The global aviation sector has seen a shift towards subscription-based models that aim to enhance customer loyalty.
A recent example is Ryanair, who introduced a ‘Prime’ subscriber discount for passengers. For an annual fee of £79 (R1 865), Ryanair members receive benefits such as free reserved seats, complimentary travel insurance, and exclusive access to monthly seat sales, which, it says, could save frequent flyers up to £420 (R9 930) annually.
In South Africa, local carriers are considering the viability of similar subscription models.
Kirby Gordon, FlySafair’s Chief Marketing Officer, told Travel News that the airline believed there could be an appetite for the concept in the South African market – provided the value proposition was compelling enough.
“A straightforward price advantage, like the one Ryanair offers, is certainly a strong pull, but the consumer’s first question will always be, ‘How much?’ It is an interesting development. It’s a model we’ve been mulling over and experimenting with ourselves for some time to see if there’s a feasible way to apply something similar in our context.»
However, Gordon highlights challenges in implementing traditional loyalty schemes within the South African market.
«We haven’t yet found a traditional loyalty scheme that delivers sufficient incremental sales to justify its costs, especially not without needing to build the cost into the ticket price upfront – which goes against our low-cost positioning. That’s why these types of subscription-style programmes have been intriguing to explore.»
He also notes the competitive landscape shaped by established rewards programmes.
«Whatever you table does need to stand up against what the likes of Discovery and eBucks are funding out of their other businesses, which is hard to match without that other income stream.»
FlySafair has been exploring alternative approaches, such as ticket auctions.
«We’ve been testing a slightly different approach recently through ticket auctions – bundles of 10 tickets sold starting from a reserve price. It’s been well received so far. It effectively allows customers to pre-pay and lock in fares at a price they determine, which creates value while offering us useful data on price sensitivity,» says Gordon.
Cilliers Jordaan, LIFT’s Chief Commercial Officer, acknowledges the potential of subscription models but points out significant challenges.
«Subscription models and the form thereof are under ongoing consideration and development within the airline industry, and some programmes have been implemented with varying levels of success across the industry. While we believe there is value in the concept, South Africa’s price-sensitive market and seasonal demand changes provide significant hurdles when evaluating the feasibility and structure of a model like this.
«While subscriptions are not something that is on LIFT’s immediate radar, we have developed the concept of an Electronic Wallet, which is available to all our direct customers and some third-party booking channels, to simplify the management of refunds, compensation and to complement our flexible fare rules.
«LIFT will continue to analyse market needs and further develop our Customer Loyalty offering,» Jordaan concludes.
