The use of relationship marketing by airlines
Importance of frequent flyers
Frequent flyers provide a high proportion of most airlines income and an even higher proportion of their profit. No wonder airlines regard them as so important. And no wonder other travel businesses are looking to emulate the success of the best frequent flyer schemes. Our research suggests it is not as easy as it looks and there is a wide range of issues — some unexpected — that go to make a successful frequent flyer scheme work well.
Flyers do not suddenly become frequent. Frequent flyers are mostly business flyers. They start by occasional flying. Then they move into a job that requires more frequent flying and develop patterns of flying similar to those depicted in figure 1. The task of the airline is then to ensure that it gives them good service and develops and retains their loyalty.
At the same time, the airline needs to treat “low flyers” reasonably well. One day they may be frequent flyers, too. And as the frequent flyer starts flying less often — because of a change in business lifestyle — he or she is more likely to start more leisure flying, so the airline would still like to retain the business even if the now somewhat less frequent flyer cannot be accorded all the service privileges.
Frequent flyer schemes have attracted much attention from the marketing world. That may not be welcome news to people who think boosting frequent flyers will solve most of an airlines’ marketing problems. It won’t. The marketing of successful airlines focuses of five critical issues:
- Product: having the right routes at the right times.
- Capacity planning: having enough capacity on these routes.
- Yield management: releasing the capacity to the highest bidders as the time of departure of the flight approaches.
- Customer service: ensuring that all customers experience good levels of service, irrespective of the class they are flying and their relationship with the airline.
- Branding: creating and sustaining an image of reliability, quality and service, occasionally with a “cultural” twist — managed brilliantly, for example, by Singapore Airlines. But branding is not simply a question of advertising. It depends heavily on every visible attribute of the airline and every customer experience.
Increasingly, however, relationship marketing has come to the fore as an important extra weapon in the marketeer’s armoury. Frequent flyer schemes, invented by the American airlines, have developed into sophisticated processes for managing those customers who have the highest value for airlines — usually the frequent business flyer.
Before we move on, a health warning: relationship marketing is only one way of managing frequent flyers. It is fact that frequent flyers have certain service expectations, tend to fly in certain classes and on certain routes. So they can also be managed by techniques that include redesign of classes, rescheduling or an overhaul of the total service level.
For further information and to purchase contact Colin Coulson-Thomas