This document discusses research on frequent flyer programs and loyalty programs. It contains the following key points: 1. The global loyalty program market is estimated at over $100 billion, with 85% of global consumers belonging to at least one loyalty program on average in 2015. Canada and France have the highest participation rates around 90%, while Germany has the lowest around 31%. 2. There are 2.6 billion loyalty program memberships in the US, with a $54 billion loyalty market growing at 20% annually. Around 90% of Americans participate in reward programs, with an average of 13 memberships per person. 3. Frequent flyer programs were pioneered by American Airlines in 1981. Over time,

1. Research on Frequent Flyer
Program

2. Loyalty Market
• Global Market is estimated at more than USD 100 bn
• On average, 85% of global consumers reported being members of at least
one customer loyalty program in 2015
• Canada and France being the highest (90%), Germany being the lowest (31%)
• 2.6 billion loyalty memberships in US
• USD 54 bn loyalty market in North America growing at 20% YoY
• 90% Americans participate in some type of reward programs
• Avg. number of memberships ~ 13 per person
• 84% Australians are enrolled in least one Loyalty Program
• Avg. number of memberships ~ 4 per person
• Coles Flybuys is the fifth largest coalition loyalty program in the world after
Travel Club (Spain), Payback (Germany), Nectar (UK) and Air Miles (Canada)

3. History of Frequent Flyer Programs
First FFP by American Airlines (AAdvantage)
First FFP Credit Card Partnership (Diners)
First FFP Alliance (PanAm-AA)
First IPO (Aeroplan)
First Airline Alliance (Star Alliance)
First FFP Hotel Alliance (Westin Premier)
Multiplus buys 28% Stake in TAM
GOL buys 27% stake in Smiles
1981
1985
1986
1991
1997
2005
2010
2013
Canada-based Aeroplan, which began
as a frequent flyer programme within
Air Canada, is the only spin-off
anywhere in the world that is not
owned in whole or in part by an airline.

4. Proliferation of Frequent Flyer Programs

5. Monetization of FFP
Rationale behind FFP Separation:
Liquidity Factor
Dedicated
Management
Greater Investor
Transparency

6. FFP Monetization ~ $3 billion of
liquidity unlocked

7. Social Loyalty – Latest Trends 1
• Effort towards rewarding not just the high value customers based on the
transaction value but rewarding brand advocates as well.

8. Technology Infrastructure for Social Loyalty
• Airlines needs to invest in procuring listening tools and analytics tools like Attensity, Visible, Converseon
etc.
• These tools take the input as the raw conversation happening on various social forums like FB, Twitter,
Youtube, LinkedIn, Flickr etc and filter out the irrelevant information and find the sentiments hidden in
the relevant comments.
• These tools help an organization listen to those conversations, analyze it and then decide their brand
advocates.

9. Case Studies of Social Loyalty
Estonian Air “Air Score” :
• First airline in the world to launch a social loyalty program on Facebook in Oct 2011.
• In this initiative, the Customer earns scores (Air score) for sharing a review of the airline on
their Facebook wall or tweeting offers & deals or sharing any generic information like
airfares, information about cultural and sports events happening in Estonia.
• The customers or so called “Ambassadors” of the airline are rewarded with discounts for
social media advocacy, without even having to fly the airline.
Jet Blue “Go Places” :
• JetBlue provides loyalty points to its customers when they announce on Facebook that they
are at a Jet Blue terminal.
• This drives the end goal of engaging the customer and loyalty.
Virgin America :
• The passengers, who were roaming in the new San Francisco Terminal (T2) home with a
Smartphone, were asked to locate the new amenities which were offered and asked to check
in via foursquare.
• In return of announcing their location on Facebook and Twitter, participants were awarded
badges which could be redeemed against prizes.

10. Fine-tune FPP & Campaign
Management – Latest Trends 2
• Simplify the redemption process through automation or call centre
support
• Send SMS and call alerts to members on miles expiring in the next
two months
• Web/Mobile-enabled key internal business processes and regular
functions for customer interaction
• Ensure customer segmentation for data mining and campaign
management
• Integrate with alliance (partner) airlines and other partners for easy
online accrual, redemption, and upgrades
• Re-engineer legacy systems with an open source system to ensure
more flexibility and rules-based operations
• Outsource application, design, and maintenance of IT systems as
well as the running of the FFP to cost effective locations to reduce
costs

11. Infrastructure for Campaign Management

12. Best in Breed : Case Study 1
Non-Monetary Programs:
• US-based pharmacy chain Walgreens launched the
“Balance Rewards” loyalty program, to encourage its
members to adopt healthy lifestyle practices.
• The program allows members to connect their digital
health trackers with the Walgreens mobile app.
• Members are awarded points whenever they engage in
a healthy activity.
• The success of the Balance Rewards program is evident
in its members’ engagement levels ~ 80 million of the
program’s 103 million members are active participants

13. Best in Breed : Case Study 2
Gamification:
• With its “Earn Your Wings” campaign, Air Canada awarded
badges to flyers when they completed specific ‘challenges’.
• For instance, members got the “Pacific Badge” every time
they took off or landed at specified airports located on the
Pacific coast, such as Sydney.
• These badges were then redeemable in air-miles. Top
badge winners were showcased on a leaderboard on Air
Canada’s website.
• Air Canada reported an ROI of 560% for the program and
saw registration levels that were double its initial forecast.
• Such examples are powerful reminders of how game
mechanics can be used to drive customer engagement.

14. Best in Breed : Case Study 3
Integrated Technology:
• Premium department store de Bijenkorf offers Privilege
Members a personal welcome on their Apple Watch upon
entering a store, showing the actual membership status
and point value which can be redeemed directly in-store.
• Privilege Members who use this service show a 9.7% higher
basket size compared to other Privilege Members.
• The technology was implemented within 2 months to over
500k users, supported by iBeacons throughout all stores
enabling in-store location positioning.
• A feature was added to the mobile app in which guests can
choose if they want to be recognised automatically by the
cashier without the need to show the Membership Card.

15. References
• For Love or Money 2015 – Directivity
• Re-inventing Loyalty Programs for Digital Age – Capgemini Consulting
• 2015 Global Loyalty Lens Report – AIMIA
• Stats & Facts of Loyalty – Snipp
• 2015 Colloquy Loyalty Census – Colloquy
• 2016 Bond Loyalty Report – Bond
• Loyalty Programs in Airlines – Interglobe Technologies
• Rising Above Clouds – Deloitte
• Revitalising Airline Loyalty – WNS
• Separation Anxiety – L.E.K
• FFP Ready to take off – E&Y
• Living your Dreams or just Dreaming – Deloitte
• Next generation Loyalty Management Systems – Capgemini Consulting