{"id":5212,"date":"2020-12-28T11:51:29","date_gmt":"2020-12-28T10:51:29","guid":{"rendered":"http:\/\/www.globalflight.net\/german\/?p=5212"},"modified":"2020-12-28T11:52:19","modified_gmt":"2020-12-28T10:52:19","slug":"using-the-loyalty-program-for-other-business-units","status":"publish","type":"post","link":"https:\/\/www.globalflight.net\/german\/using-the-loyalty-program-for-other-business-units\/","title":{"rendered":"Using the loyalty program for other business units"},"content":{"rendered":"\n
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28 December 2020<\/span><\/em><\/p>\n\n\n\n

Each of us knows this feeling of having dreams, mixing up fiction with reality. Such a dream reminded me of an issue I’ve never really understood for more than 20 years: Why don’t airlines use the loyalty currency to support all their internal business units?<\/p>\n\n\n\n\n\n\n\n

Let me\nanticipate that I don’t consider myself being a consultant between two jobs,\njust waiting for a permanent job offer. And that’s why I even hesitate calling\nmyself a consultant as this automatically comes with this notion of default\nchoice in absence of any other preferable alternatives. In order to count the\nreal consultants in the travel loyalty space, who do their job out of conviction,\non your fingers, you’d probably not need more than one hand.<\/p>\n\n\n\n

And\nnevertheless, I had this dream last night. I was offered to run the MRO (Maintenance,\nRepair, Overhaul) unit of Alitalia. I was asking all the relevant questions\netc. during the interview to understand what the full expectations were etc. (I\nwas a bit puzzled by the huge number of annual C- and D-checks they mentioned –\nbut probably Alitalia’s best days are yet to come!!). When we discussed the financial\naspects of the operation etc., I’ve raised the question whether they awarded\nmiles to their third-party customers – an absolutely natural and logical\nquestion to me. The blank lack of understanding in the eyes of my interlocutors\nfrightened me so much that I woke up.<\/p>\n\n\n\n

Having an\nengineering background, I certainly don’t join the views that airlines have a\ncommodity product and are to become pure (digital) marketing companies. While this\nis true in other industries, the airline business remains too complex in terms\nof operation, technology and regulation as this could happen. While for other\nbusinesses, a powerful app or website might be the most valuable asset, even an\nairline with a single 30-year old plane will have an asset far more valuable\nthan any app or website.<\/p>\n\n\n\n

But there\nis obviously something very powerful airlines have created with their loyalty\nprograms. And many deploy huge partnership departments to spread the loyalty\ncurrency to every corner of the country, more and more often resulting in low\nvolume transactions per partner. And at the same time, there are opportunities,\nwhich are more obvious, but which are hardly exploited.<\/p>\n\n\n\n

Especially\nlarger airline groups continue to offer a range of services beyond the\ntransportation of passengers. MRO services, catering or cargo are the most common\nones, but there are also others such as financial or technical services. These\nare high-volume businesses, where they compete though with true specialists\nfocusing entirely on the respective business segment.<\/p>\n\n\n\n

Yes, these\nare B2B relationships, which are not the actual purpose of Frequent Flyer Programs.\nBut if you keep in mind that there are human beings in the decision process, using\nFFPs in such constellation makes all of a sudden much more sense. Imagine the\nsmall airline without any travel benefits for its staff outside of its own\nairline in absence of any corresponding interline agreements with other airlines,\nrunning an RFP for MRO services. Of the three shortlisted providers, one is airline-backed\nand throws in 1 million miles, which the potential client may split up among\nsome employees. This becomes an immediate competitive advantage against the\nindependent suppliers without such in-house possibility. The cost is minimal to\nthe airline, compared to the contract volume they are going to win.<\/p>\n\n\n\n

Leveraging\nsuch opportunities only creates a neutral internal accounting transaction at\nthe group level of the airline, but is likely to help to push overall revenues for\nthe group in a very straight forward manner – pretty much in line with what the\nprograms do on the passenger revenue side. It looks indeed like a low-hanging fruit.<\/p>\n\n\n\n

But as my\ndream has clearly shown, loyalty managers should not wait for the MRO manager\nto knock on their doors, but rather analyse and pursue such internal opportunities\nproactively from their side. Especially since I’ve decided not to pick up that\nopportunity with Alitalia. For some hard-to-explain feeling, I think\ncontrolling my own destiny is the safer option these days!<\/p>\n","protected":false},"excerpt":{"rendered":"

28 December 2020 Each of us knows this feeling of having dreams, mixing up fiction with reality. Such a dream reminded me of an issue I’ve never really understood for more than 20 years: Why don’t airlines use the loyalty currency to support all their internal business units?<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_links_to":"","_links_to_target":""},"categories":[37],"tags":[],"_links":{"self":[{"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/posts\/5212"}],"collection":[{"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/comments?post=5212"}],"version-history":[{"count":1,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/posts\/5212\/revisions"}],"predecessor-version":[{"id":5213,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/posts\/5212\/revisions\/5213"}],"wp:attachment":[{"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/media?parent=5212"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/categories?post=5212"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/tags?post=5212"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}