The Importance of Frequent Flyer Programs: An In-depth Analysis

Abstract

This paper discusses the important roles of frequent flyer programs (FFPs) in the airline industry with an emphasis on FFPs as a tool for airline business development, a customer relationship management (CRM) tool, and an airline tool of highest return of investment among CRM initiatives. An FFP is a sort of loyalty program sponsored by an airline or a group of airlines that rewards regular passengers with extras and prizes to make flying with the airlines convenient. Thus, advantages and disadvantages of FFPs between airline businesses and passengers are critically discussed. The paper examined existing and recent literature reviews with some add-on case studies. Interestingly, FFPs can be both push and pull factors for airline competitiveness enhancement, analytically reviewed. All discussions presented has revealed that FFPs can be a forceful tool for creating airline competitiveness, depending on how the airline manage it professionally or not. It can be summed that if the airlines manage their FFPs effectively, they can retain their existing passengers and be able to keep the market share. Hence, the airline competitors cannot effortlessly enter to the selected market.