Magazine article Marketing

Air Miles Tries Its Second Lift-Off

Magazine article Marketing

Air Miles Tries Its Second Lift-Off

Article excerpt

Air Miles fell short as a promo scheme. Now it's relaunching in the UK with a focus on dacapture. Suzanne Bidlake visits the US to find out more about the new look Air Miles

On November 1, 1988, Air Miles was delivered to a waiting UK. Its arrival was met with rapturous applause, best wishes and congratulations and its name was broadcast across the land.

Today, people throughout the UK still know its name. But that's as far as it goes. It hasn't achieved the mass popularity its inventor dreamed of. Air Miles never really got off the ground.

Now Air Miles is planning a comeback. Boosted by success across the Atlantic (within two weeks of launching Air Miles cards into stores, Canadian supermarket chain Safeway's Air Miles customers were spending twice as much as non-Air Miles -- an average $140 a week, for example) founder chief executive Keith Mills is trying to persuade UK sceptics that his baby is worth a second look. It's grown up, he's saying. Now I'm offering a sophisticated, data-driven promotional of long-term strategic value.

Conceived on a train between Liverpool and London back in March 1987, a spurt of growth in its first year made it look destined for great things. But teething troubles turned to something far more serious.

Under the scheme retailers by Air Miles (ie free flights with British Airways (BA) -- and now Dan Air too) from the Air Miles company. Participating retailers reward their customers for their loyalty with Air Miles which, if collected, mount up to a free flight abroad. A typical reward from a supermarket might be ten miles for every 40 [pounds] spent.

Air Miles makes its money on the surplus between what it pays the airline for the seats and the price it gets from the retailer for the relevant Air Miles. For Dan Air and for BA (which owns 51% of the business) it's an opportunity to recoup some of the revenue lost from the 30% of seats that otherwise fly empty each year.

A 6m [pounds] UK ad campaign in 1988 created the frustrating conundrum of a product that had high consumer awareness but limited distribution. The problem for the UK Air Miles scheme was its failure to sign up a grocery retailer where consumers could clock up Air Miles quickly: it is a poor incentive if a year's collecting leaves you with about enough Air Miles for a one-way trip to Bognor. Having won over a food multiple Air Miles would have been in a much better position to sign up other retailers in the scheme--all with sector exclusivity.

Tesco joined up in the UK gestation period but pulled out before the launch. While refusing to say why, Mills insists it was not the programme's fault. The multiple had no comment at the time of going to press.

Gateway tested the scheme but a succession of marketing management changes left it in limbo. As no others rushed to take part, so the 17 companies signed up at launch began to slip away. Today few remain targeted at consumers, though there are strong business-to-business and business traveller programmes.

Now, four years on, Air Miles in about to be reborn in the UK, so its founders say. For all its high profile, the company may now actually change its name in the UK because of confusion over whether Air Miles is a company or a currency.

More importantly it is "coming out", eager to show off to potential suitors just how well it has developed over the years. A corporate press campaign through Alliance and aimed at potential clients will run continuously from now to next March.

There's talk of a succession of new deals over the next year--including one with a national food retailer (though possibly on a regional basis), department stores and a DIY chain. And plans to boost the 2.4 million collecting households (covering 10% of the population and including apparently "half the Royal Family") to ten million.

"We're not going for big bang," says business group director Nick Mercer. …

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