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So the marketing tool represented by frequent flyer programmes is in reality no more than a faithful mirror of a highly complex airline business where every conquest of market share turns into a more or less friendly pugilism... There are currently just over 90 frequent flyer programmes around the world. As for the number of members, it is impossible to determine precisely. But according to the American loyalty programme specialist Webflyer, there are 180 million members worldwide, including 120 million in the United States alone (2006 figures). Only a quarter of these are regular air travellers. AAdvantages, the American Airlines frequent flyer programme, is the world's biggest FFP (Frequent Flyer Program), with 46 million members - a quarter of all the members on the planet! The success of frequent flyer programmes continues unabated, as 2011 marks the 30th anniversary of their creation. Is loyalty a stroke of genius or a bottomless pit for airlines? In reality, it's a rather fair deal for airlines. Admittedly, frequent flyer programmes are a godsend for passengers, stimulated by the prospect of upgrades or free tickets. But for airlines, frequent flyer programmes are a marketing and financial sesame. Frequent flyer programmes have helped to create very precise marketing databases, thanks to the monitoring of the miles allocated to each passenger, so that any airline marketing manager can track passenger behaviour: frequency of flights, journeys made, class of travel chosen, and so on. In the event of weakness in a particular sector or class of travel, the frequent flyer programme can also be a highly effective commercial lever. During the economic crisis of 2008-2009, British Airways stimulated demand for high-contribution classes on certain routes by promoting upgrades or reducing the number of miles required to obtain a free ticket. <\/p>\n
MERGED PROGRAMMES <\/strong><\/p>\n Loyalty also helps to cement a group strategy. In the Air France-KLM merger, for example, the merger of the two frequent flyer programmes was an essential element in the commercial success of the new entity. If Alitalia were to be fully integrated into the Air France-KLM group - a prospect that is far from utopian - the Italian carrier would probably adopt Flying Blue. Swiss was quick to adopt Lufthansa's Miles & More frequent flyer programme when the German carrier acquired a stake in its capital. And we can expect a similar rapprochement between British Airways and Iberia. \"We are already looking at ways of improving coordination between the two carriers' frequent flyer programmes\", explains Patrick Malval, Managing Director of British Airways in France. The same interest can be seen in the merger of United Airlines and Continental, which should be completed before the end of the year. The stakes are high, as the two programmes have some 50 million members.<\/p>\n What will the merger of the two American aviation giants mean for frequent flyer programme holders? A survey carried out by the Webflyer website in May 2010 showed that 46 % of those questioned thought that the merger of the two carriers would not bring any benefits to members of the two FFPs. At OnePass, 55 % expected a reduction in their benefits, and at United Airlines 48 %. As for the most loyal members with Elite status (Gold, Silver or Platinum), 49 % thought that the conditions for upgrading would become stricter. This impression is not shared by Continental-United's double management team, nor by certain American loyalty specialists. \"The decisions have not yet been made, as we are still studying several options in terms of modalities. In any case, it will be done in consultation with our passengers\", says Mark Schwab, Senior Vice President Alliances at United Airlines. According to the two carriers, members who have both United and Continental miles could, for example, accumulate them in a single programme. This would enable them to achieve Elite status if necessary. <\/p>\n SPECULATION ON MILES<\/strong><\/p>\n At the beginning of August, Sir Richard Branson, CEO of Virgin Group, announced the creation of a joint frequent flyer programme between Virgin Atlantic (UK), Virgin America and V Australia. The possibility of accumulating miles will come into effect in the second quarter of 2011, but it seems that behind this merger, Virgin's flamboyant CEO has another idea in mind: that of a new alliance between Virgin members or the creation of a truly global airline. \"Stay tuned\", Sir Richard simply replied to journalists' questions. Here again, FFPs are a key element in Virgin's strategy... As in the business world, we are seeing mergers within loyalty programmes. Miles & More, originally Lufthansa's FFP, has become the largest multi-partner programme in the world and the largest in Europe: Miles & More is also the FFP of Adria Airways, Austrian Airlines, Brussels Airlines, Poland's LOT and Swiss. In all, nine airlines representing more than 15 million members. It is likely that Bmi British Midland, which currently has its own Diamond Club programme, will eventually join Miles & More. The two programmes have recently moved closer together, notably with special awards for Diamond Club members travelling on Lufthansa. The integration of Romania's Tarom into the Skyteam alliance in June was preceded by the adoption of Flying Blue as a new frequent flyer programme. Five airlines now use this FFP.<\/p>\n If the airlines are not ready to pool their frequent flyer programmes within the alliance, it is because managing them remains a profitable business. When American Airlines created its first frequent flyer programme in 1981, it opened a veritable Pandora's box of opportunities for passengers to accumulate miles, often without even setting foot on a plane. Hotels, car hire companies, shops, credit cards and banks, railway companies - everything is good for earning miles. Miles have become a 'commodity' in the same way as oil or agricultural produce. Miles are sold, bought and traded. A real business with its own laws governed by supply and demand. Every year, the mass of miles created and allocated is greater than the growth in passenger traffic. A large proportion of these miles are not used. Selling them to a third party would bring in 10 billion dollars a year for the airlines. Recently, the Australian national airline Qantas announced that its FFP division had made a pre-tax profit of 152.6 million dollars, compared with just 15.2 million dollars for its passenger business.<\/p>\n FFPs have helped Qantas to limit the fall in profits over the fiscal year to 4.5 %. Webflyer reports that around 54 % of all miles earned in a year are not earned on a plane! The loyalty site estimates that in 2004 some 20 million free tickets were distributed through FFP awards. An impressive figure, but nothing compared with the miles accumulated and not used: 9.7 trillion on all programmes worldwide. In 2005, the British magazine \"The Economist\" wrote that miles had become the world's leading currency, supplanting the dollar. The magazine estimated that, with each mile costing between one and ten cents, depending on how it was used (from simple economy class to first class), some 700 billion dollars worth of miles were at that time lying dormant in FFP accounts around the world. This figure must have grown since then, with the number of miles put on the market increasing by an average of 15 % to 20 % each year, depending on the source. But while the British magazine believed that such a sum could - as with a currency - only lead to a devaluation of the mile offered, the reality is quite different. The analysis was carried out by Infosys Technologies Limited, an IT company that works with a large number of airlines.<\/p>\n The widening gap between the number of miles allocated and those actually used is largely down to the airlines. By blocking certain dates or offering too low a percentage of seats to frequent flyers, airlines are directly influencing the relationship between supply and demand, following the principles of yield management. According to Infosys Technologies, airlines only offer an average of 6 % of their seats to FFP awards. A few years ago, this percentage was still 9 %. The crisis affecting airlines has not helped matters. It seems that the time has come to tighten up the conditions for awarding bonuses. Several measures have been introduced in recent years. Firstly, by playing on the range of fares. In the price jungle, reduced fares earn fewer miles, with the scale now set at between 25 % and 50 % of miles actually flown. For example, on SAS Scandinavian Airlines, out of 20 booking classes for an intercontinental flight, seven fare classes only earn 25 % of miles actually flown, five classes 100 % of miles, three classes 125 % (Economy Extra) and five classes 150 % (Business Class). Singapore Airlines is even stricter, offering no miles on some of its lowest fares. Air France-KLM and Lufthansa, on the other hand, promise a miles credit to all their customers, but this is modulated according to the booking class. Most airlines have discreetly widened the scope of their discount fares. Other carriers have, just as discreetly, raised the thresholds for access to Elite status - Silver, Gold or Platinum - which awards bonus miles for each flight taken. <\/p>\n USE BY DATE <\/strong><\/p>\n Another area that airlines are keeping a very close eye on is miles expiry dates. Valid for life just a few years ago, miles now have an expiry date. Thai Airways, for example, has an expiry date of just two years. In October 2008, Air France-KLM also reduced the period of validity of miles for its Ivory members. To keep their miles, members must make at least one flight every 20 months, compared with 36 months in a previous version. This is a sort of \"clean sweep\", enabling the Air France group to exclude travellers from the programme who are deemed to be too sporadic. Competition dictates the rules of frequent flyer programmes. In Africa, frequent flyer programmes are still not very advantageous because passenger traffic is less developed than elsewhere, and the customer base is therefore rather small. In Asia, national carriers rely on very captive markets, favoured by a strong national sentiment and also by the obligation imposed on government officials and institutions to give preference to local carriers. This is why Asian airlines generally have more restrictive conditions than the average. Europe is more flexible due to more intense competition. But it is in North America that the rules are the most flexible. Because of competition, airlines generally credit any flight with 100 %, in any booking class. North America also has the largest number of airlines awarding miles for life. Whatever the future of frequent flyer programmes, FFP members need to be more attentive than ever. There are many websites that provide information on the changes and advice on how to manage them. For passengers, competition between airlines remains the best guarantee of a good deal.<\/p>\n Loyalty in figures<\/strong><\/p>\n The online magazine Webflyer is edited by one of America's leading loyalty experts, Randy Petersen, who knows all there is to know about the history of loyalty, its development and the best offers available at the moment. He is one of the few specialists to give some figures on the weight of FFPs today.<\/p>\n \u00a0- 180 million members, including 120 million in the United States. <\/p>\n \u00a0- Nearly 10 trillion miles pending... <\/p>\n \u00a0- 27 % to 28 % of all members are active in their programme.<\/p>\n \u00a0- The number of members grows by an average of 11 % each year.<\/p>\n \u00a0- 54 % of miles earned are not earned during a flight. <\/p>\n \u00a0- Credit cards are the most popular way of earning miles after air travel.<\/p>\n \u00a0- On average, a member collects 1,364 miles each year. However, there are 307,000 frequent flyers earning at least one million miles a year.<\/p>\n \u00a0- 20 million free reward tickets distributed in 2004. <\/p>\n \u00a0- An average of 500 billion miles are credited each year.<\/p>\n \u00a0- The cost of an FFP premium estimated by Randy Petersen: $23.83 calculated on the following expenses\/passengers: meals on board, paraffin, insurance, baggage handling, etc.<\/p>\n \u00a0- The cost of a mile as seen by the airlines. They estimate it at 1.7 cents, but the most commonly accepted value is two cents. However, some miles can cost up to nine cents, depending on the distance and class of service.<\/p>\n![\"\"](\"https:\/\/www.voyages-d-affaires.com\/wp-content\/uploads\/2010\/10\/imagesfidelisation3-6.jpg\")
Could the next step be the creation of loyalty programmes under the aegis of the alliances? For the moment, this is unlikely. Airlines are understandably reluctant to share their customer databases with other carriers, however good their partners may be. On the other hand, the alliances could help to harmonise the conditions of use of FFPs. They have already succeeded in unifying the Elite statuses of the various programmes. The Skyteam alliance - to which Air France belongs - even guarantees a minimum bonus of 500 miles on each partner's shortest flights. However, there is still no better coordination of points collected or travel classes. Or even a website to centralise award requests.<\/p>\n
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