Linking accrual with revenue – a new dynamic model in CLM FFP

Since the beginning of the eighties, when the first Frequent Flyer Program (FFP) was introduced by American Airlines, many changes have occurred in the airline business. Although the traditional model for accrual which is based on the mileage flown by a passenger is still popular, airlines are beginning to acknowledge the opportunity of more closely correlating the fare of the ticket with the actual points credited to FFP members. This interest is being further compounded with the evolution of complex ticket price algorithms.

The dynamic model currently being offered by CLM FFP reflects this trend and provides airlines with a choice and a smooth transition between the traditional model and the modern one. How does the new model work? It’s simple and transparent. The basic points credited for a flight are based directly on the ticket price that the passenger has paid. The ratio of ticket price to points is configurable and can be further enhanced using parameters defined for sales channel, member tier, O&D as well as others. Adoption of the dynamic model eases cooperation between an FFP and Revenue Management by rewarding passengers for the actual amount of money spent while at the same time, enabling a consistent revenue strategy.

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