AirAsia, eyeing revenue, makes strong entrance to frequent flyer programme

Low-cost airlines dogmatic to their cost base have traditionally shunned frequent flyer programmes, seeing them as only increasing costs. So a move from AirAsia - Asia's largest LCC and which has the lowest reported cost base in the world - to venture into the FFP arena via its "Big" programme, a fully-fledged offering of flight rewards, a credit card and third-party partners, is a reminder that airline models are not inelastic and that few airlines are reaping the possible rewards of a FFP, which can be more valuable than the airline it is attached to.

As air travel becomes commoditised, airlines should be selling not a ticket but their brand, CAPA's boardroom magazine Airline Leader writes in the current feature examining how FFPs are for both love and money. Leveraging a brand can be accomplished through a FFP, and AirAsia has one of the best brands out there. But FFPs are not just a means to an end: they are a means unto themselves. In the year to 30-Jun-2011 Qantas reported a 22% increase in profit from external billings (points sold to credit card companies and other partners) of AUD202 million (USD212 million).