I suppose I’m just dreaming, but dormant Star Alliance could really differentiate itself with its own loyalty program and a transferable currency that would build serious brand engagement and loyalty. While unlikely to ever happen, there is great potential in creating an alliance-wide currency with fascinating arbitrage opportunities.
A Star Alliance Loyalty Program Could Be A Game Changer
If you ask me what the best overall Star Alliance loyalty program is, I’d have to say Air Canada Aeroplan, but that’s quite an incomplete answer. In many cases, it makes sense to credit travel to the airline you fly most, but I will focus on the redemption side for the purposes of this story.
Aeroplan may be the best overall, but some redemptions make more sense on Avianca LifeMiles, like business class travel from North America to Asia. Some redemptions make more sense on United MileagePlus, like economy class from North America to Europe. If you’re looking for the most premium cabin space on Lufthansa Group carriers, Miles & More makes the most sense. If you want to fly in Singapore Suites, you will need to redeem via KrisFlyer. One of my favorite redemptions is for Lufthansa First Class and that happens to be a redemption sweet spot with Asiana Club Miles.
Bottom line: there are sweet spots across the Star Alliance loyalty network. Already, flexible points currencies from American Express, Capital One, Chase, and Citi help savvy consumers maximize redemptions, but imagine if Star Alliance points could be earned in a general account, then transferred from account to account.
Would that not encourage you to shift spending to a Star Alliance credit card that earned transferable points? It certainly would for me. The technology is there, or not far off, but the question is can the disparate group of member airlines come to some sort of agreement in which this could be feasible?
Star Alliance has explored its own loyalty program in the past with redemption capabilities, but that never came to fruition. Sticking to the loyalty program of member carriers makes more sense to me because it promotes program engagement and encourages loyalty across the alliance. In other words, this is exactly the sort of thing Star Alliance should be doing as a marketing company to promote its members.
New Star Alliance Credit Card In Australia
The backdrop for this speculation is a new Star Alliance-issued credit card in Australia by HSBC bank set to launch by the end of the year. Australia no longer has a Star Alliance carrier (not since the demise of Ansett Australia in 2002), but many Star members service Australia. Thus, it marks a great test environment for a new Star Alliance credit card.
The card has a A$450 annual fee, waived for the first year, and offers Star Alliance Gold status in a loyalty program of your choice when you spend A$4,000 the first year (and A$60,000 in subsequent years). Those programs include:
- Air Canada
- Air New Zealand
- EVA Air
- Singapore Airlines
- South African Airways
- Thai Airways
- United Airlines
The card itself is not all that lucrative, since you will only earn one Star Alliance point per dollar spent for the first A$3,000 of spending per billing cycle, and only 0.5 Star Alliance points per AUD spent after.
You can designate which program you want your points transferred to and at the end of each billing cycle the points will be transferred to that program at a ratio of 1,000 Star Alliance points to 800 points in the program of your choice (with the exception of Air New Zealand, which has a purely revenue-based frequent flyer program).
Even so, what a great concept. There’s such potential here to offer a valuable product, which is probably why United Airlines, for example, would veto it in the United States.
But that won’t stop me from dreaming about a new transferable currency…
CONCLUSION
If Star Alliance were to expand on what it is doing in Australia and actually offer a parallel currency to its members that could be transferred to its members, the arbitrage opportunities would be lucrative and the program, I suspect, would encourage a much deeper level of engagement and fiercer loyalty to Star Alliance. It is for those very reasons we likely will not see such a program ever expand to the USA, Canada, Germany, or other countries with a dominant Star Alliance carrier, but even the credit card is truly an exciting innovation from the original airline alliance. There’s just so much potential…
One can dream. But the idea that you can get all of these carriers to agree on across the board redemption rates and getting carriers like Lufthansa to agree to release premium seats earlier to everyone outside their own program is pretty unrealistic. Nice thought though and yes, I think it would create a surge of loyalty in the U.S. towards United. But in markets like Germany, Switzerland and Austria (as an example) there is little to gain for LH Group…they control so much of the market there anyway…so it begs the question of what’s to gain for them?
Given that the airlines apparently make more money from selling miles to credit card companies than they do from actually operating aircraft, why would they even be interested in this venture? I’m confused.
It is a myth that Airlines make most of there money off of credit cards. Just a crazy myth that’s been going around for years but completely untrue. Airlines make most of there money in ticket revenue otherwise there’d be no purpose being an Airline.
Again, this kind of thing only really works in country without an alliance carrier (like SkyTeam in New Zealand), there’s no way in hell DL, UA, or AA, would allow an alliance agnostic card in the US. They would have to stop devaluing their worthless points.
If this happened, arbitrage opportunities would dry up, so I hope it doesn’t happen.
Why is Star Alliance dormant?
I agree with previous posters. If this were to be rolled out globally, and particularly in North America, it would end up screwing anyone who collects miles from flying. We already have to contend with Chase and Amex customers gobbling up award availability on anything vaguely touching the Western hemisphere (e.g. Copa seats on the PTY-EZE route are virtually unobtainable using *A FFP miles because CM have an arrangement allowing UA flyers to purchase them for a ridiculous amount of miles), this would be the kiss of death for all remaining sweet spots.
The UK has similarities with Australia in that it’s served by a bunch of Star carriers, none of whom have a massive market share. As a UK resident, I would probably take advantage of a *A credit card if it’s offered in that market, but I would much prefer the majority of UK points collectors to stick to the lame Avios scheme instead of competing against me for redemptions.
Star alliance needs to find a way to let its members redeem miles earned on one across other airlines, for tickets and upgrades across their network, recently Singapore declined to consider an upgrade using miles and more, it doesn’t give a feel of one umbrella!!
There is a card that comes close to your dream card, which is Chase Sapphire Reserve. There are several star alliance airlines that you can transfer miles, but you can also buy tickets with your points, which sometimes is cheaper than transferring miles.
It’s true – Chase is probably the best we can hope for right now.