Frequent Flyer Program (FFP)
Is a loyalty program offered by many airlines. Typically, airline customers enrolled in the program accumulate frequent flyer miles (kilometers, points, segments) corresponding to the distance flown on that airline or its partners. There are other ways to accumulate miles. In recent years, more miles were awarded for using co-branded credit and debit cards than for air travel. Acquired miles can be redeemed for free air travel; for other goods or services; or for increased benefits, such as travel class upgrades, airport lounge access or priority bookings. Pre history
Before there were frequent-flyer programs, there were Raleigh cigarette coupons and S&H Green Stamps. The idea was similar: encourage repeat business by rewarding customers for their loyalty.
Before such primitive loyalty programs could develop into what we now know as FFPs, two events had to occur: •
Deregulation (1978) created the marketing environment.
Pre-deregulation, airline marketing was almost exclusively "strategic": image advertising with complementary product offerings (Southwest, the "Love" airline, featuring flight attendants in hot pants; sophisticated TWA featuring a piano lounge on the upper deck of their B747s). •
Computerization created the necessary systems infrastructure. FFPs as we know them would be impossible without massive data-storage capabilities to warehouse the customer files, and the sophisticated database software necessary to manage that data. Absent either of the two, FFPs probably would be unnecessary or impossible (without the computer-tracking mechanisms which make such large-scale customer tracking possible). The Beginning
In May 1981, American Airlines (AA) introduced AAdvantage, the first FFP. Its goal is to retain AA's most frequent customers by rewarding them for their loyalty. The tactic, specifically, called for tracking members' flown miles (as a measure of their revenue contribution to the company), and awarding members free tickets & upgrades for the rewards. AA had compiled a database of 150,000 of its best customers. These frequent flyers were identified by computer-searching Sabre bookings for recurring phone numbers, which were correlated with the customers' names. They were the first members of AAdvantage. Within days of the introduction of AAdvantage, United (UA) introduced their own program, Mileage Plus. In many respects, Mileage Plus was a mirror image of AAdvantage. The "Plus" referred to the few elements in UA's program which distinguished it from AAdvantage--a 5,000-mile Enrollment Bonus and no mileage expiration. Later that same year (1981), both Delta and TWA introduced their programs, creating the critical mass necessary to make FFPs a necessary element in any and all airlines' marketing arsenals. The FFP battle had begun. FFP'S Today
Today, frequent flyer programs are everywhere.
There are more than 70 FFPs worldwide.
While the programs were introduced in the U.S., by U.S. airlines, they are now a fact of marketing life globally. Many foreign carriers were reluctant entrants. As was the case with the late-entrant U.S. airlines, foreign carriers initially viewed the growth of FFPs as a marketing fad, and an expensive one at that. Additionally, some carriers felt that FFPs amounted to a kind of rebate or discount, which was inconsistent with their premium-service/premium-price strategy (especially for business and first class). Notwithstanding these qualms, when such FFP-less carriers as South African Airways, Singapore Airlines or Swissair began losing share to their U.S. counterpart carriers, the power of mileage was proved indisputably, measurably, on the bottom line. In marketing terms, FFP has become part of the "core product" offered by airlines. Mileage is a basic consumer expectation, alongside convenient schedules, competitive pricing, safety and customer service.
The primary method of obtaining points in a frequent flyer program...
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