70 Percent of Frequent-Flyer Program Members Are 'Inactives' and Erode Airline Profits Alarmingly

In the 1980s, airlines introduced frequent-flyer programs to increase the loyalty of their customers, thereby pioneering a new approach to marketing that has come to be known, more broadly, as customer relationship management. Today, CRM programs are used in wide variety of industries to identify and retain valuable customers, to encourage fickle ones to spend more, and to cut the cost of serving those who are less valuable.

Profitable passengers on full-fare tickets, especially those in premium-cabins keep legacy airlines flying, says Philip Charlton, Managing Director of Trident Loyalty Systems.

On average, members activating on premium-cabin tickets take 70% of future flights in the same cabin, 15% in full-fare Economy and 15% in discounted Economy. They represent the key market of a Frequent Flyer Program. How can the future Silver and Golds be identified, recruited and retained?

Trident Loyalty Systems has developed an innovative strategy and enabling technology that precision-targets and enrols only active flyers into an airline's loyalty database.

The objective is to recruit profitable Frequent-Flyer Program members and only 2-4% of these, according to McKinsey, account for 33% of an airline's profit, while Accenture reports that 9% on an airline's passengers buy 50% of an airline's premium seats. The average inactivity rate of a Frequent-Flyer Program is 70%. "These inactives erode profit alarmingly", says Charlton in an interview published by The Wise Marketer in December 2006. [Get the full story ¦ thewisemarketer.com]