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Business

 

Frequent flyer schemes revamped to drive profits in tough times for airlines

Published on Aug 11, 2014 5:14 PM
 
Delta Airlines planes sit at Terminal 4 at John F. Kennedy Airport July 22, 2014, in New York City. Beset by low air fares and relentless competition, airlines around the world are waking up to the value of their frequent flyer programmes (FFP) and realising they can boost profits as well as brand profile. -- PHOTO: AFP

BERLIN (REUTERS) - Beset by low air fares and relentless competition, airlines around the world are waking up to the value of their frequent flyer programmes (FFP) and realising they can boost profits as well as brand profile.

A multitude of global carriers - preserved by complex cross-border ownership rules that curb dealmaking - means that simply selling tickets is no longer lucrative. Industry body IATA predicts a 3.5 per cent drop in fares this year and for airlines' net profit margins to reach just 2.4 per cent.

As airlines dig around for new ways to make money, many of them are finding it buried deep in their marketing departments.

Dating back to American Airlines' launch of AAdvantage in 1981, FFPs were originally used to encourage a customer to spend their money with just one carrier by offering free flights as rewards once enough miles had been collected.

 
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