JetBlue is a few years in to the cycle with its Barclays co-brand credit card offering and the revenue boost the company is seeing from those offerings continues to grow. The carrier reported a 24% YoY increase in revenue tied to the TrueBlue loyalty program, largely attributed to the credit card signups. The carrier is hoping to further those gains through what Geraghty calls “tactical initiatives” like pre-populating applications in some channels. Banks continue to pay handsomely for customer acquisition and the airlines are the beneficiaries of that spend. But there are other aspects of the program where JetBlue can also benefit.
There is a tremendous opportunity here we believe to really increase the value of this program… It’s a very immature program relative to other carriers. And when you think about upside in our plan, this is where I would view the upside being.– JetBlue President Joanna Geraghty
JetBlue‘s 24% boost in loyalty-related revenue is strong, leading its peers from a percentage basis. Delta saw a 19% boost, though $100mm of that is attributed to the contract extension with American Express. Company president Glen Hauenstein called attention to the company’s co-brand success in that earnings call as well, “New acquisitions of SkyMiles members this year are on track to increase at a rate double that of just three years ago, and more and more of our members are signing up for the SkyMiles American Express cards.”
American Airlines President Robert Isom had a similar view, with increased engagement and “capturing yield growth in this lead group that outpaces our system average” among key AAdvantage demographics. Alaska Airlines saw a 5.7% revenue increase year over year from its MileagePlan members, with 1.2% more passengers in Q2 holding the carrier’s co-brand card than in the prior year.
The 24% growth rate is higher than the rest of the ancillary segment, but JetBlue wants more from TrueBlue. With a new VP Loyalty & Personalization in place the carrier might finally be ready to tackle the next growth stage of the program. Geraghty also cited “additional earn and burn opportunities to increase utility in the program.” A lack of airline redemption partners has long been a sore spot for the program. Blamed on technical or financial causes over the years, perhaps the airline is finally ready to make the necessary steps to move to the next level.
Geraghty did not provide a timeline for any of these initiatives and they are notoriously slow to develop industry-wide, even if the necessary systems are in place. Still, there is reason for TrueBlue members to hold out some optimism on diversity in future redemption options.
A Loyalty Miss
While some carriers are seeing a strong income boost in their loyalty segment others are not so fortunate. Spirit Airlines has a significant revamp in the works for its True Spirit program, hoping to join that ancillary revenue party. Originally planned for later in 2019, the relaunch now appears to have officially sipped into 2020. Chief Commercial Operator Matthew Klein acknowledged the delay, noting that getting it right is better than getting it done quickly:
You get one chance every show off to redesign your program and we’re making sure that we get all the inputs correct. We’re making sure that we have all the technology lined up so that when we go to launch everything works seamlessly and flawlessly and included in that would be a proper promotional push behind what we’re doing as well.
So all of those pieces together we’re making sure we take our time on that and get it right. It is delayed, it is something that we wish we already had in place later this year, so this will be something that’s beneficial to us next year.
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