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Fixing Airline Loyalty Programs


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Airline loyalty programs have come a long way from rewarding passengers with plaques and promotional material to giving them special fares and upgrades. In recent years, airlines have partnered with other channels such as hotels and banks, giving customers the opportunity to redeem their points through other channels.

All of this should make loyalty programs more appealing to customers while also providing impetus to airline traffic and revenue. But accumulation and delayed fulfillment of unused points means liability getting accrued on an airline’s balance sheet.

To assess the impact of airline loyalty programs on airline traffic, revenue, and sales and marketing expenses, WNS DecisionPoint™ conducted a study of 75 global airlines. To uncover the challenges that customers faced and to understand their opinion about prevailing loyalty programs, WNS DecisionPoint™ conducted a worldwide survey among airline loyalty card holders.

The study showed that airlines with high potential customer appeal of loyalty programs experienced better airline traffic and revenue. The survey revealed that customers found their current programs to be unrewarding, confusing and incompatible with their needs.

Based on the study and survey results, and discussions with senior executives in the airline industry, WNS DecisionPoint stitched together a comprehensive roadmap that can help airlines improve their loyalty programs while maintaining a healthy operating margin. Some value propositions include:

Developing a loyalty program segmentation model that identifies profitable customers on a continuous basis and suggests loyalty reward allocation based on the behavior trends of the segments

Devising an improved airline partnership management model that can make the customer experience more seamless

Designing loyalty programs specifically for an often-neglected travel segment — leisure travelers — to ensure a high wallet share

Streamline workflows and processes with automation and invest in analytics solutions to improve operating efficiency

To study the analysis of the impact of airline loyalty programs on traffic, revenue and sales and marketing expenses in both mature and emerging markets, read the full report at:

Published in: Data & Analytics
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Fixing Airline Loyalty Programs

  1. 1. 00 Fixing Airline Loyalty Programs Rethink, Revise, Reward
  2. 2. 11 Airline loyalty programs with high potential customer appeal help in propelling airline traffic and revenue* Loyalty programs and implications on airline traffic – a snapshot Loyalty programs and implications on airline traffic – a snapshot For detailed analysis of airline loyalty programs and its impact on operational and financial parameters, please download the full report * WNS DecisionPoint™ examined the potential customer appeal of loyalty programs for airlines by interviewing and conducting research on 75 airlines across the globe In the developed markets, airlines with high potential customer appeal of loyalty programs have fared better consistently with the highest median revenue growth among legacy carriers over 2010-14 In 2014, airline loyalty programs with high potential customer appeal in the developed markets saw the maximum decline in sales and marketing expenses as percentage of revenue (median ~ -0.41pp) compared to those with medium and low potential customer appeal Low Cost Carriers (LCCs) in developing markets are performing better because a large portion of the market is extremely price sensitive and a significant percentage are first time flyers
  3. 3. 22 Major changes to loyalty/rewards programs are required as airlines strive to attain a delicate balance between business needs and passenger satisfaction  59% of survey respondents criticized the insignificant number of points that travel costs and miles translated into  43% of the respondents complained about points translating to meager rewards  Nearly a third of respondents, of which 84% have held a loyalty card for more than 5 years, claim that benefits of loyalty programs are diluted  Of respondents having trouble redeeming their loyalty points, 58% said they are unlikely to speak highly of the airlines’ loyalty program to friends/family/colleagues *WNS DecisionPoint™ administered a worldwide survey among airline loyalty card holders to uncover the challenges they face with respect to loyalty programs To read the findings of the survey, please download the full report Voice of Customer Be more loyal to travelers who are loyal. Be more user-friendly Render less restrictions at the time of redeeming points. It is quite difficult to get airline of one’s choice even months in advance! I don't think airlines value their customers - the rewards are ridiculously low especially when considering offers from competitive airlines For points redemption, be more user friendly and less restrictive. Add more options of travel destinations one can choose from and do not charge exorbitantly for points/miles redemption Make the T&Cs clearer and easier to understand
  4. 4. 33 Dynamic, customer-centric loyalty programs become essential as the aviation market in developed economies mature further But how can airlines make their loyalty programs dynamic and customer-centric? To read more about the details of loyalty program strategies, please download the full report By identifying profitable customers by forecasting future revenue and participation frequency in loyalty programs and allocating segment specific rewards? By promoting simpler and effective operating environment for airlines, their partners and customers? By catering to underserved segments like leisure travelers by adopting a differentiated approach to loyalty program management? 3
  5. 5. 44 A credible insights hub for companies looking to transform their strategies and operations by aligning with todays realities and tomorrow’s disruptions. Email: Website: @WNSDecisionPt WNS DecisionPoint WNS DecisionPoint