Cathay, Singapore battle for frequent flyers

1698
September 28, 2016

They are two Asian airline heavyweights — fierce competitors who are both roughly the same size, members of duelling alliances and with reputations for excellence.

But Singapore Airlines and Cathay Pacific are also competing for the  hearts and minds of customers with clearly differentiated frequent flyer programs.

For now, Singapore Airlines KrisFlyer frequent flyer is the bigger program with more than three million members drawn to the scheme by the airline's almost timeless Singapore Girl style and standard of service.

Cathay Pacific's Marco Polo frequent flyer program has more than a million members, but, powered by the China travel boom, that's sure to snowball as Cathay enjoys annual passenger growth of almost 6 per cent, compared with Singapore Airlines' more subdued 1.6 percent.

Cathay relaunched Marco Polo earlier this year with a range of revisions in the points-earning system. Many frequent flyer "relaunches" around the world in the past decade have been about reining in airline liabilities and devaluing points – at least for the less valuable once-a-year flyers.

But the verdict on the Marco Polo changes have been generally favourable. "It could have been worse" is a common sentiment online.

"Marco Polo Club has been refreshed from time to time over the course of the last 50 years and we believe there have been significant changes to the way our members travel," says Julian Lyden, Cathay Pacific's general manager marketing, loyalty programs and customer relationship management.

"The club must adapt to enhance the overall membership experience and continue to help members travel well."

Lyden says the changes implemented in April affect three key areas: a new point-based system to provide a "more balanced" calculation; retention of "all popular benefits" of the club; and the addition of a new range of mid-tier benefits and family-friendly rewards.

"This is a more balanced approach where members will accumulate points based on a combination of the cabin they travel in, the fare class and the distance travelled," Lyden says.

 "Overall the reaction from members has been quite balanced. Most of them have taken a pragmatic view and seem to understand the rationale behind the changes. I’m really pleased about that because the changes were years in the making and we based them on huge amounts of customer feedback."

Lyden says that, during the first year of the revamped system, the airline is taking steps to "help smooth out the transition for members". 

"In some cases, we have taken other factors such as tenure and special circumstances into consideration," he says.  "We have also allocated six months between announcement of the changes to actual implementation to allow sufficient time for members to learn and adapt to the new programme. 

Lyden's first batch of feedback suggests the changes have been well received as they have not caused any drop off in membership. "With the adaptive transition approach, membership at the elite tiers have been relatively stable since April," he says.

 The previous system was developed at a time when Cathay Pacific was a smaller airline flying to fewer destinations. Now that Cathay flies to more locations with more cabin products, says Lyden, "the old calculation – based on sectors and mileage – was no longer reflective of what we offer to our passengers".
 
"At the same time, we wanted to respond to feedback from members, so we preserved all of the popular club benefits, added a new range of mid-tier benefits, and also included more discounted fare types to be eligible for earning," he says.
 
"Lastly, providing a more flexible and family-friendly experience was a key principle to the changes, with mid-tier benefits an integral part of that."

But what can you get from the Marco Polo Club that you can't get in  competing frequent flyer programs?

"In terms of the program benefits," says Lyden, "silver members have unlimited lounge access, which is a very rare benefit in other airline programs. 

"Our mid-tier benefits are a unique to the club and are awarded to members who have surpassed renewal thresholds but have yet to reach the next membership tier. 
 
"We pride ourselves on continually investing in and improving our products.  We have fantastic new lounges around the network, not just in our home base in Hong Kong, but also in Bangkok, Manila, Taipei, Tokyo, Vancouver, and soon in London Heathrow."

By contrast, nothing major has changed recently in Singapore Airlines acclaimed KrisFlyer frequent flyer program. The membership of three million flyers around the world attests to its success.

Very occasionally, you may hear a grumble online about the difficulty in redeeming award flights – the same as you'll hear in other successful programs – but complaints are rare.

"Over the past two years we have introduced a number of new ways for our members to earn and redeem their KrisFlyer miles," says Singapore Airlines Vice-President Loyalty Marketing JoAnn Tan.

"This includes using a mix of cash and miles to pay for SQ/MI (Singapore Airlines and its subsidiary SilkAir) tickets on singaporeair.com, using miles to pay for preferred seats in SQ economy class and most recently to pay for merchandise purchased at Krisshop.com," Tan says.

"In addition to Singapore Airlines' KrisFlyer program, SIA also has a recognition program for customers who travel frequently in premium classes, known as Singapore Airlines PPS Club. Formed even before the KrisFlyer program, the PPS Club continues to accord frequent travellers in premium cabins with increased benefits, recognition and personalised service."
 
Like Cathay Pacific, Singapore Airlines knows that the quality of airport lounges is crucial as the beginning of the frequent flyer's experience.

"We have invested heavily over the past few years to upgrade our SilverKris airport lounges worldwide with our new 'home away from home' design concept, which is modelled after elements of a home, following extensive research that included focus groups with customers," Tan says.

"First introduced in Sydney in 2013, our new lounge concept features personal spaces tailored for different needs, ranging from a living room, kitchen and dining room to productivity pods where customers can work in privacy and comfort before their flight.

"Our new lounge concept debuted in Sydney and has been introduced in London, Hong Kong, Manila and Brisbane. More of our lounges will be progressively upgraded in the coming years."