CEO Blog

Why data sharing between partners could strengthen loyalty

Written by Ravindra Bhagwanani on . Posted in CEO Blog


03 September 2015

Yes, data is the holy grail in the loyalty game and even the closest partners are reluctant to share any data between themselves. But putting the limits too high can actually come with a price tag in the case of irregularities. A personal experience with oneworld.

People outside of the business often wonder why the market of Frequent Flyer Programs is so complicated and why there are not simply three programs, one for each of the three alliances. From a customer perspective, such centrally managed programs would indeed be sufficient (okay, admittedly less fun for some customers as well, understanding to exploit the differences between the programs!).

But anybody in the industry obviously understands that things are not as easy as that. Not only do airlines like to keep the flexibility of an own program in case they wish to leave an alliance, but as these partners are competitors at the same time, ownership of customer data is really the holy grail. Only having a full 360° view of the customer allows to develop a loyalty program into more than a pure points earning and burning tool, such as using it for meaningful CRM campaigns.

So far, fair enough. But the question rises nevertheless what kind of basic data should be shared if the partners really act as partners and cross-sell each other. This becomes evident in the case of irregularities – and current practices might end up costing operators a lot of money.

What happened to me the other day is an illustrative case: I’ve used some of my Air Berlin miles to redeem a 2-leg flight on British Airways – a normal practice within alliance programs, which happens thousands of times each day.

A few days prior to departure, I was checking by pure chance my reservation and my surprise was big to realise that the second leg of my trip was cancelled as I was never approached by anybody about this. When I contacted Air Berlin, which had issued my ticket, they confirmed indeed the situation and managed to rebook my flight, arriving 11h after the initial schedule.

As this was a clear case for a compensation for cancelled flights under the EU regulations (cancellation less than 14 days prior to departure and delay of more than three hours compared to the initial booking), I’ve approached British Airways for a compensation claim, not anticipating any problems as I had actually a very similar case just before on a BA flight, but using British Airways miles on that occasion, and the airline acknowledged the facts and agreed to pay the compensation without any further discussion.

So my surprise was big when BA turned down my claim this time – arguing that they informed Air Berlin two months prior to departure about the cancellation. That is certainly true, but Air Berlin had never passed that information on to me – so how am I supposed to know? British Airways also added, and that is where it is getting interesting from an industry perspective, that they had no chance to contact me directly as their partner Air Berlin wouldn’t share my contact details with them as part of the reservation.

I don’t think that too many secrets are revealed if basic contact data for the case of such irregularities are shared between partners. In my concrete case, British Airways will not only have to pay the compensation (as I am not accepting their logic and taking the case to court to get clarity), but also the costs of the legal procedure just because they have failed to put in place such a practice with their partners.

As the world between partners becomes increasingly connected, it might be time to rethink that practice. With frequent irregularities, everybody is busy with itself and taking care of irregularities of partners around the world is simply a lower priority and one shouldn’t rely on a partner fulfilling that task at the same level of quality as one would strive to do it for its own passengers.

This situation between partners is obviously a bit similar to the relationship between airlines and travel agencies, which are also reluctant to share contact details with airlines (reason why the idea of FFPs as direct communication channel with end customers started more than 30 years ago in a world still relying almost entirely on distribution through travel agents). But there are two major differences here: Travel agencies get paid to do that customer-facing job of managing irregularities while hardly any partner airline would see its role like that. And secondly, airlines are trying hard to work around travel agents as additional intermediary. If they manage to do so with the help of partners, they should, however, also look into the appropriate handling of such situations, even if they concern only a very small part of all bookings.

At the end of the day, handling irregularities in a professional manner can do a lot to maintain or even create loyalty, as we all know. To do the same between partners in a next step seems, however, to require some fundamental rethinking of partnership processes and practices in terms of data sharing. But if managed, it will not only have a positive loyalty and reputation impact on one company, but even on two! Such aspects of partnerships might be less exciting, but they should be on the task list of each partnership manager as well. In times of thousands of code-share agreements and FFP partnerships, it seems indeed high time to introduce new standards here.