Advertisement

The Standalone Frequent Flyer Program

  • Evert R. de Boer
Chapter

Abstract

An increasing number of airlines choose to establish standalone units for their frequent flyer programs (FFPs). De Boer explores the drivers behind this strategy, and identifies the typical steps involved in the process of separation. De Boer also reviews the spinoff or equity carve-out model, where outside shareholders become (partial) owners of the standalone FFP. By offering a detailed review of the pros and cons, De Boer provides a comprehensive context that helps to better understand this business model. To illustrate the model, De Boer includes a detailed case study of the Multiplus program. De Boer demonstrates the role separation and spinoff can play in broader airline loyalty strategy.

References

  1. Air Canada. (2006). Annual report. Retrieved May 22, 2017, from https://www.aircanada.com/content/dam/aircanada/portal/documents/PDF/en/annual-report/2006_ar.pdf
  2. Air Canada. (2017, May 11). Air Canada to launch its own loyalty program in 2020. Retrieved May 13, 2017, from http://aircanada.mediaroom.com/index.php?s=43&item=1135
  3. ANA. (2016). ANA Group established ANA X Co., Ltd., a new company that is responsible for ANA Group’s customer related businesses. Retrieved May 29, 2017, from https://www.ana.co.jp/group/pr/pdf/20161031-2.pdf
  4. Avianca. (2015, July 14). LifeMiles deal announcement. Retrieved May 29, 2017, from http://www.aviancaholdings.com/en/images/kit_inv/LifeMiles_Webcast_Prez_Final_English.pdf
  5. Avianca. (2016). Annual report 2015. Bogota.Google Scholar
  6. Butcher, P., Thompson, M., & Sanderse, M. (2007, July 31). Hidden value of Airline loyalty programs. Morgan Stanley Research Paper. London, UK.Google Scholar
  7. DeNardi, J. (2017a, March 6). United’s loyalty program disclosures used to be perfect. Stifel. Retrieved April 30, 2017, from https://stifel2.bluematrix.com/docs/pdf/f26652b3-89a4-401d-8c9c-42fe91ebb5b1.pdf
  8. DeNardi, J. (2017b, March 20). Valuing Airline loyalty programs – Airlines are intrinsically undervalued. Stifel. Retrieved April 30, 2017, from https://stifel2.bluematrix.com/docs/pdf/bfcbb9a0-ed7f-41de-89ea-2b97d3afe082.pdf
  9. Felsher, N. (2012, September 18). Deutsche Bank: Can an LCC monetize its loyalty program? Presentation presented at Loyalty Americas, Chicago, IL.Google Scholar
  10. Gudmundsson, S., Boer, E. de, & Lechner, C. (2002). Integrating frequent flyer programs in multilateral airline alliances. Journal of Air Transport Management, 8(6), 409–417. doi:https://doi.org/10.1016/s0969-6997(02)00043-1.
  11. Halliday, G. (2015, November 6). IAG.L – International consolidated Airlines Group SA capital markets day. Retrieved May 13, 2017, from http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzE0ODgzfENoaWxkSUQ9LTF8VHlwZT0z&t=1&cb=635840650671533945
  12. Knibb, D. (2013, January 17). Under-valued airlines prompt alternative thinking. Airline Business. Retrieved March 26, 2017, from https://www.flightglobal.com/news/articles/analysis-under-valued-airlines-prompt-alternative-t-381194/
  13. Kutscher, E. (2014). A spinoffs study applied to the airline industry. Journal of Transport Literature, 8(2), 134–177. doi:https://doi.org/10.1590/s2238-10312014000200007.
  14. Landry, C. (2008, March 11). Aeroplan: The redemption dilemma – Strategic considerations of dynamic rewards. Presentation presented at FFP Conference 2008, Istanbul.Google Scholar
  15. Lufthansa. (2014b, March 17). Joint report of the Executive Board of the Company and the managing director of Miles & More International GmbH pursuant to sec. 127 UmwG. Retrieved May 13, 2017, from https://investor-relations.lufthansagroup.com/fileadmin/downloads/de/hauptversammlung/2014/Gemeinsamer-Ausgliederungsbericht.pdf
  16. Multiplus. (2010, February 3). Offering memorandum. Retrieved May 18, 2017, from http://ir.multiplusfidelidade.com.br/arquivos/Offering.pdf
  17. Multiplus. (2017). Multiplus spreadsheet. Retrieved March 16, 2017, from http://ir.pontosmultiplus.com.br/default_en.asp?idioma=1&conta=44
  18. Qantas. (2008b, 29 February). Loyalty programs investor briefing. Sydney.Google Scholar
  19. Schifter, R. (2008, March 11). TPG capital: Independence Day: Creating value through frequent flyer program separation. Presentation presented at Loyalty 2008, Istanbul.Google Scholar
  20. Swaffield, A. (2010). Avios: Surviving the recession – how loyalty played its part. Presentation presented at Mega Event 2010. Montreal QC.Google Scholar
  21. United. (2002). Form 10-Q. Chicago.Google Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Evert R. de Boer
    • 1
  1. 1.FFP Investment & Advisory Pte. Ltd.SingaporeSingapore

Personalised recommendations