The Economist has a very good article on Frequent Flier miles. It was in 1981, the frequent flier program was launched in the US by Amercian Airlines. Here are some interesting facts from the article:
- Today, more than 130 airlines issue miles
- About 163m people around the globe collect miles
- Total stock of unredeemed miles was worth more than all the dollar bills in circulation
- The biggest collectors of miles today are not frequent flyers but frequent buyers
- In 2004, over 20m free tickets were issued, and on a typical flight 7-8% of passengers were travelling on such tickets
- Charging partners for each mile earned on a credit card, say, by a member of a frequent-flyer programme, brings in estimated annual revenue of more than $10 billion for the industry worldwide.
- In 2004, the 14 biggest American airlines posted a total liability of only $3.9 billion to allow for future frequent-flyer mileage redemptions
- The average success rate in getting a free ticket varies from 71% on US Airways to 54% at British Airways and only 37% on Northwest.
According to me, this is an idea that created a whole loyalty industry across the world. Let's raise a toast to one of the most powerful customer-centric ideas of the last century!