The Interview Issue – Part 2

The Interview Issue – Part 2

Alitalia

Callegari Giorgio, SVP Strategical Alliances & Business Development, Alitalia — Our first time ever chatting with this gentleman and we were duly impressed. We came away thinking only one thing: he knows everything.

InsideFlyer
First, fill us in on SkyTeam, Alitalia and the first thing that pops into your head concerning alliances.
Callegari Giorgio
As a general rule for SkyTeam, we want to care about the customer. Something we believe is a significant benefit for our customer is redemption. Multi-carrier redemption is something that enables the customer to take advantage of the extended network of the members. That means all the carriers have stipulated an agreement with the other members.

When you mention Flying Blue, you’re referring to something that goes beyond that, because it’s the establishment of a single program that is applicable to different carriers.

Air France and KLM are our close partners in participation with the program; we are together with CSA (the other European member of SkyTeam) assessing benefits, costs and so on. It seems logical that we conduct an in-depth analysis, because KLM and Air France have a common bottom line, therefore the cost and leverage that a marketing tool like a frequent flyer program provides can easily be accounted for.

We are in the process of doing that as far as the relationship with MilleMiglia and Flying Blue.

On a different level, there is the associate membership program there. We as SkyTeam believe in the same level of benefits, so the customer should not see in any way the difference when flying with Alitalia or Copa.

One of the things we believe in is the delivery of frequent flyer benefits, in a way in which easy for the customers and efficient for the carriers.

That’s why we decided, considering the associates are based on a regional focus, that it made sense to either adopt the sponsor of frequent flyer programs, (because not all of them might have their own frequent flyer program) or to merge their frequent flyer program into the sponsor’s one.

IF
How were the sponsors chosen?
Callegari
When the program was devised, long before being implemented, we had a number of candidates. There are always a number of carriers trying to define different options and solutions. It was not so much a matter of where do we start, but a matter of with whom we would start the program. We had more interested parties at the beginning than we actually ended up with.

The concept to decide which carriers was a combination of what we where proposing to the members and which of the carriers would find the membership interesting. It’s no secret that we were in talks with Malev, but they chose oneworld instead of SkyTeam. It’s a two-way highway.
Two were a natural choice, because Kenya is partially owned by KLM and Copa is controlled by Continental.

As for a European carrier, AirEuropa, I pride myself in saying the first lateral agreement between members of SkyTeam and AirEuropa was signed in1998 by Alitalia.

The geography and natural flows make it logical that the strongest partnership would happen with Air France. It seemed logical that the sponsor carrier would be the one with which the size of the relationship would be stronger.

So the combination of history in the partnership, size and depth of relationship plus of the willingness of the two parties, made it easy to join SkyTeam.

IF
Will they ever be a regular member of SkyTeam or just an associate?
Callegari
We made it very clear in the press conference that associates will not become full members.

IF
Is SmartMiles going to be dissolved into MilleMiglia?
Callegari
It will be dissolved. We are targeting the end of 2005 to the beginning of 2006

IF
Anything else you would like to add?
Callegari
I would like to point out that if this is being perceived that the big guys imposing on the small guys, that is not our intention. It’s always hard to ask someone to give up a brand.

IF
Will there be other airlines that will become a part of the associate program?
Callegari
We are in talks with carriers that might become part of a second batch. The size and quality and numbers of carriers in the second batch will depend of a couple of things: One, the success of our first batch program, and second, whether those carriers that will develop over time.

We have an understanding with China Southern for full membership. They are the only Chinese carrier that announced formally its intention to become a part of an alliance, and they have chosen SkyTeam.

Points.com

Rob MacLean, Chief Executive Officer, Points.com — Does this guy know the business or what? As one of the major forces in the Canadian (International Airlines) Plus program from days gone by, Rob knows miles, points and a lot about frequent flyers.

Grad Conn, Chief Marketing Officer, Points.com — Grad wears a hat that fits well. The best part — he comes at this from not being in the industry, rather as a mileage-earning guy from other consumer marketing positions.

InsideFlyer
Where does Points.com go from here?
Grad
We’re trying to modify points.com as more of a reward management portal. What we’re finding when we talk to people is that the old points.com did one thing that people thought was interesting, which was swapping, but that was such a narrow part of their over all loyalty experience. It was like having a bank that only made change.

What we’re trying to do now is to give people a more of a complete picture of managing their miles and points, and we’ve got a long road ahead of us.

We need more and more partners; we need to build more features. We need to earn, buy and swap.

IF
You could become that one-stop portal.
Rob
We’re never going to be all things to all people, but what we’re relevant to are people in multiple programs.

IF
Would you say most people are in multiple programs?
Rob
Yes, research shows if you play in one, you have 7 to 8 programs.

IF
You’re a little light on the hotel programs. Is that one of the things that will be adjusted over time?
Rob
Yes, our vision is that with anyone with a loyalty currency, we can bring value to that program and their members. Hotels are a really important area. Financial services is another really important section.
Grad
When you think of Points.com, we’re not in the business of telling anyone anything. We’re more like a multimedia area, like an eBay, connecting sellers and buyers.

IF
Was it the technology that led you your first tool to be like a Mileage Manager, or was it research from your customers leading to the tool?
Rob
It was driven by the partners, and what they were trying to deliver to their members. With the technology we built for Points.com, we were lucky enough to have real smart partners. It was driven first by the programs trying to add more value to their membership.

IF
You’ve taken on a non-business approach. Is it your approach to make this a friendlier consumer site?
Grad
Yes, there is a bigger opportunity with the bulk of people who have programs but don’t really know how to get value out of them.

IF
Anything else you want to run through?
Rob
There is more stuff coming, more products coming out of the industry to do more for their customers. You’ll see us launch more programs and products.

IF
What is the next thing we’ll see?
Grad
The big change will be mass increase on earn. We’ll like to see members go from swap to earn.

IF
When you say earn, is it giving information on how and where to earn?
Grad
We would give information to earn, and we will have an earn loop and have our own offers.

IF
Alternative burn rate … do you see a day you may lead members to fewer considerations of burning, but to exchanging?
Rob
We’ve already added on gift certificates. You’ll see more direct relationships going forward, to make it easier for the members of these programs to get that end reward.
Grad
The programs that sell more of their miles have a clear understanding that creating currency is important. We’ll continue to work with each partner.
Rob
At the end of the day the customers are going to drive this in the long run.

IF
Why aren’t there more portals out there like you?
Rob
It’s the technology. We weren’t to trying create something that would extract value from members and program into our pockets. It was truly an opportunity to help the programs generate more loyalty and value to get the members something. The technology was easy to implement. We got lucky on timing.
Grad
Points.com has never dropped a transaction.

Choice Privileges

Wayne Wielgus, Executive Vice President and Chief Marketing Officer, Choice Hotels — Experience (check), out-of-the-box thinking (check), tests well for listening to members (check), determined to make Choice Privileges a player in mid-level loyalty programs (check). Looks like everything checks out OK here.

InsideFlyer
How did you come about your partnership with Preferred Hotels?
Wayne
In talking with our Choice Privileges customers, one of the things lacking in our program was aspiration. In terms of, “I know you sit firmly in the mid-scale of economy segments, but if we wanted to go to a luxury hotel chain and we’ve got all of these points to do something with that we wouldn’t normally do in our lives, how do we do that?”

That’s where it came out. In talking with Preferred Hotels and Resorts, they saw a opportunity to deal with some in our customer base that have very high income levels, and there might be opportunities for them to stay at a Preferred Hotel, but they haven’t been introduced to them. So this was a great opportunity for them as well for us to offer something in the five-star segments by partnering with them.

IF
In terms of aspiration, were there clues from your members that aspirations didn’t mean offering a mountain bikes or a big screen television? It was travel they associated aspiration with?
Wayne
Yes. There was no question that the aspiration was being able to stay in a luxury hotel. We’re getting more and more members wanting it and using it.

IF
Was the choice of the Preferred chain from the input from your members?
Wayne
We talked to Preferred because of the relationship I have with them. It hit a good chord.

IF
It seems to me you could have gone half way to Preferred, but you went all the way.
Wayne
I think that if you’re going to go aspirational, you go all the way, to the best hotels. No pun intended, but it was the Preferred Choice.

IF
I haven’t talked to any of the executives there to see their view. What do you think their perspective is?
Wayne
I think it is a good fit. I think it gives them exposure on our Web site to a customer base they just wouldn’t have gone after. Everything lined up; we’re very comfortable with where we are. I think they see that from within our segment playing as a value brand, you don’t see us out there with any cheap advertising.

IF
Choice has invested very carefully and wisely in the cohesion of the brands and also in the quality of the program.
Wayne
No question, you’re spot on!

IF
Your marketing speaks of first class: where is the next place you’re taking this program?
Wayne
You’re going to see more of the program, what really fulfills the needs of the member; your going to see more technology from the standpoint of communicating. We launched the elite status, the online profile, the statement management, and the redemption. These things will evolve.

IF
How difficult was it for you to come to grips on what an elite level would look like for the Choice Program, because you’re the latest and greatest with elite status within that segment?
Wayne
It’s talking to customers, what’s important to them. It was testing something with them. Also what is affordable.

IF
Anything else?
Wayne
We’re going to be launching with “Stay Twice and Earn a Free Night.” In the fall.

IF
You tend to do that differently. What I mean is you don’t layer it. They kind of get to double dip. Why are you so different?
Wayne
This is how we look at the world of loyalty programs. It’s not only the positive feedback after we put it in, but our decision was based on the idea that the minimum barriers you put in place to doing business, the happier the customer is. No barriers, no blackouts, you stay, you get and you use. As long as the promotion is running, you can stay as many times as you want. We make it easy; you stay, you get.

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