When Loyalty Programs Build Anything But

Feb 11 • Functional Skills, Morry Morgan Articles, Sales and Negotiations, Trainer Articles • 3435 Views • 3 Comments on When Loyalty Programs Build Anything But

When Loyalty Programs Build Anything But

BOTH CHINA MERCHANTS BANK (CMB) and Qantas Airways have loyalty programs. That’s no surprise. Just about every large organisation does these days. And this is because marketers want to make their product ‘sticky’.

Stickiness keeps customers coming back. Even better still, it is the likelihood that a customer will recommend the brand to others. Loyalty programs help with stickiness, since they create a perceived investment in a brand, due to the accumulation of points and the point’s associated benefits. In some circles a loyal customer is believed to be up to twenty times more valuable to a business than an uncommitted customer. But loyalty programs operate as hygiene factors – get the customer service right and customers don’t even notice. Get it wrong and these same customers can become furious.

Get it wrong and these same customers can become furious.

Last month I was furious. It started with my bimonthly trip to Shanghai and Singapore. Qantas doesn’t fly directly from my home city of Melbourne to Shanghai, and so they codeshare. Codeshare is airline jargon for when two numbers appear for the same flight – in my case MU738/QF341 (China Eastern and Qantas, respectively). Two numbers, two airlines, but one crew and one plane. In this case China Eastern.

So why codeshare?

In Qantas’ own words codesharing with China Eastern allows for “better access to major cities in China” to meet “strong demand from the business market.” But in reality, codeshare agreements really allow airlines to expand their service offerings without investment in additional resources, equipment and eliminating costs. Sadly, in the case of Qantas, these savings are not passed on to the loyal customers. Quite the contrary.

But in reality, codeshare agreements really allow airlines to expand their service offerings without investment in additional resources, equipment and eliminating costs.

According to Australian Business Traveller, in their August 2014 article titled ‘How codeshare flights could be costing you thousands…‘ an MU/QF codeshare ticket was twice the price if it was bought through Qantas, than through China Eastern.  Not that this discrimination is limited to Asia travellers. The Qantas price premium is similar for other codeshare arrangements, including LA/QF and EK/QF.  Again, two numbers, two airlines, but one crew and one plane…and one significant markup.

In short, codesharing benefits the airline, but rarely the customer. And that’s why I was furious. Not only once, but twice, I experience a mix up of messages in relation to two independent MU/QF codeshare flights; the first from Melbourne to Shanghai, and the second from Shanghai to Singapore.

Let me explain.

The first incident happened at the Melbourne Airport. I am both a Qantas ‘Frequent Flyer’ and a China Eastern ‘Eastern Miles’ loyalty card holder, so when I saw that the check-in counter was advertising both an MU and QF number, I pulled out both cards.

“Hi there,” I said as I approached the check-in staff. “Which card should I use for this flight?” The check-in staff member was not a China Eastern airlines staff, so I assumed he was from Qantas.

“Might as well use Qantas, mate.” And on that advice, I did.

Only to discover that he was wrong.

It turns out that in its codesharing arrangement with China Eastern, Qantas had decided that even passengers with Gold status and above would not have access to the Qantas lounge in Melbourne. I only discovered this fact after being rejected by the lounge staff. And yes, my ego was bruised. 

It would appear that when it comes to codesharing with China Eastern,  there’s literally no such thing as a free lunch – even with Gold Status.

Worse still, I inadvertently forfeited any points that I could have accumulated on my Eastern Miles loyalty card. Lose-lose. It would appear that when it comes to codesharing with China Eastern,  there’s literally no such thing as a free lunch – even with Gold Status.

Ten days later, at the Pudong airport in Shanghai I found myself on another MU/QF codeshare flight, this time bound for Singapore. Again, the arrangement between the two airlines left Qantas loyalty card holders in the cold, again – and again, literally. China Eastern lounge staff had not even heard of Qantas, let alone any reciprocal arrangement. Instead, they recommended that I go to the ‘One World’ lounge – located in Terminal 2, some one and a half kilometres away, and via a customs clearance. In short, an impossibility.  Dejected, I spent that evening roaming the length of Terminal 1, one of the world’s longest, and coldest, in search of a power supply for my laptop.

(Note: Yesterday, I discovered that I could have used the JAL lounge, which was in Terminal 1. Of course, nobody in Shanghai’s Pudong International Airport has a clue). 

And it was in that long, cold terminal, that I discovered that loyalty program screw-ups are not limited to the airline industry. Being resourceful, I realised that a non-airline aligned business lounge was available for Platinum Card holders of China Merchants Bank customers, of which I am one.

But not all loyal customers are equal.

At China Merchants Bank, when two cards are co-issued, say to a husband and wife, one card is deemed to be the primary card, while the other is the secondary card. In my case, I hold the secondary card, since my wife, a Chinese national, was first to register with the bank.

And here in lies the problem. While I do all the spending and the travelling, the secondary card cannot be used to redeem loyalty features – such as VIP lounge access.

So there I was, on a cold evening in mid winter in one of the world’s longest and coldest airport terminals, holding the VIP status of two completely useless loyalty programs. A first-world problem, I know, but no less infuriating.

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3 Responses to When Loyalty Programs Build Anything But

  1. Tao Wu says:

    Terrible news, Morry!

  2. Gary 'Macca' McDonald says:

    At the moment Qantas has a monopoly on the ‘safe’ brand, particularly in Asia at the moment. Mind you, if a codeshare flight crashes and it has a QF number attached, they might re-evaluate their partnerships. But that doesn’t change the fact that the service you received was well below the quality you expect as a frequent flyer. On that note you might be interested to learn that Qantas is ranked 11th best airline in 2014, and in 2013 they were 10th! So they are slipping backwards, and your experience isn’t going to help!

  3. Harry says:

    Great but sad story.

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