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Low-cost carriers finally embrace customer loyalty

August 26, 2016 Headline News No Comments Email Email

egtmedia59European low-cost carriers (LCCs) are getting into frequent flyer schemes and customer loyalty, having worked out that customer databases are worthwhile for all sorts of reasons.

Originally, LCCs spurned customer loyalty schemes, saying they were irrelevant and only price counted. Now, Europe’s two largest low-cost carriers, Ryanair and easyJet have launched customer loyalty schemes and are investing in data analytics.

The aim, analysts say, is to leverage data from huge online customer bases to create personalised offers customised to the preferences of those who fly with them.

Ryanair aims to sell optional extras and easyJet is keeping its eye fixed on ticket pricing, according to a Reuter report.

This trend was foreseen way back in 2013, in a far-seeing airline brief called “The Legacy Effect: Rethinking Loyalty for Low-Cost Carriers” by Evert de Boer and Ralph Browning.

“The low-overhead obsession has driven some of the low-cost airlines away from frequent flyer programs – or any other kind of frequency or revenue-based

recognition program, for that matter,” the paper said.

“Instead, they [LCCs] choose to attract customers again and again with a low-price strategy. But the LCCs that resist using these programs are missing two essential points. The first is that loyalty programs do not have to add to net costs, especially when the benefits of incremental travellers and incremental mileage are factored in.

“The second is that loyalty programs bring new business partners, affiliate revenue, and a potential for added profit to the LCC. In fact, loyalty programs can be the ultimate ancillary revenue source.”

You can download and read the whole paper in PDF format here.

Written by Peter Needham

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