Why loyalty programs like Skywards are not for (most) leisure travellers
Aug 11, 2016, 11:21 pm
#16
Join Date: Jul 2007
Location: SYD (perenially), GVA (not in a long time)
Programs: QF PS, EK-Gold, Security Theatre Critic
Posts: 6,785
If not - all people who travel less are very important!
Imagine a simple case: An airline has only two flights a day (730 flights a year) with 100 passengers each. On each flight there 95 infrequent flyers who only fly two flights a year. And there are 5 "frequent flyers" who fly twice a week. So in one year, there are (95 per flight) *(730 flights)/(2 flights per year) = 34,675 individual "infrequent flyers" and there are (5 per flight) *(730 flights)/(104 flights per year) = 35 "frequent flyers".
Further imagine (to keep it simple) that the airline gets $10 profit from each passenger for each flight. So in one year, the airline has 34,675 people who have contributed $20 each to their profit, and 35 people who have contributed $1040 each.
Yes, in total, the infrequent flyers contributed $693,500 to the profit, and the frequent flyers contributed $36,400. But should the airline reward the people who only contributed $20 each, or the people who contributed $1000 each? What does it cost to reward 35 people compared to rewarding 35,000 people?
Even if you fly one trip a year for 20 years, your individual contribution to the airline's profit is small compared to a frequent flyer.
I think you're probably right that it's pretty hopeless in Y, but OTOH, the benefits of the FF program are not that significant if you're paying for J. J (or F) gets you priority check-in and boarding, lounge access, better service in IRROPS, etc. So it's not clear what Gold or Plat gets you that you don't already have by buying a J or F ticket.
Aug 11, 2016, 11:26 pm
#17
Join Date: Nov 2013
Posts: 5,454
It's much more to do with the marginal cost of rewards rather than absolute dollar values on tickets.
Loyalty programmes represent a commission cost, measured in percentage terms.
You can afford to give a high Y, J or F pax more miles etc. because there is more margin to play with. You simply can't do it on cheaper fares with no margin - no matter how often they fly. Similarly, if you reward a low margin pax with things like lounge access which have allocated fixed dollar costs (e.g. 40 USD for an outstation lounge), if your profit margin on their ticket is only 10 USD, then you've gone and shot yourself in the foot.
Loyalty programmes represent a commission cost, measured in percentage terms.
You can afford to give a high Y, J or F pax more miles etc. because there is more margin to play with. You simply can't do it on cheaper fares with no margin - no matter how often they fly. Similarly, if you reward a low margin pax with things like lounge access which have allocated fixed dollar costs (e.g. 40 USD for an outstation lounge), if your profit margin on their ticket is only 10 USD, then you've gone and shot yourself in the foot.
Aug 12, 2016, 3:40 am
#18
Join Date: Apr 2016
Location: Isle of Man
Programs: IHG Platinum Elite, BA Pleb
Posts: 347
And it's the margin that pays for the perks.
EK are actually pretty good for the nice little touches- they put a complimentary cake for my new wife on the plane when I was on honeymoon- but the perks through FF programmes, like lounge access, costs real cash. And they don't give them away to low-margin passengers. It would be financial silliness to expect otherwise
Aug 12, 2016, 3:49 am
#19
Suspended
Join Date: Mar 2002
Location: Canada, USA, Europe
Programs: UA 1K
Posts: 31,452
I can't agree with it: Is there any airline in the world which will have profits if only people who travel more then twice a year will be allowed to use it?
If not - all people who travel less are very important!
People who travel once per year are also important and I also can't agree that all of them will check only price of the ticket.
Actually it is in interest of the airline to make such people buying ticket even if they are not the cheapest (this is what they actually do, but usually using other methods then loyalty programs.).
"loyalty pax" may also be pax who was travelling whole his life using only the same airline.
Such person give during his life much more money to the Airline then someone who just travelled once per month but stopped after one year.
Unfortunately, in Skywards it is impossible to prevent miles from expiring.
(it was great loyalty program but few years ago...).
E.g. why to not allow people to use miles to access lounge in Dubai?
(it may be restricted to pax who already flown given number of sectors etc).
I assume that after e.g. 25 years of flying the same airline (and maybe 50 sectors or much more), some pax may expect "thank you for using our service" instead of "hello, is it your first flight with us?"
If not - all people who travel less are very important!
People who travel once per year are also important and I also can't agree that all of them will check only price of the ticket.
Actually it is in interest of the airline to make such people buying ticket even if they are not the cheapest (this is what they actually do, but usually using other methods then loyalty programs.).
"loyalty pax" may also be pax who was travelling whole his life using only the same airline.
Such person give during his life much more money to the Airline then someone who just travelled once per month but stopped after one year.
Unfortunately, in Skywards it is impossible to prevent miles from expiring.
(it was great loyalty program but few years ago...).
E.g. why to not allow people to use miles to access lounge in Dubai?
(it may be restricted to pax who already flown given number of sectors etc).
I assume that after e.g. 25 years of flying the same airline (and maybe 50 sectors or much more), some pax may expect "thank you for using our service" instead of "hello, is it your first flight with us?"
Aug 14, 2016, 5:51 am
#20
Join Date: Oct 2007
Location: Dubai / NYC
Programs: EK-IO, UA-1K2MM, ETIHAD-GOLD, SPG-PLAT LIFETIME, JUMEIRAH SERIUS GOLD
Posts: 5,220
Actually, OP is bringing up a good point!
Long-term "loyality" - even if it's just low-level activity, should be rewarded in some way (but isn't really nowadays.. ). Sure it is, they are rewarded with a seat from A-B
I think this is indeed a missed opportunity for airlines. You can't have it both ways. Extra perks for the once in a while Travellers takes away perks from the really loyal customer. Perks for the "best" customers are being cut back to the point that they hardly give anything any longer to the best customers.......so what other then an occasional free drink do you think they should give to the infrequent customer s
Of course, infrequent flyers don't bring that much money per person - but on the other hand, a person flying twice a year on EK (and not another airline) brings them in money, slow but steadily. The same could be said for ANY business where someone goes to once or twice a year. I ate at McDonalds twice this year,,,,I could have gone w Burger King but didn't. Doesn't McDonalds owe me something for my loyalty
Like In fact, this could even be an idea to lure customers into "buy-up" into C class.
Some kind of small benefits after every so-and-so much flight, maybe? A lounge invitation after every 20th flight (ie, for 5 RTs via DXB)? An upgrade voucher (valid for a maximum of 8 hours flight, maybe?) on checkin every 50th flight, when space available?
Something that doesn't cost EK much money, but actually brings in loyality. For the not-very-often flyers. That are usually after the cheapest fare, but would return some kind of gifts with loyality to some extend?
I could see this being more like a "gimmick", rather than something very big, but maybe it could get more people to choose EK when they otherwise wouldn't had - at little costs to EK (How much does a lounge visit really cost? How much an upgrade to C, when it wouldn't have been sold anyway.. and maybe even avoided an OpUp that way )
Long-term "loyality" - even if it's just low-level activity, should be rewarded in some way (but isn't really nowadays.. ). Sure it is, they are rewarded with a seat from A-B
I think this is indeed a missed opportunity for airlines. You can't have it both ways. Extra perks for the once in a while Travellers takes away perks from the really loyal customer. Perks for the "best" customers are being cut back to the point that they hardly give anything any longer to the best customers.......so what other then an occasional free drink do you think they should give to the infrequent customer s
Of course, infrequent flyers don't bring that much money per person - but on the other hand, a person flying twice a year on EK (and not another airline) brings them in money, slow but steadily. The same could be said for ANY business where someone goes to once or twice a year. I ate at McDonalds twice this year,,,,I could have gone w Burger King but didn't. Doesn't McDonalds owe me something for my loyalty
Like In fact, this could even be an idea to lure customers into "buy-up" into C class.
Some kind of small benefits after every so-and-so much flight, maybe? A lounge invitation after every 20th flight (ie, for 5 RTs via DXB)? An upgrade voucher (valid for a maximum of 8 hours flight, maybe?) on checkin every 50th flight, when space available?
Something that doesn't cost EK much money, but actually brings in loyality. For the not-very-often flyers. That are usually after the cheapest fare, but would return some kind of gifts with loyality to some extend?
I could see this being more like a "gimmick", rather than something very big, but maybe it could get more people to choose EK when they otherwise wouldn't had - at little costs to EK (How much does a lounge visit really cost? How much an upgrade to C, when it wouldn't have been sold anyway.. and maybe even avoided an OpUp that way
)It's time to do away with all FF programs. People are going to fly. The exception should be top top elites. I'm not talking about Plats or 1Ks......the carriers should stop awarding free tickets, etc. they can keep one very elite invitation only level for those that SPEND the most (not fly the most).
Aug 14, 2016, 7:11 am
#21
Join Date: Nov 2013
Posts: 5,454
Emirates changes Operational Upgrade procedure
People are going to fly. There is no need to reward them for something they will do anyway. If one airline starts rewarding infrequent flyers the competition will start doing the same and you end up giving away perks for nothing. For every new customer EK gets, the competition also gets new customers
It's time to do away with all FF programs. People are going to fly. The exception should be top top elites. I'm not talking about Plats or 1Ks......the carriers should stop awarding free tickets, etc. they can keep one very elite invitation only level for those that SPEND the most (not fly the most).
It's time to do away with all FF programs. People are going to fly. The exception should be top top elites. I'm not talking about Plats or 1Ks......the carriers should stop awarding free tickets, etc. they can keep one very elite invitation only level for those that SPEND the most (not fly the most).
Also FFPs are going the way of pure revenue in any case - but they won't disappear though as they are good revenue streams for partners.
Aug 14, 2016, 7:23 am
#22
Join Date: Oct 2015
Location: Economy, mostly :(
Programs: Skywards Gold
Posts: 7,801
Fare type or actual fare? e.g. someone who paid much more for BKK-DXB-LAX has higher upgrade priority on BKK-DXB than someone who has the same fare type (e.g. Flex) or higher on BKK-DXB-AMM?
Aug 14, 2016, 8:11 am
#23
Join Date: Aug 2012
Location: MAN DXB ✈️
Programs: Skywards Gold
Posts: 6,831
Eks IT is not sophisticated enough and given how much they oversell I think it's doubtful they can do anymore then status and ticket type!
Aug 14, 2016, 8:49 am
#24
Join Date: Nov 2013
Posts: 5,454
I imagine they would have to create a new manifest report that lists pax in fare group rather than expecting a staff member to open every single reservation to check the fare paid manually yes!
Aug 14, 2016, 9:58 am
#25
Join Date: Nov 2013
Posts: 5,454
Apparently sorted by fare group (Flex Plus, Flex etc.) then tier within fare group.
Aug 14, 2016, 10:02 am
#26
Join Date: Oct 2015
Location: Economy, mostly :(
Programs: Skywards Gold
Posts: 7,801
That's fine then. I'm usually on Flex, rarely Flex Plus. And I imagine most of the travellers from the sub continent are on Flex or below. Lucky for me South Africa routes generally book into Flex at good prices
Aug 14, 2016, 10:10 am
#27
Join Date: Aug 2012
Location: MAN DXB ✈️
Programs: Skywards Gold
Posts: 6,831
Aug 14, 2016, 10:15 am
#28
Join Date: Nov 2013
Posts: 5,454
Aug 14, 2016, 10:19 am
#29
Join Date: Aug 2012
Location: MAN DXB ✈️
Programs: Skywards Gold
Posts: 6,831
Aug 14, 2016, 10:34 am
#30
Join Date: Oct 2015
Location: Economy, mostly :(
Programs: Skywards Gold
Posts: 7,801
Not sure how much of an impact it would really have. On average you might slip 2 or 3 spots down the priority list I'd presume but op-ups aren't a benefit one expects anyway, as we've seen in some recent posts here some Silver members have gone for 2 years without ever getting one as it is heavily route dependant. Anyway, I'm sure it won't affect you too much, m3red 