Ai Editorial: Fostering loyalty by being a superapp - airlines ready for it?

Kuala Lumpur, #MegaAPAC

22nd August, 2019

Ai Editorial: Completing every transaction with one app is increasingly becoming common in Asia. How are airlines responding to such a trend, and in the process re-defining loyalty, probes Ai's Ritesh Gupta

 

WeChat, Meituan, Grab, Paytm...the list of apps that offer a convenient all-in-one shopping experience stands out in Asia. Competing against such ecosystems/ superapps hasn't been easy for travel e-commerce brands. These apps are setting a new benchmark when one thinks of loyalty. The level of stickiness with these apps is quite high and certainly not easy for the likes of airlines to grab the attention of a consumer.

But airlines in Asia, especially LCCs, are trying to capitalize on their biggest strength - the aspiration of flying, and in the process certain carrier are evolving as travel and lifestyle platforms. AirAsia being one of them. 

Bonding with infrequent travellers

Airlines acknowledge the gap that results owing to infrequent shopping associated with flying in case of leisure travellers. Such a traveller might only travel once or twice a year, and doesn't engage with the airline for almost 50 weeks. This has been a challenge for airlines. This results in inactivity in the loyalty program. In this case, by working on a travel and lifestyle platform that keeps such consumers with them for their daily or other activities, airlines are getting them closer to flying (via the lure of a free ticket, travel-related offers/ discounts or using loyalty currency for payment) by rewarding them for their non-travel shopping.

The concept of a travel loyalty program operating as “one channel for accruing and spending” points/ miles is drifting away. Being flexible with a program’s loyalty currency is the new norm. Airlines in Asia, be it for Air China or AirAsia, are taking new initiatives. Airlines are looking at ways to strengthen the currency they offer, and increasing the activity within their loyalty programs. The objective is to let loyal customers gather and then spend their miles as freely as cash. Some of the initiatives that are standing out:

  • The likes of AirAsia and JetPrivliege are enabling their members convert their bank/ hotel/ other loyalty reward points to their own loyalty currency. In case of AirAsia, the simplicity with which all of this happens stands out. Its loyalty program's BIG Members are required to register their bank cards or loyalty cards on the loyalty program app. Other than converting their credit card or loyalty points to its loyalty currency, members can decide to convert their points in blocks based on the set minimum conversion amount. 

  • Certain airlines are also trying to expand their reach, and by doing so, offering their loyalty program members the convenience of shopping on 3rd party travel sites. For instance, Air China is allowing members to shop for domestic flight tickets on Ctrip using mileage and cash.
  • When it comes to redemption, while some carriers in Asia are allowing shopper to redeem their currency on 3rd party marketplaces, there are others which aren't ready to let members go beyond their own platforms/ sites. They are evaluating how far they intend to go down the road of becoming a digital currency, especially in the context of redemption options.

"The decision to participate on 3rd party sites depends on several factors, and one of them is related to the profile of travellers. If an airline believes that running a classic frequent flyer program that tends to rely mainly on frequent flyers and can be actively engaged via flying benefits, rewards etc., then they might not open up to be a completely digital currency,” mentioned a source in an earlier interview. “On the other hand, a lifestyle rewards program is different from a frequent flyer programme. For infrequent travellers to open up a range of earn and burn options is understandable. It is important for such progams to understand who their members are, what motivates their purchases, how they eventually spend money etc.”   

Those who are keen on running a lifestyle program assert that their goal is to gather as much as data they can. By letting members collect loyalty currency when they spend on products like fuel and relatively frequent buys like movie tickets or dining out, these programs are stepping up its efforts to track the activity of the user.

It is intriguing to assess how carriers are going about both the earn and burn aspects of their respective loyalty programs, their intentions of being a two-sided marketplace, and to what extent gearing up to offer a "super-app" like experience going forward. But one thing is clear - the eagerness to collect data from a variety of sources and act on it is what is going to drive the future of loyalty.

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