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Frequent flyer programs for European low-cost airlines: Prospects, risks and implementation guidelines

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  • Klophaus, Richard

Abstract

The continuous growth of passenger numbers masks the fact that the European market for low fare air travel is radically changing. New airlines, takeovers as well as bankruptcies are reflecting strong competitive pressures within the market and from established network airlines fighting back to retain their market shares. European low-cost airlines (LCAs) operate with significant differences in unit costs and most of them are reporting marginal profits or losses. This suggests that many market participants will re-evaluate their business model and depart from aggressive low-cost, no-frills positioning by using service features such as frequent flyer programs (FFPs) to offer something more than simply cheap tickets. The author assesses prospects and problems involved in setting up FFPs and outlines how such a program should be designed for European LCAs to increase customer loyalty and long-term profitability.

Suggested Citation

  • Klophaus, Richard, 2005. "Frequent flyer programs for European low-cost airlines: Prospects, risks and implementation guidelines," Journal of Air Transport Management, Elsevier, vol. 11(5), pages 348-353.
    • Handle: RePEc:eee:jaitra:v:11:y:2005:i:5:p:348-353
    DOI: 10.1016/j.jairtraman.2005.07.001
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    References listed on IDEAS

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    1. Paul Klemperer, 1995. "Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(4), pages 515-539.
    2. Fredrik Carlsson & Åsa Lofgren, 2006. "Airline choice, switching costs and frequent flyer programmes," Applied Economics, Taylor & Francis Journals, vol. 38(13), pages 1469-1475.
    3. Proussaloglou, Kimon & Koppelman, Frank S., 1999. "The choice of air carrier, flight, and fare class," Journal of Air Transport Management, Elsevier, vol. 5(4), pages 193-201.
    4. Gudmundsson, Sveinn Vidar & de Boer, Evert R & Lechner, Christian, 2002. "Integrating frequent flyer programs in multilateral airline alliances," Journal of Air Transport Management, Elsevier, vol. 8(6), pages 409-417.
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    Cited by:

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    2. Castillo-Manzano, José I. & López-Valpuesta, Lourdes, 2014. "Living “up in the air†: Meeting the frequent flyer passenger," Journal of Air Transport Management, Elsevier, vol. 40(C), pages 48-55.
    3. Crespo-Almendros, E. & Del Barrio-García, S., 2016. "Online airline ticket purchasing: Influence of online sales promotion type and Internet experience," Journal of Air Transport Management, Elsevier, vol. 53(C), pages 23-34.
    4. de Boer, Evert R. & Gudmundsson, Sveinn Vidar, 2012. "30 years of frequent flyer programs," Journal of Air Transport Management, Elsevier, vol. 24(C), pages 18-24.
    5. Stefan Gössling & Jan Henrik Nilsson, 2010. "Frequent Flyer Programmes and the Reproduction of Aeromobility," Environment and Planning A, , vol. 42(1), pages 241-252, January.
    6. Mark Wever, 2020. "The Effect of frequent flyer programs on consumer behavior in the German airline market," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 6(6), pages 222-235.
    7. Akamavi, Raphaël K. & Mohamed, Elsayed & Pellmann, Katharina & Xu, Yue, 2015. "Key determinants of passenger loyalty in the low-cost airline business," Tourism Management, Elsevier, vol. 46(C), pages 528-545.

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