Cathay Pacific Reiterates Wish For A Revenue-Based Loyalty Program

We’ve known since January that Cathy Pacific’s management have been thinking about moving their Marco Polo loyalty club away from a distance-flown format and in the direction of a revenue-based system.

At the time, sources from Cathay Pacific were reported to have told the China Morning Post that the proposed changes to the frequent flier program would include implementing a revenue-based accrual system fat favours “big spenders and premium cabin travellers over discounted-economy flyers”

Today, Business Traveller is reporting that Cathay Pacific have been talking about the change again. Ivan Chu, Cathay’s CEO, has reportedly told Hong Kong’s Apple Daily newspaper that a revenue-based loyalty program is “consistent with the ongoing industry trend” already adopted by United and British Airways.

The proposed new system would work by basing the number of miles earned on the price of the fare paid leaving a lost all economy class flyers a lot worse off.

As things stand, members of the Marco Polo Club earn miles and sectors by flying on Cathay Pacific, Dragonair and other OneWorld airlines. While the number of miles they earn varies according to the ticket type purchased, most flights still contribute towards a passenger’s tier status.

Marco Polo Club Tiers – Click to Enlarge

Marco Polo Club Mileage & Sector Accrual – Click to Enlarge

The very cheapest economy seats (booked in classes S, N Q & O) do not earn miles or count towards the sectors needed to move up the club’s tiers, but there are still seven economy class ticket rates that do.

There have been a couple of rumours surrounding the nature of the proposed new system for the Marco Polo Club. The first, as already mentioned, would work by basing the number of miles earned on the price of the fare paid while the second system would see a Marco Polo club that was much closer in style to Singapore Airlines’ PPS Club.

The PPS Club recognises members who travel frequently in premium cabins. Under this program status is achieved by members who spend S$25,000 ($18,500) in a 12-month period and do so in premium cabins.

Under this type of program, Cathay would only award status-earning points to travellers who purchase premium cabin seats or the most expensive economy class seats (which are often just as expensive as the cheapest premium cabin seats). Passengers flying on discounted economy class tickets would be shifted across to a revamped version of Asia Miles where members can earn miles that are redeemed for future travel but do not earn any sort of tier status with an airline.

Image – Matt Weibo via Flickr

Today comments from Cathay’s CEO also come with bad news for Marco Polo Silver tier members. As things stand, Silver tier members enjoy a few perks that passengers with a similar status on other airlines do not get, like access to Cathay’s Business Class lounges. But these perks look like they’re on their way out.

Ivan Chu is quoted as saying that Cathay would be looking to limit lounge access to Silver tier members, by introducing an annual cap for visits, as a means of reducing congestion in the lounges.

Holders of the lowest tier, Green card, are not safe either. Despite the card costing $50 per year the airline will look to cut priority check-in and priority boarding privileges in an effort to reduce queues at check-in and at the gate.

Whatever the airline says, this looks to have less to do with the need to reduce lounge congestion and check-in lines and more to do with pushing travellers towards the company’s premium products – which is where all the money is.

Revenue-based loyalty programs are here and they’re probably here to stay. What will be interesting to watch is just how quickly all the other major airlines rush to follow suit. Delta, British Airways and United are all there in one way or another already and Cathay is just about there…. so how long before AAdvantage, Flying Blue et al follow suit?

Featured image: Aero Icarus via Flickr