Customer Loyalty in the Airline Industry: Frequent Flyers Programs

Abstract

The aim of this paper is to study loyalty programs in the airline industry. In particular, FFP's are analysed. FFP's have the objective to reward customers that travel with the airline for more than 10-12 times every year. They collect miles that can use to obtain allowances and other advantages. Are FFP's only promotional tools based on price competition or are they relationship marketing strategies that want to create long-term customer loyalty? This paper tries to answer this question analysing objectives, costs, risks and effectiveness of FFP's. Finally FFP's of major airlines are analysed. Findings reveal a main trend that is the creation of international networks based, not only on partnership among airlines, but also on alliances with operators of other industries such as banks, mobile operators, credit cards, hotels, etc. Existing international alliances are Sky Team, Oneworld and Star Alliance. This concentration trend entail the integration of loyalty programs towards the creation of extended FFP's, which include programs of each operator of the alliance.