As both British Airways and Lufthansa transform their frequent flyer programs to reward big spenders while gaslighting their most loyal flyers, Air France-KLM can go in a very different direction with its Flying Blue loyalty program. But can it resist the urge to mimic its fiercest competitors?
Air France-KLM Flying Blue Stands At The Crossroads Of Loyalty – Will It Make The Same Mistakes As British Airways And Lufthansa?
I have written fondly in the past about Benjamin Lipsey, the Senior Vice President for Customer Loyalty at Air France-KLM. He’s a fellow Flyertalker and av-geek…he gets it. He understands the “irrationality” that drives loyalty and seems to understand the importance of having a loyal program, not a program that simply recognizes the biggest spenders.
He recently sat down with CNN (thanks to One Mile At A Time for sharing this story) and explained the “irrationality” of loyalty programs.
“A rational consumer would take the cheapest flight at the best time. From a psychology perspective, [loyalty programs] are about trying to stimulate irrational behavior.”
But context is important. Why wouldn’t a customer take the cheapest flight at the best time? Well, if she could score an upgrade or enjoy lounge access or checked baggage or priority boarding, or all of the above by paying a little more or connecting in Frankfurt instead of Paris or Houston instead of Dallas, is it really that irrational?
The problem for us “gamers” (I don’t like that label, but I will begrudingly accept it) is that planes are running full, airlines have smartly montetized premium cabin fares, and there simply isn’t the bandwith for such rewarding programs any longer…they are unecessary when people are buying premium cabins tickets without any loyatly status, negating the complimentary ugprades that used to be commonplace but lately are more like a needle in a haystack.
And yet concentrating all flying into one program may still make sense if you do enough of it. Per Lipsey:
“It’s important to let customers feel they can find gamification opportunities. If you do London-Paris-New York, or London-Amsterdam-Tokyo, by connecting you achieve status more easily. Me personally, I’m happy with that.”
Gamification is not defined, but to me it most clearly means lounge access and upgrades, the sort of perks that really transform a painful flying experience into a nice one. That may not be possible even if you are loyal to one carrier or alliance, but it won’t be possible if you are not.
“I think a lot of companies forget loyalty is a two-way street. It’s not just a transactional relationship; trust is really crucial… When the program makes a change, it reflects on the airline and vice versa.”
Yes, loyalty is a two-way street.
And what I hope for Flying Blue is that it will always be honest and transparent with customers. Let Ben Smith, the former Air Canada CEO who now runs Air France and certainly understands loyalty, and Lipsey avoid the critical mistakes made by British Airways and Lufthansa Miles & More. It can do so by:
- providing advance notice of devaluations to give loyalty members time to lock in at old rates
- not gaslighting consumers by trying to cast negative changes as positive
- offering aspirational redemptions that make earning points more lucrative than spending on a cash-back credit card
Honesty goes a long way. Transparency goes a long way.
If Flying Blue can embrace honesty and transparency while realizing that loyalty and big spending may overlap but are not the same thing, it can continue to offer a leading loyalty program…and make more even more money by attracting customers at the margin who will go out of their way to fly Air France-KLM or use a co-branded credit card because they actually get something they value in return.
The temptation to follow the crowd…like a lemming…will be intense. But hopefully Flying Blue can resist.
image: Air France
I credit every DELTA flight to Flying Blue and have been a Flying Blue Gold for a long while now.
I get a fair amount of value out of the program compared to “SkyBolivars” (SkyPesos were more valuable so I downgraded them to Bolivars) that I don’t care I am missing out on Medallion benefits as with DELTA if I want First Class, I buy First Class, so upgrades are meaningless to me.
Flying Blue is the only program I care about and the only reason I fly DELTA mainly, Flying Blue oddly keeps me loyal to DELTA.
Internationally, I will look at AF/KLM first, but as my wife is Swiss, many times we invariably end up on SWISS or UNITED to get to ZRH to see her side of the family.
I didn’t fly a whole lot of Delta till I became interested in Flying Blue. Even before the changes at BA/IB I had moved most of my spend over to Flying Blue. Like you I fly Star Alliance on occasion but I like what KLM/AF does in terms of qualification. Since I buy premium fares with AF/KLM I think they are making plenty of money from me both on spend and even when it comes to redemptions I don’t always care about the least expensive flight.
I’d also like to point out that Flying Blue has been revenue based in terms of mileage earning longer than most airlines. So not sure what they want to optimize. They have also reduced the amount of XP you can carry over each year so that was a negative (but acceptable) change they made not too long ago.
If I were AF/KLM I would take my time to spend more time incentivizing people to go for Ultimate rather than messing with what is a program that is relatively easy to understand.
For example I stopped being loyal to United when I found there program way too complicated to understand and senselessly expensive. If a program doesn’t make sense then I stop caring. Simple as that. And this is where Flying Blue have done a good job. Easy enough to understand and rewarding enough to care about flying with them and not another airline.
The problem with flying Delta domestically and crediting to Flying Blue is irregular operations. When something goes wrong, the Delta diamond status is going to make a difference in terms of rebooking, hotel accomodations, reimbursements — you name it. Especially since the USA doesn’t have an EU 261 kind of regulation. Delta treats me very well in these situations.
You are 100% right…it’s the other side of the sword.
“…offering aspirational redemptions that make earning points more lucrative than spending on a cash-back credi card.”
This! Delta has already passed the point where you’re better off spending on a cash-back card and spending the dividend on travel. United is on its way. American found a way to reward spend on its co-branded cards that other cards can’t offer—elite status—and it named the reward … “LOYALTY Points!”
Flying Blue miles have been seriously devalued over the past couple of years. I’ve mentioned before that I got a business class ticket for a friend to fly SCL-CDG-ATH for just 50k and they’ve increased that [minimum] figure twice in less than 18 months- it’s 85k now, a full 70% increase. You can’t justify holding any kind of balance in these circumstances- the programme is more attractive to US credit card holders than European frequent flyers. Skyteam status is pretty handy, particularly given that you get free checked bags with a silver card, but *A works well for me most of the time so I can’t be bothered to chase backup status.
Doesn’t that depend on when you book? Have the minimum thresholds really been raised that much?
I’m traveling on a 50K J ticket later this year from Central Europe to LAX….booked it a few months ago.
Different regions have been affected differently. 50k used to be possible, if not easy to find, for South America, now the minimum has moved to 85k. Same with Africa- Dakar’s barely more than four hours away from LIS but they want 85k for the privilege of spending a day backtracking through CDG for anyone silly or spoiled enough to refrain from purchasing a cheap ticket on TAP. I seem to recall reading on Flyertalk that some partner devaluations have been even worse than that!
North America has only increased once, from 50k to 60k, as they’re actively targeting points transfers and presumably want to remain competitive in that space.
I’ll keep slowly collecting FB miles through my accor stays and might credit some random flights there in case I need one of their non-ST partners, In December I managed to nab a seat on GOL from AEP to Florianopolis for 13k when the ticket was $300k. But anything more than that is out of the question, even VS miles seem to have more value nowadays.
$300, not $300k, I wasn’t chartering the entire 738!
Well said. FB is saying the right things for now but let’s see about their actions. How’s that big increase in business class saver space that was promised to go with the price hike going? If FB can’t do something fairly simple that they’ve already promised then things look bleak for them to do the right thing down the road.
Just fyi that this year, on Economy FB awards have been equal to, or less than SkyMiles value TATL, when you factor in their much higher ($300-350USD) taxes, and the fact that I have to reposition to ATL or BOS or any AF/KL US destination. 1-2 years ago I can do all that and still come up way ahead on FB points versus SkyMiles
And as far as J goes, it’s far less available this year than in the previous 2 years.
FB has devalued a lot, even though there hasn’t been a big announcement on it.
Sure, FB has devalued and I hate that there is no award chart. But I still find it far better than Delta for any route that touches the USA.
If you’re talking about J, sure.
But like I said, when flying TATL coach, SkyMiles has had better values for this spring. This is why it’s funny to see bloggers and FTers whine about SkyPesos but for most people, DL awards can be competitive.
Not if you need to book one-ways. And why are you carrying water for SkyMiles? Do you, Jan, like to fly in economy class?
Most leisure travelers don’t book one-ways, and as an unofficial travel consultant for my parents I’ve directed them to 22-25k + $200 round trip FB points to Europe several times in the past two years. This year will be the first time DL SkyMiles beats FB outright in value.
I tell you what, despite traveling in economy, my parents put value much more fun eating exotic foods in foreign lands than flying lie-flat to Seoul only to look for a Taco Bell, so some folks have different priorities in travel. I’m very much in that same camp as well (no care for fancy hotels), though I put more planning into flying J whenever I can.
I know lots of leisure travellers who buy one way tickets. If you’re unlikely to return to West Africa, Central Asia or wherever for many years, you’re going to want to hop around the region a bit. Incidentally, some of those routes offer lots of award availability yielding outstanding value as revenue tickets are expensive due to the lack of competition.
Also, isn’t the quote, “A rational consumer would take the cheapest flight at the best time. From a psychology perspective, [loyalty programs] are about trying to stimulate irrational behavior.” an tacit admission that there’s no difference in on-board product, something that AF used to try to provide?
That is a fair point. I need to try the new Air France 777 business suite soon…
BA actually offers some excellent business and PE copay awards with Iberia requiring few miles comparatively to choosing BA or AA on the same route,and Iberia has allowed free seat assignments as well.Iberia catering sweetens the deal even more.
BA has insanely high fees. IB is marginally better. US carriers are usually the best deal. My fees on Flying Blue redemptions are usually a third to a half less than redeeming on BA/IB. BA/IB gutted their frequent flyer program. They are worse than Delta or United when it comes to actually qualifying for status.