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Revitalizing Airline Loyalty-Frequent Flyer Programs

Nov 26, 2015

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AUTHOR(s)

Pankaj Pandit

General Manager, Operations, Research & Analytics

Key Points

FFPs have evolved from being a tool to promote loyalty for airlines to becoming independent profit centers
While the number of FFP members is steadily increasing, the value of FFPs for members is increasingly perceived to reduce
FFPs add long-term value and competitive advantage to the airline only when they are in sync with the overall airline strategy
To create best-in-class FFPs, airlines must chart out a clear-cut strategy, design an effective structure, and proactively leverage technology

Airline loyalty programs, called frequent flyer programs (FFPs), have evolved since the time the first airline loyalty program was launched in USA three decades ago. Today, about 100 million consumers belong to one or more airline frequent-flyer programs.

As a matter of fact, FFPs have now become a crucial part of an airline’s customer retention strategy and are increasingly being run as independent profit centers by airlines. FFPs add long-term value and competitive advantage to the airline. However, despite the value they bring to an airline, many FFPs have become commoditized, with little differentiation.

In this paper, we discuss the elements for setting up a best-in-class frequent flyer program through offshore member service centers, campaign management, data management, and research and analytics services.

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