Frequent flyer schemes revamped to drive profits in tough times for airlines

Mon Aug 11, 2014 4:50am EDT
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* Selling tickets not profitable; airlines need new impetus

* Frequent flyer schemes often airlines' most lucrative unit

* Rich customer data makes them appealing to investors

* More airlines making schemes independent to drive revenues

* Airlines need to collect more detailed data to keep momentum

By Victoria Bryan

BERLIN, Aug 11 (Reuters) - Beset by low air fares and relentless competition, airlines around the world are waking up to the value of their frequent flyer programmes and realising they can boost profits as well as brand profile.

A multitude of global carriers - preserved by complex cross-border ownership rules that curb dealmaking - means that simply selling tickets is no longer lucrative. Industry body IATA predicts a 3.5 percent drop in fares this year and for airlines' net profit margins to reach just 2.4 percent.

As airlines dig around for new ways to make money, many of them are finding it buried deep in their marketing departments.   Continued...