Last week, I wrote about how Air India is working to make upgrades cheaper using the Air India Flying Returns frequent flyer program. One of the comments I received on the post was about Air India shutting down the program after the sale,
Ajay – This may be a bit tangential to the topic on hand, but till when do you think will AI be around?
In other words, is this last chance saloon for burning AI-FR miles earned via flying or cc spend?
If you feel AI liquidation is imminent in say, next 2 quarters or so, then a guidelines post as to how best get the value out of AI-FR miles would be greatly appreciated by many.
This is a legit question in the face of the current scenario with Air India, however, I’m happy to state that basis my current assessment it is not a concern. Let me explain:
- Loyalty programs are a trove of data and patterns. Anybody who would acquire Air India would want to crawl through this data to see how an Air India customer operates and customise things for them and make customer delight happen. Remember the time JetPrivilege actually sent birthday miles to everyone unexpectedly? Or those one-off upgrades on Emirates that everyone I know receives ever so often based on your profile.That.
- You know how mileage programs are profitable, right? JetPrivilege was carved out of Jet Airways and sold to Etihad Airways. In this case, Air India Flying Returns with 2 million members as of last year, is the second biggest program in India. Assuming that Flying Returns will be sold as a part of the airline, I’d assume it will then move to become a mileage factory just like JetPrivilege did after the carve-out from Jet Airways.
- The theory we profess about marketing programs such as Flying Returns or JetPrivilege is, that they drive behaviour. Personally, I give a disproportionate share of the business to Jet Airways all the time due to the fact that they have a network fit for me, along with the Etihad partnership, and hence I choose them over others most of the times.
- Air India won’t be spending so much time making the program likeable by people, such as the current discussion about upgrades being made easier with Flying Returns, only to shut it down later. Imagine the number of people who will cry hoarse.
The first and the third reasons are perhaps also the reasons why Indigo is considering launching a loyalty program of its own.
So, basis all of these pointers, in my assessment, Air India’s Flying Returns is not going anywhere for the foreseeable future. The new owners may have new ideas about how to run the program or may want to change the valuation of the points and so on, but they are definitely not shutting down the program, not without notice, and your miles won’t be worthless like Kingfisher overnight.
What do you think about the fate of the Flying Returns program once Air India changes hands?
If the Tatas do purchase this airline, I foresee the groups financial troubles to get even worse.
Apart from TCS, there are no notable profit making companies in the group. And Im not even going into the hideous rebranding of Taj Hotels which will only serve to confuse the customer once again.
I kind of disagree. Air miles are liability for the airline, while the new owners would ideally like the data coming from it, they would not like the miles balance that comes with it. If the miles balance is high, that would be compensated by airline being valued at a lower price. Ideally, Air India would not like that. And they are taking steps to reduce as much (or all?) miles balances as possible before the takeover. You can see the desperation in recent changes in redemption. In coming months, you’d see more.
@Amex Guy and how much do you think is the liability from miles as compared to the other liabilities? Let’s not aim in the dark here. A mileage program is a part and parcel of a full-service carrier and let’s not forget the intangible brand equity that comes with it. Had it not been an essential, a new-comer such as Vistara wouldn’t have had the intention to put in place a program on day 1. AI maybe not the best program out there, but no access to the data when no access to the miles. Oh, and don’t even forget how will people be engaged with Star Alliance when there will be no concept of miles.
Circling back, there is no desperation in redemption, it is just a good change. Not every change has to be driven by the disinvestment agenda.
That all is true, but only if they are acquired by someone in one piece and who intends to run it as a full-service carrier. Only then existing customer loyalty and brand equity matters. If sold in parts or to an LCC, it wouldn’t matter much. But then, AI has a lot of orphan units that an LCC would not want, such as their catering arm.
I’m actually hoping for a full takeover. Partially because I don’t want Jet to be the only full service international Indian airline. That would likely screw us all more in coming years.
@Amex, like I elaborated before, I expect it to be a full takeover. Indigo may have thrown their towel in the ring, but that does not mean they will win it. Expect Tatas to give them a tough fight.
I would agree and disagree at the same time with your assessment.
In a case where the airline is sold on an “as is where is basis”, the miles may remain intact. However, what happens if it is stripped and sold in parts, which seems to be quite likely. Also, I am not sure if FR is a separate company.
Reasons for carving out Jet Privilege were of course different – it was a workaround to bring equity beyond the permissible limit.
@Rajat, I don’t expect to be sold in parts. The whole sale would be a path of least resistance for the airline, not in parts. Additionally, FR is a part of the airline. And the carve out of JP was planned way before Etihad walked into the picture.