Executive Summary
The main
objective of this project is to find out how effective and efficient the
Customer Loyalty and Retention programs of the Airline Industry towards their
respective airlines’ customers. The initial step of the project was to select the
three suitable airlines to compare. We discussed and decided on Singapore
Airlines, Qantas, and Cathay Pacific. The reason behind this was because they
have fairly large offices in
We experience a hard time deciphering the information from the internet as there were some ambiguous terms as well as certain areas of the frequent flyer programs that were not covered in detail. We organized a field trip to the customer service centers of the three airlines to enquire more on the programs. We were given pamphlets as well as some mediocre information. After that, we began comparing the requirements for each tier such as the amount of miles needed to travel, as well as the benefits from each airline. We also created a survey designed for the customers of the 3 airlines to examine their opinions on the respective airlines’ frequent flyer program. In the end, we were not able to conduct the survey as we were unable to obtain permission from the airline. This survey is under the Appendix section of the report.
We
came to the conclusion that Qantas qualifies as having the best frequent flyer
program as they do not have very high requirements and they provide the most
benefits.
Introduction
(i)
The project background
The main objectives of this project are to analyze the aspects, benefits and differences in the Loyalty programs of 3 different airlines. Selecting 3 airlines that will be easily comparable, then conducting customer satisfaction surveys as well as mystery shopping and calling would be the initial stage of the project. Following that we will record a detailed analysis as well as the results and conclusions on which airline possesses a better frequent flyer program.
(ii)
About the two companies
Qantas Airways: Today, Qantas is
widely regarded as the world's leading long distance airline and one of the
strongest brands in
Project Scope
Desktop research was done to
have a better understanding of the Airlines that offer customer loyalty and
retention programs in
Business
Process Flow Chart
Gantt Chart
(You would need to comment if you have met the timeline, resources. If delay, state
the reasons)
Findings and
Analysis
Our analysis of the three airlines is based on our firm’s comparison of the three frequent flyer programs of Singapore Airlines, Qantas Airlines and Cathay Pacific.
There
are many benefits that come along with being a member of the KrisFlyer frequent
flyer program. Singapore Airlines is a member of Star Alliance, the largest
airline alliance in the world, with 16 airlines. Flying with a member from the
Star Alliance, such as Singapore Airlines, enables benefits with other airlines
during transfers and/or transits. The members of the Star Alliance are Air
There are 4 levels of the KrisFlyer frequent flyer program. They are the KrisFlyer Elite Silver, KrisFlyer Elite Gold, PPS Club Member and Solitaire PPS Club Member. To become a member of Krisflyer, there is a required amount of miles that have to be flown within one year on Singapore Airlines, or Silkair, Virgin Atlantic, or one of the Star Alliance members mentioned above.
KrisFlyer Elite Silver
To qualify for KrisFlyer Silver, you
need to accumulate 25,000 flight miles on Singapore Airlines, Virgin, Silkair
or a Star Alliance flight in any class service, be it economy class or first
class within a 12-month period, between 1 April and 31 March each year. To re-qualify, you need to earn the same number of miles
the following year. And when you
are a member, you'll get a 25% bonus on actual miles flown whenever you fly
Singapore Airlines, SilkAir or Virgin Atlantic which is 125% of the miles that
you fly. You are also given priority when waitlisted for a flight on Singapore
Airlines, SilkAir or any Star Alliance airline. Aside from redeeming flights, the rewards for KrisFlyer Elite Silver are
Priority on the reservation Waitlist, as well as
KrisFlyer Elite Gold
As a KrisFlyer
Elite Gold member, you receive benefits such as increased check-in baggage allowance,
worldwide lounge access, Priority Airport Check-In, Priority Baggage Handling,
and Priority Boarding.
To qualify, you
need to accumulate 50,000 credited flight miles in any class of service on
Singapore Airlines, SilkAir, Virgin Atlantic or any Star Alliance airline in a
12-month period, between 1 April and 31 March each year. To re-qualify, you
need to earn the same number of miles the following year.
PPS Club and Solitaire Club
The PPS Club
consists of the highest travelling members. As a PPS Club member, you will
enjoy special attention and personalised service as well as a host of exclusive
benefits and privileges whenever you fly Singapore Airlines or SilkAir. To
qualify for PPS Club membership, you need to earn 50,000 credited flight miles
or 25 flight sectors in
First or Raffles Class on Singapore Airlines, or Business Class on SilkAir,
within 12 consecutive months. As a PPS Club member, you enjoy the status for a
12-month period, regardless of whether you exceed the number of miles required,
or achieve the quota in less than 12 months.
The benefits of being a PPS
Club Member are as follows. Waived or Reduced KrisFlyer Programme Service fees,
Special Events and Redemption Offers with KrisFlyer, Travel assistance and
Insurance, Lifestyle Privileges Portfolio & Highlights and Offers. Along
with these, you also received Guaranteed reservation in Economoy class if
waitlisted in First or Business or Raffles Class, Priority Reservation
Waitlist, Priority Airport Standy, Priority Check-in, Increased Check-in
baggage allowance, Priority Baggage Handling, Priority boarding, Extended use
of Silver Kris Lounges, Access to Virgin Atlantic Clubhouses, Access to
hundreds of Star Alliance Lounges, Singapore Airlines Service Centre usability,
Special Meal Preference, as well as Seat Preference.
Solitaire PPS Membership
Solitaire status
is awarded to PPS Club members who have accumulated at
least 500,000 credited flight miles or 250 flight sectors in First or Business Class
with Singapore Airlines or SilkAir. Life membership is offered to Solitaire PPS
Club members who have flown at least 1,875,000 credited flight miles or 1,000 flight sectors with Singapore Airlines or
SilkAir in First and Raffles/Business Class since joining the programme. Life
members enjoy all the benefits accorded to Solitaire PPS Club members without
the need to renew their membership every year.
The criteria for PPS Club and Solitaire PPS Club membership renewal are the same as for membership qualification. Members who have accumulated 500,000 credited flight miles or 250 flight sectors on First or Business Class with Singapore Airlines and SilkAir in their account are rewarded with Solitaire PPS Club membership.
The benefits that are offered are, receiving a Supplementary Card for Spouse, Renewal Gift Vouchers, Waived or Reduced KrisFlyer Programme Service Fees, Special Events and Redemption Offers with KrisFlyer, Travel Assistance and Insurance, Lifestyle Privileges Portfolio & Highlights and Offers, Guaranteed reservation in Economy Class if waitlisted in First, Raffles or Business Class. Also you get Priority for Check-in, Increased Check-in Baggage Allowance, Priority Baggage Handling, Priority Boarding, Extended Use of Silver Kris Lounges, Access to Virgin Atlantic Clubhouses, Access to hundreds of Star Alliance Lounges, Special Meal preference and seating preference.
Cathay Pacific has its own customer loyalty program which is the Marco Polo Club (The Club), and is concurrently also a partner of Asia Miles and OneWorld airline alliance, the third largest airline alliance in the world. The Marco Polo Club solely benefits the Cathay Pacific Frequent Flyers, and there are a total of 4 different tiers levels.
They
are Green, Silver, Gold and lastly Diamond category. The Green membership tier
is the entry level for all the flyers of Cathay Pacific who wish to be a part
of the Marco Polo Club. However it also has the least benefits for all the 4
different tiers level. Next on is the Silver membership tier. In order to be a
member of this tier the requirement is to have flown at least 30,000 miles with
As for the gold and diamond membership tiers, one has to travel 60,000 miles or have traveled to 40 club sectors, and 120,000 miles or 80 club sectors per year respectively. Once the flyer has become a Gold member, they qualify to become a Sapphire member of the oneworld alliance and enjoy all the benefits of the ruby members, boarding at own convenience and also lounge access.
All the members of the Marco Polo Club also enjoys the benefits of having a dedicated counter which also includes an in-town counter, personal service, excess baggage allowance and lounge access.
Lastly, a Diamond member of the Marco Polo Club also automatically qualifies to become an Emerald member of the oneworld alliance and thus, enjoys all the benefits of the Sapphire members with the addition of one more benefit, the First Class Priority Check-in.
As
Cathay Pacific is one of the partners of Asia Miles, being a Marco Polo Club
member also allows the flyer to earn
In addition,
being a Marco Polo Club member, it allows the flyer to earn 2
For example, when u fly Economy Class you will earn 100% or 50% of the actual miles flown, depending on the associated Airline’s class, such as Qantas’ Discounted Economy class being 50% and Full Economy being 100%. Flying with Business Class allows you to earn 125% of the actual miles flown. Lastly, flying with First Class allows you to earn 150% of the actual miles flown. However, the flyers would have to be an Asia Miles member (which is free to become a member – Green Tier) in order to earn these miles.
Qantas
Qantas has their own customer loyalty program which is the called the Qantas Frequent Flyer. Qantas is also a partner of the oneworld alliance and Asia Miles similarly to Cathay Pacific.
There are a total of 4 different tiers in the Frequent Flyer Privilege, Bronze, Silver, Gold and Platinum. In order to gain points, the flyer needs to travel with Qantas Airways. The miles calculated are different when the flyer travels in different class like Discount Economy, Full Economy, Business and First Class. For example, the flyer gained 100% points traveling in the Full Economy class but only 50% of points gained traveling in discount economy class whereas for the Business and First class, the points gained are 200% and 300% respectively. (For example, if the flyer flies 9601- 15000miles, he would get a total of 60 points for discount economy, 120 for full economy and so on.)
Bronze is the most basic level in the Frequent Flyer Privilege program. Being a Bronze member, the customer has almost no benefit as bronze is just only the entry level for the program. When the flyer has reached a minimum level of 350 points with Qantas Airways, the flyer will be qualified to attain the Silver level. Being a Silver, Gold or Platinum status member lasts for one year, from the time the flyer qualifies to be that tier.
The benefits for a silver member include 25% point’s bonus (For example, if the flyer is to fly 3749 miles and he will have a 25% status bonus of 937 points and a total of 4686 one way), priority check-in, priority waitlist, baggage allowance, preferred seating, priority telephone reservation service and lastly membership luggage tag. Being a Silver member, the flyer will automatically gain a Ruby status in the oneworld alliance airline flights. It will entitle the flyer to have priority check-in and preferred seating. Since the Silver, Gold and Platinum status have one year expiry they need to obtain a certain amount of points yearly to retain their status. In order to retain the Silver level, flyer is required to gain 300 points, which is 50 points less than qualifying. Lastly, when the flyer attains 7000 points, he/she will be able to retain the Silver level for life.
As for the Gold membership, flyer needs to attain at least 700 points. The privileges are almost the same as Silver membership except that it also includes the increase in bonus point’s rate of 50%, priority baggage and on Departure upgrades within Qantas Club lounges. Similarly, on oneworld alliance airline transactions, the status will change from then become Sapphire, which is the equivalent of the Gold membership. This equivalence is very similar to Cathay Pacific’s frequent flyer program tiers, only with different benefits. This tier will entitle the flyer to have more benefits like preferred boarding and access to oneworld alliance airline lounge (Business). In order to retain the Gold level for another year, flyer is required to obtain 600 points that year, which is 100 points less than qualifying. If the flyer attains 14,000 points, he/she will be able to retain the Gold level for life.
Lastly, for the Platinum membership
level which is the highest level, flyer needs to attain a minimum of 1,400
points in order to qualify for it. The benefits that a Platinum member has are
the most compared to other levels. This includes, 100% point’s bonus,
complimentary gold membership for flyer’s partner, priority check-in, priority
waitlist, more baggage allowance, priority baggage, preferred seating, on
departure upgrades within Qantas Club lounges, guaranteed Economy Class seat
purchase, priority telephone reservation service and membership luggage tags.
Upon attaining Platinum level, flyer’s status in oneworld alliance airline
flights will change from Sapphire to Emerald, the highest tier of the oneworld
alliance membership. The benefits are the same except that flyers have access
to oneworld alliance airline lounge (Business/First). As with the other
membership tiers, the Platinum flyer is required to attain 1,200 points to
retain the Platinum level.
Overall Findings
From the analysis that we made, we will compare the loyalty program of each airlines.
Although Singapore Airlines are part of the world’s biggest airline alliance, the Star Alliance, to be a member of their loyalty program requires the most miles to be flown. If a flyer wants to be the highest ranked member of all the airlines and flying with the First Class, Qantas’s requirement is the least as they only need 60,000 miles to be the Platinum member, as for Cathay Pacific, one has to fly 120,000 miles to be a Diamond member and Singapore airlines requires the flyer to fly at least 500,000 miles to be a Solitaire PPS Club members.
Singapore Airlines is a partner to only Star Alliance but Qantas and Cathay Pacific is a partner to both oneworld alliance and Asia Miles, providing benefits, but not as many as Qantas and Cathay do. The lifestyle benefits offered by Asia Miles alone are astounding. The ways to collect points as well as redeem them seem to be on a never ending list, as everything from car rental to dining, shopping, using credit cards, staying at hotels, buying insurance and a lot more. This way, Qantas and Cathay Pacific provides considerably more lifestyle and service benefits than SIA because of the partnership with Asia Miles.
Therefore,
from our findings, being a SIA member are not as good as being a Qantas member
and Cathay Pacific member. Now that its up to Qantas and Cathay Pacific, they
both are in the oneworld alliance and also the Asia Miles. However, to be a
Ruby, Sapphire or Emerald member of oneworld
Thus,
it means benig a member of Qantas I much better than both the other airlines.
They require the flyer to fly lesser miles to be a member, it provides on air
benefits and also lifestyle and service benefits to all their members.
Limitations of the
project
The first limitation we suffered from was insufficient time to do the project as there was another ongoing project. We had to juggle the two projects, alas, we completed our major project. Another limitation was there was a shortage of information for the loyalty programs of the 3 airlines as they did not make it clear how a flyer can be a member of their airline on their websites. Therefore, we had to make trips to the various customer service centres of these respective airlines to enquire on these detail of their customer loyalty program.
As we are all students, the staffs there did not really show much enthusiasm as they obviously thought we would not be their potential customers. All they do is briefly tell us about the program and give us some pamphlets about the program. As the result, we have to read every single detail given from the pamphlet, analyze what the staffs told us and finding as much information as possible though the internet to understand their customer loyalty program.
After analyzing all the customer loyalty program of the airlines, we met up with another problem. We could not go on to do our survey regarding the loyalty program of the airlines around the sites of the customer service centre as we were not granted permission by the airlines.
This posed a major problem as we were not speaking from experience and do not have a great understanding as to which airlines have the best loyalty program from the view of the airlines’ customers. Therefore, we had to determine which airline has the best customer loyalty program from our own perception which may not be very accurate compared to how the ‘real’ customers view it.
The last limitation is that we are not frequent flyers ourselves; we do not know which benefits really benefit the flyer more and which of it does not. All we can do is find out which airlines has the most benefits and has the least requirement to be a member, and in the end, use that to determine the airline that has the best loyalty program.
Conclusion
With the companies background information and the benefits of being a member of the frequent flyer program of the three airlines; Singapore Airlines, Qantas Airlines and Cathay Pacific, we can conclude that Qantas is more beneficial than the other two compared airlines. Our firm compared the policy of customer loyalty program of the 3 airlines and the benefits given to their members as they earned points. Analysis was done to determine which airline provides the best to its members and is placed in the findings & analysis section.
Qantas is determined the winner among the frequent flyer program of the three airlines because they require the flyer to fly lesser miles to be a member, it provides on air benefits and also lifestyle and service benefits to all their members. In addition, members of Qantas can gain points easily to upgrade their membership position even though they travel lesser miles compared to other airlines which requires them to travel longer distance. At the Silver level of 350 points, the flyer can start enjoying special privileges provided by the airline.
Recommendations
For SIA, the frequent flyer program that they provide to the customer is fairly good to the extent that it is able to attract the customers in traveling more with SIA. However, SIA could be able to improve on their frequent flyer program by revamping their calculation of the credited miles system as the credited miles are the same regardless of whether the customer is traveling in economy or first class. People who travel in first class definitely pay more than those in economy class; therefore the credited miles in first class should be counted as more credited miles than those traveled in economy class. It can be done by giving 150% of the actual miles traveled in first class cabin in order to make it fairer to first class travelers. The credited miles that are required to become the highest level in the frequent flyer program are 500,000 miles which is much more than Cathay Pacific and Qantas. Thus, it is recommended to reduce the required miles so as to compete effectively with other frequent flyer program of other airlines.
As for Cathay Pacific, the overall benefits provided are quite good however it can be improved by adding more benefits to the list such as guaranteed Economy Class seat purchase and priority telephone reservation service. The more benefits they possess, the more people will be attracted to the program, which in turn is the source solely responsible for the success of this program. On top of that, Cathay Pacific may consider lowering the difference in the miles required for each level. Base on what we know, the miles required for each level are twice as much as the previous level.
From
what we have analyzed, Qantas has the best frequent flyer program. The benefits
provided are slightly more than Cathay Pacific and SIA, and the requirements
are much lesser than Cathay Pacific and SIA leaving it with few areas to
improve on. The only area that needs to be improved is on the joining fee of
the frequent flyer program. Australian and
Appendix
Proposed Questionnaire for Customer Satisfaction Survey
Hi! I am ( ) from Nanyang Polytechnic. We are currently working on a survey to find out about the airline customers’ perception on the Frequent Flyer Program of the airline companies.
1) Are you a member of any frequent flyer program?
Yes No
(If yes, go to No. 2, If No, just say, Thank You Very Much)
2) Can you tell me the airline(s) which you are a frequent flyer member of?
3) How long have you been traveling with this/these airline?
___________________________________
4) Which frequent flyer program(s) are you currently a member of?
___________________________________
5) Do you think it is easy to become a member?
Yes No
6) Do you think it is worth the money to become this/these airline member?
Yes No
7) Which of the privileges do you like most from your membership(s)?
___________________________________
8) Have you been enjoying the benefits of the membership(s)?
i) Very Much
ii) Satisfactory
iii) Not Delighted
iv) Disappointed
9) Are there any particular areas of this/these membership(s) you find unattractive or inefficient?
___________________________________
10) What is the overall satisfaction level of the membership(s) you’re enjoying now?
i) Attractive & Good
ii) Good, room for improvement
iii) Requires major revamping of benefits
iv) Plain Disappointment
If option iii) or iv) chosen, may I know the reason:
_________________________________________
11) Would you recommend another flyer to become a frequent flyer member of your respectively airline(s) if he/she fly enough to enjoy the benefits?
Yes No
If No, may I know the reasons?
___________________________________________________