Exploring the leverage in airline loyaltyNews / Distribution | OnlineBy Viewpoints | January 22, 2015Share This article was originally published on From a loyalty perspective it is widely accepted that travel rewards, such as flights and holidays, are the most sought after.Given that travel is an important component of loyalty program success, choosing the right travel redemption partner is key.There is much to be gained by loyalty programs working with an airline for travel redemption; however the advantages are far from one-way.NB: This is an analysis by Mark Lenahan, vice president on product strategy at OpenJaw Technologies.So why should a Coalition or Private Label loyalty program work with an airline to provide travel services?What does an airline gain from working with loyalty programs, other their own/alliance Frequent Flier program?Here are six take-aways you should know about the “Airline / Loyalty Leverage”:Benefits to the loyalty programAirline brands are typically household names in their market. In fact, with the level of brand recognition often out of proportion to the size of the business in terms of revenue or marketing budget. The right airline brand can provide loyalty programs with a positive halo effect that few other travel brands could surpass.Airlines excel at customer acquisition through multiple channels, including direct, mobile, metasearch, and onboard delivering considerable additional reach for a loyalty company intent on growing its membership base.Unlike most loyalty programs (banks, super markets, fuel companies), travel is an airline’s core business competency. Airlines that adopt a travel retailing model sell much more than just flights. Their online stores are stocked with a significant range of products, including hotel, insurance, car hire, transfers and destination activities, which can provide a full range of engaging travel rewards to program members.Benefits to the airlineFrom a commercial perspective, a loyalty partnership sees the airline generate revenue, because the program purchases actual revenue tickets from the airline. For example, if the airline takes in 10,000 points as payment from a member, the airline invoices the program for the actual fare (often a private / discounted fare).When members attain a travel reward using the program currency (points), they typically redeem them for leisure and they have further discretionary cash in real currency to spend on other high-margin products, such as hotels or car hire. The rate of cross-sell and up-sell for cash onto a redemption booking is much higher than the rate with the same revenue booking.Because the underlying fare is not exposed, airlines have the option of mixing distressed inventory into the loyalty channel (via private fares / special RBDs), in order to increase overall yield without cannibalising high revenue sales on other channelsNB: This is an analysis by Mark Lenahan, vice president on product strategy at OpenJaw Technologies. It appears here as part of Tnooz’s sponsored content initiative.NB2: The Airline/Loyalty Leverage is explored further in this video from the recent Airline Information Mega Event in New Orleans.NB3:More information via email.