The Interview Issue – June, 30 2006

The Interview Issue – June, 30 2006

Aeroplan

This magazine has chronicled the trends of frequent flyer programs for 20 years, and among the dramatic signs of how frequent flyer programs have evolved is how the frequent flyer program of Air Canada became its own company — a public company at that. The always affable Rupert Duchesne, President of Aeroplan, gives us the inside view of this unique mix of miles and members.

InsideFlyer
Aeroplan made the news last year as the first publicly owned frequent flyer program. What does it really mean?
Rupert Duchesne
The IPO did two things for us.
First thing, for the first time in history, it guaranteed the stability of miles. Before this, no airline in the world could have gone through restructuring or Chapter 11 or a straight bankruptcy with a secure currency. It was never backed by a gold standard. The IPO gave us the gold standard. The idea that we were financially dependent on an airline prevented us from growing. So now we can go to a major partner and can say the currency is safe. We have $4 million cash in the bank, which is earmarked as a reserve only in the case of any turbulence in the industry. That was a huge transition point for us in terms of credibility with everybody else in the world loyalty business who wants to use a loyalty currency.
If I had to single out the one business difference the IPO made, that would be it — the confidence issue.

IF
The confidence comes from the idea that if Air Canada wasn’t there, you have the resources to go fulfill travel opportunities elsewhere?
Rupert
We have in the bank more than a year’s worth of cash in terms of purchase or redemption saved. Even if Air Canada disappeared and it took a year for something to emerge from the ashes, we would still be able to keep every single member whole for the entire year. Even if we didn’t get any revenue from any other partners, which would be extremely unlikely because their contracts are with us and not the airline.
The second thing that comes from that is only 27 percent of our miles issued are issued to the airline. 73 percent are issued to all the other partners. That is a huge demonstration of diversity. We have not formally announced it; as of the fourth quarter of year we will have access to purchase on any seat on an Air Canada flight. We’re taking the capacity limit off, and any seat on any flight is purchasable by Aeroplan. The route controllers will not see any difference from the seat they sell to us and a seat they sell to anyone else. For the first time again in any airline’s history, we will be the only airline that can literality use and pay for every seat on the airplane, including business class.

IF
That’s kind of dangerous in a way, because if someone was unable to get what he or she wanted, they would say: You said you had access and I didn’t get what I wanted. Is that a dangerous part of that whole scheme?
Rupert
I don’t think so, because the higher up the yield curve for the airline we go, the more the member will have to pay in miles. So there will never be a seat they can’t have. But they may decide it will be too expensive to choose.

IF
That’s going to be kind of different because you’re talking about dynamic pricing of award selection.
Rupert
Everyone has this to a degree, but that is fairly constrained, and it doesn’t exactly suit the very high mile accumulator that doesn’t happen to fly very much.
It won’t change the benefits for elites, because they will still have access to full “Y” entry. But for everyone else it will turn the program into a true rewards program as opposed to an “if you’re lucky” program.

IF
If 23 or 27 percent of your miles are really from air travel, that could be construed as a different customer base than the other customer base, yes?
Rupert
Yes, but what we find is that clearly for Air Canada, the people who accumulate the miles are critical, but the other thing they found is that to compete with local air carriers like Westjet or JetBlue, they need to keep even the infrequent traveler loyal to the Air Canada brand. So if that person redeems on Air Canada through Aeroplan, they don’t even get to try Westjet. If they need to fly their kid home for Christmas or whatever, they are more likely to buy their ticket on Air Canada.

IF
How difficult has it been to manage an IPO?
Rupert
When Air Canada negotiates to bring someone new into the Star Alliance, we are usually at the table with them or we give them a very clear brief of what we would require on the loyalty aspect. We are sort of seen as the well of knowledge in the Alliance for how to do this.

IF
One of the things I’ve heard is the core of your success is the partnerships with credit cards. It seems that looking backward, the relationship with American Express at the right moment may have helped propel you to towards some of the things that became the IPO.
Rupert
That’s very true — more than half of our revenue comes from our Visa card partner. Bringing on American Express as well was a clear signal to the financial market.

IF
Could Aeroplan stock be traded in the U.S.?
Rupert
Yes, but the difficultly is that we’re a limited partner.

IF
How has the perception of Aeroplan changed?
Rupert
The change came when we introduced the new brand in mid-2004. We signed up three big retail partners who in my view would never have associated themselves with us if we had remained purely an airline.
These days, three years on, if you ask a member who is not a flyer and you talk about Aeroplan, they will talk about it in a very different language from a “frequent flyer program.” Yet the frequent flyer program for the flyers I still think is being very wide. So we’ve tried to keep both sides stoking at the same time.

IF
How difficult is it as a stand-alone to still remain airline savvy?
Rupert
That part is really critical. First, we drew up a very detailed contract between the two companies. Secondly, most of the staff that deal with the frequent flyer program were the people that designed the Air Canada program to begin with.
The day we forget our roots is the day we’re toast.

IF
You had to release a lot of data that before was a dark secret. How does that change now with the IPO?
Rupert
It was really scary. When we were writing the prospectus for the idea, we revealed the hidden inner sanctum of the economics of the program. I don’t know of any other airline that calculated so carefully how much a reward seat truly costs. The true liability is not the one cent per mile, and most U.S. airlines account for somewhere between .03 and .06 cents per mile. We were very concerned that letting a lot of this out would be problematical. But funny enough, some of our new partners were really reassured to actually be taken through the numbers to see how it works. It’s had its pluses and it’s had its minuses.

IF
So does Aeroplan today look like the Aeroplan of tomorrow?
Rupert
I think most of the major changes were with the blueprint, but it won’t just be Aeroplan in the future. You will see us in two to three years in five or six markets around the world under different brand names, but with the same management structure.
That is the growth objective for us.

IF
I’m impressed with the number of staff members you have.
Rupert
Yes, the 1,200 call center agents, those people are still part of the Air Canada Customer Service Union. But the job security with Aeroplan is watertight.

IF
What is your point of view on the where the programs are now?
Rupert
I think the U.S. market has the best potential to do this brilliantly. The ongoing restructuring in the industry will mean that it actually may be one of the last major global markets to play this game right. I would say that the chances are that some of the big European markets and the major Asian markets are much more likely to see the kind of growth into multi-party loyalty that we have achieved earlier than it happens in the U.S. Not only is the U.S. industry in a lot of flux, but some of the restructuring in the U.S. is going to make it harder for the companies concerned to do what we have done. If you try to do what we have done and you’re sitting in Atlanta, it’s actually harder to get the high concentration of high value customers to change the way they do business when they are buying gas or banking or buying groceries than it is in Canada or Europe. So I think my prognosis is if a couple of the U.S. carriers are really brave, they would get on the bandwagon very quickly take a bit of risk while everybody is in disarray, and come out way ahead. I’m just not sure the airline mindset is really in that space at this point. But I would love to see a major U.S. carrier try this.

IF
Does it really create a better frequent flyer program?
Rupert
I look at the number of letters and complaints we got five years ago when we first started this versus now, and I get a 20th of what I got five years ago.

IF
Your tier benefit — do travelers really get that?
Rupert
The choices are incredibly diverse. That was a huge victory for us. While a lot of people choose bonus miles, there are huge differences in people who travel intentionally a lot and people that travel domestically, and there are huge differences between people whose companies force them to fly coach and for whom upgrades are critical, versus people who are senior enough in business to fly business or first. The last thing they want is upgrades — they want more status miles or lounge passes.
Before we could never satisfy them. It gives them a choice and they don’t have to take benefits they don’t need.

US Airways Dividend Miles

If there is anything going on with frequent flyer programs these days it’s in Phoenix, where US Airways, by combining itself with America West saved millions of members from the fears of losing all their miles and awards. That was one task; merging the two programs is yet another monumental feat. We chatted with Travis Christ, VP of Sales and Marketing, for an update.

InsideFlyer
Tell us about the hurdle of merging miles programs (FlightFund and Dividend Miles).
Travis Christ
We moved the Web sites and the frequent flyer programs together at the same time, which was good and bad. This is the first of three big hurdles we need to get over from a marketing perspective to complete the merger. So that was one. Number two was integrating the reservation systems, and sometime next summer we anticipate operating under one certificate.
We still have some things to work around, and we know there are frustrating issues for our customers, but this is the stuff that makes airline mergers hard and expensive.

IF
Where is Dividend Miles today?
Travis
What we’re trying to do is watch what some of the other successful loyalty programs are doing. We’re trying to find the right balance between doing the things that are most important to the customer and doing them really well. Yet we’re facing the realities of $70-a-barrel fuel and the true cost of running the program. What we’ve done is pulled back on some of the optional benefits, including elite bonuses and double-miles offers. But the one thing we have done is put as much as we can in the one thing that is most important to the members, and that is free upgrades and automatic upgrades. By next year we intend to have the automatic upgrades in real-time.

IF
The research shows members are willing to forgo benefits in order to make this work?
Travis
Yes. The vast majority doesn’t care about the bonuses and the marginal benefits; they care about the free upgrades.
Also, we are trying to provide a Preferred program that is more meaningful for consumers and still provides them the complimentary perks they are used too. And to do things for them that they find valuable, like the stand-by list and clearing the flight, and airport recognition, including the security-line access. When you’re in the club, we have your drink order in your profile, and if the flight is running late, who to contact. We have spent a lot of time on the recognized services.

IF
Is that set up for a cancelled flight?
Travis
It’s like a full service travel agency, focusing on the airline aspect. Everything that happens to the customer the staff is going to handle.

IF
It sounds like you’re focusing on one to one relations. Are you going to do anymore all-member promotions?
Travis
We are doing retail offers. There are a lot of promotions that aren’t specific to miles but are providing benefits for the customer. There are a lot of really neat offers out there for our base members.
We think that one of the best ways to serve our customers is to stop the near-death experiences that the airline continues to go through. It’s in everybody’s long-term interest that we act more rationally than we have in the past. It appears sometimes we’re being unconventional, but we think that following convention is what has gotten most airlines in trouble.

IF
Do you have any plans to come out with any promotions to mark the merger?
Travis
We will go out with a press release about the new site and the new program, but no new promotions at this time.

IF
Does the network of America West/US Airways include your partners?
Travis
Not yet. We do have all the partners accessible through reservations.
There is a new feature, and that is one-way pricing. We have the ability for you to mix the premium award and mileage saver award. Plus you can mix your cabin.

IF
How has the launch of the Hawaii on the redemption side been?
Travis
Hawaii has really taken off. It’s been great for the members and it been good for us.
Also the entire range of Star Alliance benefits are extended onto the US Airways Web site operation.

IF
Is there an end in sight?
Travis
It has been a lot of work. It’s been a great match. Considering that the alterative was that US Airways would have ceased to exist and America West could have been right behind them. To have it all come together has been really great.

goldpoints plus

Carlson Hotels goldpoints plus program made news last year when it relaunched itself with a new name and a new mission-given it’s the loyalty program for flagship Radisson Hotels. The mission is to form a more perfect union from the two distinct groups that run the program worldwide. We chatted with Jacques Dubois, senior vice president of marketing, distribution and customer relationship management for Belgium-based Rezidor SAS, the “other half” of the Radisson goldpoints plus program.

InsideFlyer
What’s happening with your program?
Jacques Dubois
A big concern we have is that you can’t have a program up against the other major programs that is fractured. You have an operation in Europe and one in North America. You need to come out with one program at the end of the day. Hopefully that one program includes the best practices of the two programs.

IF
Do you think that is hobbling the goldpoints plus program?
Jacques
I think the members see a difference. For one thing, the proposition is not the same. Our proposition is richer. I think that in the U.S. they have in some ways been their own worst enemy. I don’t think we have been a hindrance to the program; if anything, I think we may have helped it. It does need to come together. Sometimes you need to put wrinkles in the proposition to respond to regional expectations.
A small issue is calculating points on the basis of the U.S. dollar. We say, why don’t you just say you can use the U.S. as a reference but the customer can choose the currency in which their points will be calculated?

IF
That is a unique way of thinking about things; does it adjust as currencies fluctuate?
Jacques
I would not move it with the daily currency market, I would say maybe once or twice maximum. And then send an email to the customer when we would be updating the exchange rate.

IF
You talked about how goldpoints plus is run at the international market then the U.S., mostly because of a different competitive set. Do you want to talk about that and what you’ve done to be the most aggressive?
Jacques
In the major centers we compete with the same players as everyone else does. InterContinental, Marriott, Hilton and Starwood. But if I go into Norway, then we have Hilton with Scandic Hotels, we have Choice, we have Sol Melia, and we have Accor, who is a big player over here. But we look at what everybody is doing, so we constantly maintain a charge. We’ve got what we call the global charge, where we benchmark all the major programs. Then we’ve got the regional charge — we don’t necessarily match them set for set but we watch what they are doing. Sometimes if you focus on the big guys you miss some big innovations from a smaller player.

IF
What are your strong suits?
Jacques
We refer to Rezidor SAS as the new breed of hotels. If you look at hotels such as Frankfurt, Birmingham that just opened, the Disneyland Paris hotel, we talk about the new breed of hotels.
We try to bring in a more relaxed and edgy quality to how we communicate. We want to take a few risks. We don’t feel our advertising is effective unless someone complains about it.
I think what gives us strength in goldpoints plus is the geographic spread of our product. The program itself is very competitive. Our strength comes from the fact that we are a small program and we continue to focus on the members.

IF
Book Now Earn Later is a unique concept. Can you talk a little about that?
Jacques
Basically, it was a no-brainer thing. About two or three years ago, we took away the credit card requirement. What we did was redesigned that function on the Web so it was harmonized with the hotel’s guarantee policy. We do not require a credit card. The experience of booking should be seamless everywhere. We looked at the same thing when booking a reservation for a redemption stay. It occurred to us that a lot of this approach is driven by a mistrust of the customer, which isn’t a good way to start a relationship. So again we said to the customer, if you want to make a reservation for a redemption stay, you book the reservation, and if you don’t have enough points, then you pay for the room at the reservation rate. Then what we want to do now is build this functionality.

IF
Where is the battleground for loyalty?
Jacques
I think many airlines have lost the point. They saw this is as a big income stream and now there is a pool of points that have no real value.

IF
You don’t see the hotel industry as the same?
Jacques
We will never have a major load-factor problem. There will always be some inventory somewhere. I do think we need to be careful that the program makes sense to the customer.
I would also say that the airline programs just got to big. I think you need to create programs that truly enrich the performing level of the member.
For example, one of the things we do is “the unanticipated gift.” We don’t always give them to the top members.

IF
That could be a keystone of how you approach the loyalty programs?
Jacques
Yes, a program that is going to be meaningful to someone needs to surprise you. When we open a hotel, we will write a letter to people in the area, ask them to stay two nights on us and give us their opinions.
At a hotel pre-opening we will have the employees stay so the staff will learn to serve a guest.

Omni Select Guest

Of the two major hotel programs that focus on guest benefits over a traditional points-based hotel program, Omni Select Guest has always intrigued us (the other being Wyndham ByRequest). It is one of the oldest programs of its type, and we wanted to know more about its new triple miles initiative and just what’s in store for members of this program. Who better to chat with than Caryn Kboudi, VP of Marketing at Omni Hotels.

InsideFlyer
What is your current marketing strategy for returning guests to Omni Hotels?
Caryn Kboudi
We think loyalty is very essential to our business. Day in and day out we look to those high value guests that are members of our high recognition program and serve them the best way we can possibly serve them. Our marketing is not about going out to find people through advertising, but to serve them well during their stay. Service is what we focus on.

IF
So the success of Select Guest seems to be that perks are more important than points?
Caryn
Yes, we try to take care of our guests with things like a free beverage of their choice, or making sure they got the guest room they wanted. That they were recognized when they walked through the door.
No one size fits all today. Our hotel stay is the same, and everyone wants their way. We were the first to work our program around recognition and not points. We have stayed true to this personal mission. As the program has hit its stride we have sat back and said there is more we would like to do to reward our guest.

IF
How long has Select Guest been around?
Caryn
In 1988 or 1989. The basic concept of service in which one size does not fit all remains the core of the program.

IF
You still play the miles game. How valuable has that been?
Caryn
It does a couple of things. It drives heavy business travelers to Omni Hotels, and it let’s them know we like them to come in. We’re also looking to bring them into the loyalty program so they can experience Omni for the first time but also experience it a very high level. By people coming back the second time to get the triple miles, they’ve had the opportunity to try us twice and appreciate what we offer to them.

IF
Have you done this promotion before?
Caryn
This is the first triple miles promotion we have done.

IF
What made you go to triple miles?
Caryn
We saw other brands doing it, and we have had great success with the double miles promotion. We’ve seen that when you offer miles it impacts their desire to come back; however, you would have had to have a great experience to want to come back.

IF
The media has indicated that miles have no value, but I’m hearing from you that miles really work. What is your perspective?
Caryn
We still see that the partners have very loyal members who do look to the miles as a way to extend their business travel. We have not seen any slowdown in this. But things could change. Just about every major brand has them.
I do know a few people have had trouble using their miles, but I haven’t heard anyone saying they don’t want them.
We have not seen any decline when asking for miles. Triple miles will run from June 1 to July 31 — you get triple miles with your second stay. It would of course happen with your third, fourth, and so on.
In addition, after you have your first qualifying business stay, we will also send you a bonus of what we are calling a BOGO 25, buy the first night and get the second night for only $25. That runs through the end of September.

IF
You launched a Sensory Advisory Board, tell me about that.
Caryn
As you look at the guest experience, you really want to know if you’re doing the most to create a memorable stay. The senses are great triggers for people to find something that really stands out for them, be it a fabulous culinary adventure, or a great little price of art in the lobby that’s interesting or intriguing. What we did with the Sensory Advisory Board is go out to well-known brands that represent different senses and their whole business is a model wrapped around a particular sense, and get their perspective. All the people on the board happen to be business travelers and leisure travelers as well. We have the Juilliard School, the Kimbell Art Museum, Elizabeth Arden Red Door Spas, SIRIUS Satellite Radio, Apple, and Bon Appetit magazine to provide their thoughts. Also, we have the “Take Five” promotion. Guests can choose a free gift when they book online and receive it during their stay. They can enjoy an in-room movie, listen to music with an iTunes card, savor the moment with a bottle of wine, wrap in luxury with an Omni Hotels signature bathrobe or relax with a travel candle featuring Omni’s signature scent of lemongrass and green tea.

IF
It sounds like this is not an advertising program.
Caryn
That is correct, we did put out an email to all of our guests, but it is an offer through the press.
We are not the biggest brand, we are a niche player. We are going to look for the pockets of opportunity. We understand the importance of the press.
We believe in driving our own destiny.

Amtrak Guest Rewards

If you live in the Eastern Corridor, then you are well aware that Amtrak competes daily with airlines for loyal customers — and thus members of frequent flyer programs. And Amtrak is every bit as good as their competition, and may be even a little better. We chatted with Michael Blakey, Director of Marketing at Amtrak about the program that rides the rails.

InsideFlyer
Give us an update on the Amtrak Guest Rewards program.
Michael Blakey
The program is growing leaps and bounds. We’re in our sixth year, AND we have about a 1.2 million members.

IF
Who makes up the membership in this program?
Michael
We have two distinctly different types of customers: the business customer and the leisure customer. The majority of the membership base is the heavy business traveler.
We do have a co-branded credit card. It’s a great card; there are a lot of ways for people who don’t travel frequently to maximize points.

IF
What is the main redemption for your members?
Michael
Seventy percent of the redemption activity is train travel.
The Amtrak reward, unlike that the frequently flyer currently experiences, is user-friendly and easier to get.

IF
I’ve never heard of anyone complain about getting an award with Amtrak. Do you have controls in place?
Michael
At this point there are only a handful of blackout dates, and we are not capacity-controlled.

IF
Blackout dates are major holidays?
Michael
Yes.

IF
How do you view Amtrak getting attention as a points exchange program?
Michael
The program was not designed to be currency exchange; it’s not something we try to market.

IF
What do you think of the Greyhound Rider program?
Michael
It’s a different kind of customer, it won’t affect us.

IF
Do you have to compete with the airline shuttles?
Michael
In order to compete we had to have a good quality product and we had to have a comparable loyalty program. That’s why our earning structure in the program is the way it is. In certain cities we go head-to-head with the airlines.

IF
How do you compete when airlines promote certain bonuses?
Michael
We have a pretty defined way of promoting and targeting. We do a lot of one-to-one targeting. We have a targeting program that runs every month that helps us. We also look at the behavior of active members.

IF
Once in a while you partner up with frequent flyer programs. Is that something that could be continued?
Michael
That’s tied to our co-share.

IF
How does that work?
Michael
There are certain co-share city pairs with Continental; in those circumstances their members can earn OnePass miles on our trains and in the appropriate market our members can earn Amtrak Guest Rewards.

IF
How does the world look at the Amtrak program?
Michael
Some might be interested in partnering with us down the road. VIA Rail in Canada has a somewhat comparable program.

IF
Are you looking to innovate anymore?
Michael
We looking at ways to enhance and expand the program. We also are looking at ways to improve efficiency.

IF
What do your members tell you works the best?
Michael
For our top-earning members, we have created Select tiers to recognize and reward our best customers. One of the benefits of that program is access to first-class lounges.

IF
What else would you like to share with our readers?
Michael
We are going to announce a new aspect of the program in October. It’s an offshoot to the program but linked to the program. It will be very nice for businesses.

Virgin Blue Velocity

After nearly 6 years as an airline, Virgin Blue of Australia launched its anticipated frequent flyer scheme. And what a scheme it is, winning a vote of confidence from its members with a Freddie Award in its first year, no doubt led by “cheeky” advertising (ala the Virgin heritage) and plenty of research that indicated members really did want to use their awards when they wanted to. We tracked down Phil Gunter, General Manager of Velocity Rewards, and Amanda Bolger, Director of media relations, for some insight into this young frequent flyer program with plenty of energy.

InsideFlyer
How did Virgin Blue come upon Velocity?
Phil Gunter
Everything that Virgin does is customer-focused. Virgin Blue did not want to replicate another program where, when it came down to the crunch, customers would spend a couple of years earning their points and then not get the flight they wanted.
That’s why we have come up with any-seat redemption.

IF
Was there a lot of research that went into that?
Phil
The research was very clear. It was available redemption that was driving people’s desire to have a scheme, and having established that getting the flight they wanted was a key issue, it was just a case of working out a model that worked for them and us.

IF
Has this been a good model for you?
Phil
It is a perfect model, not just on the redemption side but also on the earning side. By having such a clean earning proposition, it gets away from all the problems you have on some flights, where you can’t earn on some flights and you can earn on some flights. It is a very simple six-dollars per dollar spent on Virgin Blue. That means whether it’s the cheapest flight of the day or the most expensive flexible tickets, it’s the same ratio, customers get it, they can earn it quickly and then they can redeem.

IF
It doesn’t seem you need any “terms and conditions” — is it that simple?
Phil
You always need “terms and conditions” to cover yourself, but it is very simple to explain and it’s very simple for customers to get the benefits. A lot of the people who have been taking it up are exactly the people we wanted.

IF
Is this a thorn in your competitors’ side?
Phil
We only try to focus on our own customers. I can only assume it’s keeping our competitors on their toes.

IF
Where is Virgin Blue gong from here?
Amanda
In terms of growth, we are up to about 51 aircraft, and nearly 4,000 employees. The biggest area of growth of us was when Ansett collapsed. We had a decision to make: Do we go for it and win it, or do we sit back and let Qantas gobble it all up? It took about a millisecond to decide that we were giving it a go. I think it’s safe to say we would do it all again exactly the same way, because that cemented where we are now.
As far as future growth, there will be more network growth but also more regional routes; there are the transpacific opportunities we’re looking at as a company from a bigger picture. But it will be small strategic growth going forward for Virgin Blue.

IF
Is Velocity right on target?
Phil
We are where we expected.

IF
In terms of promotions, what is your strategy for Velocity?
Phil
The earning promotion was getting people to understand it — that you cold actually get the flights, and get them in a reasonable amount of time. So there were a lot of above-the-line promotions. That it is different and better for the customer.

IF
Do you recall how soon after your program launched your first redemption came in?
Phil
I can’t tell you the first one, but our redemptions are way ahead of where we expected. The way the formula works, is that customers can get some very cheap redemptions if they book a cheap flight. So we find some customers are very savvy. They look at what the best flights are and take advantage. It works two ways: one, that you can get any flight, and two, there is a loose link between the points needed and the price that is sold to the customer. So any seat that is available for sale is available through points.
Amanda
Everyone knows that Tuesday afternoons when no one is flying are the best time to get a good deal.
Velocity advertising is different. It has a very different look and feel. It is very cheeky.

IF
Where did the name Velocity come from?
Phil
There was a phenomenal amount of research that when into the name and brand. Velocity came out as clearly the best.

IF
Where do people redeem their flights?
Phil
Seaside has the most traffic to date. We have not done a lot of marketing, we will do that, and our focus is to get more people on board.

IF
Does your program Velocity include different types of partners?
Phil
We do have a range of partners. What we’re doing now is constantly asking our current members: What more do you want? Because the whole point of the program is to do it in a way that actually meets the customers’ needs. Once we know what they need, we talk to the partners, and we try to seek the sweet spots so it works for us, works for the partner and works for the customer.

IF
Australia is unique in that the local government seems to have an interest in the rights of members of programs. Do they see your scheme as the best of all things, that there is no bait-and-switch?
Phil
We have set it up with a trust so that people will be absolutely confident, the government and the members, in that their points are safe. There is nothing for the government to worry about.

IF
What has been the biggest surprise?
Phil
There are some poor guys that have got no home life. Once you look at the averages, there are some people sitting on the plane everyday.

IF
How is your partnership with National Australia Bank Credit Card?
Phil
National Australia Bank is the largest bank, and they have also won bank of the year. They have a direct-earn proposition in that every dollar spent on the card earns points on Velocity. The customers say it works to have a linked card.

IF
Any plans to tier-out the Velocity program?
Phil
The first research came back very clearly that they want some benefits. So we are looking at what’s next. We are looking at whether there is a need for tiering. Right now we don’t have a clear answer for that, so we are going to continue to research and ask questions about that issue.

IF
Velocity is one of the few start-up programs that seems to have a separate division between the airline and itself. Do you run independent of the airline?
Phil
It’s set up that way. That is why we have a separate trust. It’s to protect the members.
But we are very much a part of Virgin Blue. We have the best of both worlds; we do what’s right for the membership.

IF
Do you think over time you might find yourself in competition with coalition programs such as FlyBuys?
Phil
There is enough room in the market for us all to coexist.

IF
Anything you want our readers to know?
Phil
We’re young and excited, we want to keep getting more members and see their redemptions.

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