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Can a consumer loyalty program boost an airport’s non-aeronautical revenues?

Customer loyalty programs in the aviation industry are usually associated with the airline business. Nowadays, an increasing number of airports are showing interest in launching such schemes as well.

In 1981 American Airlines was credited with introducing the first frequent flyer program (FFP) which became an effective marketing tool for airlines to enhance customer retention. Direct competitors in the USA such as United Airlines and Delta Air Lines responded quickly by launching their own FFPs. In Europe the trend caught on much later and airlines introduced their concepts in the early 1990s. Besides the aviation industry, loyalty programs have spread across a wide spectrum of industries: retailing (Payback), personal finance (American Express), vehicle rental (Hertz), and hotel sectors (Sheraton).

Due to operational interdependences the question arises how airlines’ experiences of FFPs could be transferred into beneficial concepts for airports. Moreover, airports are lacking the answers to the questions: what are favorable market conditions for a successful loyalty program management, what are the essential features of such a long-term marketing initiative and which features are appropriate for which kind of airport (hub, regional, LCC-dominated, hybrid)?

The primary intention of loyalty programs is to identify and reward the most loyal customers. Reward schemes offer benefits for both the organization and the customer. Through loyalty programs airports can potentially gain more repeat business, identify cross-selling opportunities and obtain essential customer data for future individualized customer relationship management (CRM) efforts.

Given the growing interest of airports in launching a loyalty program, Lufthansa Consulting has developed a method to support airports in their decision making processes on an individual basis.

Thus, Lufthansa Consulting initiated research on this issue in cooperation with the University of Applied Sciences in Frankfurt. A comparison of airlines’ as well as airports’ markets and business models based on the aspects: market conditions, customer groups and value chain processes depicted best-practice approaches. As a result of the investigation, a guideline was elaborated listing the main strategic and operative factors an airport has to consider when deciding whether to implement a loyalty program.

Lufthansa Consulting’s evaluative approach helps airports to carefully consider the potential success of introducing a loyalty program, taking both the related cost and the expected non-aeronautical revenues into account. Furthermore, airports benefit from Lufthansa Consulting’s knowledge on regulatory requirements, customer’s expectations, pitfalls and upcoming trends.

If you are interested to learn more about the loyalty program evaluation for airports, please contact Mail@LHConsulting.com.