Over the past few years, many airlines -including the Big Three U.S. carriers – have migrated their customer loyalty programs from mileage-based to revenue-based earn structure. While we have applauded the moves, other industry analysts have questioned our wisdom for doing so; the controversy centers on whether airlines truly understand who their most valuable flyers are, and how generously or how stingily they reward them. Now that the trend is established, other airlines are distinguishing their brands by bucking it: in the U.S., Alaska Airlines has resisted migrating to a revenue-based model (and has earned industry plaudits because of it); and now in Asia, Malaysian-based low-cost carrier AirAsia has bucked it by re-launching their BIG loyalty program as a good old-fashioned frequency program. Will Asian travelers respond?
By Rick Ferguson
The overhauled loyalty program, dubbed the Freedom Flyer Program, is based on a unique membership status system determined by how often guests fly - the more guests fly with AirAsia, the faster they will earn BIG Points, regardless of how much they spend on fares. The four-status system starts with Red status for guests who fly 13 or fewer one-way short-haul flights in the preceding 12 months, through to Gold and Platinum, and all the way up to Black for those who fly 50 or more times with AirAsia. Long-haul and Fly-Thru flights count as two one-way short-haul flights for status calculation purposes.
Of course, members still earn redemption points based on spend: For every RM10 spent, Red bembers can earn up to 20 BIG Points, Gold up to 40, Platinum up to 70 and Black up to 120. Members also qualify for substantial discounts on ticket prices based on status. The points can be earned and redeemed in Malaysia, Thailand, Indonesia, Philippines, India, Singapore, China, Taiwan, Japan, South Korea, Australia and New Zealand.
The Freedom Flyer Programme was launched by AirAsia Group CEO Tan Sri Tony Fernandes, AirAsia X Group CEO Datuk Kamarudin Meranun and AirAsia BIG Loyalty CEO Dato’ Eddy Leong. Money quote from Fernandez:
“I am pleased to introduce the world’s first Freedom Flyer Program. AirAsia is about freedom. When my partner Datuk Kamarudin and I started AirAsia, we dreamed of democratizing air travel so flying would no longer be a luxury only a few could enjoy. We wanted to give everyone the freedom to fly. This new and improved loyalty program is the latest in our continuing quest to give our guests the freedom to live the rewarding life they’ve always dreamed of.”
And another from AirAsia BIG Loyalty CEO Dato’ Eddy Leong:
“Our Freedom Flyer Program is the first of its kind in the world that is designed specifically for everyone. No matter who you are and what you do, our Freedom Flyer Program is our way of saying thank you for making AirAsia great. This is for you.”
According to the Bangkok Post, the revamped program cost US$6 million to develop, and was launched as a way to boost the load factor on AirAsia flights, which on average depart with 15 percent of seats unfilled. The airline also hopes the new program will drive ancillary revenue. Money quote from the Post:
"The FFP will also help drive ancillary income - generate through selling in-flight food and drinks, among other services - which represents about 15 percent of the group's overall annual revenue, as there are more passengers on each flight. Mr. Fernandes said the revised FFP was partly inspired by the retail sector, 'from which we have learned so much.' He described the new FFP as part of a low-cost carrier's aspirations to become as good as the legacy carriers. The new FFP is meant to more than double AirAsia's loyalty program membership, now at 13 million, to about 30 million in the next three years."
That’s a worthy goal, and the new Freedom Flyer program sounds like an on-brand program to deliver results. While the world’s largest carriers increasingly narrow their focus to elite business travelers while punting relationships with the folks in coach, AirAsia has designed a revamped program that will continue their mission to “democratize air travel.” We wish them well as they pursue that mission in earnest.
Rick Ferguson is Editor in Chief of the Wise Marketer Group and is a Certified Loyalty Marketing Professional (CLMP).