This document discusses key factors to consider when selecting an IT application for a Frequent Flyer Program (FFP). It outlines the functionality that an ideal FFP application should provide, such as member management, partner management, program management, and communication capabilities. The document compares the benefits of a tailor-made solution developed in-house versus a ready-made solution from a vendor. It also examines the tradeoffs between licensing a solution versus using application services provided by a vendor. The goal is to help loyalty program managers identify an IT solution that best fits their strategically designed FFP scheme and supports it now and in the future.

1. www.niit-tech.com
NIIT Technologies White Paper
Finding the right application for your
Frequent Flyer Program (FFP)
Finding the right application for your
Frequent Flyer Program (FFP)
Amogh Joshi &
Syed Masood

2. CONTENTS
Introduction 3
The Functionality Report Card 3
Tailormade vs. Readymade Solution 4
Licence vs. Service 5
Conclusion 6

3. TRANSPORTATION
JOURNEYJOURNEY
TRANSPORTATION
TRANSPORTATION
TRANSPORTATION
TRAVEL
TRAVEL
TRAVEL
TRAVEL
TRAVEL
TOUR
GUIDE
GUIDE
GUIDE
CARGO
CARGOCARGO
CARGO CARGO
LOGISTICS
LOGISTICS
PACKAGING
This white paper intends to explore some key parametersfor
assessing an IT application deemed suitable for your FFP scheme.
The Functionality Report Card
An ideal IT solution should always be structured around clearly defined
business requirements. All business requirements should be prioritized
and have a defined weight. An exhaustive list of frequent flyer features
grouped into different functional categories can be helpful in identifying
the features you would like to include in FFP scheme.
The shortlisted functionalities can further be compared for efficacy
and availability, with different products.A FFP application should
have loosely coupled yet tightly integrated modules incorporating
the desired features.
Some of the important elements of an FFP application are below.
Member Management
The objective of loyalty is to understand guests and offer better
service leading to repeat business. Half the job is done if the
member information, as highlighted below, is managed well in
application.
i. Profile Details: A detailed profile is not only essential to
understand member preferences (including – Meal, Seat, Inflight,
lounge, Communication etc.), but also helpful to segment
customers based on personal, geographical and other attributes
captured in profile.
ii. Activity Details: A trail log of all member activities, including
accrual and redemption, with the sponsoring enterprise or
associated partners.
iii. Account Details: An account of all credits and debits of points
as a result of awards, purchase, redemption, expiry, donation or
other qualified activities.
Frequent Flyer Programs have become an obvious component of
the aviation business. The success of the loyalty initiative is based
on 3 key factors:
a. Well-crafted product to delight the customers
b. Intelligently designed Loyalty program to gratify customer
interaction
c. Formidable IT application to support the FFP scheme.
With the changing dynamics of loyalty, it is very important that the
IT application should be enhanced to support the FFP to
accommodate the futuristic vision.
3
Introduction
In today’s economic volatility the perception about loyalty program
has changed considerably from being luxury to necessity. In fact
95% of the British consumers believe that rewards make more
sense during economic down turns. The number of consumers
voluntarily joining one or the other program is at all-time high and
so is the number of operational Frequent Flyer Programs.
With changing dynamics of loyalty, it is very important that the IT
application used for supporting the FFP is implemented or
enhanced to accommodate the futuristic vision. This white paper
intends to highlight key parameters, based on which an IT
application can be assessed for efficacy and long term relevance.
The parameters, if observed carefully, can lead the loyalty
managers to an IT solution best suited for the strategically
designed FFP scheme.
US Canada
South America
Europe
Middle East

4. Partner Management
FFP has now become a profit center and the major source of
revenue is trading of miles with partners. Partners, in terms of
revenue, are now considered comparable to passengers and
therefore should be handled with the equivalent finesse. For
efficacy, following partner related features should be sought after
by loyalty managers:
i. Partner Profile: Ability to maintain profile details, including
partner category, contact details, geography and services.
ii. Partner Contract: Ability to record contract details and
automatically translate the inputs to operational business rules.
Contract details include – Open and end date, billing rates (with
cash and credit ceilings), settlement SLAs, Penalties and
applicable fees
iii. Partner Portal and other interfaces - Portal is much required
to empower partners to maintain their own profile and request
trades and offers in a self-service fashion. Ability to directly
interface with partner system brings desired ease to share
member and activity details.
Program Management
The other aspect of loyalty is to have a concept in place to
appreciate the customers and motivate them for their continued
patronage. Program, as the concept is known, is a framework
offering immediate gratification with each business transaction and
a promise to offer value which multiplies with every forthcoming
business transaction. It comprises of 4 key postulates – Objective,
Tier, Points, and Qualification. The needed features are:
i. Program Objective: Ability to design multiple programs based
on business objectives, timelines and enrollment conditions.
ii. Tiers: Ability to define multiple tiers linked with timelines (if
desired) and member activities.
iii. Points: Ability to define different point types (bonus,
redeemable, status etc.), set up point expiry and top up rates.
iv. Qualification: Ability to define rules for upgrade and
downgrade between tiers.
Communication and Campaign
Communication is another key factor in loyalty which ensures that
target customer understands the business proposition as much as
the enterprise understands the customer. It not only creates
4
IBE Loyalty Website Mobile Website Mobile Apps Social Media Management
Communication Management
FFP MIS / GUEST Insight
FFP / CRM / NPSD / IBE and Other Databases and Ware Houses
Customer
Service
Campaign
Management
Access
Management
Reservation
Ticketing
Check-in
Lounge
Access
Baggage
Control
Guest
Management
Partner
Management
Program
Management
awareness about the brand, offers and specialties but also the
customer informed and motivated. Following key features are
essential to manage communication well.
i. Target: Ability to create segments so as to target right audience
for the proposed communication
ii. Template: Flexibility to design templates according to segment,
mode of communication and event.
iii. Timing: Ability to schedule communication and control over
communication based on frequency or recensy rules.
iv. Track: Ability to track campaign response and evaluate success
or failure
Tailormade vs. Readymade
Solution
In a quest to retain frequent flyers the CRM systems evolved to
Frequent Flyer Loyalty Programs. These programs were
designed to give a sense of recognition to frequent flyers,
intending them to continue giving business and keep them out
of reach from competitors.
Airlines like American Airlines, Lufthansa, Air Canada, and Virgin
Atlantic are some of the airlines which developed an IT application
catering to the loyalty product they offered. Gradually a need in the
market was felt and GDS like Sabre and Amadeus developed the
FFP application to compete there airlines solution offerings.
As the loyalty programs were launched for retail, hotels, credit card
and other domains, the leading ERP/CRM solution providers like
SAP, Oracle Seibel etc. also enhanced their CRM solution to
accommodate the need of a Frequent Flyer program. However
these solutions failed to attract many customers in airline industry
due to lack in domain expertise and various integration functions a
FFP application requirefor covering all guest touch points.

5. Strategic Planning – Ancillary components do offer competitive
edge, however to maximize the benefits, timing and expertise are
critical. For best results, a strategic timeline forprioritized
introduction of ancillary components is advisable and the decision to
buy such components as part of full application or independent
components later on should be left to other listed guidelines.
Cost Benefits – Ancillaries packaged with a product are cost
effective as compared to unpacked independent components.
Hence, if the budget allows, it is better having all components as a
single wholesome product.Products are usually parceled with a
price which usually is not discounted, at least in terms of unwanted
features. So there is no point in losing, features while paying for the
complete product.
Licence vs. Service
According to McKinsey, the model of offering IT as a service (or
technically Software as Service) is perceived as a game winner
which has brought real benefits to business in a very cost effective
fashion. The service model has enabled enterprises to focus on
strategy and outsource the business IT to experts.
Licensing, which is often structured as Application Service Provider
(ASP) or locally hosted model, has its own advantage of autonomy,
authority and better alignment to business strategy. The following
table is intended to develop a contrast of such benefits so as to help
you reach at the right model for your FFP.
Over the time, IT vendors have come up with specialized designed
FFP application like CRIS by Emirates Group IT and Crane by HITIT
(taken over by Amadeus). These FFP applications have a clear
advantage over the general CRM and retail loyalty product.
Readymade loyalty applications are parceled with necessary core
components and good to have ancillary components. Loyalty
managers, in any case, cannot compromise with core which
constitutes the loyalty framework. Ancillary components, whichare
instrumental inoffering competitive buoyancy, can at times be
negotiated based on following maxim.
Type of Venture - For startup loyalty ventures it is beneficial to keep
it lean and take off with the essential core components.
Nevertheless, the good to have features can be added over the time
with yielded expertise.
5
GDS Companies
Loyalty Specialists
In House
Others
Ready Made
Tailormade

6. Factors like security of data, reliability, ease of operation, product fit
and strategic alignment are considered relatively influential than the
cost alone. However, considering the budgeted allocation, loyalty
managers should take care for minimization of costs without compro-
mising with strategic objectives. If the factors like functional fit,
security etc. are considered as constant, the cost can only be
optimized by careful evaluation and adoption of IT service model. The
matrix evaluates the ‘Cost Head’ associated with different model.
Conclusion:
6
A Loyalty scheme is as competent as the underlying IT application.
However, it is often complicated and a real daunting task to find the
right application for your loyalty strategy. To simplify the process of
sorting, it is required to have some benchmarks in place. A series of
case studies and extensive literature review finally lead to the much
needed list of criteria associated with following problem statements:
i. Functional Sorting
ii. Tailor-made or Readymade
iii. Licensed or Service
Though, none of the criteria individually answers the big question of
choice; yet an optimum combination of all leads to a reliable and
competitively advanced loyalty application.
COST HEAD SaaS LICENSE
Usage/Licensing Fees Locally Hosted ASP
Base Product Cost
Additional Component Cost
Branding Cost
Customization Cost
Principal Usage Fees (Fixed @ Contract )
Usage Charges (Variable @ Contract )
Support and Maintenance Cost
Periodic Base Charges
Billable Extra Charges (@ contract)
One time Maintenance Charge (% of license)
Annual Variable Fees (@ Contract)
Parameters License Software as Service
Startup Cost Huge set up cost
because of hefty licensing
fees, installation charges,
hardware and other
infrastructure cost.
Remarkably cost
effective because of
lesser contract fees and
relatively nominal
investment in hardware
or installations.
Customization/
Upgrade/
Maintenance
Licensee has to pay for
customization, planned
upgrades and
maintenance
As application is owned
and operated by vendor,
the onus of
customization, upgrade
and maintenance lies
with vendor only.
Ease of Operation Infrastructure and human
resource is required to
operate. Cost of operation
is fixed irrespective of the
size of member base or
transactions.
Operation is offered as a
service and the cost of
operation is usually
variable, depending on the
size of member base or
number of transactions.
Agility Strategically agile,
customization can be
called on by the licensee.
Strategically stiff and
licensee has to rely on the
offered services only
Infrastructure Set up Cost
Facility Setup Cost
Cost of Hardware
Cost of Software Licenses
Database Cost
Network / Bandwidth Cost
Hosting Fees
Resourcing Cost
Other Onetime costs
Periodic Reoccurring Cost
Professional Services Cost
Training Fees
Consultation Charges
Travel and Per-diem Cost
Other Professional Services Cost

7. Amogh Joshi
Amogh is a Business Solution Specialist with a decade of experience in enhancing,
designing and development of IT systems for loyalty programs. His passion is to provide
creative CRM strategy that positively impacts on customer service, cost reductions and
profit realization.
Tel +91 - 98447786364 amogh.joshi@niit-tech.com
Syed Masood
Syed is a Business Analyst with one of the largest IT service providers to Airlines. He has
been instrumental in implementing mission critical IT solutions for global airlines, and has
published several artifacts airline strategies and associated processes.
Tel +91 – 9582404557syed.masood@outlook.com
About the Author
D_48_091213
Write to us at marketing@niit-tech.com www.niit-tech.com
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