Taking advantage of loyalty programmes that offer travellers rewards makes sense in this competitive age
Angus Begg
Shamiyana is a 30-year-old South African working for a cellphone company in Seattle, United States. I’m in the seat next to her on a business class flight to Amsterdam, and in between the odd glass of champagne and extended body stretch allowed by the rather comfortable seats, she tells of the great perks she receives because all her international travelling, wherever possible, is done with the same airline.
Yes, the company pays for the flight, but the choice of airline is hers and as a result she accumulates the miles and eventually gets a pleasant reward in return. That’s how badly the airline wants her business.
With every airline vying for the custom of today’s very pampered business traveller, it is hardly surprising that there has been such phenomenal growth in “loyalty programmes” in recent years. And this growth has now moved beyond the world of air travel to include “loyalty partnerships” with the likes of hotel chains, car-rental and credit card companies, a deal that appears to mean money for all concerned.
Tempest Car Hire attributes 31% of its vehicle rentals to its partnership with the South African Airways (SAA) loyalty programme. Imperial Car Hire is also linked to the SAA venture, a partnership that Imperial’s Johannesburg marketing manager Cathy Farrow says has been a great success. Standard Bank has also linked its reward programme to that of the national airline.
Marco Micci, manager of Sandown Travel in Johannesburg, says the competition between airlines to win customers is so intense, especially on European routes, that the one that offers the most perks and valuable partnerships – from car-rental to hotels – has a good chance of winning the traveller’s business. “With eight or nine 747s going out every night, there’s lots of supply but not so much demand”.
A well-known Sandton international hotel recently stepped up its own customer loyalty programme by offering, as is the trend with such programmes, extra benefits such as special check-in, free shuttle bus transfers, airport pick-up and guaranteed room availability with a minimum reservation of 48 hours.
In the same vein, Virgin Atlantic and British Airways (BA) continue their efforts to outdo each other: Virgin offers new “Flying Club” members free return economy class tickets after their first upper class return trip from South Africa, while BA, in conjunction with the Royal Bank of Canada, in a quite radical twist to the world of “loyalty”, offers Executive Club members the option of offshore banking.
But with typical Branson chutzpah, Virgin goes that step further with some interesting means of redeeming miles, from hot air ballooning to river rafting on the Zambezi.
Travel News Weekly (TNW), a local trade magazine, says this “sudden surge [in loyalty programmes] can be attributed to the fact that a great proportion of the travel industry’s business is generated by a select customer base”.
American Airlines pioneered the concept of a dedicated frequent flyer programme in the early Nineties, calling it AAdvantage. The airline currently has a membership of more than 38-million, up from its 1994 figure of 23,9-million, which equates to a 60% increase in the roughly five years since its beginnings. And it doesn’t look like its growth will stop there.
American Airlines has since combined resources with America Online (AOL) to create AOL AAdvantage, the world’s largest online and offline customer rewards programme.
This “unification” now enables members of both schemes to earn and redeem points on a wide range of services and products, from travel on American Airlines and other alliance members to AOL fees and shopping with online merchants. As one industry observer said: “This new joint programme [American Airlines and AOL] will usher in a new period in loyalty, e-commerce and travel, paving the way for more advanced and accessible programmes with a wider range of options to earn and redeem points and miles.”
Despite loyalty programmes having increased in number, scope and complexity, TNW claims that the airlines, which first ran with the idea of “loyalty programmes”, can’t afford to be without them. “Customer loyalty programmes have been shown to attract new customers … and increase profit through the benefits of focusing on a selected market.”
Before buying into one of these reward programmes, wise travellers will check an airline’s alliance partners – flying within an alliance can boost the customer’s “loyalty miles” – and how soon the miles can be used. And more importantly, whether those miles can be used to upgrade an economy ticket to business class. Some airlines just won’t do it. Many of today’s major airlines belong to one or other of the following “sky conglomerates”: Oneworld (including BA, Cathay Pacific and Qantas), Star Alliance (Lufthansa, Singapore Airlines), Qualiflyer (Swissair, Sabena) and the KLM Partnership (Alitalia, Kenya Airways and Northwest).
For the traveller, however, loyalty programmes remain of secondary importance. The traveller’s primary considerations when booking a flight are still price, scheduling, convenience and accommodation.
Travelling as I do in what is best described as independent consultant capacity where someone else gets the bill, I haven’t the experience of participation and have thus never enjoyed the luxury of adding up those miles and planning a real holiday on an imaginary, remote tropical island.
But touching as they do now every facet of our daily lives, such as the miles accumulated for simply purchasing items with the credit card, loyalty programmes just seem to make a whole load of financial sense.
Much like learning to use a computer.