Airlines Agree That a Diverse Revenue Strategy Is Key to Loyalty and Ancillary Growth
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How can airlines extract the greatest value from their loyalty programs? Getting the relevant earning opportunity in front of passengers at the right time is a key component of revenue strategies, some airlines have agreed.
For carriers that fly long-haul only, such as Virgin Atlantic, frequency of engagement is a major challenge. The average consumer only flies across the ocean every three or four years, so selling them flights only is not a viable strategy. Juha Järvinen, EVP Commercial, Virgin Atlantic, acknowledges that it is “very difficult for a small airline alone to be relevant.” The carrier compensates for this setback by partnering up, through the powerful network of Virgin Group. “We need to team up with other companies – utilities, supermarkets – that are more relevant in everyday life.”
Co-branded airline credit cards also offer compelling points earning opportunity for consumers. But again, it depends on putting the right offer in front of the passenger at the right time. Aeroméxico’s SVP Marketing and E-Commerce, Andres Castañeda, noted that the company’s lower-end credit card with Santander Bank, which is a newer product, quickly scaled up to a portfolio five times the size of its legacy higher-end card with American Express. That translated to a compelling financial play for the carrier.
For frequent fliers, the credit card solicitations can prove to be a frustration rather than a perk. But, as American Airlines’ managing director of Customer Experience Erwan Perhirin points out, it works very well for the airline. The vast majority of its passengers only fly once every year or two. The credit card “allows them to extract more value from their travel and the takeup rates speak for themselves,” he said.
Credit cards aren’t the only alternative earning opportunity for airlines, of course, but they remain a massive factor in airlines’ ability to generate loyalty program revenue. And the ability to deliver a range of earning opportunities through those cards keeps the airlines top of mind. That’s a nice loyalty boost, especially from the very occasional passenger.