15th May, 2020
Airlines have taken a couple of initiatives to safeguard the interest of its esteemed members. Ai’ Ritesh Gupta spoke to IBS Software’s Binay Warrier about the same.
Airlines have been trying to soothe the concerns of their FFP members, especially those who are accustomed to travelling frequently. These members are worried about their loyalty currency, benefits etc. and keen on gauging whether loyalty is a two-way street.
A challenging scenario
The entire economics of loyalty works on maintaining a tight-rope balance of managing liability while preserving cash. On a normal day, a majority of redemptions are seen as a positive sign of member engagement, and is encouraged. Redemptions in general, ultimately lead to further earn and is therefore reasonably encouraged.
“What we see now across programs are panic redemptions, while at the same time the opportunities to earn miles/ points and bring back cash into the program are limited. This is indeed a challenging scenario,” Sydney-based Binay Warrier, IBS Software’s Head of Business Development told Ai’s Ritesh Gupta.
“While some are putting restrictions or a temporary clamp down on redemptions, earning member's ire and causing anguish, a few others have been innovative to channelize and extra incentivize redemptions that are ultimately most profitable for them. This include extending points validity, offering cheaper cash + miles options for future bookings, cheaper award tickets for flights well into future, higher prices for consumer good (citing lower availability) etc,” shared Warrier.
Reciprocating for esteemed members
Key initiatives to cope with the liquidity crisis and expectations of members:
Also, airlines with enough clout have also been negotiating hard with redemption product suppliers to defer payments to preserve cash.
While extending member's status makes sure that they do not get auto-downgraded due to lack of flying (not their fault), this additional move presents an excellent opportunity for members who had already retained their status, and were on the verge of getting to the next elite tier, but now are left with no flying based option to rake up tier miles. This encourages elite members to continue being loyal on the ground within the program's partner ecosystem, so as to reap the benefits of a higher tier when flying resumes, says Warrier.
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