Loyalty Programs in the airlines sector (2/4)

Posted on January 31, 2009 by Matthieu Desiderio

In the early days of Frequent Flyer Programs, the trend for airlines was to have a subsidiary in charge of the FFP. This was a cautious appoach due to a lack of experience in this new Business. When more experience was gained, it was assumed that this Business could bring more revenue, even when taking into account Liability provisions. Hence, the FFP were reintegrated in the airlines’ core Business.

Recently, some airlines have built a new Business model for Loyalty. Thay decided to outsource the FFP Business as a specific entity, bringing in outside investors. The first example is “Groupe Aeroplan”, a public company listed at the Toronto Stock Exchange, owing Aeroplan (the FFP of Air Canada), Nectar (a leading Frequent Buyer Program in the UK), having interest in a FBP in the Middle East and a communication company. No doubt that the future and financial results of Groupe Aeroplan will be closely monitored by the Airline industry.

Other similar initiatives seem to be on tracks (there were rumours about a similar project by Qantas), but might be slowed down by the worldwide financial turndown.

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