Cathay Pacific Bucks the Trend in Rewards Boost — Business of Loyalty

In a rare move for the airline industry, Cathay Pacific released a series of updates to its loyalty program last week that didn’t involve any changes that flyers might perceive as negative.

Starting next month, Cathay’s Marco Polo loyalty program is changing to boost the number of status points that many passengers earn on each flight — shortening the journey for many to reach elite perks.

Those who fly in premium cabins on short-haul flights will see the majority of the benefits. On ultra-short flights (defined as fewer than 750 miles), for example, first class passengers will see a 50 percent increase in status points earned on each flight. Nearly all cabins for all distances will see improvements of some sort except for deeply discounted tickets on ultra-short flights. Even those budget travelers, however, will see improvements on all flights more than 750 miles up to even ultra-long haul flights exceeding 7,500 miles. None of the tiers will see a reduction in points.

The new elite point chart is available here.

Cathay’s decision is curious at a time when most airlines are reshuffling loyalty programs to give less to travelers. Its motivation may be steeped in an effort to kickstart loyalty at the carrier.

In 2015 Cathay, like many of its competitors, moved to a revenue-based program that the South China Morning Post flatly called “less generous.” In a study, analyst Mark Ross-Smith later showed that move resulted in a major jump in unhappy passengers and defections to other carriers.

Business at Cathay has also been strained. Thanks to a wave of low-cost carriers and slow reaction to the competition, Cathay just reported its worst first-half loss in two decades. In August, Bloomberg boldly stated that the airline needs to do something drastic to win back customers.

“Cathay’s recent belt-tightening has cut down on even the small things like blankets and meals for short-haul flights, both of which are easily offered by cheaper competitors,” says Richard Lai, a Hong Kong resident who’s been avoiding Cathay Pacific for the last few years. “These days, I tend to stick with other airlines which can offer better service for the same or even lower fares.”

Whether Marco Polo’s changes actually restart the airline’s turnaround is still unclear. But it may be a step in the right direction for Hong Kong’s once-favorite carrier.

Cathay’s changes are slated to go into effect on December 8.

— Grant Martin

Skift Stories and More Expert Insight

Air France-KLM Move to a Spend-Based Loyalty Program In 2018: Flying Blue, the loyalty program used by Air France, KLM and a handful of smaller carriers, will get a significant overhaul in 2018.

British Airways CEO Plots Return to a ‘Golden Era’: British Airways pledged to spend $5.9 billion (£4.5 billion) on improving its passenger experience as the airline looks to bounce back from a turbulent year.

Will Travelers Buy Singapore Air’s New Suites? Singapore Airlines has created one of the world’s most luxurious airline products. But is that enough to make the six-seat cabin profitable?

JetBlue Is Giving Out Complimentary Trips to 3 Destinations to Those Who Wish to Volunteer: In collaboration with the airline’s ‘JetBlue For Good Month,’ JetBlue’s #CheckInForGood contest is giving out complimentary trips to those who may want to volunteer at three destinations that can use a few sets of extra hands.

New Emirates 777 First Class Suite Looks Great! Will Emirates outdo Singapore’s stunning new A380 Suite? The carrier is unveiling a new first class product for its 777 on Sunday and has released a teaser video offering hints at what the new product will look like.