This story is produced in partnership with PaxEx.Areo - The Business of Passenger Experience
The long slog to full integration of Emirates and flyDubai continues apace. This week’s announcement brings the loyalty programs of the two carriers together. And the move looks an awful lot like a shotgun wedding, with minimal regard for the flyDubai OPEN members’ history with that program.
The flyDubai OPEN program is closing in just one month. That leaves minimal time for program members to plan for the transition. On the plus side, there really isn’t much planning to be done. For the vast majority of members the accounts will be shut down on 31 July 2018 and the points balance converted into a flyDubai voucher. Given that OPEN was a revenue-based scheme there’s no real loss of value here, though the forced redemption timing could be less than ideal.
For those who earned elite status in the flyDubai OPEN program there’s slightly better news. Those members have the option to convert their points to the Skywards program. Perhaps more significantly, the status tier will also be migrated at the end of the month. Partial qualification in the flyDubai program will not transfer over, however, leaving those tier points orphaned as OPEN is shuttered.
As program integrations go this one is abrupt. From a business perspective it makes some sense: killing off the overhead of running a second program helps the bottom line and the flyDubai program members don’t have a ton of other options anyways. The main incongruity in the move is that a revenue-based program is being shuttered in favor of a more traditional distance-based earn-and-burn scheme.
Revenue-based loyalty programs are the way of the future for airlines. The transition started slowly but picked up speed in recent years as larger carriers came to grips with how partner airlines could be integrated into such plans. In the case of this Emirates/flyDubai deal, however, two significant factors block the move. First, the Skywards program is significantly larger than OPEN. Changing the scheme of the smaller group is the right answer in so many ways. Second, Skywards is already something of a revenue-based program. No, it is not directly tied the fare paid but earning varies dramatically by type of ticket and class of service.
The program still has plenty of opportunity to further develop revenue-based options for both earning and redemption but it started far enough along that making that change now proves an unnecessary complication in the integration of flyDubai into the Emirates brand.
Don’t call it a merger (even if it is one)
And make no mistake: This is a complete absorption of the flyDubai operation into Emirates. It is a staged play and it will take a couple years, but there is no reason for these two state-owned carriers to continue independent operations given their aligned goals. In October 2017 a first major move came in the form of increased codeshares and some alignment of the loyalty benefits. At that time HH Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Group and Chairman of flydubai suggested that “This is just the start and as we expand the partner network in the coming months we will open up more opportunities for our passengers to explore the world.” The “just the start” part of that statement is quickly proving true in multiple ways.
Emirates President Sir Tim Clark is keen to push that integration along. Nearly a year ago he was describing the synergies of the two different approaches to marketing and delivering services, hoping to see it all play out on a single aircraft.
Therein lies an opportunity. We can merge the seemingly different business model. We can converge our low cost-ish product with theirs. We can supply low cost and full service on the same airplanes. That’s pretty smart, if we can make it work.
Combining the loyalty program is not necessarily the same thing, but it is a step in that direction.
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