21 October 2008

Loyalty - Airlines have devalued their FFP currency

Steve Hay from ICLP in Hong Kong gave a short but very insightful presentation yesterday at WIT/2008/Singapore.

He demonstrated the difficult positions the legacy carriers are in with their FF programs and how they could address them.

Interestingly it is clear that the airlines have been slowly eroding the value of the currency. The impact has been yet more erosion of brand value amongst consumers. This has been a constant theme of the Professor - the big airlines have done a very bad job in maintaining their brand value.

Steve actually gave a couple of very good ideas about how the supplier community can continue to breathe life into their programs. These are no longer programs about incremental value and loyalty. FFPs are now a price of staying in business. Carriers who move to a la carte service models will be struggling to serve their "premium".

Unfortunately we didnt have time to delve into Steve's ideas but I believe that just ignoring what is going on elsewhere in the airline's marketing mix will come back to BITE them big time. Browsing through the FF sites - such as Flyertalk and Expert Flyer amongst others - it shows that things are definitely not good.

In the Asia-Pacific market - the profligate give-aways of the US carriers didnt happen. However some carriers because of their global alliances were forced to give away large amounts of miles. Qantas recently just destroyed the "Miles" accounts of almost all of its users. It now takes more than a million miles to have that "special" trip - say pair of long haul biz class tickets. Tim Hughes over at the BOOT has clearly vented his frustration at this bad behavior.

While I was writing this a PR release from Sabre crossed my mail. Have a quick peak:


Bottom line - WAKE UP AND SMELL THE COFFEE - you are further eroding the value of your brands.


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