Loyalty Programs and the Pandemic

Interview with leading Loyalty Expert, Steve Arsenault by Madeleine Anderson

It has been a rollercoaster of a ride for the airline and travel industry over the last few months.  For many industry players, it has been their loyalty program that has come to their rescue.  Not only continuing to generate revenues for them in the absence of travel.  But, also, providing them with much needed cash which several big players have borrowed against the assets of their programs.

Steve Arsenault was recently interviewed by Madeleine Anderson to discuss the various developments that program operators have deployed.  You can see the interview in the video below.  

If the video player is not rendering on your screen try this link below:


And, if you have seen some other innovations relating to what programs are doing around the world then please drop Michael Smith a line MSmith(at)AiConnects.us


“Pay over time” and travel sector – strengthening ties during the pandemic

14th September, 2020

Facilitators of “buy now pay later” (BNPL) are expanding across the globe. They are not only encouraging consumers to pay via debit cards, but they are also starting to reward them via loyalty initiatives.

A specialist in this arena, Afterpay, has shared that its growth momentum continued in all markets with FY20 global underlying sales increasing 112% to $11.1b (year ended June 30). Active customers more than doubled to 9.9m. An average of 20.5k new customers were added to the platform per day during the last quarter, exemplifying growth during the pandemic. The company went live in Canada, and also chose to acquire Pagantis (will offer Pagantis' BNPL products under its European brand, Clearpay). It is also available in Australia, New Zealand, the U. S., the U. K. etc.


Afterpay’s model -  it charges retailers to offer customers interest-free installment plans by splitting a purchase amount over four manageable fortnightly installments, available both online and in-store or via the iOS or Android app. By enabling customers to enjoy the benefits of splitting any purchase into these four, manageable installments with zero interest, the increased ability to plan and budget cash flow accordingly has resonated strongly with the Afterpay customer community. Customers can not revolve in debt, with no exceptions, and neither are they able to make further purchases if an installment is overdue. “These simple and transparent rules make Afterpay different,” shared a spokesperson. Customers can select Afterpay at checkout online or through the apps of its merchant partners. Afterpay currently has 55k+ merchants and almost 10 million customers globally. 

Travel sector

Afterpay has announced a couple of travel-related initiatives in Australia in the recent months. It launched a partnership, allowing Qantas Frequent Flyers to earn Qantas Points with the BNPL platform. In April this year, Afterpay and LayAway Travel collaborated to create a new travel service, PLAY - a platform that helps Aussie travellers’ pick, book and pay for their holiday over a series of installments prior to their departure date.

Travel brands like Qantas acknowledge that financial services is one of the most popular ways to earn points in the program.

Afterpay has had Jetstar on its platform for three years now offering customers the ability to pay for their holidays in four fortnightly installments. “We also launched with Agoda and Webjet earlier this year, in addition to our partnership with PLAY,” the spokesperson told Ai. “We are always guided by our customers as to where they want to see Afterpay made available and there is definitely appetite in the travel space, particularly prior to the Covid-19 pandemic.” The company asserted that by offering customers a BNPL solution, travel and airline brands are able to offer choice to customers that are looking for a transparent, flexible and easy solution to pay for their travel that doesn’t incur interest and allows customers to budget responsibility, which is particularly important during this time.

The team at Afterpay also works on customized flexible payment offering for a travel e-commerce platform. For instance, in case of PLAY, customers can design a holiday and payment cycle that suits their budget. “They can select to pay with weekly or fortnightly installments which are automatic and always interest free. The holiday is then paid off by the time they depart, meaning they avoid coming back from their holiday with a debt-lag,” said the spokesperson. 


Explore payment-related trends at the upcoming Airline Travel Payment Summit - ATPS Virtual Conference 2020

Date: 20 - 22 Oct 2020  



Personal finance apps + payment = opportunity for travel merchants?

17th August, 2020

Aspects of personal finance, including spending, saving and investing, are under scrutiny. A detailed understanding of it, including the logic behind certain decision-making, can be the best starting point for encouraging spending whenever one is ready.

The specialists in "Buy Now, Pay Later" payments category are going beyond their financial wellness stance and have started their own loyalty programs.  


After Klarna’s move to work on a rewards program, Afterpay announced its new loyalty program last month.

Drifting away from excessing spending

These companies assert that till date loyalty programs have revolved around excessive spending.

They point out that consumers are now being rewarded for paying in a way they prefer, with their debit cards. Klarna mentioned that shoppers would earn a loyalty currency once their payments are completed and paid on time.

Travel merchants must assess how consumers are looking at saving money and spending it. Affirm has already “seen the momentum around savings firsthand” and also mentioned savings may yield future travel spending.

So is it time for travel e-commerce players to be a part of apps that reward consumers for saving, spending or even investing in a new way?

By Ritesh Gupta


Co-brand & Travel Reward Cards Virtual 2020



Increasing revenue on the billing as a loyalty program operator

28th July, 2020

Interview with Jason Adessky

The reality is – it is hard to foresee revenue generation escalating in the foreseeable future, but certainly there can be ways to mitigate the downside on billings. How to work out the same?

Ai’s Ritesh Gupta spoke to Jason Adessky. Excerpts:  

Ai: Looking at the airlines vs. financial service providers’ equation, is the power balance shifting?

Jason Adessky: The key stakeholders i. e. travel suppliers (airlines and their FFPs) and banks/ financial institutions are both hurting in terms of spend and more in case of airlines since their ability to influence or encourage travel is being hampered. Travel suppliers are handicapped by restrictions (be it for advisories, bans or self-imposed travel restrictions), so can’t materially influence what little traveler behavior there is.  The whole idea of a traveler flying and spending more with an airline has been shaken. For an operator, aside from groceries and certain e-commerce related shopping, consumer spending is down – may not be catastrophically down as this segment tends to be affluent and tend to have more wherewithal in terms of where to spend, how to do it etc. But on the whole spend hasn’t been great. 

From a financial services partner’s perspective (banks, credit cards, insurers etc.) again spend for these segments are down, not dramatically, but enough to hurt. Incentives usually in place that revolve around miles/ travel are less attractive. Many are evaluating their strategy to motivate and engage customers. But since airlines have more direct exposure, they are hurting more, their primary advantage of international redemption seats doesn’t exist for short to medium-term. On the other financial services companies have relatively more flexibility to drive and change behavior.   

Ai: What happens to redemption when fleets shrink?

Jason Adessky: As a general principle, when fleets shrink, there would be structural changes within an airline and these will flow down to eventually have an impact on FFPs, associated partners and their ability to influence customer behavior as well. Fewer redemption, less attractive seat options, etc will result in reduction in 3d party billing. And FFPs become relatively less attractive. Airline’s and other travel providers natural reaction, would be to start shifting toward discount pricing and use the same as more attractive, immediate levers to incentivize price-sensitive travelers. This will compound the damage to FFPs effectiveness.  

Not all doom and gloom, though.

FFPs are phenomenal, sophisticated data and marketing machines, with a highly attractive, high yield, low capital business model. Some of the gloss may come off, but opportunities to grow are available if they are able to aggressively pivot and address the silos, inefficiencies and unnecessary friction that have crept into their internal and external relationships with partners. This crisis provides a unique opportunity to re-examine how value is created and shared amongst various stakeholders. As an example, when card interchange regulation came into Europe and Australia a few years ago threatening core revenue streams, programs and card companies adapted and more collaborative and creative solutions were found by sharing and taking a whole portfolio view. Sure, the products are not as profitable as they once were, but they are innovating to create new opportunities. Today, it is a different set of challenges, but if anything the upside from innovation and streamlining is far greater. 

Ai: How should a loyalty program operator go about increasing the revenue on the billing at this juncture?

Jason Adessky: The reality is – it is hard to foresee revenue generation escalating in the foreseeable future, but certainly there can be ways to mitigate the downside on billings. From my experience of running airline loyalty programs, first I would look at breakage. It is a huge lever. The miles that are sold and not redeemed end up swelling the profit.  One can carefully examine whether it (breakage) is a good profit or a bad profit, but a sophisticated loyalty program operator would have focused on certain segmented strategies in the past. But I would re-visit that lever…the historic or previous models won’t apply anymore. So the plan should be to re-assess the appropriate breakage strategies and reconsider how to influence those by individual, by segment and by partner to optimize the outcomes.

Second, I would consider redemption- since international travel and front-end redemptions are going to be constrained, the plan would be diversify redemption options. Considering that local travel is going to be the best option, my suggestion would be to look at high margin experiences. Local operators are hurting badly, and there is an opportunity to work with them, possibly by sending customers their way.  There could be lot of upside for both the parties.

Third and most importantly, it is time to re-visit the business model and the current ways of working (financial, technical and organizational). This crisis offers an opportunity from program and partner strategy perspective. There has been an enormous amount of friction and silos created over the years. It has negative impact on the growth of the program. The model hasn’t changed much in the last 20-30 years. With careful reengineering of financial services and programme economics and processes, I believe that there is a very real opportunity for cards to be offering better propositions at a lower cost and for airlines and FFPs to be far more efficient in distribution of seats.

Overall, a loyalty program manager needs cut down on the friction in the multitude of processes and break down silos that inhibit future growth of the program, whatever the situation looks like. It is time to be flexible, open-minded and aggressively think of change. The time to come is still going to be fantastic for those  airline loyalty businesses that are structured and managed for success. Now is the perfect time for pivoting and enabling the acceleration of the growth once a situation stabilizes a bit. 

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Leveraging 3rd party mobile wallet as entry point for travel


23rd July, 2020

Interview with Björn Goß, CEO, Stocard, an app with over 50m user


Connecting mad rush for toilet paper with emotional loyalty

22nd July, 2020

It is imperative for travel brands to dig deeper into consumer psychology and why certain behavior continues to exist or sway owing to the pandemic.

For instance, from travel loyalty perspective, how loyal shoppers, generally referred as affluent shoppers in this category, are spending, which categories they are looking at and how can full-service airlines bring the “earn and burn” cycle into the same?

Also, according to Comarch, consumer purchase decisions are influenced by their emotional state, and this intensifies during unsta­ble times. And to achieve emotional loyalty, brands must build and maintain three key components: affinity, attach­ment, and trust.

Highlighting the same in its latest report, Comarch mentioned: “this irrational and emotional state of mind results in a trio of buying states: “panic-buying,” evidenced by the mad rush on toilet paper that ensued; “social buying,” whereby shoppers grab what everyone else seems to be scooping up; and “frozen buying,” which finds consumers retreating from buying altogether, paralyzed by fears like, “‘my 401k looks pretty bleak; I’m afraid I’m going to lose my job”.

In this elevated emotional state, brands have an opportunity to stand out by offering the support that the consumers need to build a deeper and long-term relationship that can continue once the crisis is over.

Comarch emphasizes that companies must prepare for change in the organizational mind-set to put customer-centricity at the core of everything a brand does.

Download Comarch’s report

Some of the key points:

  • Understand the customer journey to provide seamless and emotional experiences
  • Personalize every customer interaction with the power of data and technology
  • Ensure transparency to build trust
  • Listen to customers
  • Build a loyalty program focused on customer needs
  • Continuously test and learn

By removing friction, rewarding members instantly and frequently, giving customers the ‘power to choose’, using ‘surprise and delight’ tactics and including “gamified” elements, brands can create a loyalty program that promotes lasting customer loyalty.


By Ritesh Gupta

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Five recommendations to get corporate structure right for FFPs

4th June, 2020

Nik Laming, Airline Loyalty Consultant 


This is the second post in our two-part optimizing airline loyalty programs series. In this, Nik has shared five recommendations to get corporate structure right for FFPs.

History has presented us with large and progressive events where airlines have failed and succeeded with loyalty programs.  Innovators such as Qantas and Air Asia are pushing the boundaries of loyalty programs to become substantial data, media and digital businesses.  In the previous article I explored these events and innovations.  I have distilled the lessons into 5 key points below.  The objective is to learn from innovators and past mistakes optimizing structure and governance to best serve members, partners, shareholders, and parent airline. What should we take from the past and how do we optimize corporate structure to serve all the stakeholders sustainably?

  1. Form a Separate Company Entity under Airline Holding Group -There is a huge opportunity for airlines to diversify income streams by adding digital and data businesses on top of a well-structured and managed loyalty program. The airline is left to focus on its core operations and ecommerce distribution functions and the new business serves as an incubator for new businesses to disrupt the market using the rich data and marketing engine of a loyalty program as the foundation.  The sheer scale and discipline required strongly suggest adding loyalty as a separate entity under the holding company which results in the following corporate structure:


As more digital and data businesses are incubated it may become necessary to follow the AirAsia approach and put in a mini-holding company above X Loyalty, perhaps X Digital Ventures, but for now the simple addition of an independent loyalty subsidiary would be a major step forward.

  1. Experienced and Independent Leadership Team - The loyalty company must have an experienced and independent leadership team to ensure governance and maintain focus on the business in hand. It should not just be folded into the core airline hierarchy several layers down from the board with occasional CFO influence.  There should be a board of directors for the loyalty business containing professionals from airline, loyalty, financial services and other industries with its own independent CFO and governance in place.  It should not be dominated by the airline and treated as an afterthought as the stakes are now way to high.

    The scope of the management team should be loyalty, data, analytics and digital business incubation such as payments, fintech, e-commerce and insurance. The skill sets required are diverse:
  • Loyalty
  • Fintech and payments
  • Marketing and CRM
  • Insurance
  • UI/UX, mobile app and technology
  • Partnerships
  • Operations and member care
  • Data management & analytics
  • Privacy and other support functions

It therefore makes sense for the new business to become a centre of excellence for analytics, data monetization and targeted marketing which should be available to the airline and other anchor partners to use.

  1. IFRS Accounting and Establish a Trust - The IFRS accounting principles need to be followed with rewards properly accounted for at fair market value and as a cost of sale rather than a promotional expense.  A trust should be established to ring-fence a sufficient percentage of future redemption monies owed to members.  This is to ensure the program can continue to maintain the value to its investors – the members and partners under any situation and to prevent a cash-starved airline from dipping in to feed from the cash.
  1. Develop a Solid Legal Agreement - There must be a detailed, well thought through, totally binding and very long term agreement in place between the airline and the loyalty business to prevent it being exploited at the expense of any shareholder, but also to set out the rules and the way of operating very clearly.  These agreements are often neglected but become incredibly important as sunny days turn to rain and leadership of the entities change together with revenue management policies, CFO pressure and market changes such as Aeroplan, AIMIA and Air Canada.
  1. Generate Cash from the Program but Consider the Longer Term - The holding company can choose to sell a minority stake to generate cash but more importantly as a strategic partner to provide support, increase governance, discipline, commercial drive, and rigorous accountability. However, it does need to be approached carefully and with caution.  Under no circumstances should the airline ever relinquish control or its majority interest in the loyalty business.

    When a crisis strikes or times are tough there are mechanisms for using the loyalty business as collateral, for finance or to pre-buy redemption seats as exemplified by AeroMexico.  I would advise against pre-selling points to banks unless times are very desperate, and the terms are not too onerous as the amount of unencumbered cash generated net of future redemption cost will be relatively small.

The future is bright for airline loyalty businesses that are set-up, structured and managed for success.  Digital disruptors are prospering under more realistic business conditions presenting opportunities for airline loyalty programs which come with a rich and well affiliated member base, broad digital marketing channels, low cost base and a strong underlying business model.  As a long time practitioner, builder of loyalty programs and advocate of their transformation into digital and data businesses I am excited by the potential and will make every effort to continue to drive the industry in the right direction.


Nik Laming is the founder of Urban Leopard Ventures a boutique consultancy helping companies reboot and build loyalty programs to extract which deliver maximum value and revenue for airlines, banks, retailers and other companies. He is now focused on helping companies optimize and build loyalty programs into digital and data businesses.

Formerly he was SVP Asia Pacific at AIMIA both managing the SEA regional business and working with clients across all disciplines in loyalty marketing and consulting.  Most recently he designed and built the GetGo coalition lifestyle rewards program for Cebu Pacific Air, an LCC and the largest airline in Philippines. A next-generation, lifestyle rewards program targeting and monetizing a broad base of 5.5 million members and serving 250+ partners.

He is a regular commentator and adviser on all things loyalty including the potential and requirements to create a new model - digital and data incubator business from traditional loyalty programs or under-utilized customer data assets.


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