Star Alliance Explores a Broader Loyalty Proposition Beyond Airlines

Star Alliance is thinking beyond air. It is exploring technologies that will allow frequent flyers to redeem miles not just for flights and upgrades but home stays, tours and activities, even underground train tickets.

While this may sound like a yawn, it is big deal for airlines, where it is still not even possible for passengers to use miles accrued from one Star Alliance airline to redeem a bottle of whiskey on another when shopping inflight.

That, too, is being explored.

All this is part of Star Alliance’s digital transformation which began February last year when it partnered with Accenture to create a ‘digital services’ platform. Once a digital service is available on the platform, member airlines can decide individually if they want to make it available to customers.

One such digital service that has taken off is seat selection across member carriers. A United Airlines customer can now select his seat for the entire journey on United and Singapore Airlines on his United app or website, at the time of reservation rather than only at check-in.

Half of 28 Star Alliance airline members have agreed to “enable the service to be consumed,” Star Alliance CEO, Jeffrey Goh, told Skift in an interview at the Aviation Festival Asia in Singapore this week.

Getting them to come onboard is the easy part. “It is more difficult to put the seat map onto the digital platform and show it to the customers. We are rolling it out progressively over the year or so,” he said.

Why it is Slow

The reality is digital is very new to airlines, Goh said. Creating and adopting new technologies is also new and takes time.

Moreover, the world’s biggest airline alliance has 28 members, many of them legacy carriers, all of different sizes, in different stages of technological advancements and are often faced with competing resources.

But customers are demanding of airlines smarter and more seamless solutions, especially those in Asia where smartphone penetration has grown rapidly and consumers are bypassing desktop and going straight to mobile for online travel bookings. This makes digital transformation the new buzzword for individual carriers like Singapore Airlines, Malaysia Airlines or Lufthansa and, collectively, airline groupings such as Star.

Goh said the alliance is looking at digitalizing “many things” covering customer service, airport experience and loyalty.

Of the three, he said loyalty is “very exciting,” it being the heart of global air alliances.

“We are looking into loyalty 2.0 to 3.0,” said Goh. “Today, the typical proposition is you accrue miles among members and that’s not a problem. Most of the problem is to use miles, getting a flight or upgrade, but what if we give you the opportunity to use your miles to pay for an ancillary that’s not within the airline that you use but another?

“Let’s say you have a million miles and you see the bottle of whiskey that you can buy for your father-in-law on SQ’s inflight shopping. Can you use your United or Lufthansa miles to buy it?

“When the technology is proven, could we expand the redemption portfolio to let you take your husband on a treetop Airbnb experience or a great dining experience or a tour or activity using your miles?

“Further down the road, with the technology and a digital wallet, can you use your miles for daily applications like buying a newspaper or underground train tickets by flashing the e-wallet? That is where we think the excitement is,” said Goh.

It’s not just about buying airline tickets, airline insurance, car rental or Airbnb, but “how we deal with the travel experience ecosystem, how we integrate the experiences,” Goh added.

Who Needs a Super App?

It is also about how to simplify processes and make travel seamless for customers. There is no need, for example, for a Star Alliance super app for customers to transact.

Said Goh: “You will continue to use your preferred channel of communication, whether it is the United app if you are in Star Alliance, or Japan Airlines app in the case of Oneworld [alliance], to conduct your transaction. We would never be able to convince our members to throw their apps. But we also don’t want a situation where you are on a five multi-carrier itinerary and have to download five different apps and walk to five different check-in counters every time. What if you could check in on just one, your preferred app, which connects you to the four other Star Alliance airlines you’re flying with?”

Another technology that Star Alliance is looking at is biometrics, where a customer could call up the biometrics identity he had registered in the first instance with the preferred app and use it at airport security, hotel check in, car rental, et cetera, without having to re-register each time.

It is also looking to use technology to improve the airport experience “beyond the bricks and mortar.”

“If your flight comes in late and you risk missing your connection, today we send people to meet you at the gate and take you to the connecting flight,” said Goh. “We want to see if we can digitalize that assistance, so that you can have in the palm of your hands [information] that you have arrived at this gate, that it takes you 10 minutes to walk to your gate, security is five minutes away and when you reach it, you have a voucher that says I can jump the queue.”

Given that technology has opened up vast opportunities to improve the loyalty program, customer service and airport experience, how does Star choose initiatives?

“We work with experts from member airlines and typically identify the opportunity,” said Goh. “If it’s something we want to do, we call for proposals from the market. We are open to technology — what you can deliver for us to create that seamless experience right to the end.

“The technology is there, it is a question of applying it to the industry. We need to be more agile with recognizing a product’s viability or feasibility but at the same time put our hands up to drop it if it’s not working.”