report loyalty

Graham Dunn Fort Worth Loyalty set for new frontiers Thirty years on from the birth of airline frequent flyer programmes, the landscape for reward schemes continues to evolve, and the immediacy of social media opens up a previously unchartered world

irline loyalty pro- customer database. So what are each partner. This coalition effect gramme experts met in you going to do with it?” is very powerful.” Groupe Aerop- Fort Worth for the an- Speaking during Loyalty 2011, lan has itself gone even further nual Airline Business Ryan Green, senior development than Qantas. The scheme, origi- Aand Global Flight-organised Loy- of customer loyalty at Southwest nally part of Air Canada, is one of alty conference with nostalgia in Airlines, said he believes the in- a few that have been spun out the air. But while this year’s 30th dustry needs to evolve its pro- completely from the airline. anniversary of host airline Ameri- grammes to give customers more. So far, not too many more air- can Airlines’ AAdvantage pro- “They expect something in re- lines have followed this path. gramme – the birth of frequent- turn, not just a mileage base that “About two years ago there was a flyer schemes – gives an excuse to doesn’t mean anything. There’s a real buzz [about more follow- look back at the journey, it is clear great deal of pent-up frustration ing],” notes Webster. “But I’m not the evolution continues. out there and we have to deal sure that’s happened as quickly “Every year, about ten new with that as an industry. I think as people thought it was going programmes join the 200 plus ex- it’s something that will be a cata- “It provides a new to.” Global Flight’s Bhagwanani isting these days. Obviously, you lyst for a lot of change,” he says. adds: “I think airlines really won- have to be ahead of the game if In March, Southwest itself community and der what the benefit is in there for you still want to be successful in transitioned its own long-stand- platform to continue them. If you don’t need the cash this area,” says Ravindra Bhagwa- ing frequent flyer scheme to a re- the dialogue” (as Air Canada did to survive), maya Leibman nani, managing director at FFP vamped All-New Rapid Rewards President, why should you give away con- specialists Global Flight. programme. Points are earned on AAdvantage trol and excellent future revenue Iain Webster, senior loyalty a purchased fare and product opportunities?” consultant at reward marketing basis, while there is more flexibil- agency ICLP, believes this year’s ity on redeeming miles. programme into its own profit Ancillary measures conference coincided with many It better positions the South- centre, which posted record un- For Webster at ICLP, which is part airlines reaching a plateau. While west programme to cater for high- derlying operating profits of of the group which also owns an- many loyalty programmes are er yielding business traffic, with A$328 million ($330 million) last cillaries specialist Collinson Lati- tiding over as a sales tool, the the airline believing it has the po- year. “To make the change, you tude, one of the challenges for question is what are they going to tential to contribute hundreds of do need to separate. You need to airlines is to use loyalty pro- do next? “Our view is what air- millions of dollars of incremental own your own destiny,” says Rob grammes to expand ancillary rev- lines have to realise is their great- revenue annually – even after as- Colwell, Qantas executive man- enue opportunities. He cites the est asset is not the aircraft, but the sociated programme costs. ager commercial and marketing. example of banks, which group Meanwhile in February Delta Part of the strategy at Qantas together a range of unrelated Air Lines moved to differentiate was to find more partners for the products and sell these as a perk its SkyMiles programme from its scheme, and its tie-up with Aus- of bank membership. “There are rivals by eliminating mileage ex- tralian retailer Woolworths has a lot of things airlines could wrap piration altogether. Previously been a central plank in expanding up together,” he notes. miles accrued in Delta’s SkyMiles its non-airline partners. Indeed, Webster also points to the need programme expired 24 months Colwell says the growth opportu- to find imaginative ways to deal after a member’s last qualifying nities at Qantas for the loyalty with the issue of redeeming mileage activity. programme are based around ex- miles, in light of the ever more panding the coalition of partners. limited space to redeem them. To spin or not to spin? “The growth is far more about Passengers are likely to want to While many loyalty programmes how many of our 8 million mem- spend their miles on the most focus on the classic model of re- bers I can get earning with differ- popular routes at the most popu- warding passengers to fly their ent partners, because there is an lar times, while the higher load own product, the other end of the overall lift for all the partners factors being flown today com- “To make the spectrum sees others looking to [when this happens],” he says. pound availability issues further. secure more partners to build the These sentiments are echoed “This creates a new situation change, you need to value of the programme. This has by Rick Ferguson, Groupe Aerop- that did not exist five years ago. own your destiny” seen some separate out their fre- lan’s vice-president of knowledge You have to try and get people rob colwell Executive manager quent flyer programmes to pro- development. “As members shop thinking of different ways of commercial vide the autonomy to grow. at additional partners, that indi- burning your miles,” he says, cit- Qantas Qantas has evolved its loyalty vidual becomes more valuable to ing innovations such as auctions flightglobal.com/ab April 2011 | Airline Business | 55 report loyalty

Loyalty 2012 Next year Loyalty comes back to Europe. Keep the dates and check the website for updates Dates 27-29 February 2012 www.loyalty-conference.com

Best in show gagement with the customers. “We don’t try to monetise it. From Emirates won the popular vote at our point of view the value is Loyalty 2011 in Fort Worth for its from listening to the customer. It Skywards Miles Accelerator initia- is much more of an opportunity tive. The Middle East giant picked to listen and share experiences,” up the Gold Award for its Miles says JetBlue’s Canty, Accelerator initiative, moving away “Our caution is its easy to from the traditional pattern of throw a lot of resources into so- awarding bonus miles over a given cial media to no great effect,” period of time to allocate bonus adds Webster, pointing to some miles on specific flights and cabins airline social media efforts which only, closely aligned to yield man- push rather than communicate. agement. “The difficulty is in trying to see It was one of the three winners how you can monetise it or add recognised by the awards’ judging Emirates’ Kashmira Motiwalla (second right), Thomas Bruhn of SAS value to the brand. I think we are panel, alongside SAS and (centre) and IHG’s Amy Ceriani-Nelson (second left) picked up awards all foundering in the dark a bit.” Intercontinental Hotels Group. The Global Flight’s Bhagwanani Scandinavian Star Alliance carrier members to predict their own flight non-air category for a highly publi- also questions the measurable re- was recognised for its Time to activity with the SAS Group. cised campaign aiming at mem- turn of social media activities. “It Forecast promotion, engaging Intercontinental Hotels won the bers of a competitor’s programme. definitely makes sense for carri- ers like JetBlue to engage in this field, given their average custom- or prize draws to encourage cus- to incentivise people to share their likes and over 4,000 new Twitter er profile. But the majority of tomers to redeem miles. travel plans when booking. “It followers within 24h. more traditional airlines would Airlines are also of course em- gives you miles if you share where “The dramatic increase in fol- probably be disappointed if they bracing social media across dif- you are travelling [with the air- lowers shows how much custom- had too high hopes towards a re- ferent areas of the business, and line]. It’s sort of a viral, but you are ers value AAdvantage miles and turn in this area. It is useful for a perhaps it is in the loyalty sector doing it in the booking process,” also provides a new community specific segment of the market – and the ability to communicate explains Ron Callari, vice-presi- and platform to continue the dia- only - and unfortunately hardly in real time with frequent flyers – dent of business development at logue,” says AAdvantage presi- the most lucrative one.” where the potential is most evi- Flip.to. “It connects them into en- dent Maya Leibman. He believes the overall chal- gaged advocates.” lenge in the industry remains the US carrier JetBlue is seeking to The learning goes on lack of holistic view of things. “We don’t try to tap into a similar feel with its new Thomas Bruhn, SAS’s manager of “Loyalty is not about social monetise it - the GoPlaces Facebook application – customer relationship manage- media, ancillary revenues, new value is from where passengers can earn miles ment strategies, EuroBonus, redemption models or CRM – but listening to the by checking in at its airport loca- points to the opportunities to about all of that and much more tions via Facebook. “It is an op- communicate with passengers in at the same time,” he says. customer” portunity to see where our cus- real time, evidenced by recent pe- But the aim remains the same, tomers are going and what they riods of disruption. “We had a whether it be evolving pro- are doing,” says David Canty, Jet- very successful communications grammes to add new platforms, dent. Much of the attention fo- Blue’s director of loyalty market- with passengers via Facebook partners or members; it is to at- cuses on developing an airline’s ing. “It’s a bit like TripAdvisor, through the ash cloud and the tract and retain customers. As flyers into brand advocates or to with the different opinions.” snow crisis.” But this also raises AAdvantage’s Leibman observes: create a buzz or community JetBlue’s app is part of the expectations of how much an air- “Through the evolution over around the airline. Here, the wave of new initiatives tapping line will or can communicate three decades of loyalty, things world of loyalty programmes and social media . At the time of Loy- with passengers as a norm. “You have changed a lot. But they have social media initiatives merge in alty, for example, American’s have to learn as you go along. It also stayed the same.” ■ increasingly imaginative ways. AAdvantage’s Mystery Miles pro- has been a learning process.” For example, Uruguayan carrier motion – under which visitors But social media gains remain Read more about the 2011 Pluna is working with US technol- clicking “like” on its Facebook relatively intangible in bottom- Loyalty Award winners and this ogy firm Flip.to on a concept al- page collected free miles – drove line terms, with the focus largely year’s event: ready in development with hotels, more than 160,000 new Facebook on the benefits of increased en- www.loyalty-conference.com

56 | Airline Business | April 2011 flightglobal.com/ab