Contents Worldwide Loyalty Report The IdeaWorks Company Page 1

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2 Contents General Commentary and Analysis... 4 Graph: Overall Reward Availability Graph: Long-Haul Flights Reward Availability Graph: Flights Under 2,500 Miles Reward Availability Graph: Overall Reward Availability by Month Graph: Reward Availability June Graph: Reward Availability July Graph: Reward Availability August Graph: Reward Availability September Graph: Reward Availability October Air Berlin topbonus Air Canada - Aeroplan Air France/KLM Flying Blue AirTran A+ Rewards Alaska Airlines Mileage Plan American - AAdvantage British Airways Executive Club Cathay Pacific Asia Miles Continental OnePass Delta - SkyMiles Emirates - Skywards GOL SMILES Iberia Iberia Plus JetBlue True Blue LAN Airlines - LanPass Lufthansa/SWISS/Austrian Miles & More Qantas Frequent Flyer SAS Scandinavian - EuroBonus Singapore - KrisFlyer Southwest Rapid Rewards Turkish Miles&Smiles United Mileage Plus US Airways Dividend Miles Virgin Australia Velocity Rewards Appendix Table of Query Dates Used in This Report Worldwide Loyalty Report The IdeaWorks Company Page 1

3 About Jay Sorensen, Writer of the Report Jay, with sons Aleksei and Anton, in the Sunrise area of Mount Rainier National Park in the state of Washington. Jay Sorensen s research and reports have made him a leading authority on frequent flier program development and the ancillary revenue movement. For 2011 he is a speaker at the World Low Cost Airlines Congress in London. His published works are relied upon by airline executives throughout the world. The 2010 Guide to Ancillary Revenue was the third edition of this popular report; it is regarded as a global resource on the topic of a la carte pricing. IdeaWorks also published its first Guide to Loyalty Marketing in Mr. Sorensen is a veteran management professional with 27 years experience in product, partnership, and marketing development. As president of the IdeaWorks consulting firm, he has enhanced the generation of airline revenue, started loyalty programs and co-branded credit cards, developed products in the service sector, and helped start airlines and other travel companies. His career includes 13 years at Midwest Airlines where he was responsible for marketing, sales, customer service, product development, operations, planning, financial analysis and budgeting. His favorite activities are hiking, exploring and camping in US national parks with his family. About Eric Lucas, Editor of the Report Eric Lucas is an international travel, natural history and business writer and editor whose work appears in MSN/Bing Travel, Michelin travel guides, Alaska Airlines Magazine, Westways Magazine and numerous other publications. Founding editor of Midwest Airlines Magazine, he is the author of five books, including the 2009 Michelin British Columbia Green Guide. Eric has followed and written about the travel industry for more than 20 years. He lives in Seattle, Washington, where he grows and sells organic garlic; visit him online at Eric, at his favorite summer retreat, Steens Mountain, Oregon Worldwide Loyalty Report The IdeaWorks Company Page 2

4 Disclosure to Readers of this Report: IdeaWorks makes every effort to ensure the quality of the information in this report. Before relying on the information, you should obtain any appropriate professional advice relevant to your particular circumstances. IdeaWorks cannot guarantee, and assumes no legal liability or responsibility for, the accuracy, currency or completeness of the information. Terms of Use for this Report: You may not disseminate any portion of the Report through electronic means, including mail lists or electronic bulletin boards, without the prior consent of IdeaWorks. You may make one hard copy by downloading and printing it. You may store the document as a file on your computer. Please contact IdeaWorks if you require multiple downloads for use within your company, and for all other uses. Except as expressly permitted in this Terms of Use, the Report may not be reproduced, transmitted, or distributed without permission. You may not commingle any portion of the Report with any other information and shall not edit, modify, or alter any portion. IdeaWorks provides the Report and services as is and without any warranty, or condition, express, implied or statutory. IdeaWorks specifically disclaims any implied warranty of title, merchantability, fitness for a particular purpose, and non-infringement. In no event shall IdeaWorks be liable for lost profits or any special, incidental, or consequential damages arising out of or in connection with the Report (however arising, including negligence). Distribution of this Report is protected by the Economic Espionage Act of 1996 of the United States and the data protection laws of Europe. Issued June 2011 by The IdeaWorks Company Shorewood, Wisconsin, USA Worldwide Loyalty Report The IdeaWorks Company Page 3

5 Introduction to the Report General Commentary and Analysis Less might mean more to savvy travelers when they compare the generosity of frequent flier programs. Customers of low fare airlines will be pleased by their top rankings in this 2nd annual survey of reward seat availability. Members in the programs operated by traditional airlines may need to place more value in benefits beyond free travel when choosing a favorite frequent flier program. Low fare airlines GOL, Southwest Airlines, Air Berlin, and Virgin Australia filled the top four slots in reward survey results for GOL, which calls itself the largest low cost and low fare carrier in Latin America, topped the rankings with an unmatched level of reward bliss; an astounding 100 percent of survey queries yielded two or more reward seats. And USbased Southwest Airlines matched its 2010 standing with a survey result of 99.3 percent reward seat availability. The average among the six low fare airlines in the survey was 85.6 percent and is significantly above the 62.9 percent calculated for the other 18 carriers in the survey group. Consumers realize there is no free lunch. Low fare airlines are generous with reward seats while offering bargain prices. Traditional airlines are seemingly more stingy with rewards but offer other benefits such as entry to airport lounges, upgrades to premium cabins, and access to worldwide flight networks. But survey results also show adding more global partners doesn t equal more reward opportunities. It s true, travelers living in major hubs such as Atlanta, London, and Hong Kong might have little choice beyond joining the hometown program. But many other consumers can weigh reward, accrual, and upgrade features and choose a program on a range of merits. Global carriers promote the allure of reward travel to faraway destinations. But seats on 2,500+ mile flights were found to be a rare commodity. Average reward seat availability for flights under 2,500 miles was 81.6 percent. This plummets by nearly half to 46.6 percent for long haul routes. Six airlines posted results below 38 percent. This year s reward seat availability survey is based upon 6,720 booking queries made by IdeaWorks at the websites of 24 frequent flier programs during March and early April Carriers in this year s survey represent the world s largest airlines by passenger volume that offer a frequent flier program. Travel dates spanned June through October 2011; with 20 top routes checked to assess reward seat availability. The table on the following page summarizes the 2011 results. The % of Total Availability represents the frequency of queries which produced one or more available flights for a roundtrip pair of travel dates. A minimum of two seats was required for each outbound and inbound reward reservation query. The 100 percent result for GOL reflects the fact that each of the 280 outbound and return date queries provided a minimum of one flight in each direction with at least two available reward seats. The right hand column compares 2011 results to the reward seat availability survey conducted by IdeaWorks in Worldwide Loyalty Report The IdeaWorks Company Page 4

6 The results for 2011 deliver good news and bad news for program members. Four airlines experienced significantly improved results above 2010 levels of reward seat availability (10+ points): Singapore Airlines, Turkish Airlines, Delta Air Lines, and US Airways. Four airlines saw a drop of more than 10 points from 2010: Air Canada, Alaska Airlines, SAS Scandinavian, and AirTran Airways. Rank Overall Reward Availability Ranked High to Low Seat Availability for June October, 2011 & 2010 % Total Availability Airline Program Name % for 2011 Versus % GOL SMILES New for % Southwest Rapid Rewards No change % Air Berlin topbonus 2.2 points % Virgin Australia Velocity Rewards 1.4 points % Singapore KrisFlyer 13.6 points % Lufthansa/SWISS/Austrian Miles & More 0.7 points % Air Canada Aeroplan 11.5 points % JetBlue TrueBlue New for % LAN LANPASS New for % Qantas Frequent Flyer 2.1 points % United Mileage Plus 2.8 points % Continental OnePass No change % Iberia Iberia Plus 5.7 points % Cathay Pacific Asia Miles 0.7 points % Air France/KLM Flying Blue 8.6 points % Alaska Airlines Mileage Plan 10.7 points % American AAdvantage 5 points % British Airways Executive Club 3.6 points % SAS Scandinavian EuroBonus 11.4 points % Turkish Airlines Miles&Smiles 14 points % AirTran A+ Rewards 20.8 points % Emirates Skywards 0.7 points % Delta SkyMiles 14.2 points % US Airways Dividend Miles 15 points % of Total Availability = Percent of queries that result in outbound and return reward seats See Notes regarding query methodology at the end of this report Worldwide Loyalty Report The IdeaWorks Company Page 5

7 The size of the 2011 survey increased to 24 airlines with the addition of GOL, JetBlue, and LAN. Jet Airways was dropped because its traffic no longer places it in the top group. Survey results reflect the availability of saver rewards or capacity controlled seats with two exceptions. For Southwest, Anytime or Wanna Get Away rewards priced up to 12,500 points (each way) qualified as reward travel. For JetBlue, rewards priced at 12,500 points (each way) qualified as reward travel. IdeaWorks added a new reward query for 2011 which tested larger US-based carriers for reward travel using a much shorter 5 to 15 day advance booking window. Eighty queries each were made for travel during April 5 21, 2011 on American, Delta, United Airlines, and US Airways. The test was done on April 1, 2011 to determine if airlines release reward seats just prior to departure. The results, shown on the next page, confirm rumors within the airline industry and what many travelers already suspect is true: booking later may provide an opportunity. Short Advance Booking Test Seat Availability for April 5 21, 2011 Captured on April 1, 2011 June October % Availability Airline Program Name Availability Survey 65% United Mileage Plus 71.4% 47.5% American AAdvantage 62.9% 42.5% Delta SkyMiles 27.1% 25% US Airways Dividend Miles 25.7% United and American offered reward availability for this 5 to 15 day booking window that was surprisingly close to queries using the 3 to 7 month booking window. US Airways matched the results from the longer booking window survey. Delta was a surprising standout with a result that was much better than the reward availability found in the main survey. One significant caveat for this test is comparing the travel period of early April to the summer season tested for the June through October travel dates. Short advance booking queries for the summer period would likely provide poor results due to far higher demand levels. But there is an interesting lesson here for spontaneous travelers... they might get lucky with a last minute reward booking. Good fortune seems to be on the side of frequent flier program members for The economic travails of the airline industry, which include reduced seat capacity, provide abundant incentive for airlines to be less generous with reward seat availability. The results of the survey indicate some airlines have indeed become more careful and stingy. But what is most surprising is how carriers have gently improved the odds of getting a seat in The overall result among the 24 airlines was 68.6 percent for 2011, which is just a little above the 2010 result of 66.1 percent. Perhaps airlines are cognizant of the need to be more loyal to consumers who have persevered through the ultimate test of a worldwide recession Worldwide Loyalty Report The IdeaWorks Company Page 6

8 Air Canada - Aeroplan Overview of Reward Availability Reward ranking: #7 of 24 (total availability is 82.1%) City Pairs Queried Reward level queried: Summary of reward structure: Airline partners observed at online booking engine: Alliance: ClassicFlight in economy class. ClassicFlight is the lowest reward level; capacity controls do not apply for the ClassicPlus reward level. One-way rewards are offered on Air Canada and Jazz at approximately 66 to 75% the miles cost of roundtrip reward levels. Air China, All Nippon, Asiana, Brussels Airlines, Continental, Lufthansa, SAS Scandinavian, SWISS, Thai, United, and US Airways. Star Alliance Date queries made: March 2011 Pay with points/miles (same as cash) Key non-air redemption opportunities: Search conditions: Observations: Not offered Members may convert miles to spend on a wide array of hotel accommodations, car rentals, activities, and merchandise. Option to display alternate airports was not selected. Short-haul rewards are offered within Canada and US. Regular roundtrips are 25,000 miles, while short-haul are priced at 15,000. Mileage rates are increasing for some rewards on 15 July Reward display filters may be set for a range of departure and return times, and flight duration. Under 2,500 Miles (10 total) YUL YVR YVR YYC YHZ YEG LGA YWG YEG LAX YYC YVR 2,500 + Miles (10 total) LHR FRA CDG PEK HKG FRA LHR NRT LHR LHR YUL YVR YUL YUL YVR YYC 2011 Worldwide Loyalty Report The IdeaWorks Company Page 24

9 Air Canada 2 Overall Reward Seat Results. The results from each booking query were analyzed to determine flight availability based upon the number of flights offered. Connections requiring long layovers, such as in excess of 4 hours, were excluded. Air Canada - Aeroplan Range of Seat Availability June - October, 2011 Seats on 3+ flights 62% Seats on 1 or 2 flights 20% Zero reward seats 18% 0.0% 25.0% 50.0% 75.0% 100.0% % of queries (280 total) that result in outbound and return reward seats Reward Availability by Region. This graph displays the reward queries grouped by geographic regions and length of flight. 50% of the queries were city pairs under 2,500 miles and 50% were for city pairs at 2,500 miles or more. Air Canada - Aeroplan Reward Availability by Region, June - October ,500+ Miles 77% Under 2,500 Miles 87% All Queries 82% 0% 25% 50% 75% 100% % of queries (280 total) that result in outbound and return reward seats 2011 Worldwide Loyalty Report The IdeaWorks Company Page 25

10 Air Canada 3 Reward Availability During Select Months. This graph displays the reward queries grouped by departure month. June represents seat availability with a 3 month booking window, as queries were made March October statistics provide longer term results with a 6 7 month booking window. Air Canada - Aeroplan Reward Availability During Select Months of % 75% 87% 100% 100% 50% 71% 25% 0% 46% June July August September October % of queries (280 total) that result in outbound and return reward seats Reward Availability by City Pair Type. This graph displays the reward queries grouped by departure month and city pair type. Air Canada - Aeroplan Reward Availabilty During Select Months of 2011 by City Pair Type 100% 87% 87% 83% 100% 100% 100% 100% 75% 50% 62% 58% 25% 31% 0% June July August September October % reward queries (280 total) that result in outbound and return Under 2,500 Miles 2,500 + Miles 2011 Worldwide Loyalty Report The IdeaWorks Company Page 26

11 Air Canada 4 Screen shot of reward booking page from the carrier s website Worldwide Loyalty Report The IdeaWorks Company Page 27