Do Customer Loyalty Programs Really Work in Airlines Business?—A Study on Air Berlin

Abstract

Programs to secure customer loyalty have been used by marketers for many years. However, how effective are these programs? More than 50% of marketers said that their loyalty budgets rise during the past two years, while only 10% saw a reduction in budget. This reflects the increase of loyalty programs attracting frequent buyers for everything from food to clothing to entertainment. The main aim of this paper is to identify what extends customer loyalty program work in customer retention, customer engagement, and revenue generation in airlines business taking example of Air Berlin. This paper adopts a single case study design. Relationship management and customer loyalty theory are the theoretical foundations used for evaluation of the aspects of loyalty program effectiveness. It is concluded that though Air Berlin has been successful so far to implement their customer loyalty programs, retaining the customer loyalty can only be possible by being competitive over the other players in the market because customers will look for alternatives on the basic services and that reduces the influence of the drivers that keeps the customers loyal to one single company.

Loyalty programs for the passenger transportation industry: a study of Zimbabwean Companies

“…Paramount to the success of the road passenger transportation business is enhancing the desire of passengers to continue patronising the same brand over a long-term period (Lovelock & Wirtz, 2007). Understanding that passenger preferences go beyond their behaviour towards a bus company becomes significant thereby allowing for the incorporation of likes, preferences and future requirements (Hossain et al, 2017). Most importantly is that research on all these factors in the past has focused on retail, air travel, hospitality industries and the identified sub-sector has very little work undertaken on it thereby providing a gap.…”

“…Do Loyalty Programs Really Work: Hossain et al 2017use their research to ascertain how well customer loyalty programs work in an airline business explicitly focusing on Air Berlin, the success of Air Berlin in passenger retention was highlighted as being premised on essential services such as timing and pricing, which would be an exciting proposition for players in the road passenger transportation sub-sector (Hossain et al, 2017). The study was conducted using archival research methodology through secondary information collection from Air Berlin's official website and their annual reports for 2015 (Hossain et al, 2017) by seeking to empirically substantiate the theoretical framework in the case of the airline industry. Key findings of the study highlight that the airline through continuous innovation has managed to make the customer more loyal (Hossain et al, 2017).…”

“…The study was conducted using archival research methodology through secondary information collection from Air Berlin's official website and their annual reports for 2015 (Hossain et al, 2017) by seeking to empirically substantiate the theoretical framework in the case of the airline industry. Key findings of the study highlight that the airline through continuous innovation has managed to make the customer more loyal (Hossain et al, 2017). Moreover, success in retaining patronage is achievable by creating a competitive advantage over other players.…”

Cooperation Agreements and Customer Portfolio Management in Hotel Industry: The Airline Market Segment

“…Steinhoff and Palmatier (2014) define a loyalty program as "any institutionalized incentive system that attempts to enhance customers" consumption behavior over time". They can be met in many industries such as retail and hotel chains, airlines, and credit card companies among others (Hossain et al, 2017). Laskarin (2013) postulates that the evolution in information technologies contributed to the creation of a new generation of customer relations management (CRM) practices by marketing managers and one of them focuses on attending the guest and is the loyalty program.…”

“…Aegean Airlines, United Airlines and Accor hotels are some examples that participate in loyalty program networks declaring, in their corporate websites, to be partners of hotels and airlines respectively. Additionally, loyalty concerns the identification and reduction of the factors that may lead to existing customer loss by handling effectively the complaints and recovering the service as previously described (Hossain et al, 2017).…”