Frequent flyer programs premium and the role of airport dominance

This paper estimates a Frequent Flyer Programs (FFP) price premium -- higher fares associated with a larger proportion of travelers using FFP. The results show that FFP affect the entire price distribution, but the effect is larger on lower end fares. In addition, airport dominance increases the premium on less expensive fares but has no effect on the premium associated with the right tail of the price distribution.Frequent Flyer Programs; Pricing; Airlines; Panel Data

Does Price Matter? Price and Non-price Competition in the Airline Industry

This paper studies passengers' choice behavior in air travel. Products are defined as a unique combination of airline and flight itinerary while markets are defined as a directional round-trip air travel between an origin and a destination city. A structural econometric model is used to investigate the relative importance of price (airfare) and non-price product characteristics in explaining passengers' choice of these differentiated products. The results suggest that, on average, prices may not be as important as we think in explaining passengers' choice behavior among alternative products. Non-price characteristics which may include convenience of flight schedules, frequent flyer programs, the quality of in-flight service, among other things, seem to be much more important in explaining passengers' choice behavior. As such, the results have implications for the focus of antitrust policies in the airline industry when assessing the impact of mergers, alliances, or other business decisions of airlinesDiscrete Choice, Mixed Logit, Airlines, Hub and Spoke Network, Frequent Flyer Programs

The effect of frequent flyer programs on customer loyalty

Müşteri bağlılığı günümüzde firmaların rekabet avantajlarını korumasında ve kârlılıklarını arttırabilmelerinde önemli unsurlardan birisi haline gelmiştir. Müşteri bağlılığın yaratılmasında en çok kullanılan ve en etkili yöntemlerin başında bağlılık programları gelmektedir. Günümüzde birçok sektörde ve alanda birçok firma/işletme bağlılık programları geliştirmişlerdir. Bu araştırmanın amacı; havayolu firmalarının sadık müşteri yaratmak için kullandıkları sık uçan yolcu programı uygulamasının müşteri bağlılığı üzerinde etkili olup olmadığını ortaya koymaktır. Bu amaca yönelik olarak, Türkiye'de sık uçan yolcu programlarına üye toplam 530 kişiye anket uygulanmıştır. Anket dört bölümden oluşmaktadır. Anketin birinci bölümünü sık uçan yolcu programlarına üye kişilerin demografik (cinsiyet, yaş, eğitim durumu, meslek, aylık gelir) ve seyahat ve üyelik özellikleri (seyahat amacı, seyahat sayısı, üyelik süresi, üyelik kartı) oluşturmaktadır. Anketin ikinci bölümünde, sık uçan yolcu programları kapsamında sunulan ödül ve hizmetlerin önem düzeyini belirlemeye yönelik ifadeler yer almaktadır. Üçüncü bölümünde, müşteri bağlılığını ölçmek amacıyla sorulan 13 adet soru yer almaktadır. Dördüncü bölümü ise, sık uçan yolcu programlarının müşteri bağlılığı üzerindeki etkisini doğrudan ölçmeye yönelik sorulardan oluşmaktadır. Bu araştırmada sık uçan yolcu programlarına üye kişilerin, müşteri bağlılığı ve onun alt boyutları olan davranışsal bağlılık ve tutumsal bağlılık düzeyleri arasında anlamlı bir farklılık olup olmadığı, ilişkili ölçümler için t testi ve varyans analizi ile test edilmiştir. Diğer taraftan, üye kişilerin müşteri bağlılığı ve onun alt boyutları olan davranışsal bağlılık ve tutumsal bağlılık düzeylerinin bireysel özelliklerine, seyahat ve üyelik özelliklerine göre anlamlı bir farklılık gösterip göstermediği bağımsız örneklemler için t testi ve varyans analizi ile test edilmiştir. Ayrıca, sık uçan yolcu programlarının müşteri bağlılığı üzerindeki etkisi korelasyon ve basit doğrusal regresyon analizi ile belirlenmiştir. Araştırmada, sık uçan yolcu programlarına üye kişilerin, program kapsamında sunulan ödül ve hizmetlere oldukça önem verdiği görülmüştür. Üye kişilerin ödüllerden çok sunulan hizmetlere daha çok önem verdikleri ortaya çıkmıştır. Diğer taraftan üye kişilerin uçuş yaptıkları firmaya karşı olan müşteri bağlılık düzeylerinin orta düzeyde olduğu görülmüştür. Buna karşın üye kişilerin davranışsal bağlılıklarının tutumsal bağlılığa göre daha yüksek olduğu ortaya çıkmıştır. Bununla birlikte, müşteri bağlılığı ile sık uçan yolcu programları arasında ise r=0,446 düzeyinde pozitif yönlü orta düzeyde bir ilişki bulunmuştur. Ayrıca yapılan regresyon analizi sonucunda; sık uçan yolcu programlarının müşteri bağlılığını etkilediği ve davranışsal bağlılığı tutumsal bağlılığa göre daha fazla etkilediği ortaya çıkmıştır.At the present day, customer loyalty has become one of the fundamental components for the companies in maintaining their advantages and increasing their profitability. Loyalty programs lead the most frequently used and most effective methods that provide customer loyalty. Nowadays a great many firms/establishments in a wide selection of sectors and fields have developed loyalty programs. The aim of this study is to put forward whether the frequent flyer programs that are applied by airline firms to create loyal customer are effective on customer loyalty or not. In accordance with this aim a questionnaire is carried out with 530 people who are members of frequent flyer programs in Turkey. The questionnaire consists of four parts. In the first part of the questionnaire, there is information about demographic (sex, age, education status, occupation, monthly income), travel and membership characteristics (aim and number of travel, membership period and card) of the members of the frequent flyer program. The statements that aim to determine the importance level of the gifts and service that are presented within the frequent flyer programs take place in the second part of the questionnaire. With the aim of measuring the customer loyalty 13 questions appear in the third part. Lastly, in the fourth part consists of questions that are for directly measuring the effect of frequent flyer programs on customer loyalty. In this study, whether there is a significant difference between customer loyalty and its sub dimensions behavioral loyalty and attitudinal loyalty levels is tested via t test and variance analysis for the related measurements. On the other hand, whether the customer loyalty of the members and its sub dimensions behavioral loyalty and attitudinal loyalty levels differ significantly depending on their individual, travel and membership characteristics is tested via t test and variance analysis for independent samplings. Moreover, the effect of the frequent flyer programs on the customer loyalty is determined through correlation and simple linear regression analysis. In this study it is seen that members of the frequent flyer programs pay great importance to the gifts and service that are presented within this program. It is revealed that members pay more importance to the service presented rather than the gifts. On the other hand, the customer loyalty level of the members for the firm they fly with is medium. In spite of this fact, the behavioral loyalty of the members is seen to be higher than their attitudinal loyalty. In addition to this, a positive medium relation which is about r=0.446 is found between the customer loyalty and the frequent flyer programs. Furthermore as a result of the regression analysis, it is proved that the frequent flyer programs affect the customer loyalty and they influence the behavioral loyalty more than the attitudinal loyalty

A Conceptual Framework for Valuating Airline Frequent Flyer Program Miles

Frequent flyer programs of airlines have gradually evolved into a multi-billion dollar business over the years. Valuing frequent flyer program miles accurately and fairly has its practical implications both for airlines and members of frequent flyer programs. As a ground-breaking academic study dedicated to airline loyalty programs, this study aims to build a conceptual framework to guide the valuation of miles. Through comparing required miles for different award types with their equivalent cash prices, this study has successfully addressed the purchasing power of AAdvantage miles of American Airlines when they are used for award redemption. Not only can this study be used to assist frequent flyer program members to maximize the utility of their miles assets, it also has the potential of becoming the theoretical foundation to build an industry-wide benchmark for valuing miles. Findings of this study could be significant and meaningful to multiple stakeholders, including consumers, airlines and their business partners, investors, financial institutions and taxation departments

THE EFFECT OF FREQUENT FLYER PROGRAMS ON CONSUMER BEHAVIOR

Elektroniskā versija nesatur pielikumusBiežo lidojumu programmas (BLP) ir izveidotas kā populāri stimulēšanas plāni. Ņemot vērā pieaugošo izmaksu ietekmi uz aviācijas nozari, aizvien biežāk tiek apšaubīta BLP efektivitāte, lai iegūtu un noturētu aviokompāniju klientus. Šajā pētījumā novērtēti efektīvas BLP izstrādes noteicošie faktori, izmantojot jauktā modeļa pieeju, kas ietver tirgus analīzi, sistemātisku pārskatu, ekspertu intervijas un Vācijas Miles & More dalībnieku klientu aptauju (n = 502). BLP ietekmē visus klientu uzvedības ķēdes līmeņus. BLP elementi intensīvi mijiedarbojas: efektīva pakalpojumu, statusa un naudas balvu kombinācija maksimāli palielina ietekmi uz klientu; to kopīgi nosaka partneru tīkls, izpirkšanas iespējas, aviokompāniju drošība un kvalitāte. Lai uzrunātu šos klientus, aviokompānijām jāattīsta savas programmas un jāuztur BLP godīgums, nodrošinot pārredzamus un stabilus izpirkšanas nosacījumus un vispusīgu pakalpojumu paketi. Atslēgvārdi: biežo lidojumu programma, aviokompānija, klientu lojalitāte, klientu attiecību pārvaldība.Frequent flyer programs (FFP) have been established as popular incentive schemes. The effectiveness of FFP to gain and retain airline customers is increasingly questioned in the face of growing cost pressures in the aviation sector. This study evaluates determiners of effective FFP design in a mixed model approach, including market analysis, systematic review, expert interviews and a customer survey (n = 502) of Miles & More members in Germany. FFPs impact all levels of the customer behavior chain. FFP elements intensely interact: an effective combination of service, status and monetary awards maximizes customer impact; partner network, redemption options, airline safety and quality codetermine it. Airlines should develop their programs to appeal to these customers and maintain the perceived honesty of their FFP by transparent and steady redemption conditions and a comprehensive service package. Keywords: frequent flyer program, airline, customer loyalty, customer relationship management

Up in the Air Over Taxing Frequent Flyer Benefits: The American, Canadian, and Australian Experiences

Vessel segmentation is an important prerequisite for many medical applications. While automatic vessel segmentation is an active field of research, interaction and visualization techniques for semi-automatic solutions have gotten far less attention. Nevertheless, since automatic techniques do not generally achieve perfect results, interaction is necessary. Especially for tasks that require an in-detail inspection or analysis of the shape of vascular structures precise segmentations are essential. However, in many cases these can only be generated by incorporating expert knowledge. In this paper we propose a visual vessel segmentation system that allows the user to interactively generate vessel segmentations. Therefore, we employ multiple linked views which allow to assess different aspects of the segmentation and depict its different quality metrics. Based on these quality metrics, the user is guided, can assess the segmentation quality in detail and modify the segmentation accordingly. One common modification is the editing of branches, for which we propose a semi-automatic sketch-based interaction metaphor. Additionally, the user can also influence the shape of the vessel wall or the centerline through sketching. To assess the value of our system we discuss feedback from medical experts and have performed a thorough evaluation

The influence of frequent flyer programs on the loyalty of low-cost airlines customers

As companhias "low cost" revolucionaram o mercado aéreo. Os seus preços competitivos permitiram a milhões de passageiros viajar para destinos fora do seu alcance. No entanto, as companhias aéreas "low cost" sempre sofreram de pouca lealdade por parte dos seus consumidores. Dado que o preço é o principal fator na tomada de decisão, os consumidores mudam rapidamente entre companhias aéreas. Consequentemente, as companhias aéreas criaram programas de lealdade que visam inverter esta tendência. O nosso estudo visa estudar se de facto esta decisão estratégica feita por parte dos gestores das companhias aéreas é a correta e se ajuda a mitigar o risco de fraca lealdade nos passageiros de companhias aéreas "low cost". Começamos o nosso trabalho por estudar minuciosamente a literatura atual e investigando autores que explicam lealdade de marca, lealdade em companhias aéreas, lealdade em companhias "low cost" e programas de lealdade em companhias aéreas. Posteriormente, fizemos um questionário e analisamos os resultados em função os nossos objetivos. Em conclusão, verificámos que existe um ligeiro aumento de lealdade em passageiros que são parte de programas de lealdade de companhias "low cost". Finalmente, sugerimos que os gestores de companhias aéreas "low cost" repensem a sua estratégia e criem programas de lealdade mais atrativos para os passageiros.Low cost airlines have revolutionized the travel industry. Their competitive prices have allowed millions of passengers to travel to destinations that were far off their reach. Nevertheless, low-cost airlines have always suffered from low loyalty from their customers. Since price is the main driver of their purchase decision, customers switch quickly between airlines. As a response, airlines have created loyalty programs that aim to reverse this trend. Our research aims to study if in fact this strategic decision made by low-cost airline's managers was the correct one and if it helps to mitigate the risk of low loyalty of low-cost airline's customers. We started our research by deep diving on the current literature and study authors that explain brand loyalty, brand loyalty on airlines, brand loyalty on low-cost airlines, loyalty programs and loyalty programs on low-cost airlines. Furthermore, a survey was conducted where we analyzed the results according to our objectives. We concluded that there is a very low increase of loyalty for passengers that are part of frequent flier programs of low-cost airlines. As a result, we advise and urge low-cost airline's managers to re-think their strategic decision and to create loyalty programs that are more attractive

Frequent flyer programs premium and the role of airport dominance

This paper estimates a Frequent Flyer Programs (FFP) price premium -- higher fares associated with a larger proportion of travelers using FFP. The results show that FFP affect the entire price distribution, but the effect is larger on lower end fares. In addition, airport dominance increases the premium on less expensive fares but has no effect on the premium associated with the right tail of the price distribution

Retailer Choice and Loyalty Schemes - Evidence from Sweden

From economic theory, it is known that consumer loyalty schemes can have lock-in effects resulting in entry barriers and higher prices. This paper concerns consumer loyalty schemes where the main issue is to test the hypothesis that loyalty scheme membership affects the choice of food retailer. This choice is modeled as a random utility maximization problem estimated with maximum likelihood. Based on a data set covering 1,551 Swedish households, we find evidence supporting this hypothesis. Further, according to the results, store characteristics and geographical distance matter for the choice of retailer while household characteristics are not found to have a significant effect.Bonus card; Conditional logit; Consumer choice; Distance; Food retailer; Loyalty scheme