Airlines Seek To Customize Loyalty Promotions

Just as corporate travel departments are beginning to implement software that will better track travel patterns and spending habits, airlines too are considering systems that provide detailed traveler profiles and-for the first time-enable customized individual offerings.

These are the new weapons of choice in the battle for the managed traveler. While an improvement in the airlines' individual customer service is in keeping with one of the most important mandates of corporate travel management, travel managers also are wary about airlines strengthening their hold on customer loyalty.

Such relationships started with frequent flyer programs and most recently have moved to e-mail and Internet technologies, through which airlines can offer special deals for new booking methods in combination with mileage offerings. All of these programs create the possibility, if not the tendency, for a traveler to listen to the airline rather than his or her own company-particularly if it doesn't have a formal, well-communicated travel policy.

The new airline systems-such as Unisys' new Customer Loyalty System, which is in place at Ansett Australia and will soon be rolled out at Continental and other carriers-give airlines easily accessed information on the traveler. In addition to data on travel and spending patterns, personal information-should the traveler choose to provide it-can include hobbies, interests, and family and business relationships.

With this kind of information, airlines could, for example, analyze a passenger's recent flight experiences to find that the flights were delayed or canceled, and determine that because the traveler makes a certain contribution to profits, he deserves a special perk that he already has told the airline he likes. All that information can be made available to telephone and gate agents if the airline chooses, enabling on-the-fly decisions.

Airlines can create broad or narrow discount- or mileage-based promotions based on the market, flight or other customer criteria. These systems also help airlines integrate management of a number of loyalty programs, from frequent flyer to airport club memberships, but they're not just for loyalty programs-all customers can be tracked.

While Unisys executives emphasized that the loyalty system has not been developed so airlines can bend the rules of a corporate travel policy or pilfer each other's frequent flyers, no one denied that it can be used that way.

"That can certainly be done, but I don't think it's a good use of the airlines' time because it can be done back to them," said Cynthia Crowley, director of passenger solutions for Unisys. "This will help the airlines develop loyalty with their customers, so there isn't a need to steal."

"In the past, all the airlines did was keep track of the number of miles, never data like the city pairs," said Randy Petersen, editor of Inside Flyer. "They're starting to change that. Picture this: 'Last year, sir, you flew four times this month to Atlanta. Can we help you with the fare this year?' That kind of stuff only happens when you deal one-on-one with the airline."

In addition to database systems such as Unisys', industry experts believe the Internet will allow airlines to get to know their frequent flyers even better. "Airlines will soon know more than they ever dreamed of about their customers," said David Dingley, director of special communications projects for IBM. "Using data mining practices, they will come up with questions they never thought to ask, giving them detailed information on groups of passengers."

Lois McKeon, a product manager in EDS' air transport division, noted that airlines are regaining the power they had before the existence of CRSs, when carriers controlled all the data. "To a certain extent, we're going back to the airlines having the control-whether that means the intermediaries are taken away, I don't know," she said. "Corporate travel managers for a long time will play a big role, but I can see how they might feel uncomfortable with this."

The airlines' traditional one-on-one marketing mechanism-the frequent flyer program-already has posed a threat to compliance in many cases. A survey published recently in the Financial Times found that the proportion of travelers and corporate travel agents claiming that frequent flyer programs tempt employees to ignore company policy was up from 10 to 20 percent.

But according to a recent survey of 1,600 frequent travelers for The Corporate Traveler (BTN, Nov. 11, 1995), 95 percent of those whose companies have a travel policy said they follow its rules most of the time. Clearly, any company that really wants to can beat the frequent flyer temptation, but travelers at companies with softer policies-perhaps those that have little senior-level support for travel-will be tempted by the customized deals coming at them.

Meanwhile, airlines continue to add value to their frequent flyer programs. US Airways recently fitted its Dividend Miles Service Center with new technology that expedites the airline's responsiveness to frequent flyer calls for missing mileage credit, information gathering or response to promotions. The program, called ASTRO-Advanced Service Through ReOrganization-incorporates optical imaging of member mail and faxes, as well as promotional material the carrier sends out, so telephone agents have easy access to all communications between the airline and customer.

"It has reduced significantly the time it takes to service our customers," said Don Witte, senior director of marketing services for US Airways. The airline credits this system for much of its vast improvement in the Department of Transportation's consumer complaint figures.

Other frequent flyer changes are coming about on the international horizon. Partners American Airlines and Canadian Airlines International just made upgrades reciprocal for both programs, and American and British Airways essentially combined their frequent flyer programs. In addition, Northwest Airlines reportedly will soon provide its non-U.S. Gold Elite WorldPerks members the same benefits enjoyed by members in the United States.

All of these developments come in addition to some older trends that continue to accelerate as the airlines improve their profits, including holding out the best coach seats for top frequent flyers and adding new frequent flyer-related features every day to Websites and airport kiosks.