Loyalty Cards – What value? There have been a growing number of reports recently about airlines reducing the number of ‘ex-gratia’ cards negotiable within corporate and business agreements and I have no doubt whatsoever this increase in future. There are many possible known reasons for this trend. These cards began as a way of keeping the devotion of regular holidaymakers by giving a range of advantages from comfortable lounges and ‘free’ plane tickets to priority for upgrades. They truly became a major device for wooing business people from their competition, and possibly company policy by causing the travelers feel very special in a rapidly comoditising market.
Some companies hated them and visited great lengths to try and cancel out their allure. Some attempted with little success to confiscate the travel component (kilometers) for company use. Others required a different view and used the attraction of these commitment clubs to underline and support the utilization of their chosen policy carrier.
It was then that such honors became a significant beneficial element within corporate offer negotiations. So suddenly airline loyalty clubs became valuable to corporates and a tool to sweeten a big change in policy. This whole change thing became a great deal easier if you were able to hand out membership cards with considerable benefits to key holidaymakers. As important were the very best tier credit cards which appealed to position conscious senior executives. These Platinum/Black/Premier credit cards were usually allocated in really small numbers and from the company’s volume potential.
Often you’ll see joint CEOs scrapping like alley cats concerning who should get ‘The Card’ and TMCs being pestered to broker more of them. Much of the above mentioned still happens now however the disposition of the airlines is changing for a number of key reasons. Firstly the number of credit cards at high position (platinum etc) has grown alarmingly leading to lounges to be too full for comfort.
The cost of the lounges and other benefits has risen correspondingly whilst their exclusivity has declined. I have been in a few lounges that are busier and noisier than the chairs outside them. Equally there are fewer chairs available with loyalty points which can cause problems. The airlines in their pursuit to lessen distribution costs want very closely at the worthiness now, and importantly, the cost of these plans.
They have gone from viewing these night clubs as less of a marketing ploy and more of an out of control overhead. As a result they have determined the value and put a budget cost against it. This means that each time an airline salesman gives a card their budget gets debited accordingly. They now have to control this cost in the same way that they are doing discount pricing and other overheads. This continuing state of affairs has reduced the number of cards being awarded within offers. Incidentally the same thing works within the airlines themselves.
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Senior air travel management are experiencing their own travel credit cards downgraded too and they are probably just as aggrieved as the organization buyer. The problem is that investing the something away from someone it offers at least twice the effect as providing it to them to begin with. What you perhaps you have never missed never!
I do you know what everybody must realize is that if you drive mainstream airlines to behave like and contend with low-priced carriers you shall see the carrying on decline in such ‘luxuries’. Also, if you manage to finally be successful in mandating policy to your travelers then your need for such loyalty inducements disappear anyway.