The Rise of the Mileage Programs: The Case of Korean Air Alliances - Dissertation Example

? The Rise of the Mileage Programs: The Case of Korean Air Alliances Introduction The beginning of marked the modification of airlines. Airlines have adopted mileage programs that accrue frequent-flyer kilometers or miles matching the expanse flown on an airline or partners. The past few years also marked partnerships and coalitions between airlines (Latrou & Oretti, 2007, p. 127). This has led to the development of airline alliances. Airline alliances or partnerships refer to concurrence between airlines to work together at a considerable level. Such alliances provide international passengers with a set of connections and conveniences. These airline alliances are also noted to aid in marketing and brand improvement through the connections to other countries (Petersen & Winship, 2005, p. 156). Sky Team is an alliance that consists of Korean Airline, Aeromexico, Aeroflot, Air Europa, Middle East Airlines and Kenya Airways. Sky Team has adopted the use of mileage program. The passengers have greatly benefited from Sky Team airline alliance mileage program (DIANE Publishing Company, 1996, p. 212). Largely because of the growth of international tourism and the globalization of economic activities, the demand for air travel among countries across the world has rapidly grown. Vedder (2008, p. 67) notes that there has been a notable increase in passenger traffic over the past few years to and from Korea. Airlines have cooperated and collaborated with their rivals to remain aggressive and mutually grow into international market. It may seem difficult and downright challenging for an organization to make it in a very competitive business industry. In reference to Gossling et al. (2009, p. 56), the process of collaboration is a significant approach to not only reducing risks but also maintaining customer care, brand loyalty and creating brand awareness. The aviation industry has experienced downright alliances frenzy for the past few years. Sky Team alliance was founded in 2000 by Korean Air, Air France, Delta Airlines and Aeromexico before growing to its current membership. Sky Team has increased the number of carrier members and destinations, thus offering customers a greater connectivity to the rest of the world. In addition, Sky Team has continuously offered mileage programs to its passengers. Korean Air, a founding member of the Sky Team, has 145 aircrafts which operate in more than 121 destinations in more than 41 countries in the world. Korea Air is among the twenty best airlines in the world. Korea Airline has expanded its operations’ quality and quantity over the past few years (Tretheway, 1989, p. 445). The improved management system and the adoption of the flight flier program have assisted the company in attaining significant results. It is the largest flight operator in Asia, serving more cities and regions than any other airline. Since 2004, Korea Air has been one of the most successful and largest business airline freight operators (Haddad, 2000, p. 129). The growth of Korean Air has contributed to the growth of the economy and other sectors of the economy. Aim This paper aims at identifying some of the benefits that accrue to the passengers from the use of the mileage program in Sky Team, particularly Korean Airline, and ways on how this can be improved to increase brand loyalty. The passengers have reaped many advantages and benefits for using Korean Airline, but still this can be improved to increase loyalty and satisfaction. The mileage program adopted by Korean Air has benefited passengers by providing them with the opportunity to earn sky pass miles and attain bonuses from many airline and hotel collaborations. Passengers have continuously enjoyed expressly cut rates from organizations such as Hyatt Hotels, American Express, and Hertz rental cars (Storm, 1999, p. 25). The more a passenger accumulates miles, the more they benefit from the program. The alliances and the use of the mileage program has necessitated a global network without incurring extra costs and has assisted them in strengthening their customer loyalty and brand awareness. The favorable offers of the mileage program act as a strategy for longevity and a way to stay in the game (Latrou & Oretti, 2007, p. 182). Cognac and Delozier (1997, p 18) note that the growth of mileage program has necessitated the growth of the economy as it has led to the growth of the hotel industry where passengers will be motivated to visit as they will be discounted. Research shows that the mileage program has encouraged travelling among passengers (Beiske, 2007, p. 93). Increment of other offers may attract and increase the number of passengers using Korea Air. The passengers can be issued with brochures to assist in marketing the company and the favorable offers. This study aims to identify the significant role of the flight flyer program to passengers and to improve the Korean transport industry. Moreover, this study also aims at identifying ways on how brand awareness can be created and brand loyalty improved. This can be improved through a customer oriented approach that aims to satisfy the needs of the customers. This is because a customer oriented approach makes the customers feel valued and a part of the company. This study also aims to identify and recommend other ways on how mileage program can improve market share of Korean Air. Haddad (2000, p. 212) notes that mileage program adopted by Korean Air has benefited passengers by providing them with the opportunity to earn sky pass miles and attain bonuses from many airline and hotel collaborations. Objective Implementation of mileage program has not only contributed to the growth of the airline industry but also the whole economy. Examination of the role of the flight flier program gives insights into the level of achievement that the state has attained, and its plans on how policies will be executed. Petersen & Winship (2005, p. 125) note that premeditated coalitions were adopted in diverse industries across the world over the past few decades. The primary rationale for this tendency is frequently noticed in alteration of several external factors such as the technology and economy, which are as a result of a recognized resource inadequacy. The need for competitive advantage has necessitated this need for collaboration (Storm, 1999, p. 32). Research questions include: Has implementation and growth of mileage program led to the growth of other sectors of the economy? What is the relation between the growth of mileage program and economy? And finally, what are the primary techniques that Korean Airline has taken to improve brand loyalty and satisfaction of consumer needs? The objectives of the study include: To make recommendations on how Korean Airline can improve brand loyalty and increase awareness To make recommendation on how mileage program can be optimized to have a greater impact on the economy and passengers reap greater benefits. To review the available literature on the benefits that accrue to passengers for using flight flier program. References Beiske, B. (2007). Loyalty Management in the Airline Industry. GRIN Verlag. Cognac, M. & Delozier, M. (1997). Frequent Flyer Programs Promotion: An Analysis of a Paradoxical Industry. Southwestern Marketing Association. DIANE Publishing Company. (1996). International Aviation: Airline Alliances Produce Benefits, But Effect on Competition is Uncertain. DIANE Publishing. Gossling, S., Ceron, J. P., Dubois, G. & Hall, G. M. (2009). Hyper Mobile Travellers. Alicante . Haddad, A. (2000). Using Smart Cards to Gain Market Share. Gower Publishing Ltd. Latrou, K. & Oretti, M. (2007). Airline Choices for the Future: From Alliances to Mergers. Ashgate Publishing ltd. Petersen, R. & Winship, T. (2005). Mileage Pro: The Insider's Guide to Frequent Flyer Programs. Kathy Marr. Storm, S. (1999). Air transport policies and frequent flyer programs in the European community: a Scandinavian perspective. Unit of Tourism Research. 1(1) p. 1–105. Tretheway, M. W. (1989). Marketing bonanza or anti-competitive tool? Frequent Flyer Programs. 30(1) p. 445. Vedder, H. (2008). Strategic Alliances in the Aviation Industry: An analysis of Past and Current Developments. Grin Verlag. Read More