The FFPs of the Middle East

The FFPs of the Middle East

Frequent flyer programs in the Middle East date back to the early years of the programs. El Al introduced its first frequent flyer program in 1984, a mere three years from the debut of American AAdvantage, the first-ever frequent flyer program (FFP). Today, there are more than a dozen frequent flyer programs in the region with a combined membership of over six million and business travelers in the Middle East have adopted the frequent flyer lifestyle. For example, El Al Matmid Club reports that an impressive 70 percent of the program’s membership is active (at least one earn/burn activity every 18 months) and Emirates Skywards reports that the program’s current rate of growth is just over a member a minute.

The Middle East is a burgeoning business market with demand for air travel up 19.6 percent in May according to the International Air Transport Association; demand in African airlines reported an 11.2 percent growth while North American growth was a more modest 4.2 percent and European carriers’ growth was recorded at 3.2 percent.

The airlines of the Middle East are known worldwide for their customer service and the airlines’ frequent flyer programs draw a worldwide membership base. Compared to U.S., Asian, or European programs where members tend to be close to home, Middle East programs tend to have membership bases in other parts of the world. For example, Middle East programs have won Freddie Awards in parts of the world other than the Europe, Middle East, Africa region. At this past Freddie Awards ceremony, Emirates Skywards won the Best Bonus Award in the Japan, Pacific, Asia, Australia region and Qatar Airways Privilege Club won three Freddies in that same region: Best Member Communications, Best Web Site and Best Customer Service. Freddie Awards are bestowed upon travel programs that garner the highest value votes by the travelers who vote for their favorite programs.

With the growth in air travel, and the load factors of airlines in the Middle East rising to over 70 percent, you can expect to see these programs continuing to grow and evolve. North American airlines hover around an 80 percent load factor — one reason frequent flyers are seeing fewer upgrades and available award seats. FFPs in the Middle East look to be going in this same direction — high load factors and fewer available seats. Will these programs do a better job dealing with this dilemma?

Recent news from the Gulf Times quotes Qatar Airways chief executive officer Akbar al-Baker as saying, “Like other airlines we also have set a limit on the number of redemption seats in each flight. The demand for redemption tickets is increasing. We cannot fully cater to their demand with the existing capability.” Qatar Airways recently made changes to their frequent flyer program including raising the mileage necessary to redeem upgrades. “When I have only eight seats in first class, how can I give away six seats to frequent flyers? What do I sell if I give away six of the total eight seats to frequent flyers?” al Baker asked. He continued on to say that the FFP is very important to the airline and that the changes were borne out of necessity. “As we grow in fleet strength we will be able to accommodate more frequent flyers in each of our flights. But the existing restrictions will have to continue until then.”

We will be looking closely at some of the most popular frequent flyer programs in the region: EgyptAir Plus, El Al Matmid Club, Emirates Skywards, Etihad Airways Etihad Guest, Gulf Air Frequent flyer, Middle East Airlines Cedar Miles, Oman Air Sindbad, Qatar Airways Privilege Club, Royal Jordanian Royal Plus, Saudi Arabian Airlines Alfursan and Turkish Airlines Miles&Smiles as we map out the frequent flyer programs of the Middle East.

By the Numbers
Of the programs we looked at, Emirates has the largest worldwide membership number at 2.87 million. When you look at the percentage of members in relation to the 4.4 million United Arab Emirates population, you can easily see that the program is not only far reaching within the United Arab Emirates but also worldwide. American AAdvantage, the largest frequent flyer program in the world, has 57 million members — about 19 percent of the total U.S. population. If you do a similar comparison with Emirates Skywards, the percentage of members to the total country population is a whopping 65 percent. Emirates also has the most members based in the U.S. of all the Middle East programs (just under 200,000), followed by El Al Matmid Club (101,000). El Al has the highest percentage of its members living in the U.S. at 18 percent. Overall, the membership numbers are quite small compared to U.S.-based programs, but this does not mean that the programs aren’t well-received and well-planned. Just as in the U.S., business travelers are loyal to their chosen programs and have come to expect certain benefits from membership.

We should note that Qatar Airways Privilege Club chooses not to disclose the program’s membership numbers. This is not unusual. There are several loyalty programs that do not like to disclose membership numbers for their competitors to see.

Etihad Guest offers a good case study for the popularity of frequent flyer programs in the Middle East. The program just celebrated its first anniversary in August and has over 170,000 members worldwide, including 1,000 Gold (Gold is obtained at 50,000 miles or 20 segments) and 4,000 Silver members (obtained at 25,000 miles or 15 segments). Within three months of the program’s launch, it had 42 Silver members and one Gold.

And as long as we’re looking at numbers, a final note: at the most recent Freddie Awards ceremony, Qatar Airways Privilege Club walked away with the highest number of Freddies ever won by an airline program. The program is following in the footsteps of Emirates Skywards, which started wrestling awards away from the traditional European programs for the European, Middle East, Africa region some five years ago. Qatar Airways Privilege Club received an impressive eight wins including Program of the Year for the Europe, Middle East and Africa region.

Earning Miles/Points/Units
Several frequent flyer programs in the Middle East follow the “one mile flown equals one FFP mile earned” policy mirroring most frequent flyer programs worldwide. The programs we looked at that do not use miles as the measurement for their FFP are El Al Matmid, EgyptAir Plus and Royal Jordanian Plus in which members earn points instead of miles and Gulf Air Frequent flyer in which members earn what the program calls “redemption units.” And most FFPs in the Middle East allow members to earn miles on all fare classes (some offer fewer miles for the lowest fares) and their elite members earn bonus miles/points for flights based on their elite status: 25 percent for the first-tier elite members and 50 percent for the top-tier elite members. Turkish Airlines offers a 100 percent flight bonus for upper-tier elites, but only when they fly on business class fares and Middle East Airlines Cedar Miles offers a 25 percent class-of-service bonus when members fly in the highest coach fare as well as a 100 percent bonus when they fly business class.

Where most Middle East programs differ the most from U.S. programs is the ways in which members can earn miles using partners. In general, the program partner lists are not as extensive. The programs boasting the largest partner lists are El Al, Emirates and Qatar Airways — each with just over 40 partners with which you can earn.

The Middle East is known for its colorful and active markets, but does the market mentality reach to the frequent flyer programs? Not as much as you might think. Etihad Guest and Qatar Airways Privilege Club members can earn two miles per dollar spent for In-Flight Duty Free purchases. El Al has partnerships such as H Stern and Flower4Me where they can earn Matmid points and Gulf Air Frequent flyer members can earn miles at Jashanmal retail outlets at 10 miles per Bahrain Dinar spent. Emirates Skywards members can earn one mile per dollar spent on merchandise from Home Centre, Rivoli and Zam Gems; and miles can also be earned for jewelry purchases at Damas. But none of the programs offer a full mileage mall like we see with North American-based programs. Perhaps this is to come, but none of the programs we looked at have yet to take the leap.

Bonus miles/points promotions are also prevalent such as the generous 5,000-mile bonus for online enrollment that Middle East Airlines Cedar Miles offers. Emirates Skywards won a Freddie Award this year for its innovative bonus offer treating the program’s Gold members to an award sale based on the amount of miles they earned in 2006. The year before, Qatar Airways Privilege Club won a Freddie for its bonus offer crediting miles to members’ accounts based on the number of years they had been members. Gulf Air Frequent flyer and Emirates Skywards rounded out the top three in the Best Bonus Promotion category.

Award Choices
Taking a general view of the programs, it is more likely for the program to weigh heavily toward award flights, companion flights or upgrades over other award choices such as free hotel nights or merchandise. Emirates Skywards is one of the few programs that offers an award chart with choices such as hotel stays, experiences like a Colombo city tour with Sri Lankan Holidays and gift vouchers. Skywards also offers a unique Raffle award twice a year where you can redeem 2,500 miles for a chance to win one of five pairs of business class tickets. Oman Air Sindbad and Gulf Air Frequent flyer offer holiday packages along with the usual flight award offers. And Gulf Air and Qatar Airways Privilege Club offer train travel awards through their partnership with Eurostar.

Etihad Guest is without a doubt at the forefront of offering flexibility with their award offers through their unique “slider” online tool that allows members to choose the number of miles and the cash amount they would like to combine to get the award they want. The program also offers the most extensive list of awards from award auctions, weekend breaks and shopping to one-of-a-kind experiences such as a night with the paparazzi or tandem skydiving among many others; over 600 awards are offered in the program’s online Reward Shop. Etihad Guest rivals and surpasses quite a few U.S.-based frequent flyer programs when it comes to the program’s award offers.

Middle East programs offer award sales like most FFPs and some prove to be very popular like El Al’s recent 20 percent bonus when transferring American Express points into Matmid points — the program tripled its usual transfers during the promotional period. Etihad Guest offered an impressive 50 percent discount on 15 routes from March to May this year that was well-received. Gulf Air offered a 50 percent discount in the month of May on flights and upgrades. Middle East Cedar Miles offered a 50 percent mileage reduction over its entire network for two months at a time, twice in one year.

Emirates Skywards members tripled their online booking of awards with the program offering a 10 percent mileage discount across the board for award tickets booked through the Emirates Web site — members can save up to 36,000 miles on a single flight.

Qatar Airways has recently shown creativity by allowing members the ability to choose their own award from three options: extra miles, extra status points or extra lounge passes to encourage members to book the airlines’ new U.S. flights. This type of flexibility is generally very welcomed by members.

Many programs in the Middle East also allow members to donate miles to non-profit organizations such as the Make-A-Wish Foundation.

When you compare award charts of the programs in the Middle East, Qatar Airways Privilege Club stands out as one of the most generous programs with a roundtrip award flight between Doha and Dubai for only 6,000 miles; when you compare the mileage cost between the Middle East and the U.S., Turkish Airlines Miles&Smiles stands out as a bargain at 50,000 miles when flying from Istanbul, other locations in the Middle East require 70,000 miles, which matches the other mileage-based programs. Since there are so many programs that do not use miles as their measuring device for flights, comparing the value of awards becomes more difficult. So, we looked at the number of roundtrip coach flights it would take to earn a roundtrip coach award ticket and found that the programs match up at just over five roundtrips. El Al is the exception here because members do not earn full mileage on low coach fares so a member looking for flight bargains would have to fly a whopping 18 times to get an award flight — El Al awards become more comparable to the other programs if you fly at higher fares. Looking at North American based programs, United Mileage Plus (Star Alliance) offers a flight between the U.S. and the Middle East after 5.5 similar flights while Northwest WorldPerks (SkyTeam) members would need 6.6 flights to earn an award. It’s possible to get an award ticket through Delta SkyMiles (SkyTeam) with 4.8 roundtrips. Air Canada Aeroplan members would need to fly 7.2 roundtrip flights to get the award. These numbers are all based on getting miles for the least expensive fares for the lowest-level award. As with most things in life, and in frequent flyer programs, not everything is cut and dried and if your flights are on partner airlines or in different fare classes, the numbers we mention here might not be the same.

Award Availability
One of Qatar Airways Privilege Club’s eight Freddie Awards this year was won in the Best Award Redemption category with Gulf Air and Emirates following in second and third place. Gulf Air Frequent flyer has also been the recipient of a Best Award Redemption Freddie Award.

If you are a Gold member of Qatar Airways Privilege Club, you can book an award seat on flights where no more award seats are available by redeeming double Qmiles; as long as there are revenue seats still available on the flight in the class you wish to travel. All members of Middle East Airlines Cedar Miles can request an award on any flight, even if no frequent flyer seats are available, for 1.6 the normal award redemption level.

As one of the newest FFPs around, Etihad Guest looked closely at how to offer awards to its members in a way that does not restrict the member’s access to the seats they want. Through the program’s GuestSeat and OpenSeat concept, every seat on the plane is available for redemption. You might have to pay more, but you won’t hear a “no, not available.” And with the program’s 1MileRedemption policy, a member need only have one mile in their account to redeem an award — the rest of the cost of the award can be paid for with cash. Other programs offer guaranteed award seats such as Turkish Airlines Miles&Smiles where members are guaranteed a seat as long as the flight has seats available for sale, even in high season.

A few programs in the Middle East are still in the early stages where award seats are easy to come by, but overall, it looks like the programs are aware of the difficulties they will face in the future when members collect more and more miles/points and are making plans now to deal with the onslaught of members looking for a free seat in the future. Time will tell how successful the programs are.

Partnerships
Once again comparing programs in the Middle East with their U.S. counterparts, the Middle East program partner lists tend to be much shorter. Royal Jordanian Royal Plus was the first program in the Middle East to join a worldwide alliance when it joined oneworld April 1, 2007, and Sawsan Qaddoumi of Royal Plus had this to say, “In addition to being in the oneworld Alliance, we are always working to expand the ways our members can accrue and redeem points by adding more non-airline partners.” Turkish Airlines and EgyptAir are set to join Star Alliance and Qatar Airways has codeshare and FFP agreements with several Star Alliance carriers, but no announcement has been made regarding the airline joining an alliance. Middle East Airlines Cedar Miles has plans to join SkyTeam and El Al and Gulf Air say that they are open to an alliance but neither airline has teamed up with a worldwide alliance to date.

Credit Cards
Most programs in the Middle East offer co-branded credit cards and if they do not offer one, they have partnerships with credit cards where members can transfer credit card points into frequent flyer miles/points. And most programs in the Middle East stick to their home countries to offer members earning through co-branded cards. El Al Matmid Club currently does not have a co-branded credit card but has plans to offer one in Europe. Gulf Air also does not have a co-branded credit card but members can earn miles when spending with American Express and other financial/credit card partners. Qatar Airways Privilege Club has one of the strongest credit card programs, offering two different co-branded options from competing banks in Qatar as well as bank cards in U.A.E., Egypt, Kuwait, Bahrain, Sri Lanka and Greece. Emirates offers several cards including the Ultima Citibank credit card that offers a 25,000-mile enrollment bonus and a free three-night stay at Marriott’s Village d’Ille-de-France Resort in Paris. Cards are available for members residing in U.A.E., Bahrain, Qatar, Kuwait and Sri Lanka with plans underway for some of the airline’s other key markets.

Elite-Level Programs
All of the programs we studied have elite-level programs, most featuring a two-tiered program (see Elite-Level Program comparison chart). Only one of the programs offers a published “lifetime” status. Gulf Air Frequent flyer offers a Life membership when a member earns 2,000 loyalty points in the Gold tier for five consecutive years — once obtaining Life status, they need to fly at least twice a year to retain it.

Complimentary lounge access is a perk that many elite members in Middle East programs can look forward to. Even the lowest elite tier members of Emirates Skywards, Etihad Guest, Saudi Arabian Airlines Alfursan and Turkish Airlines Miles&Smiles receive lounge access while higher-tier members receive complimentary lounge access in the Gulf Air Frequent flyer, Qatar Airways Privilege Club and Royal Jordanian Royal Plus programs.

Qatar Airways Privilege Club won a Freddie Award for its elite program this year. The program offers unlimited lounge access for Gold members; and when family members fly, miles are posted to the member’s account according to the member’s tier (recently changed from up to nine family members and “others” to now only the member’s spouse and children). Additional baggage allowance is afforded Qatar Airways Privilege Club elite-level members along with elite flight bonuses, among other benefits. A new benefit is guest lounge passes where Gold members receive four one-time guest passes for the lounge at Doha Airport in addition to being able to bring one guest on an ongoing basis; silver members receive two one-time guest passes.

Gulf Air Frequent flyer came in second in the Freddie Elite-Level Program category for the Europe, Middle East and Africa region this year.

Of the mileage-based programs we looked at, Middle East Airlines Cedar Miles and Turkish Airlines Miles&Smiles have the quickest route to elite at 20,000 miles, but both airlines do not offer elite flight bonuses at the lowest elite level.

El Al stays in touch with its elite members by inviting a group of top-tier members to meet with the company president once a month and Gold and Platinum members in the U.S. receive personal handwritten birthday cards as well as a New Year’s (Rosh Hashanah) gift. Middle East Airlines Cedar Miles stands out with its threshold bonus: 3,000 bonus miles are given for every five one-way sectors flown in business class and upper-tier members receive four upgrade vouchers which they can transfer to anyone of their choice. El Al Matmid Club and Middle East Airlines Cedar Miles both have 24/7 help desks for their elite members. Oman Air Sindbad Gold members save 10 percent on in-flight duty free purchases (Silver members save seven percent) and Turkish Airlines Miles&Smiles members can take advantage of a 50 percent discount on paid business class companion tickets. Emirates Skywards offers a unique benefit to its elite-level members called “Opening Doors” which is an exclusive service providing an array of privileges and premium offers from the program partners including access to private clubs, resorts and spas; access to Skybid, Emirates’ Gold member auction tool, and invitations to special events.

Web Sites
FFP Web sites in the Middle East vary greatly and you can’t help thinking that there’s a bit of “have” and “have not” at play. Programs such as Emirates, Qatar Airways and Etihad Airways seem to have an endless supply of resources to host a first-class Web site while other sites look like they have not been updated for years. And then, there are those in between that are functional to a point, but still require members to make phone calls to redeem awards. Etihad Guest won the Best Web Site Freddie Award this year with its award “slider” tool and Reward of the Day and other first-class functions. Qatar Airways came in second while Gulf Air was third.

Customer Support
To look closely at customer support is a bit tricky from our perspective in the U.S., so we looked at responses from members of these programs during our most recent Freddie Award voting period. Emirates has historically had very good customer service and the airline still rates highly with members. However, some members say that the airline is resting on its laurels a bit too much and that other airlines, such as Qatar Airways, are matching and sometimes excelling Emirates’ efforts. Qatar Airways won a Freddie Award for Best Customer Support and Member Communication in the most recent awards. Iain Webster, Senior Manager of Qatar Airways Privilege Club had this to say about the program’s approach to its members: “With the benefit of a relatively small home market we have the luxury of being able to ‘take you more personally’. We meet more than 100 members face to face every day in our service center, and organize frequent social events where we can interact and learn more about their needs and experiences.”

The Fine Print
Will FFPs in the Middle East follow the lead of U.S.-based programs to shorten the validity of miles? So far, it doesn’t look likely — at least not for a few years when the programs might face the same problems that U.S. programs are grappling with — too many miles on the books and too few seats available for awards. As Sharada Iyer, Manager, CRM Development at Etihad Airways mentioned, “At the moment, we have no plans to change [the mileage expiration policy]. The chances of losing one’s miles in the Etihad Guest program are very slim as every mile is worth something and members do not have to wait until they have clocked up a significant amount of miles before they can redeem them.”

Gulf Air miles are valid for 10 years and as of Aug. 1, 2007, Oman Air Sindbad miles is going in the opposite direction from the changes U.S.-based programs have recently made to shorten the life of members’ miles. Sindbad miles will not expire as long as a member takes at least one qualifying flight within five years from the date of the previous activity. Most other Middle East region airline programs miles are valid three or five years.

An anomaly to note in regards to mileage expiration policies, El Al Matmid Club is the only program we know of that places a longer life on points earned with partners than with the airline. In the Matmid Club, points earned for El Al flights have a shelf life of three years, but points earned through the program’s partners do not expire.

Programs in the Middle East are more likely to restrict who a member can redeem an award for — sometimes awards can be redeemed for the member only, or for family members only — not to anyone the member chooses like U.S.-based FFPs. However, when Qatar Airways recently relaunched their FFP, they changed the policy to allow members to redeem awards for anyone, so perhaps other FFPs will follow Qatar Airways’ lead.

Family Programs
Frequent flyer programs in the Middle East often have family programs where a member will earn miles/point into their account when family members fly. These types of programs are seen in frequent flyer programs throughout the world, but are well represented in the Middle East. Programs in the U.S. rarely have a way for family members to pool miles. The frequent flyer programs of Emirates, EgyptAir, Etihad Airways, Gulf Air, Oman Air and Saudi Arabian Airlines all offer a way for members to earn miles into their account when family members fly. The percentage of family-member miles varies between the programs; for example, a member of Emirates Skywards will earn 20 percent of miles flown by family members whereas members of Etihad Guest will earn 100 percent of the miles flown by family members. Other variations apply such as how many family members can be enrolled in the program and what constitutes a family — in the Etihad Airways and Saudi Arabian programs, one domestic employee can also be counted as a family member. Turkish Airlines and Qatar Airways offer family programs for elite-level members only. Royal Jordanian does not have a program where family members earn miles into one account, but members can transfer points to pre-designated family members’ accounts when requesting awards.

El Al takes a different approach for families by offering the Matmid Kids Club where children aged 2-12 earn points as well as special kid-friendly perks. El Al also does not forget four-legged members of the family with its unique Pet Club wherein members earn points when flying with their family pet.

FFP Success in the Middle East
We conclude our tour by looking at what has made these programs successful. There are several factors influencing the success of Middle East FFPs, among them are the way the programs staffed their executive teams with seasoned loyalty management. Witness ex-British Airways Executive Club loyalty experts running Qatar Airway’s program, ex-Canadian Airlines loyalty and marketing experts running the Emirates Skywards program and ex-Swiss Qualiflyer marketing experts running the Etihad Guest program. As well, the availability of funding to grow these programs has been at the forefront of their success. These are for the most part, very rich programs and much like the success of Dubai, certain airlines are willing to pay up front for the price of immediate success.

But having said that, it should be understood that even if these airlines did not have the funding to drive these programs to the top of today’s competitive airline environment, the programs would have done well with their high level of innovation and the partnerships they have formed. Look no further than the heralded member kiosk that Qatar Airways introduced last November in the Qatar Airways Business Class lounge at Doha International Airport where travelers could sign up for the program and receive a personalized membership card within seconds of completing their application; and the award “slider” from Etihad Airways. In an industry that is 26 years old, some of the most interesting developments are coming from this area of the world and there is little doubt that all the attention the programs receive is deserved.

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