Is Alitalia’s Milemiglia loyalty scheme next to change?

As Alitalia trudges along, seeking the right mix of investors to keep its airline operations afloat, another portion of the business may prove a more interesting attraction. The Milemiglia loyalty program operates at arm’s length from the core airline business. It is a venture backed in part by Etihad (as a means to funnel more cash into the airline to keep it afloat, similar to the AirBerlin/TopBonus “spin-off”) and it could be headed for an abrupt change of course.

Rumors are swirling that the airline wants to bring the loyalty scheme back in-house. This is not, however, the same as Air Canada buying Aeroplan back from Aimia. Instead, the carrier appears inclined to create a new loyalty program completely and simply cast off the old Milemiglia program, leaving it to whatever ends should happen.

There are many roadblocks to such a plan, not the least of which is the technical implementation of a new loyalty program within the company while not breaking the existing implementation. And, while Alitalia seems content to let Milemiglia die, it does still want the members. Keeping them without a coherent acquisition or migration plan would almost certainly prove messy on many levels.

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The Milemiglia plan is renown for its strange expiration policies. Every couple of years the prior program expires. Members can either redeem their points or fly some number of new trips in a short period of time to keep their account active. Or the account – and associated point – simply disappears. It is one of the most aggressive “breakage” models in the airline loyalty world but it seems to work. Or maybe it doesn’t. Either way, that natural reset seems a good time to perform a migration such as the one rumored.

Such a migration would depend on cooperation between the old and new programs, however, and that seems to not be part of the plans. Would members consider investing in the program again after seeing their historical loyalty trashed in a migration? Or would the new program offer a different means to migrate over, one that does not require cooperation from the old vendor?

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With a new government in place and new plans to finally close the sale of the carrier maybe this proves a moot point. But the fact that it was even considered suggests the current company executives see the operation more as a random amalgamation of pieces than a coherent set of components. Yes, airline loyalty programs can be spectacularly profitable. But that’s not a given. It requires that the program be tied to a trusted and stable business. That is hardly the Alitalia model on a good day, and the current uncertainty over the carrier’s future only adds to that risk.