: Interesting stuff. Greg Foran, Air New Zealand, CEO, appreciate you being with us today. Thank you, sir.