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Airline frequent flyer programs: equity and attractiveness

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  • Suzuki, Yoshinori

Abstract

The scheme of a frequent flyer program describes how travelers accumulate and redeem their frequent flyer miles in the program, and determines the amount of benefits travelers can receive from the program (e.g., number of free trips). In the US, there are three basic types of frequent flyer program schemes (standard, discount, and non-mileage schemes). This paper investigates, by type of traveler, which scheme is most (or least) attractive to customers, so that each airline can select the most appropriate (or attractive) scheme for its target audience. The study results imply that the "non-mileage" scheme may be most attractive to travelers with low average trip miles (flown miles per trip), while the "standard" scheme may be most attractive to travelers with high average trip miles.

Suggested Citation

  • Suzuki, Yoshinori, 2003. "Airline frequent flyer programs: equity and attractiveness," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 39(4), pages 289-304, July.
    • Handle: RePEc:eee:transe:v:39:y:2003:i:4:p:289-304
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    Citations

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    Cited by:

    1. Edward Wang & Lily Chen & I. Chen, 2015. "The antecedents and influences of airline loyalty programs: the moderating role of involvement," Service Business, Springer;Pan-Pacific Business Association, vol. 9(2), pages 257-280, June.
    2. Agostini, Claudio A. & Inostroza, Diego & Willington, Manuel, 2015. "Price effects of airlines frequent flyer programs: The case of the dominant firm in Chile," Transportation Research Part A: Policy and Practice, Elsevier, vol. 78(C), pages 283-297.
    3. Philip G. Gayle, 2007. "Airline Code-Share Alliances and Their Competitive Effects," Journal of Law and Economics, University of Chicago Press, vol. 50(4), pages 781-819.
    4. Philip G. Gayle, 2008. "An Empirical Analysis of the Competitive Effects of the Delta/Continental/Northwest Code-Share Alliance," Journal of Law and Economics, University of Chicago Press, vol. 51(4), pages 743-766, November.
    5. Aaron Luntala Nsakanda & Moustapha Diaby & Yuheng Cao, 2011. "An aggregate inventory-based model for predicting redemption and liability in loyalty reward programs industry," Information Systems Frontiers, Springer, vol. 13(5), pages 707-719, November.

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