The Airmiles Bridge: Redeem Frequent-Flyer Miles as Gift Cards

Frequent-flyer miles sit on an airline's balance sheet as a real obligation, and the fastest route to reducing it is to give members somewhere useful to spend them. With over 25 trillion miles outstanding by the end of 2012 and IFRS pushing carriers toward deferred-revenue accounting, the cost of an unredeemed mile stopped being theoretical.

Why Traditional Redemption Stalled

Capacity discipline made award seats scarce, and every redeemed seat risked displacing a fare-paying passenger. Airlines responded with instant Cash Rewards accounts, but redemption was confined to a short list of sponsors, required members to move value between a Mileage Account and a Cash Account online, and ended with a card or parcel in the post. Choice was narrow and fulfilment was slow.

Bridging Miles into the Retail Till

The alternative is to connect the loyalty programme directly to a retailer's gift card platform. Ogloba interfaced air miles programmes through a web service API so that a member's Cash Account PAN is recognised as a gift card PAN — sometimes via an alias method — and reloads in real time as the member accrues. At the checkout the card is simply swiped and identified by the cash register solution as a gift card. Nothing is issued, nothing is shipped.

The result is a shorter liability tail for the airline, a redemption catalogue as wide as the retailer's shelves, joint marketing between two large players, and a measurable lift in average basket for the merchant. Loyalty value moves to where customers already are.

FAQ

Why did redeeming miles for flights become so difficult?

Capacity discipline made award seats scarce, and every redeemed seat risked displacing a fare-paying passenger — so fewer and fewer seats were released for miles.

What was wrong with instant Cash Rewards accounts?

Redemption was confined to a short list of sponsors, members had to move value between a Mileage Account and a Cash Account online, and the process ended with a card or parcel in the post. Choice was narrow and fulfilment was slow.

How does a member's cash account become spendable at a till?

A web service API lets the member's Cash Account PAN be recognised as a gift card PAN — sometimes via an alias method — and it reloads in real time as the member accrues. At the checkout the card is simply swiped.

What does the retailer gain from hosting the redemption?

A redemption catalogue as wide as its own shelves, joint marketing with a large partner, and a measurable lift in average basket.