Etihad launches new FFP based on consumer research

WM Circle Logo

By: Wise Marketer Staff |

Posted on August 21, 2006

Frequent flyers are increasingly disillusioned by hidden catches associated with redeeming airline miles, according to United Arab Emirates airline, Etihad Airways, which has stepped up its own loyalty efforts following research into loyal customers' attitudes to loyalty programmes.

According to the survey conducted by Etihad, almost one-third of frequent flyers (31%) believed that the standards of rewards offered to loyal customers had decreased in terms of actual benefits to the individual over the years.

Worryingly, 79% felt that loyalty schemes were simply regarded by airlines as clever marketing ploys rather than being a genuine service to loyal customers, while 77% felt that the only people to benefit from airline rewards were business travellers.

Few redemptions
The Etihad survey, commissioned during the run up to the forthcoming (30th August 2006) global launch of the airline's new loyalty and recognition programme (called Guest), also found that while two-thirds of regular travellers (67%) belonged to an airline loyalty programme, only 37% had ever redeem airline points, and only 21% had redeemed airline miles within the past year.

These figures do seem to support The Economist's claims (on 8th January 2005) that the total stock of unredeemed frequent flyer miles stood at approximately 14 trillion miles by the end of 2004 (and was worth over US$700 billion at the time).

Frequent flyer concerns
Etihad's research also highlighted the main concerns for business and leisure travellers. According to Peter Baumgartner, head of marketing for Etihad Airways, "Our research clearly indicates that the travelling public has become increasingly dissatisfied and disillusioned with the concept of frequent flyer programmes. Taking this consumer feedback on board, our aim remains to introduce hospitality-orientated initiatives which rebalance the notion of encouraging loyalty amongst travellers � this time in the customer's favour."

Baumgartner explained that the key area where Etihad identified room for improvement in terms of adding value was flexibility of choice, as an overwhelming majority of survey respondents agreed that they would welcome a scheme that "put them in the driving seat". This view was endorsed by industry expert Randy Petersen: "I find it encouraging that those in charge at Etihad Airways have studied all of the world's leading frequent flyer programmes to identify the features that most appeal to members, as well as the pitfalls other programmes have experienced. As a result, Etihad's Guest programme appears poised to be the most innovative programme in the world, and certainly one that will attract loyal travellers."

Lower tier choices
Another common problem highlighted in the survey was an overall lack of choice for lower tier frequent flyer programme members. Not surprisingly, three-quarters (75%) felt that there was an "extremely limited" range and choice of rewards options, particularly for those who travel less frequently and tend not accumulate sufficient mileage to enjoy the full selection of membership benefits.

Many frequent flyer programmes operate as a unit separate from the airline's larger marketing, product and service strategy. Etihad's new approach has involved the complete integration of its loyalty programme into the airline's overall business strategy. As Baumgartner explained, the new programme aims to provide a series of benefits and redemption methods that focus on what the public wants and feels is most important to them.

Programme launch
Once launched, membership of Etihad's Guest programme will be free of charge, and mileage accrual is done in real time, with individuals from any country (and at least 2 years of age) being eligible to join and earn points. The programme's web site will be opened on launch day.

Membership application forms will be available on all Etihad flights, in reservations offices, lounges (in Abu Dhabi and London) and at the airline's check-in desks. Travellers can also request an enrolment form by calling the programme's service centre and then mailing the completed form to a local address.

The research was based on a commissioned online survey of 1,632 people, and another independent worldwide poll of 122 professionals. Etihad Airways offers flights for passengers and cargo to 40+ destinations in the Middle East, Europe, North America, Africa and Asia.

More Info: