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

---
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.

If you go with the points for delayed flights idea. Add delayed luggage return to that list. Call it "We snooze, you win"

If you want to be different and make it so points are easily spent, maybe go away from the free flight model. Instead of 25,000 miles for a free flight, maybe do something like 2,500 miles for 10% off. Follow Starwood's lead and have no blackouts with guaranteed mile usage if the seat's available for purchase.

You haven't visited OMNI, have you http://www.flyertalk.com/forum/wink.gif

If Independence Air aligns with Star Alliance then maybe, just maybe, I will fly them when need be. Oh, wait, that is old news since ACA wanted to end the UAX relationship. Therefore, my chances of flying IA is, with all due respect, slim and none and I think slim left the arena.

Atlantic Coast Airlines/Independence Air would do well to (1) emphasize basic customer service; and (2) establish one or more alliances with major carriers. During 2003, I took more than 50 ACA flights. Regarding (1) (customer service) I would estimate that at least 40 of them were late, and more than a handful of flights cancelled, some for very poor reasons. For instance, ACA had a 5.30pm (about) CRJ departure from LGA to IAD. This was a convenient time for me, and I scheduled it nearly every Friday afternoon. However, this flight was frequently cancelled -- not due to weather or other unpredictable problems -- but because ACA scheduled this flight as the last leg for a crew that started off on a 4 or 5 leg day from Indianapolis. Because of prior flight times and mandatory FAA regulations regarding maximum crew flight times, this flight had to actually take off from LGA within 30 minutes of scheduled departure or the crew could not lawfully complete the flight. After several cancellations (each of which involved not only inconvenience but an unreimbursed $180+ hotel charge), I changed my plans to take the 7.00pm United mainline flight, even though it was a less convenient schedule. Moreover, in early 2003, ACA deleted one of three IAD-LGA late Sunday afternoon flights, despite the fact that all three were routinely booked 100%, causing regular travellers much inconvenience (i.e., I then had to schedule a 2pm flight and spend less time with my family). Unlike many of the schedule problems airlines encounter due to the nature of their business, these types of problems are self-induced and generate particular customer service problems. The other customer service problem that ACA needs to address is the delivery of baggage at their hub at IAD. I have routinely waited 45 minutes and sometimes waited as long as 90 minutes on a Friday night for the bags from my flight to be delivered to carousel 1. This is clearly a staff scheduling (or perhaps, ground support equipment) issue, but also clearly under ACA's control. I sincerely believe that ACA should take a top-to-bottom look at its entire customer service operation because it is this operation, more than anything else that ACA can do, which will build customer loyalty. Regarding (2) (frequent flyer alliance) ACA should not underestimate the pull of the major airlines frequent flyer programs. The ONLY reason I stayed with ACA as long as I did was because of its tie-in with United Mileage Plus. As soon as the US Airways flights became available for Mileage Plus credit, I switched to US Airways because of superior customer service. If ACA's business model is primarily to aim at the leisure market, then perhaps a major frequent flyer alliance is less important because pure leisure travellers typically do not accrue enough mileage for frequent flyer status (etc) to make a difference. But for a business traveller like me, it will make a big difference. Even if the benefits of an independent ACA frequent flyer program are superior to United Mileage Plus or AAdvantage -- who wants to redeem points for a trip to a second tier eastern city? The key for ACA's frequent flyer program is not the internal benefits, but the ability to earn mileage on ACA and redeem it on other carriers with flights to more desireable destinations.

I wish ACA good luck on its new endeavor. It is certainly a challenging time in which to make a grand strategy play as that which it plans. If ACA can provide good customer service and reasonable frequent flyer alliances, I will be back in the A Concourse at IAD. If it cannot, I am likely to be a customer of its successor as the United Express carrier in IAD.

One of the major flaws with FF programs is to award miles based upon miles segments/miles flown regardless of routing. It would make more sense to only award miles the way the bird flies. If you fly from DFW to NRT, you should only get the miles as if this was flown as a non-stop. The current systems allow you to do odd routings such as DFW - LAX - ORD - NRT, for roughly the same price as the non-stop flight. The airline is loosing revenue by transporting passengers on extra flight segments. If everyone took the most direct routing, there would be many more seats open to sell to other passengers.

No! But if this were to ever happen, some FT'ers would have a heck of a lot of time on their hands as they wouldn't be spending hours in front of the computer trying to figure out crazy routings.

I'm intrigued by this idea of "penalties" (points) for less-than-perfect performance. For every minute that the flight is late you get 10 points (or whatever). For every minute it takes to get your bags to the carousel it's 10 points, whether you check bags or not. (That way everybody gets a minimum number of points for a perfect flight.) Subject to (generous) maximums.

You could have some really terrific ads with this. For example: "Ladies and gentlemen, this is your captain. We apologize for the weather delay..." (Cabin erupts in cheers.) Promote it as a competitive advantage, that other airlines won't put their money where their mouth is, so to speak, and that your airline has an added incentive to aim for perfection.

Of course, that's contingent on Independence actually doing a decent job. If everybody's earning maximum points, it'll only slow defections to other airlines.

I think you're hearing a lot of people wondering about point redemption. If you have "Less Than Perfect Points," then it would be fitting to make them redeemable for things people can use with imperfect performance. Hotels stays, for example. But I'd agree that an international partner would make sense. Obviously I'd look at the Dulles international carriers, which I'll list here: Aeroflot, Air Canada, Air France, ANA, Austrian, BMI, BA, BWIA, Grupo Taca, Ethiopian, KLM, Korean, Lufthansa, Saudi Arabian, SAS, and Virgin. Might also consider Cunard's QM2 for your ultimate award.

As for elite status, there are still plenty of perks you can offer: first boarding, preferred baggage handling (if that's possible), blocked seats, free alcohol (passenger and companion), accelerated point earning (for imperfection, of course), guaranteed window or aisle preference (to the point of calling up a non-elite at the gate to issue a new boarding pass), priority rebooking/standby, preferred alternate carrier rebooking (if substantially delayed and as available), one courtesy refundable nonrefundable per year, two free cargo shipments per year (might be good marketing anyhow, and you could call this the "I forgot my golf clubs" benefit), employee "good job" tip coupons (so elites can reward and motivate your exceptional employees), and, for super elites, a personal visit to Independence's flight training center with some airplane simulator time. Elites also get a dedicated reservations line and 12 hour advance e-mail notice of leisure fare sales (such as weekend specials). Might also consider one free family emergency trip (e.g. funeral) per annum for elites.

On rewards and perks, always think of things that (1) the business traveler can't get reimbursed by his/her employer and (2) they can actually use (or at least aspire toward). I agree with the other poster who said that, as a business model, you don't necessarily want people to carry near-zero point balances because they can (or want to) redeem quickly. You want them working toward higher rewards. It's a fine line, though. The rewards can't be too out of reach.

Good luck!

Having had a decent experience on no more than 8% of my ACA flights, I cannot imagine ANY FF program (and particularly one that awarded MORE flights on them) that would induce me to choose them.

Amen! ACA just rewarded me by terminating the connection with UA/UAX. AWAC is 100x better. There is no way I'll fly with

"Always late and rude while you wait"air

again. Even now I can book around them to ORD and IAD.

See you in chapter 7.

Maybe an award option for free parking @ IAD?

Seriously.

Let me just reemphasize my earlier point about offering an online booking bonus and giving it to the person who books the flight rather than the one who travels.

Do that and I'll personally send you 60 trips a year. http://www.flyertalk.com/forum/biggrin.gif

How many miles per booking would it take to swing you, gleff?

Once upon a time... in a land out west, there was... Western Airlines. Pasengers who were targets of a mistaek http://www.flyertalk.com/forum/wink.gif were issued a "flub stub", good for a buck (in those days) at the counter - and later, if I recall, a drink. It was catchy, and the pax loved it.

I agree wholeheartedly with this point...it makes FF programs useless to many leisure/occasional flyers. I'll pick a three-year expiring flight over a one-year expiring flight in a second. Even if I have to pay slightly more.

Also, consider lower award levels. Frontier gives away a domestic round-trip for 15,000 miles. Increases the value by a whole bunch and actually puts an award where consumers see it as something within reach, that they might actually benefit from.

Also, consider lower award levels. Frontier gives away a domestic round-trip for 15,000 miles.

Maybe. How about 15,000 for a two segment round trip and 20,000 for a round trip with connections?

I am not likely to ever be flying Independence Air, so I'll leave the questions of potential benefits to those who will. On the other hand, it so happens that I was recently thinking of just how benefits should be earned in an ideal FF program, so here goes.

It's my thought that elite status should be earned on trips flown (trips, not segments; the airlines should be able to tell by now whether your segment has an X or and O in the stopover field -- and I'm referring to one-way trips). This is, after all, billed as a "frequent flyer" program. Using non-Independence examples, I shouldn't be getting more credit for flying LAX-LHR once than I do for flying ORD-LGA three times. And I shouldn't get more credit just because I fly ORD-DEN-SEA instead of a nonstop flight. I reiterate that these comments apply only to gaining elite status.

General rewards, though, are quite appropriately accumulated based on dollars spent. Using strictly airline travel as an example (to keep things simple), I would allow for an airline credit of, say, .1% of dollars spent. It could not be redeemed until a certain minimum amount had been accumulated ($500 credit, perhaps), but I would have no minimum on the redemption. The credit could then be applied as part payment of a fare, to pay for an upgrade (obviously not on Independence), or whatever complete unrelated way the airline chooses to offer.

It's been said again and again, but let me reemphasize it.

DON'T LET YOUR POINTS EXPIRE.

I LOVE trueBlue, and I think the most perfect FF program would be trueBlue with no expiring points and maybe even some FF/hotel/car partners.

As someone who flies ACA a LOT and has mixed feelings (yes, they can be pretty bad but I've been pretty lucky), Independence Air might be a good change of pace. I would like a FF program based on trips, with a rolling expiration count (if you don't travel in over a year, then your points expire. However, if you travel within that year, all your points are still OK, kinda like the majors right now) I would go similar to Jetblue with short, medium, long, and make it so four long trips earn you one free roundtrip, and similarly for the rest.

Just my $.02

Here's an idea that I'm surprised no one at all has suggested yet: a two tiered system. One for business travelers who are always on their own, and one for families where you can earn points on adjascent seats (ie mommy daddy and baby's points all going to the same account). Of course the redemption rates would be higher for the family one, but you could make them more geared towards families (ie 200000 points flies two adults and one child to Orlando from anywhere in the US, 50000 for each additional child)
For the business one, they could have stuff like 3000 points gets you free broadband on the flight, etc.

Edit: Holy Crap! They're flying to YOW (or so they say) I've never heard of this airline before but I hope they're really cheap. Are they?

[This message has been edited by canrocks (edited Mar 16, 2004).]

FWIW, things that I'd rather have:

Elite check in. Costs almost nothing to implement and goes a long way.

Elite Security Lanes. Always a winner.

Elite Boarding. Costs zero, but is a benefit.

Automatic club (or discounted club) membership. I don't fly much through IAD (though that may change), is there a way to partner with another airline on Lounge access? A place to wait away from the crowds is always welcome, and if it can be had for the cost of a few points and a few dollars, it'll sell well.

Perhaps the ability to upgrade Vehicle rentals by use of points. I dunno how hard it would be to implement, but if it could be pulled off it'd be something no one else (so far as I know) has even thought about doing.

Pick a mainline hotel partner like Mariott or even Holiday Inn and give special bonuses to elite members (free breakfast buffet or free internet access) or the ability to use a small number of points for these things.

Use the WLAN hotspot in the Airport and allow for lower cost or free internet access (perhaps points related).

Most or all of these can be tied to the members account number / pin.

Since the cost of the tickets on Independence Air is already going to be low (relatively speaking), it doesn't make as much sense to concentrate on free tickets, as opposed to other amenities that make life a bit easier. Just the ability to access the airport WLAN for less than 6 bucks a minute (or whatever the ridiculous charge is now) would be a tier benefit that would interest a lot of folks as much if not more than a free ticket, because it's easily attainable and of immediate benefit. Really, if you run your own WLAN in your bording areas or lounges you can do this at moderate one time infrastructure cost, with negligible continuing cost.

Seven for One. Seven trips gets you one freebie. Simple, easy to maintain, and a goal that is neither too easy nor too hard to achieve.

Use points, factored on miles flown + tier status divided by class of ticket. This keeps the holiday specials folks from skewing the system.

Get a couple of town cars and drivers and allow upper level elites to use it at cost to and from the airport within some reasonable distance (say 20mi or to/from the partner hotel). Alternatively, contract with a service for this.

Most of these suggestions are relatively low cost to implement and encourage people to stay with the program and the airline, because they are almost all peripheral services that don't cost as much seat revenue yet make the program stand apart.

Make the airport *experience* better for your elites and they'll be happier, even if the plane is delayed. They'll also buy more tickets because they feel like they're getting more in return.

Regards,
-Bouncer-

The program is live.

Sorry if I get out in left field here, but I must plead ignorance on Independance Air. Some observations, that is all:

1. Since there is no FC seating, I wouldn't go for a revenue-based model. I think that pax would be flying here because the fares were better than what they could get elsewhere. If the fares were on the level of the majors, then I think most FF'ers would buy a ticket on them, hoping for extra miles, upgrades, etc. So, I'd say consider segments.
2. Have one elite level and offer it pre-boarding.
3. Have preassigned seats.
4. Don't lie to us.
5. Make decisions quickly. If there's a problem, know when "to fold 'em" versus trying to fix it or wait for conditions to clear until past midnight, when there is NO possibility of getting to your hotel until after 1 am with no chance of getting a meal.
6. Probably not practical, but in relation to #5, could we have free hotels even if it is weather-related? (I know, probably not, as margins are thin already, but just a thought)

Best of luck!

They did the 12 month thing. :td: :td:



50% off of $69??? :D


Double the points for a transcon seems a little steep, especially since I only imagine hitting the bigger spots in the west (LAX/PHX/SFO/SEA/LAS) and a paid ticket will likely cost much less than 2 eastern-only trips. Look at fare differentials on Airtran eastern vs. transcon travel.

I'm still in favor of the concept of an IAD based low fare network carrier with good frequencies on routes--- but I'm not too impressed with the FF program thus far.

United fly 4, get 3 free promotion
 

Using DTW-IAD $138 all-in as an example, you'd need to take 11 roundtrip flights to earn an award ticket (and a short-haul one at that).

Not bad when compared against, say, NW, which has eliminated online booking bonuses and would therefore take 25 DTW-DCA roundtrips to earn an award ticket (25,000 miles for short-haul or long-haul).

But then look at United's WAS promotions:

* Fly 2, get 1 short-haul free with RTW promotion
* $25 off and 2,500 bonus miles on first flight
* 1,000 online booking bonus each roundtrip
* 2,500 WAS bonus each roundtrip this summer/fall (just announced today)

So someone could do DTW-ORD-DCA roundtrip 4 times (@ $149 all-in as of today, may drop to $138) and earn 3 award tickets: two short-haul from RTW and one regular just from miles: (2000 flight miles + 1000 online bonus + 2,500 WAS summer/fall bonus) * 4 + 2,500 first-time WAS bonus = 24,500 miles (plenty of non-flight ways to earn those remaining 500 miles).

Although you could use the award tickets to go to more expensive destinations, even if you used all 3 award tickets to fly DTW-WAS again, your average cost for each of the 7 roundtrip flights would be $85 all-in.