The Interview Issue – July, 02 2007

The Interview Issue – July, 02 2007

American Express Membership Rewards

Credit cards have become an everyday part of the landscape of loyalty programs as members are increasingly “cashing in” with their plastic. Over the past two years, very few of these cards have added as much flexibility and value to their program as the American Express Membership Rewards card. Witness the recent introduction of the “Flight Finder” benefit, which helps members find award seats. In a recent poll we found that nearly 70 percent of credit card holders would switch to a card that promised to help find award seats. Apparently, Membership Rewards already knows that … We spoke with Ralph Andretta, Senior Vice President of Membership Rewards, about what’s in store for the program, as well as American Express’ new “Flight Finder” and “Room Finder” online booking tools that enable visitors to membershiprewards.com to easily search award inventory, transfer points directly into a frequent flyer account or frequent guest account and book flights or hotel stays in a single online transaction.

InsideFlyer
Tell us what the future has in store for Membership Rewards.
Ralph Andretta
The Mortgage Program: This is a win/win benefit for our members. We give our card members so many ways to earn points, so here’s another opportunity to earn thousands of points a month on your mortgage payment.

Online Shopping: American Express offers safety and security when shopping online. We have over a hundred brand-name merchants, and you’re shopping on their site — you can receive double to triple points when shopping on their site.

We’ve got points transfer, which is very powerful for our cardmembers and then we’ve got any airline any time pay with points, which is overwhelmingly embraced by our card members. It’s one of our top five redemptions.

IF
When you say top five, does that include normal redemption to airline miles and normal redemption to hotel points?
Ralph
Top five redemption including our airline partners, and it’s a nice complement to our transfer program.

IF
Lets talk about Flight and Room Finder, where is this going and what’s the feedback?
Ralph
For Flight and Room Finder, we have a patent pending. This was a natural extension of host-to-host and point transfer. The upper structure was there and we expect it to grow. We’re adding two more partners that are in development now that we will announce later in the year. With Priority Club and Hilton we have over 6,500 hotel properties that our cardmembers can choose from. A hidden benefit for our partners, over 10,000 cardmembers have enrolled in our partners’ loyalty program.

IF
It sounds like Flight and Room Finder will parallel the current partnerships you have in those same categories.
Ralph
That’s correct, you have to be a partner of us to be on the Find Flight and Room site.

IF
So if we were to look at Delta and Continental, long standing partners, it may be reasonable to say they’ll be in that program at some point?
Ralph
Yes, we’re hoping all our partners join the program. The other thing I’m really excited about is Points Advance.

IF
Is that where you can get an advance on your future spend?
Ralph
Correct, depending on the card you have and the tier you’re in, we will advance you a different level of points. There is no interest on those points and no fee. Platinum members can borrow up to 60,000 points; Gold members can borrow up to 15,000 and a Blue member up to 5,000. It lets people experience the program sooner rather than later.

IF
Do you feel lonely over there? No one of any size in any of the other sectors of loyalty rewards is doing anything like this — you’re on the leading edge. Do you feel like you need to move ahead to beat the competition?
Ralph
I like being out in front. Our cardmembers are demanding. The more distance I can put between us and other cards, the better. We introduced the Platinum card over 20 years ago.

It’s all about membership; our cardmembers who have over 100,000 points with us have been with us on an average of 10 years. People invest in our franchise and so we invest in them.


Brussels Airlines Privilege

Brussels Airlines is a newly formed airline that resulted when SN Brussels and Virgin Express merged earlier this year. Privilege was the frequent flyer program of SN Brussels. The Privilege program has been around since January 1, 2003. The new airline opted to merge Virgin Express’ Flight Club frequent flyer program into Privilege and currently the program has 470,000 members and growing. We took a moment to speak with Silvia Payan Garcia, CRM Communication Manager/Sales and Marketing, in her office in Brussels.

InsideFlyer
Tell us about your new program, Privilege.
Silvia Payan Garcia
Brussels Airlines started its operations on March 25, 2007. Existing Privilege members were taken very much into consideration, and we reassured them that they would not lose any of their miles and that they would receive a new card.

On the Virgin Express side, the Flight Club program was a program where passengers couldn’t grow. I couldn’t say it was a loyalty program, because actually, they didn’t have any airline partners.

What we did was really look into the flight activities of the members within the Virgin Express Flight Club and we invited them to join the Privilege program. We granted Blue status to those that were not very active, Gold status to the more active and some have been upgraded to Platinum level. This has created very good feedback from all our members.

IF
Do you think the new program is everything the old program was?
Silvia
It’s better. While the previous program was working well, we aligned it to Brussels Airlines’ new business model for European flights. The merger allowed us to extend our loyalty destinations’ network by offering additional destinations to our members.

So now we give miles on all fares, but we offer them on how you fly — b.flex or b.light. For example if you book on a b.flex fare instead of paying for a fare in b.light, we offer more flexibility like lounge access, a fast track at the airport allowing passengers to get quicker access to the gate and the difference between the two fares is about 30 to 80 euros — but the miles we give are much more — 1,250 compared to 250 in b.light.

So as you can see, flying b.flex is a great deal, because for such a small difference in price you can get quite a lot more miles.

IF
So the flexibility is new?
Silvia
Yes. We have two kinds of passengers; one type really cares for their comfort and travel flexibility before, during and after their flight. And then we have passengers who really focus on the price. We do exactly the same with Privilege. But unlike most of the other frequent flyer programs, with Brussels Airlines you can build up miles much quicker because we give miles on all fares.

IF
Was there any change to your expiration policy of your miles with the new program?
Silvia
No, once you are in the upper tier your miles do not expire as long as you keep your upper tier. For Blue members, it’s three years.

We did change the redemption ratio for b.flex and b.light. Now it’s easier to redeem for both, and it costs less miles as well. You can redeem a b.light one way for 7,500 miles and a one way b.flex for just 10,000 miles. So it’s smart to redeem b.flex because it costs far fewer extra miles compared to b.light than it would in money.

IF
What were the recent changes that caused some news?
Silvia
Before, we offered economy flights for 20,000 miles and business-class flights for 25,000 miles. Now in b.light, you have a free ticket for 15,000 and in b.flex, you can get it for 20,000 miles. But we’ve kept economy and business class on medium-haul, and that remains as it was, 20,000 miles.

IF
When you were looking at re-launching Brussels Airlines was any thought given to a new program name?
Silvia
We were thinking when we launched the new airline, what about the Privilege program? Should we change the name? So we did some research, and what came out of our research was that Privilege is well established in the market and our customers know the product. So by changing the name, people might not associate Privilege anymore with an airline company, so we knew we wanted to keep the name as it is.

IF
Where is Brussels Airlines going these days?
Silvia
For the moment we are evaluating the pros and cons of joining an alliance. No decision has been taken but it is under evaluation. Meanwhile, we are continuously expanding our partners’ network. PlusCard recently joined the program and Jet Airways will shortly join as well.

We already have more than 40 ground partners, most of whom operate worldwide (Amex, Hertz, Hilton Hotels).

The Brussels Airlines’ network has been extended considerably, so now we have over 50 connections within Europe, and a further 20 on medium- and long-haul. Our passengers have more destinations.

Also, for our Gold and Platinum members, we feel this upper tier level really lives up to our name — Privilege. We also have paid special attention in terms of attractiveness for our Gold and Platinum members. Privilege really offers privilege. Our Gold and Platinum members have lounge access for free, they have the benefit of extra luggage allowance, they have special service at the customer service area and we also invite them to key events. For example in July, we have an event with our partner Hertz at Wimbledon. We invited some Platinum members to come and enjoy a tennis match.

You can also use your miles for vouchers with a Belgian loyalty program called PlusCard — which covers Delhaize supermarkets, gas stations, etc. The offer is two-fold, because for 700 miles you can buy a voucher for five euros, alternatively, you can trade in your five euro voucher for 700 miles.

IF
I see you have a new Web site called “Join Privilege.” I don’t recall seeing that Web site before.
Silvia
That’s right. We created www.joinprivilege.com for above-the-line campaigns at the airport to invite more people to join the program and our member base is growing. If we compare last year where we had about 412,000, now we are reaching 470,000 members.

IF
The credit cards relationships you’ve had, they have continued?
Silvia
American Express yes, we changed the look and feel of the corporate card with our new logo. We reduced the cost of the card to be in line with our product. The members can use this credit card to add up miles. The partnership works really well.

IF
Your Citibank credit card goes away at the end of this year?
Silvia
That’s correct.

IF
How popular are the awards for lounge access?
Silvia
The Gold and Platinum members already get it for free, but for our member that are flying on a b.flex ticket, they can go to the lounge for 3,500 miles. So they also have the possibility to use miles for lounge access. They can also use miles for excess baggage.

IF
That must be popular.
Silvia
Yes, it is very popular. We have people flying to Africa who usually bring a lot of luggage, for them it is a good benefit. We also allow our members to use miles for the pet cabin for their animals.

IF
I don’t know of another program that offers redemption for pets.
Silvia
It is unusual but we have a lot of destinations where people like to bring their pets. People spend their summers on holiday and they need to bring their pets.

IF
Can you redeem you miles online?
Silvia
Yes, if you go to our Web site, www.privilege.brusselsairlines.com, we have a booking engine on the home page.


Southwest Rapid Rewards

We have all heard about the global airlines alliances; Star Alliance, oneworld and SkyTeam. But some of the more valuable alliances are being constructed among the smaller and low-cost airlines. These alliances have no names, but they function in the same manner — especially when it comes to frequent flyer programs. The alliance between ATA and Southwest brought Hawaii and LaGuardia as reward destinations to Rapid Rewards members. We took a moment to speak with Joy Laukoter, Loyalty Marketing Specialist for Southwest Airlines, about this alliance.

InsideFlyer
Tell me about the relationship with Southwest and ATA.
Joy Laukoter
We’ve had a relationship with ATA for about two and half years now. Since that time, ATA emerged from bankruptcy in February 2006, and after that we saw a flurry of activity. We have a total of five codeshare cities: Chicago, Phoenix, Las Vegas, Oakland and Houston. On March 6, 2006 we began selling ATA-only service. We can sell all of their service except to international destinations (Mexico).

March 29, 2006, we introduced options for Rapid Rewards members, crossing the boundaries of our frequent flyer program by offering ATA customers the ability to earn either ATA Travel Awards points or Rapid Reward credits.

We also owned all itineraries that we sell, whether it’s ATA only or codeshare, so our members automatically received Rapid Rewards credit for those flights. So even when flying to Cancun, our members received credit for those flights.

October 30, 2006 saw a huge announcement; we introduced the ability for our Rapid Rewards members to redeem on ATA-only and codeshare flights, which meant now you can fly to Hawaii [on a Southwest award ticket]. ATA offers six destinations to Hawaii, but believe it or not, New York has been just as popular if not more than Hawaii.

Our most recent enhancement to our program and codeshare agreement has been allowing Travel Awards members to convert points to Rapid Rewards for awards. It allows them to redeem to 50 or more destinations.

IF
In looking at the codeshare, was the frequent flyer partnership part of it all along?
Joy
Yes, everything was considered at the time we considered the codeshare. Our Rapid Rewards program is not our primary reason for going to the codeshare, but of course it was strategic for our Chicago operations. And in the last three years, we have grown nearly 70 percent in Chicago. ATA had a big part in that. So, the Rapid Rewards program did eventually come into our line of thought, it was just not the primary reason to go into codeshare with them.

IF
In terms of Hawaii, was the demand what you expected?
Joy
It’s a destination that we’ve never offered. We expected large demands, we prepared for that. ATA has been great to work with; it’s a win-win situation for both of us.

IF
How does Mexico fit into all this long term?
Joy
We have made no bones about it; our plan right now is to offer our customers international service on ATA sometime before 2009.

IF
Do you think your members realize the huge increase in the value of Rapid Rewards?
Joy
Yes, the research we’ve seen is positive. It adds a benefit for both audiences.


ATA Travel Awards

It takes a good partner to make a successful alliance and ATA has been all that and more in the alliance with Southwest Airlines. We heard from the other side of the alliance and talked with Josef Loew, Senior Vice President of Scheduled Service for ATA.

InsideFlyer
How is ATA and its partnership with Southwest doing?
Josef Loew
With the codeshare, we did a distribution agreement. We flew the whole coast, so Southwest said, “We will sell your Hawaii flights on our sites and your people can get frequent flyer points for the flight. In return, you can give us some seats to redeem for Rapid Rewards members.”

IF
You’re now up to six destinations?
Josef
We fly to all five Hawaiian airports. We are the only airline that serves all five airports from the mainland.

IF
Is the result of this codeshare the same for members as a SkyTeam or Star Alliance partnership?
Josef
Yes, because you can book on our site and get Travel Award points or you can get Rapid Reward points. And when you want to redeem them, you can redeem through Travel Awards or Rapid Rewards.

IF
Does that change how your members see redemptions?
Josef
It’s really no different from any other alliance. It’s not big branded. If you fly six roundtrips you get a free ticket. You have to book them on our Web site.

IF
Did you see an acceleration in membership as a result of your relationship with Southwest?
Josef
We saw a continued growth in acceleration, because before bankruptcy we were twice the size — we served a lot more airports. Southwest has helped our Travel Awards members to stay with us because they can fly on a codeshare flight.

IF
Would you say the key to this codeshare agreement is that it helped to keep a consistent member database?
Josef
Yes, it helped us to keep in touch with our members. We’re doing really well today. This year we’re flying 35 percent more capacity from the west coast.

IF
How does Mexico fit into your strategy?
Josef
Part of our codeshare agreement with Southwest is to Hawaii and they want to codeshare with us internationally. Our expansion to Mexico will start late 2008.

IF
And Travel Awards continues to grow?
Josef
We added Visa as a partner and we’ll continue to market that.

IF
Is there any concern over time that you’re going to have to add more restrictions on flight awards?
Josef
We have a high percentage that we allocate to Southwest.

IF
You have a smaller partner base, as a result does your program have to operate out of the program itself?
Josef
It does, we had no partners, coming from bankruptcy, and we started to rebuild. We have all the elements customers are asking for.


Northwest WorldPerks

This magazine has long been a champion of using “mileage malls” to earn bonus miles, given that the world seems to have taken to shopping online. With the recent re-launch of the Northwest WorldPerks Mall, it seems timely to check in with Bob Soukup, Managing Director of WorldPerks, and Faye Proulx, WorldPerks Partner Marketing, for an update on their program and the merchants who bring us the miles.

InsideFlyer
Let’s talk about WorldPerks Mall.
Bob Soukup
We just re -launched WorldPerks Mall. It really is an easy way for members to earn miles.

The one thing we’re having the most difficultly with is trying to keep the mall on the top of everyone’s minds. We find that people go to shop and use the mall, but the next time they want to shop they don’t necessarily remember to go back to the mall.

IF
Is the challenge that they try it once but the next time they go to the merchant?
Bob
They just might not remember how they got the miles.

IF
You can really earn a lot of miles with the mall.
Faye Proulx
You can, we have a merchant right now that offers 20 miles per dollar spent. One of the other challenges we have with our members is helping them to realize that we’re always adding new merchants. We’ll have over 200 merchants by the end of August. So getting them to come back is a challenge.

IF
What are the popular merchants?
Faye
Best Buy, Circuit City, Target, Barnes & Nobel, Apple. But it’s a big variety.

IF
For Apple, do members earn miles for music download or strictly for hardware?
Faye
Strictly for hardware. iTunes is a separate offer — they offer more miles for an iTunes download.

IF
Where do these malls go next? In our research, there is still a perception that you don’t get the same prices as a regular mall, but that’s not true is it?
Faye
That’s correct, it’s the exact same as in a regular mall. If you go directly to Target.com the prices are the same.

IF
Are there any malls or merchants that have done fairly well, that you didn’t think would have worked well?
Faye
Netflix did much better than we expected. One of the other merchants that is doing very well is Boden, it’s a British company that specializes in high-end men’s shirts.
Bob
One thing we found is the demographics of the WorldPerks customer, it’s heavily skewed toward the men. The other interesting thing is that people shop the most on Mondays; it’s a high-traffic day for the mall.

IF
What’s new with WorldPerks Mall?
Faye
We launched a new mall product in May 2007. When you shop for the first time, you enter your WorldPerks number and now the program remembers you. So when you shop at another store, you don’t have to reenter your number. It’s got a clean fresh look and it’s easier to navigate. We have it on the homepage. We’re twice the size we were two years ago.

IF
Do you have big shoppers?
Faye
We do, they place very large orders. We will be offering back to school promotions and holiday offers, so there will be lots of ways for big shoppers to earn miles. We also offer miles for buying gift cards, which is a popular option.

IF
Are you involved with the merchant to help them decide the promotions?
Faye
Yes, we work with them.

IF
You’ve positioned WorldPerks Mall as a shopping mall, what’s the future for WorldPerks Mall?
Faye
I think you will see more services out there, a dry cleaner and auto repair in the future.

IF
Does that fit within the mall?
Faye
We’re working on that right now to see where it all fits.
Bob
It depends how big they are. If it’s regional that’s one thing, but If it’s throughout the country, then that changes how we market them. We would like to extend to cars and big-ticket items like that but it’s much more complicated and would deserve a different angle outside the mall. We’re also trying to improve the technology of the mall to make it easier for our members to shop.


Frontier EarlyReturns

As a Freddie Award winning frequent flyer program, Early Returns is not just relying on 15,000-mile awards and a growing network of cities served to add value to this program. The unique alliance with AirTran is the added-value that has caught our eye. We check in with Katie Fay, Program Manager, Partner Development, and Joe Hodas, Director of Public Affairs, to learn why this works for them.

InsideFlyer
We would like to hear your take on alliances.
Joe Hodas
We haven’t developed a strong network of frequent flyer partnerships like Star Alliance. And part of the reason is that, until recently, our program has been somewhat immature in the sense that we haven’t had a critical mass of members, and we haven’t had the networks to support the need for a large partnership network.

On top of that is the fact that when you look at the cost to create a codeshare partnership against the potential value in doing it with a smaller carrier, as we came to the conclusion with AirTran, it doesn’t always make sense.

In other words, the larger network carriers have a whole range of scale because of their size, because of the additional revenue they would achieve, versus the cost to make it happen.

So we went about looking at how could we could achieve some of the benefit and really reduce the cost. The result is what we set up with AirTran that is really 90 percent of the revenue and 10 percent of the cost. That model can be applied to other small carriers so that eventually you could have a nice little network of carriers that have banned together.

IF
With that type of philosophy, did you look at an airline that would measure up to what you were doing?
Joe
The discussion with AirTran started a few years ago, we were heading in the same direction as far as growth. AirTran was a nice fit as far as how our networks worked. And we came to the conclusion that a true codeshare would be truly difficult to achieve.

IF
When did A+ and EarlyReturns enter into the conversation?
Joe
It was early on, part of the reason why is because one of the biggest thorns in our side is Mileage Plus. So anything we can do to benefit and create a larger program for our passengers is paramount to the whole plan.

IF
Have your members seen that you’ve doubled the network?
Katie Fay
Our members have been raving ever since we started. The biggest win for us is getting the traffic from AirTran. Their frequent flyer base is larger than ours. We’re seeing twice the passenger revenue from them.

IF
On the redemption side, did you see anything pop up right away?
Katie
We haven’t focused on the trend of where they are flying, but on our own plans of new city expansion.

IF
A+ and EarlyReturns are two very different styles of programs. Did you do a lot of homework trying to make this simplistic?
Katie
From a consumer perspective, it was pretty basic. To fly on an AirTran network domestic roundtrip coach ticket at 20,000 miles, it’s just a little more than our network. They don’t worry about the back end; they just know that when they fly on AirTran they will receive the credit.

IF
Has Frontier considered adding business class?
Joe
We haven’t heard of a lot of feedback about adding business class. It’s not something we’re ready to do at this point.

IF
What else would you like our readers to know?
Joe
I think this is a good model. Once we find the time, this could open up a world of potential for us.

IF
I’m intrigued about the strategy into Mexico that seems to be paying off as you continue to add cities.
Joe
We fly from more U.S. cities into Mexico than any other domestic carrier, 11 different cities.

IF
Is Mexico one of EarlyReturns top five destinations for redemption?
Katie
I would say for EarlyReturns, Mexico is the top destination for redemption.

IF
Is there any concern with the demand of being able to redeem for both programs?
Joe
We looked at this very closely; we felt the revenue upside was far greater than any added liability to the program. We haven’t seen any real issues in unavailability of seats for our passengers.


AirTran A+ Rewards

There’s always two sides to an alliance. After hearing from Frontier, let’s hear the “other side of the story.” The A+ Rewards program has long caught our eye because of its creative nature. Who else in the airline industry is so member driven that they are willing to give you an award on any airline of your choice and allow you to earn frequent flyer miles with that other airline? We were lucky to catch up in a sprint with Andrew Chang, Manager of Marketing Strategy for AirTran.

InsideFlyer
What’s going on with your program — how’s the relationship with Frontier Airlines coming along?
Andrew Chang
It all started when our executive teams started talking to each other. Our route networks are very complementary. Frontier Airlines primarily serves the West Coast with a hub in Denver. We are primarily on the East Coast and have a large hub in Atlanta. If you put our routes on top of each other, it’s a perfect opportunity to do something together.

There’s the oneworld alliance and the different alliances, but we are not a part of any alliance and don’t want to be. We thought, why don’t we combine our frequent flyer programs? That would be beneficial from a customer service standpoint and we could hopefully generate some revenue that way as well.

IF
It seems like it’s worked out well. We would imagine that it starts from a revenue point of view, but then the topic of frequent flyer programs comes up, doesn’t it?
Andrew
Yes it does. Everything has worked out very well. All the risks we were afraid of never materialized and things have been going very smoothly.

IF
As you pointed out, you are no longer just an East Coast airline — you cover the country from coast to coast. Your relationship with Frontier is more complementary than competitive and a sign of a good alliance.
Andrew
Exactly. Our philosophy at AirTran is to make things as simple as possible. That’s how A+ was born and it’s our method — we do everything based on credit rather than miles.

IF
Was that difficult because you’re speaking one language and the guys in Denver are speaking a different language (miles and credits)?
Andrew
That wasn’t too difficult because we’re only primarily speaking to our respective members. So we’re talking to A+ Rewards members and Frontier is talking to its EarlyReturns members, so it isn’t that difficult when you’re talking miles to a miles crowd or credits to a credit crowd. There isn’t really any translation or algorithm we have to go through. We set our levels and they set their levels to what we both thought was right.

Going back to your point about not being competitive, that is definitely the case — we are very complementary. Remember, we try to make it as easy as possible, so just see it as a new redemption level. If you have 32 credits we’ll buy you a ticket on any other airline in the contiguous 48 states. But with Frontier, we made it a sweet deal. Hey, we’ll buy your ticket anywhere you want to go, but if you choose our partner Frontier, we’ll reduce it to 24 credits to go anywhere they fly. It doesn’t undercut our competition as much because we’ve always offered flights on other airlines and you can even earn miles on those airlines if you wish. Frontier flies to Mexico, Canada and Alaska.

IF
They are certainly big down in Mexico. We’ve never seen an airline grow that rapidly.
Andrew
That’s their market and they’re doing a good job. It takes 50 credits with us if you want to fly on another airline, but if you want a better deal and fly on Frontier, we’ll give it to you for 36. It’s just a sweet deal for our customers and they’ve really eaten it up. A lot of people like Frontier — you know more than any of us since they won the Freddie award this year.

IF
Yeah, they’ve been working hard.
Andrew
Our customers love Frontier and Frontier’s customers love us — it’s like the perfect match.

IF
Have you noticed any changes in your redemptions because of your partnership?
Andrew
We did a lot of up front work in terms of redemptions. That was part of the risk we were prepared to take on — what happens when all of our customers flood the Frontier system and vice versa? But you know, we thought about those issues carefully. We did a lot of forecasting, a lot of analysis on our end and theirs and got a revenue management team involved. But those fears never materialized, which was surprising to us. It’s been spread very evenly.

IF
So not everyone’s going to Mexico yet?
Andrew
Oh, they are going to Mexico but not as many as we thought. We were planning for a worst case scenario, but some people would rather go to Florida or Canada. Redemptions were very spread out so it was very nice.

IF
One of the things you touched on earlier is that you’ll buy a ticket on any other airline for your customer. It’s unique in the industry and we have to give credit to you guys. Do you get many of these redemptions?
Andrew
In the beginning, we weren’t getting a lot of redemptions. As we have grown, A+ Rewards has been growing even faster and we do get more and more redemptions, especially for anywhere in the world flights. Our members love it and we love buying on other airlines and giving our members the opportunity to fly on another carrier. We’ll buy a ticket for you, so you don’t have to go through the hassle of redeeming and finding the dates and making your plans based on when you can find availability for Phuket or Russia or wherever else.

IF
Are those destinations that people have flown to through your program?
Andrew
Oh yeah, Thailand, China, Hong Kong, India. We have a frequent flyer who I guess is Indian and he goes there quite often on us for free.

IF
So in your alliance with Frontier, is there going to be a phase two of the alliance or does the alliance work so well that you don’t think there needs to be another step?
Andrew
That is a really good question. We try to be as flexible as possible, so if we see an opportunity for improvement and a way to make this relationship even better for our customer, then we’ll do it. We’re always evaluating how we can improve anything and we are never satisfied with what we have. We communicate a lot with each other and are always looking for new ways to promote each other and take the relationship to the next level.

IF
Do you ever see the possibility of adding a third airline that is complementary and can be a part of what you’ve done?
Andrew
I haven’t really thought about it too much, but we are always looking for new opportunities. With Frontier and AirTran together, it’s a pretty good fit, so I’m not sure how much more we can actually expand. We don’t want to turn into a large alliance like oneworld because they get really cumbersome and complicated. Once you get the elite structures mixed up, it gets confusing for members and we like to keep it simple.

IF
Did you ever sit around and say, hey, maybe we should have a name for our alliance?
Andrew
Not quite, but that would be a cool thing.

IF
Well, we’re big fans of the added value that was created in both of these programs and we’ve heard no complaints whatsoever so far.
Andrew
Yeah, every week I lead a call for our program and am constantly asking our call center, hey, are there any complaints or issues with Frontier? And they say no.

IF
Frontier says the same so that’s a very fortunate thing.
Andrew
Our two cultures blend great together and we think our customers have a really good deal and hopefully other frequent flyers out there realize the true value of this partnership.

IF
So the growth is still going up?
Andrew
Oh yeah, the A+ program is growing faster than the airline itself.

IF
Do you think the alliance with Frontier has had an effect on this growth, or is it just natural growth?
Andrew
The redemption levels are for people that have been loyal to our respective airlines. We haven’t stolen any members from Frontier and vice versa.

IF
You’re happy with that, is that how it was supposed to be?
Andrew
That was one of the risks we knew we would take on and have been watching carefully. Our customers think of us as partners and they love Frontier. They love AirTran and see this as a whole new way to fly on another carrier and enjoy the benefits at the same time.


Jet Airways Jet Privilege

In one of the world’s fastest growing markets for air travel exists one of the fastest growing frequent flyer programs. Over the past four years, Jet Airways Jet Privilege has made a name for itself — within India and around the world. With airline consolidation already going on in India, we catch up with Rahul Kucheria, General Manager, Relationship Marketing for an update on what this means to Jet Airways and how their Jet Privilege program is poised to make the best of the future.

InsideFlyer
We’ve followed the progress of Jet Airways and your latest acquisition and boy, you guys have certainly delivered over the last two to three years.
Rahul Kucheria
Yes, there’s a lot happening at Jet Airways. I think the market is in a significant boom, especially over the last three or three and half years. The market is growing rapidly and there’s a lot of competition in our domestic market. We’ve been mapping out the domestic market and expanding rapidly in the international market.

IF
You seem to have a good grip on both of those; domestically, with the acquisition of Air Sahara.
Rahul
That’s right, if you look at what’s been happening on the Indian market, there has been some consolidation — Air Indian and Indian Airlines are proceeding with their merger. Then we have Jet Airways, which has just picked up Air Sahara, and you have Kingfisher, which has just picked up Air Deccan, which is the largest low-cost carrier, so it looks like there is going to be a tri-polar situation in the Indian market.

IF
Usually the market goes on for quite a number of years before you see consolidation, but this seems to have happened very quickly, is that right?
Rahul
Yes, I think that where we come from in India the learning curve is very sharp because we can always look to what has happened in the global market. The same things get replicated in India but at a fairly faster pace.

IF
On the international scene, you’ve done nothing but continue to add and add, haven’t you?
Rahul
Yes, in fact we started internationally a little over two years ago. We started London and some sectors in the far east like Singapore, Kuala Lumpur, etc. We’ve had a fairly good experience in these markets and now we have actually retained our hold on these markets and have been able to stabilize those markets.

I think the next logical move for us is to go international in a very big way. We’re a country with a growing population of a consuming class and Indians have taken to travel like never before. So it’s a natural extension for us to extend our services significantly beyond India. We are starting our service to the United States in August of this year, and we are going to the East and West coast.

IF
It’s been a little bit of a struggle for you in the U.S. market because you were supposed to start a year ago.
Rahul
Yes, we were, but a small legal hitch came up that set us back, then we had to start the entire process of getting the clearance again. Precious time was wasted, but I guess it’s never too late, and it’s a good thing that we are starting our flights this August.

You probably will have read about using Brussels as a hub. The idea is to have flights departing at various points in India at more or less the same time from Brussels, then from Brussels to different cities in North America; Toronto and some other cities on the east coast of the U.S.

IF
We see you have chosen a partner with Brussels Airlines.
Rahul
Yes, we have chosen the Brussels partnership to connect to various points in Europe. We’ve received a warm reception/welcome in Belgium. It’s in the press about the importance Jet Airways has been given by the Belgium government because they see a lot of potential with this partnership.

IF
So how is the program going? With all the growth, more demand on redemption and more partners in the system, what’s been learned through the Privilege partnership?
Rahul
I think the program is doing quite well. We’ve seen huge growth in membership — about 20 to 30 percent — and a fairly good number are active. We’ve noticed that as the competition in India intensifies our enrollment numbers grow. And as we move more into international markets, I think we are in the position to tap into a huge market, and that’s where the frequent flyer program has a huge role to play.

We have members who are eager for us to start the international sectors because of the huge number of miles they will be able to earn when the long distances come into the picture.

IF
Do you worry that a larger percentage of your members will all of a sudden want to redeem their miles on international sectors?
Rahul
Yes, I definitely see that happening because we have had a considerable amount of feedback from members who want to redeem internationally rather than picking up something within our domestic network. I see people are increasingly opting for international Jet Airways flights while redeeming their miles.

Another interesting trend is that people don’t mind redeeming a larger number of miles to get a business class seat because they view the awards as fun, as leisure travel, and want to have a good time.

IF
Over the last three years, have there been any surprises where your members redeem their miles? Within India, is it typical holiday destinations?
Rahul
There’s a fairly interesting mix. We see a lot of redemption on sectors that are largely for business travel. Between New Delhi and Bombay is one of the busiest routes in India for redemption. Members in Bombay want to see friends in Delhi and they want to go on holiday to Delhi. When it comes to redemption, you can’t really say it’s a leisure redemption or business redemption, people tend to mix leisure on some of the same routes as business.

IF
Do a growing number of members use their miles for family members or do they use them personally?
Rahul
We don’t see transfers, but what we do see is multiple seats against a single redeemer. We know that he is possibly traveling on his own or he has a spouse or child with him. One thing quite clear it that the redemption is for personal use as a leisure flyer. Most of our membership base is corporate travelers — people who fly for business and their employer pays for it — but when it comes to redemption, it’s all about personal travel.

IF
We are impressed with how Privilege structures your credit card partners in your program. Do your members see credit cards as a real partner of the program, or is credit card usage still young with them?
Rahul
That’s an interesting question. I would like to spend a few moments talking about overall credit card usage in India. India is a fairly different economy as compared to most countries around the world. In India, if you look at the entire spend of the country, about 90 percent of the money spent is cash. Credit card spend is about two or three percent, and the balance is in bank checks.

If we compare that with a global average, we can see credit card and bank checks considerably higher in other countries. Over the past four to five years things have changed considerably, helped along because credit card companies have offered a completely different business model in India; most credit cards are free for a lifetime with no annual fee or joining fee.

So this has seen a paradigm shift in the Indian market over the last three to four years and has caused a credit card boom. Also, credit card companies have hugely lucrative promotions, which are designed to get people used to swiping their cards.

There’s been a significant change in consumer behavior and I see consumers being much more open to using credit cards, but there is a long way to go between where we are and where other markets are.

So we have to do some amount of hand holding when giving the card to make people aware of the benefits. Having said that, there is a base of consumers who have been earning points and exchanging them for gifts.

Jet Airways has a natural market for corporate travelers, who are more evolved in the entire consumer segmentation. We have a good base of consumers who use our co-branded credit card and the card we have is an extremely important part of the Citibank portfolio of credit cards — the average spend using our co-branded card is significantly higher than the industry average. We have a good partnership and a good number of spenders, but we have a long way to go in comparison to others.

IF
How is the integration of the Air Sahara frequent flyer program coming along? Do you plan to convert those members into the Jet Privilege program?
Rahul
Yes. When Air Sahara was acquired it was a legacy carrier. We are going to take Air Sahara and make it a value-based airline. The name has been changed to Jet Light India Limited and will operate as a value-based airline with single class operation. So all of the members of Jet Light are going to be transferred to Jet Privilege. Over the next week or 10 days we should be able to announce the withdrawal of Air Sahara’s program to merge everything to Jet Privilege.

IF
Was there anything in that program that you liked and would want to adopt?
Rahul
We are comfortable with what we are offering at this time. When we look at what we offer compared to other programs in India, I think we are far ahead of any other program, barring a few features here and there where someone might be better than us, we have a significant lead over any competition in India.

We benchmark ourselves with other leading frequent flyer programs on a global basis. That’s our goal and where we want to take Jet Privilege. We have plans for Jet Privilege to further widen the gap between Jet and any other program. Members will see more good things to come over the next two to three months.

IF
Jet Privilege is certainly popular and you guys have worked hard to make it what it is — especially with all your competition.
Rahul
There is a lot of competition and that’s a good thing. But what I would like to say is that, at the end of the day, the proof that we are in the lead is that when it comes to redemption, we have an extremely high redemption rate. It is higher than the industry average and we take great pride in confirming about 80 percent of award requests. That adds loyalty as people see the program working for them; they see the rewards.


Continental OnePass

The term is “social media” what Wikipedia defines as online technologies and practices that people use to share opinions, insights, experiences and perspectives. We see it as the way customers interact in the Internet age; and specifically for our purposes, customers who gather on various Web sites seeking to learn more about airlines and their frequent flyer miles. One of the growing number of airlines to adopt this new age of customer service and social media is Continental Airlines. We logged on to chat with the CO Insider, Scott O’Leary, Managing Director Customer Experience, and the official representative of Continental Airlines and it’s OnePass program in the age of proactive customer service.

InsideFlyer
We view what you are doing on FlyerTalk as extended customer service. What’s your perception of what this is all about?
Scott O’Leary
The reality is we are always looking for ways that we can be better engaged with our customers; and that is by virtue of direct contact with customers and listening to the feedback of our internal stakeholders, meaning the ones that are actually on the front line directly dealing with customers. We have some conventional feedback forms and we arrange focus groups and do surveys. We look very closely at the common sense of customer care. There are a number of things that we do to try to stay tuned with the customer. One of the neat things about FlyerTalk is that it takes a lot of the formality out of the equation.

IF
Is that good or bad?
Scott
Actually, I think it’s a good thing. When you look at our most conventional channels, by the time the feedback gets to us, it’s sometimes stale or it’s been reworded. Sometimes it’s good to see the raw feedback from customers. I think it’s a fair assessment to say that the unique thing about FlyerTalk is that the people who are actually active in the FlyerTalk community really are a very good representation of our road warrior or our most frequent, most valued customers. And basically what these guys have to say is an accurate sampling of what a lot of our customers actually perceive, I’m sure.

IF
But did you see that to begin with? Some airlines view these online forums as just a group of whiners, not really a representation of what their members are all about.
Scott
Well, you know it’s funny that you say that. What I’ve observed is that on any online forum or blog, the comments are mostly negative. People generally don’t post anything about the wonderful service they received. Usually what they post are exceptions and sometimes those are good — and we love seeing those — and sometimes they are bad or interesting and we don’t want to bury our heads in the sand and dismiss those as whining. It’s certainly not the sort of attitude we take towards our customer care department. We’ve got a staff of dozens of individuals who do nothing each day but field questions that come through our customer care department and if they had that attitude, we’d be in big trouble. Our customer care department not only listens to feedback but they take action. If there is a complaint about a particular individual or aircraft or flight, they are following up with the operational stakeholders behind the scenes because we are extremely interested in reliably delivering on our core competencies. If someone is posting on FlyerTalk, I am more often seeing what are legitimate concerns or complaints, not what could be called whining. At the end of the day, we can’t be all things to everyone and it’s hard to tell someone who is emotionally charged about a specific issue that they are all wrong. We don’t want to respond to every threat that is put out there. Sometimes it’s not worth inserting fact into what is a very subjective conversation. But quite often, there are some very legitimate concerns with respect to the execution of a policy or the reliability of an operation or program, all the way down to the Web site, for example. We’re starved for that feedback and we want clear examples of where we fall short so we can actually go back and fix them. I can literally point to dozens, if not hundreds, of little things we’ve changed behind the scenes — everything from a misspelling on the Web site to the consistency of a procedure at our call center — bunches of little things that we’ve been able to correct behind the scenes. And occasionally we do have the luxury of dispelling a myth, but that’s not why we’re out there. We want to jump into the conversation with our customers and FlyerTalk lends itself to that. We’re very cautious about how we participate on FlyerTalk because we don’t want to become customer care, we have a customer care department, and we don’t want to come across as propagandist. We are all about open and honest communication with our customers in any way that we can actually have the dialogue. FlyerTalk is a perfect example of that.

IF
How long did it take you to get comfortable participating in FlyerTalk and did the FlyerTalkers get comfortable at the same time you did?
Scott
The honest truth is that I was very surprised at how graciously I was welcomed into the community. But that’s not to say there weren’t skeptics. It took months before people were really comfortable with Continental’s role in this forum. I would say it took about as much time for me to become comfortable as it did for them.

IF
With the impact of the Internet and social media sites, I see FlyerTalk as a way station. Is this what customer care will look like in the future?
Scott
I think it adds a new dimension to customer care. For example, we really don’t open up customer care cases. It has happened, but go to any thread where a customer has complained about a flight and FlyerTalkers are very quick to respond, in so many words, “dude, you really need to get a hold of customer care.” Usually the issues that do get some level of voltage on a forum like FlyerTalk is when a customer has gone through the formal channels, like customer care, and the customer still has not received a common sense resolution and those are the items that get discussed, and where I might get involved. As an example, there was a customer who bought a ticket online and he clearly clicked the box that disclosed what the penalties for changes would be. When he called to change his ticket, there were two people on the reservation, we told him that the change fee was going to be $100. He took that to mean $100 total instead of $100 per person and he was upset when his credit card was charged $200 for change fees. He complained to our customer care group and we politely explained to him that these are the rules he acknowledged when he bought the ticket. He was very upset and posted on FlyerTalk and through a private message, I wanted to give him the option to reverse what he did. We told him we’ll gladly switch you back to your original flight, give you your money back and pretend like this transaction never happened. And that was the option that he needed.

IF
How difficult is it for you to find the balance between private messaging and public comments, the legal voice in which you may be interpreted on behalf of Continental?
Scott
Whenever I’m in doubt, I always get a second opinion from the stakeholder I’m representing. In the 12 years I’ve been with the company, I’ve managed to make some very strong relationships with every group that interacts with customers. That is why we are able to post very meaningful responses and take meaningful action on issues that need to be resolved. In my role, with my staff of zero, I’m forced into a dotted-line relationship with any area of the company that interacts with customers. All these areas of the company work directly with me. My job is half real time and half planning. And with everything I do in this position, I never know what to expect when my phone rings because it could be coming from inflight, airport services or our contact center. Basically, any stage of the customer experience life cycle is what I’m overseeing. Customer care is just one part and we are looking for patterns and trends and examples.

IF
When you service someone in the public domain, do you see yourself servicing that single person or do you see yourself servicing all the other members on OnePass that may have that same type of situation?
Scott
There have been situations where we have serviced individuals online and the reason that we’ve gotten involved is either because our judgment needed to be clarified or reversed. In every instance where we go back and compensate a customer, you can absolutely bet we have done something behind the scenes. If it’s human error, we go back to the individual and do coaching. If it’s a technical error, we fix it. For example, there’s been a lot of discussion about the integrity of upgrades and we are excruciatingly tight on the enforcement of upgrades. In the past year, we’ve identified three very minor problems with our elite upgrade automation, all of which were fixed within 24 hours of finding what the issue was. And I don’t think we would have found those issues had we not paid very close attention to the posts of our customers and asked them for examples behind the scenes.

IF
It sounds like there’s a blend between what you are doing privately and the public posts. Is it true that not everything you do is something that people see?
Scott
Absolutely.

IF
And how has that changed?
Scott
I’m actually seeing fewer private messages now than when I first started. A lot of it has to do with everyone getting a good understanding of what Continental’s role and responsibility is in this particular forum. To start out, I was getting a lot of customer care stuff and I directed these comments to our customer care group. We’ve responded to all of these with meaningful responses within one to two weeks and haven’t received a single complaint from those customers after that. The private messages that I’m receiving from customers now, and where the distinction between private and public is, when there’s an issue out there, you’ll usually see someone create a post about what the issue is. And then when there is a specific example about the issue, that’s actually what comes through to me as a private message. If someone posts an issue, I’ll respond to it right then and there if I can see what the issue is. But if more detail is required, I’ll either send a private message to the individual or put a post in the thread that asks the person to send an example by private message.

IF
Have you found yourself getting drawn deeper and deeper into FlyerTalk and what used to take a few minutes a day is now all encompassing?
Scott
The reality is that I do have a day job. I’ve found that the effort I spend on FlyerTalk has become less and less. When I first showed up last June, there were tons of burning questions. I’ve responded to those questions in a way that can be repurposed very easily. For example, a lot of questions came up about the hierarchy of elite upgrades. Those questions were originally asked at the beginning, but now when those questions are asked, someone is already posting on it before I can even get to it. This is a community and the FlyerTalkers that are active posters are very good at answering one another’s questions and being able to share examples of situations where your mileage may vary. Sometimes the answer is not correct or needs to be clarified and that’s when we’ll jump in. I would say that it’s the same amount of work or less a year later.

IF
Airlines are experimenting with doing an in-house membership forum. Do you see a difference between a public domain like FlyerTalk and an in-house forum?
Scott
We thought about this and we believe that FlyerTalk is a better place to have these discussions than on our own Web site. FlyerTalk has some very good, solid rules of engagement and very strong moderation — to where I’ve yet to see something get out of control that doesn’t get caught by the moderator. Why bring that moderation in-house when it’s already happening on FlyerTalk? The folks that are most active in Continental’s forum are active in other forums as well, and FlyerTalk makes it very easy to jump from one set of conversations to another. You’ll never get that when an individual company represents a chat. A blog might be more appropriate but a forum is better hosted by a third party that’s a specialist in that area. There will always be a conspiracy theory that we are scrubbing the conversations and over moderating.

IF
Continental seems to be very comfortable in supporting conversations with OnePass members.
Scott
Absolutely. We are not afraid to admit that we are willing to improve. We look to any inlet that will provide us with feedback and FlyerTalk is a wonderful example. We sit down with our corporate travelers, we do focus groups, we do customer care, and we also look at other social media sites such as airlinequality.com, Skytrax, USA Today in the Sky and Airliners.net.

IF
Anything we haven’t covered that you’d like to talk about?
Scott
It’s definitely a two-way dialogue and two-way benefit for both ourselves and our customers. In my role here, I’m half real time and half planning. A lot of what we get from FlyerTalk speaks to both. Some of those things are things that we can do better — we have our established procedures and there are ways we can constantly improve on delivery. We get great feedback on FlyerTalk about how we can improve. There’s a lot of feedback from people on FlyerTalk who have ideas about how we can make broader, sweeping changes. There’s been some great ideas, some of which are definitely part of our longer term plan.

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