As commercial airlines melt under the pressure of the Covid-19 pandemic, experts assert that effective and innovative use of loyalty programmes, partnerships and client data will be their lifeline.
Speaking at an Aviation Festival Asia webinar last week, independent consultant Nik Laming of Urban Leopard Ventures said: â€śLoyalty programmes are probably the most valuable asset that airlines have at this moment. It will be a very quick recovery option for revenue.â€ť
He explained: â€śAirlines have a database of highly engaged, valuable people. They have the ability to go to co-brand partners â€“ especially banks â€“ and give them a very good deal to pre-purchase miles to generate cash. It depends on how desperate the airline is, but at this point, nothing is off the table. Itâ€™s far more important for airlines to survive.â€ť
New World Loyaltyâ€™s airline loyalty consultant Mark Ross-Smith agreed that airline loyalty will â€śplay a big roleâ€ť in recovery.
With air travel at a standstill, customers are now cashing out their miles through partner redemptions, such as supermarket and F&B gift cards, causing airlines to go into â€ścash preservation modeâ€ť, he described.
Despite this occurrence, it is important for companies to continue reassuring customers.
Ross-Smith said: â€śThe best example is that the CEO would send a communication to reassure members that the airline is maintaining safety and keeping things clean. They should acknowledge the situation so that members feel confident about their miles, health and safety. Itâ€™s important to remove the uncertainty or anxiety, especially for elite members.â€ť
However, this measure alone would not be enough to sustain customer loyalty and sentiment, as â€śmembers â€“ and people in general â€“ will remember how you treat them during a crisisâ€ť, he cautioned.
Instead, he advised airlines to heavily consider perks like extending membersâ€™ elite status or incentivising the collection of miles during this time, citing an example of an American airline that is offering 10 times the number of elite miles to its members.
These promotions can also be tweaked based on different markets and their price sensitivity, which may affect how quickly their travel demand will return once travel restrictions ease, said Laming.
He predicted that while business travellers are â€śhighly likely to travelâ€ť and practise â€śvery low discretionâ€ť to prices, young leisure travellers have shown to be â€śimpulsiveâ€ť and â€śhighly price-sensitiveâ€ť; the two main markets that are likely to start travelling first.
Laming concluded: â€śAirlines should be able to pick the promotions extended to each market to maximise cash yield and get people flying again. We will see a rebooting market that will hopefully reboot loyalty programmes to be bigger and better than before.”