Randy Petersen's Opening Remarks – February, 22 2012

Randy Petersen's Opening Remarks – February, 22 2012

2012 Continued

The new year is in fine form (not) with already the loss of two airlines and their frequent flyer programs. The disappearance of Malev Duna Club leaves us with no rumors of a phoenix-like return and the sudden disappearance of Spanair with its newly renamed SpanairStar frequent flyer program seems to be lost to history as well. Membership in oneworld (Malev) and Star Alliance (Spanair) was not enough to save the business models of these two airlines. SpanairStar members were just “upgraded” from the former Spanair Plus program with their point balance being multiplied by three so as to maintain the same reward value in SpanairStar. A cruel reality of any loyalty program membership is not knowing for whom the bell tolls.

Members of both of these programs are now left without recourse and only those lucky enough to have been ticketed on an alliance partner for a future flight have any value left in the programs. And then when Republic announces they are seeking a buyer for Frontier Airlines to sell it off or break it up in pieces, it does leave a little queasiness in the stomach when the term “in pieces” is used to describe its future. Coming out of Indianapolis (Republic’s headquarters), that news may not be as “super” as more recent football news. Strangely, the headline not so long ago was “Republic deal beats Southwest, keeps Frontier intact.” With an unknown future and the continued growth of Southwest in the Denver market and other places, maybe Republic didn’t do anyone much good in winning this deal. But the deal can’t be changed. The question now is … are we feeling lucky with our EarlyReturns miles? With news that Republic has canned their entire marketing staff leaving EarlyReturns rudderless for now, I’m not sure what the immediate future of that program is, especially if it does get broken into pieces. No sane acquisition will want to honor and complete the value of loyalty redemption with only a partial element of the membership and route base. These are those moments of truth when one must know when to hold and when to fold.

The problem is that the analysts and others don’t give any acquisition of Frontier an immediate chance, noting that its route structure just doesn’t fit easily into a deal. Okay, instead of saying a Hail Mary–paging Ben Baldanza. With the stock price of Spirit Airlines trading near its 52-week high, Ben likely could take a page out of the playbook of Doug Parker (Chairman of US Airways) and simply announce he’s going to buy Frontier and take Spirit Airlines (SAVE) from its snowbird roots to national recognition. Anyway, I digress. Because I have some miles and status on the line with EarlyReturns, I will be monitoring this situation very closely. For now, I’m taking it all a month at a time. The advice is to hold rather than fold on this airline’s frequent flyer program.

Now, turning toward more positive news, I’m quite excited about two emerging programs: KulaCauses and PointsPay. First, PointsPay is another innovative solution by the same guys that introduced the first “slider” that allowed members to mix miles and cash when redeeming awards. Basically, this mobile-based redemption solution allows members of participating loyalty programs the opportunity to redeem their points and miles at 30 million point-of-sale (POS) terminals–almost any merchant or restaurant. I think it is groundbreaking; it solves what the loyalty industry has been looking for the past couple of years–an easy way for members to spend their points–and is quite member friendly. The challenge will be that age-old dialogue among members that want to pick and choose the value their points and miles have when redeemed for travel and have that exchange equally into the real world of POS. Not sure there’s enough value to satisfy all, but when it comes to flexibility of currency, maybe there will be something to the axiom that miles are just like money. You can check it out at pointspay.com.

Moving on to something just as groundbreaking but in a different model, the soon-to-launch KulaCauses allows unredeemed loyalty points and frequent flyer miles to be used for donations to millions of local and global charity causes. No longer will your choice of giving back be restricted to the choices of your current loyalty program (this should make it much easier to satisfy the demands of promoting charitable interests). You like to donate to the local Save-The-Library effort or a scholarship fundraiser? Those may be among the choices you’ll have if this program can gain the traction it needs among the loyalty sector. You can sign up for the launch of the beta at kulacauses.com. And there’s a unique twist this program has spent a lot of time on … they say that by private letter rulings, your donations through this program will become tax deductible. That question has been posed to me a hundred thousand times and apparently, the secret sauce to tax deduction is that miles and points are actually converted into a cash donation for your charities of choice.

One last thing–it’s time to get the vote out. Remember to cast your ballot for the best of travel loyalty programs. Frequent flyers do have a voice and it is called the Freddie Awards. Vote now at freddieawards.com.

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