Lower cost carriers should embrace loyalty, says Collinson Lattitude

Collinson Latitude, a global provider of incremental revenue and membership products, is arguing today, on the eve of the Mega Event 2011 travel industry summit, that loyalty programmes are fully compatible with the low-cost carrier (LCC) business model, and that loyalty is a vital part of differentiation for the coming generation of LCCs.

Speaking at a pre-conference expert panel session in Miami, Collinson Latitude director Janet Titterton said: “There are some people who believe Ryanair is showing the way ahead for low-cost carriers by not offering a loyalty programme. However, several factors make Ryanair an exceptional case and other low-cost carriers, including new entrants, need to incorporate loyalty strategies to ensure their profitable growth.

“Ryanair operates the purest form of the low-cost carrier strategy, devoted to delivering the lowest possible seat price. The airline then offers multiple additional ancillary revenue products to create a range of profitable add-ons. In this instance, a loyalty programme could conflict with Ryanair’s fundamental lowest-cost strategy, which is clearly extremely successful.

“However, not all LCCs are built on the Ryanair blueprint, which brings variety the market welcomes. Some airlines, such as easyJet, are successfully offering services that straddle the divide between low-cost and legacy carrier, such as bundled services for business travellers. Other airlines have inherited fleets or operational structures that impact their seat pricing strategies. These airlines, for whom rock-bottom pricing may not be an objective, must develop loyalty strategies to build lasting, mutually beneficial customer relationships.

“The really exciting opportunity for LCCs is to offer loyalty and ancillary revenue programmes that deliver relevant benefits to passengers in different aspects of their lives. While some LCCs offer discounts on their own fares, airlines should expand their offering to include non-travel ancillary opportunities. By analysing passenger data to deepen customer insights, LCCs can offer benefits that are relevant to and valued by the individual, whether through music, financial services or leisure.”