Independence Air - radically new frequent flyer program
 

As a member of Flyertalk, here is your chance to help create a program from the ground up!

Independence Air will begin service out of IAD later this summer with a fleet of all coach CRJ's and A319's. Service will be to over 50 domestic destinations including transcontinental service.

A loyalty program needs to be developed that will be based on either dollars spent per year or number of segments flown. It will not be based on miles.

Independence Air wants to make this program stand out. Since they will be competing with the likes of UA Mileage Plus, there needs to be some benefits that are not available with the legacy carrier programs. There will be inherent weaknesses with the Independence Air program as well since there will not be any alliances with other carriers domestic or foreign nor any opportunity to upgrade to a first class seat.

Some initial ideas include a "smart card" that allows members to earn AND redeem points at venues other than with the airline. An example: Buy a cup of coffee at Starbucks and earn a number of points. Lets say you need 25,000 points to take a free flight but only 50 points to redeem for a latte and muffin. The key to this is immediate gratification instead of having customers feel that they have points towards an unattainable goal. Since the points would be stored on a smart card, they could be redeemed instantly without having to place a request.

I'm sure many of you have other terrific ideas to share. Please keep the ideas realistic!

Thanks!



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"You can't be a real country unless you have a beer and an airline. It helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer." - Frank Zappa (1940-93)

Leverage Independence Air's unique position at Dulles Airport to make its frequent flyers real VIPs at Dulles.

Redemption opportunities could be for free parking, especially valet parking... or airport limo services... free drinks onboard... will Independence Air continue to operate its lounge? Redeem for memberships.

Parking would be a benefit to leisure travelers, since business travelers expense it. But parking could be an elite benefit for business travelers if it meant they had access to valet, drop off the car and go.

Definitely offer an elite level program. Priority checkin, priority security, and priority boarding. Consider a companion pass like Southwest. All elites get lounge access.

If the airline is considering something that's directly revenue-based (I think it could rub some folks the wrong way, but let's go with it) why not take it to its logical conclusion. Why not offer cash rebates instead of redemption? So I buy a $500 ticket and get 3% cash back. Granted the marketing tie-ins are revenue generators, so losing that would be a drawback if you see a Starbucks partnership as an independent money maker rather than a cost.

Another elite benefit would be waiving change fees and (if they exist) standy fees. Also allow same-day confirmed changes at no cost.

Similarly a redemption opportunity would be to use FF credits to pay these charges.

Whatever you do, twelve-month expiring points are a very very bad thing. Don't do it. Don't do it. Don't do it.

While we're on the subject of leveraging the local DC market, why not a partnership with metro? FF points redeemable for trips on metro... local destination restaurants .. sporting events ..

But don't overlook the importance of having some really high value awards that will take alot of savings to achieve... something really aspirational that will capture the imagination of members who do book very frequently. Awards that take only a flight or two mean that a traveler doesn't have to consistently choose your airline. People don't understand sunk costs well and will continue to book especially as they feel closer and closer to achieving something, especially something they really want. So as you offer small rewards also offer something worth saving towards. Even without major airline FF partnerships, there has to be some way of offering a "dream" award. I think space at 10 or 20 million points is just silly.. flights on the Concorde used to be aspirational... perhaps some partnership with a foreign carrier would be doable -- if only to redeem for a single high end award that few will ever achieve -- or all-inclusive vacations (fly Independence Air to the destination, get free rental and hotel at the destination, maybe Disney in Florida or California).

[This message has been edited by gleff (edited Mar 07, 2004).]

Isn't the title of the topic more exciting than it really is? These are FT proposals, not actual details of Independence Air/Atlantic Coast's ff program.

Airlines count on some people not redeeming awards. If everyone gets a small award for one flight, doesn't this run counter to that goal? However, many airlines do have poorly publicized magazine awards so people who fly an airline only once can get some magazines.

Within the past year, I've started participating in the low prestige programs like Comfort Inn/Sleep Inn's program, Southwest Airlines, and Econolodge/Rodeway Inn's Easy Choice program. Don't laugh. It's simple to get an award. The rewards are not an overseas ticket or a stay at the Dorchester, but it's free.

I should preface my comments by disclosing that I am an ACA/Independence shareholder.

I would add to the comments of an elite level, with perhaps a UA-E+ seating-like area on the A319's. You could call it the iZone or something like that and offer extra legroom. Elites could also be able to preassign exit rows.

Non-expiring (at least within 12 months) would be a nice benefit.

Perhaps segment points could be developed, although why not do a mileage-based program, but with a really high minimum to compensate for the CRJs? Like earn min 1000 miles per segment, with 20 000 for free ticket, so with a connection, only 5 RTs are needed for a free ticket.

Another idea would be to let people transfer points (no matter how they are based) to family members or even the booking agent.

If business travel is a target, awarding points to both the traveler and the bus could be a fascinating ammendum-I think AA does something like that.

I'll continue to ponder, but I am convinced that ACA's launch will be quite successful-it's why I keep buying shares.

Downside to segments is that connecting pax earn status (if there is such a thing) and awards twice as fast as DC pax. Is it worth twice the marketing expense for non-DC pax?

I like incentivizing those booking travel... at the very least, something like an online booking bonus that goes to the one booking travel rather than the one flying (if the two are different).

Let's see, fly lots in coach to earn more flights in coach. I'll leave that to SW.
No thanks.

I read the previous post and I am so amazed that there are so many smart asses here on FT.

I think that this is an AWESOME opportunity and I am excited.

Is this topic designed to accumulate a list of things frequent flyers want, to be whittled down for implementation, or do you want us to present a business plan?

That is, if Independence Air implemented half the stuff in this thread, they would go broke pretty quickly (assuming they wouldn't be able to charge higher fares to compensate).

Take the 3% cash rebate for instance. This is ridiculous. 3% off the top for an airline is like cutting off just one leg of a marathoner. Not only would you be "giving away the store", you also make accounting more difficult for businesses. A $100 ticket would be a $97 tax deduction.

As others noted, making non-expiring points easy to use in small amounts and transferable will increase the redemption rate to practically 100%. This means costs go up.


Personally, I only use my miles to fly to bizarre destinations in coach or normal destinations in First Class, so I'll pass.


[This message has been edited by JS (edited Mar 07, 2004).]

http://www.atlanticcoast.com/NonFlas...NF/jobs_NF.asp

(about 1/3 down the page)

MileageAddict, did you change jobs perhaps? http://www.flyertalk.com/forum/wink.gif

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My ideas-
DH absolutely has to have some kind of elite preferred seating. If you fly X number of segments, we will block the seat next to you and give you pick of the least undesirable seats in your CRJ. Don't want to make it too complicated, but something like:
Seats blocked for full-fare elites, then elites, then for full-fare customers. As the plane fills up, the full-fares lose the empty seats, then the elites, then the full-fare elites. Maybe also have a program where elites can buy the seat next to them at a discount (and of course earn whatever it is DH frequent flyers are earning on that 2nd seat they purchase).

Maybe try to arrange for codeshares with BA and AA, since BA's east coast feed is fairly limited and AA doesn't have the biggest east coast presence.

I would also have an "IADS" program (borrowed from UGS of United Global Services, Independance Air Domestic Services). DH has some bad operational problems right now, bad ontime performance, customer service, etc. They don't want someone buying a full-fare ticket and having such a bad trip that the passenger ends up avoiding the airline at all costs. IADS would exist at least until the airline can fix its operational problems.

Will,

I emailed you last week but no response. Did you get it? I do want to talk with you...


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"You can't be a real country unless you have a beer and an airline. It helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer." - Frank Zappa (1940-93)

Having flown 4 ACA flights this past weekend....

How about they offer bonuses for flights that do not take off on time? http://www.flyertalk.com/forum/smile.gif

I would be miles rich that way...

I am being partially serious here... they have some major customer service/on-time departure and arrival issues that many customers will be hard pressed to forget.

They may want to consider something to work on getting customers "rewarded" when they do not deliver what is expected.


William

The challenge is that an airline would like to base their rewards on what matters to them, which is dollars spent, but that makes the program a sitting duck for the IRS. The IRS would love to make this taxable income in the case where the company pays for the ticket but the individual gets the award -- obviously a common situation.

So it's necessary to have a proxy for dollars spent that gives the IRS problems. Miles works, and so would segments, but clearly both can be gamed. Still, I think you'll have to pick one and be stuck with a system that is an imperfect proxy, unless you want to bring in Big Brother IRS which will doom not only your program, but maybe all of them.

This is far down on the simplicity side, but I'd design it so that you are awarded points per flight. Calculate the points you get by a formula of [price - (cost*miles)]. That way you are awarded on profit. Give a minimal amount of points for even the lowest fare and go from there.

Don't copy jetblue - one year expiration doesn't work for most leisure travelers (even on SWA, where only 5 RTs are required).

Work with TSA and WMAA to expedite security screening (whether you have a program or not).

Awards based on cost with more points required for flights with higher costs.