Air France and KLM mortgage Flying Blue program for 1.5bn : that's how much a loyalty program is worth
Here at TFC we are sick of loyalty programs and points, one of the questions we are most often asked [...]
KLM
Air France
SkyTeam
Here at TFC we are sick of loyalty programs. and points, one of the questions we are most often asked by those who know little about this world is "but how do companies make money if they give away points?"
In this article:
Today I take the cue from the news reported by several sources to show how, even in Europe, loyalty programs can be a "golden goose" for airlines.
Flying Blue mortgaged to finance growth of Air France and KLM
Air France-KLM is in talks with Apollo Global Management to raise funds to improve its balance sheet in a deal that would involve spinning off its loyalty plan into a new entity. The news emerged from an analysis of the just-released quarterly report. The news bounced around many specialized sites, such as. The Airline Observer.
Almost all airlines have outsourced the management of the loyalty program, but it remains the property of the carrier. Even ITA Airways' Volare, for example, is a separate entity from the carrier.
Did you get your flight cancelled, miss your connection, land late?
You could get up to 600€ compensation per person
Making it clear what size we are talking about is the value of program evaluation Flying Blue, which has more than half a million members in Italy, is on budget for more than $1.5billion. An incredible value when you consider that Lufthansa bought ITA Airways' 41% for 325 million euros.
Why make a spin off of the fidelity progrmma
There are many reasons for this, certainly by doing so the Franco-Dutch company will have an important cash injection to continue in its growth process, and possibly even shop around European companies, there is a lot of talk about TAP Portugal As a response also to the sale of ITA to Lufthansa.
In addition to making cash FB will be able to take advantage of a leaner structure and seek to increase its customer base and partnerships so as to increase program profitability.
In conclusion
We will see whether this change will also mean an "Americanization" of the program or simply a financial strategy, in any case for us FB members a news item to keep an eye on.
