Cash flow from the Alaska Airlines Mileage Plan credit card was around $1 billion for 2017. Revenue produced by frequent flyer programs is a meaningful ancillary revenue component for airlines in the US. Alaska doesn’t stop there, as the carrier also generates ancillary revenue from a range of optional extras typical for a traditional airline. These include checked baggage, extra leg room seating, onboard café and pre-order, inflight entertainment and Wifi, and Premium Class seating. But clearly, the revenue associated with the Mileage Plan frequent flyer program overwhelms the other categories.
Alaska disclosed that revenue from its Mileage Plan program represented 11 percent of total revenue for 2017, and that’s up significantly from 9 percent back in 2013. Credit cardholders represent 30 percent of all Mileage Plan members, which is among the highest penetration levels in the world. The airline recently described its Mileage Plan as crucial to the carrier’s growth. Not surprisingly, the growth model is based upon flying “where customers want to go with affordable fares.” But the model also invokes the frequent flyer program as one of the core attractions that delivers repeat customers. Loyal members are seen as a requirement to allow the airline to expand its network in terms of routes and flight frequency. Alaska reinforces this model by making its co-branded credit card an ever-present feature at all customer touch points to include an instant application offer on the payment page in the booking path.
Read the interview with Toni Freeberg, Director of Distribution and Ancillary Strategy for Alaska and find out more about Alaska’s ancillary strategy here.
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