What’s the big news at Alaska Airlines this quarter? The company spent more time than is typical on its quarterly call this morning discussing its MileagePlan loyalty program and the value it brings to the company, including the co-branded credit card. And the numbers are significant.
MileagePlan has grown its membership base by 30% in two years, a massive increase for a mature program. And the growth is relatively consistent year over year. That is impressive but the ability to convert those new members to actively engaged customers is where the real money comes from and co-brand credit card enrollment is a big part of that profitability.
For Q1 2016 the company says it increased co-brand credit card accounts by 12% year-over-year. That is also a massive growth rate and likely not wholly attributable to the churning of the most aggressive points game players. The partnership with Bank of America is expected to contribute $60mm to the company for the full year and in Q1 it hit the expected target to meet that goal. And the numbers may do even better as new credit card products roll out.
Alaska Airlines expects a boost in sign-ups starting on 1 June 2016 as new features are added to the card. These include:
- Free first checked bag (already a benefit)
- 30,000 points sign-up bonus, an increase from the current 25k
- Removal of foreign transaction fees
On the earnings call it was suggested that the card will be one of the best or most compelling airline travel cards available. I’m not willing to go that far but, depending on the annual fee holding steady it will improve to remain competitive in the market. Either way, expect to see a significant marketing push for the new card in a few weeks, especially with the “BIGGEST SIGN UP BONUS EVER” part of the news.
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You say: “That is also a massive growth rate and likely not wholly attributable to the churning of the most aggressive points game players.”
Why do you say that 12% growth is not wholly attributable? I mean, I don’t expect you to know one way or the other, but I am constantly curious about the impact that “churners” have relative to the general population. I’d bet that it’s more than most people would think.
I’m in no way an analyst here but I’m confused why the surprise over Alaska’s growth in MileagePlan membership and credit card holders. SLC is my home market and since Alaska expanded here, starting routes somewhere around June 2014, they have been marketing like crazy. Billboards and websites offering $50 flight credit to new MileagePlan signups, mailers promoting the credit card. If Alaska is as aggressive in other markets like they are here then it’s no wonder they’ve been able to grow things so well. It seems that not only did they want to attack Delta at a hub city but they went all in, actually doing a lot to make things work. I’m not surprised to see this type of growth, had they not expanded their route map and not been so aggressive marketing the loyalty program and credit card I doubt these numbers would have been quite so large.
Again, I’m not an analyst so I may have completely misunderstood things.
Not sure they can claim “The Biggest Bonus Ever”, as there was a 50K bonus, albeit short-lived.
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