Argentina's national airline calls on consulting firms to reshape loyalty program

19 June 2018 Authored by Consultancy.lat

Argentina’s largest airline Aerolíneas Argentina has put out a call for an international consultancy to remodel its loyalty program. After a call in the country’s official news outlet, the Official Gazette of Argentina, which stated that no local firm had the technical experience to perform the overhaul, AeroLíneas Argentina announced that it was opening a bid to external and international consulting firms.

An audit of Argentina’s national airline’s air miles loyalty program Aerolíneas Plus has brought to light that it is underperforming in comparison to regional and global peers. The program is outdated in terms of the technology and rewards redeemable and, according to the audit, is inherently immature and belated.

The document which was released by the Airline earlier this month was well received by industry officials, who see admitting to the problem as the first step to fixing it. Aerolíneas Plus earns well below the global average for frequent flyer programs, taking in an annual profit of $2,800 as opposed to a $10,800 average. “We are well below the global average in the sale of miles," said a spokesperson for Aerolíneas Argentina. 

The Aerolíneas spokesperson touches on the issue of outdated frontend technology which allows the Aerolíneas Plus passenger to spend their miles. “We also have to improve the website where we offer the products and the processes to make the air miles exchanges. It’s currently done in three steps however we require eight.”

This is a sentiment that the internal audit shared, stating that the technology was severely outdated and that it does not allow for customers to access a dynamic range of redeemable options. The airline references middle-range perks which are not including flights, which are usually purchased when flights are not obtainable and miles are close to expiration. 

Argentina's national airline calls on consulting firms to reshape loyalty program Aerolíneas Plus

“It is difficult for businessmen to make tangible the benefit of free passage with the use of accumulated miles. When not perceiving a real benefit, the program ceases to have a weight in the purchase decision, does not fulfil its loyalty function and, as a consequence, the allies (i.e, banking entities) do not see real value in investing their economic resources in the purchase of Aerolíneas Plus miles to deliver these benefits to their customers,” the company states. 

The airline’s call to foreign companies to revamp the air miles program is a contentious issue as the airline itself is run by the Argentine government. After a series of economic downturns, the state renationalised the Spanish-owned company in 2008, and by 2014 it was completely state-owned. This creates the necessity for the airline to look to local firms first and can only search outside in the case of extreme circumstances.

The report states that foreign firms or professionals may only be contracted “in exceptional cases, [and must be] previously approved by resolution of the competent ministry, which can only be based on the lack of local technical capacity in the matter of the service or consultation, and impossible to supply by subcontracting.” 

Included in the airline’s call for consulting firms was a list of possible candidates which featured Accenture, AT Kearney, Bain & Company, KPMG, The Boston Consulting Group, Deloitte Consulting, IBM Global Business Services, McKinsey & CompanyErnst & Young and PwC. Whilst there has been no contracts signed, it is credible that some of these companies are in the process of bidding for the tender.

"We want to have the best loyalty program in the country. For this we have to get technical advice from abroad as there have not been any competitive programs developed by airlines within the country,” the Airlíneas Argentina spokesperson said, adding, “We currently do not offer services that the competition does, such as the possibility of exchanging miles for non-air products (buying a TV, for example). This is something that we have to do.”

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