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Mobile rewards gain stature as currency for airlines

By
December 16, 2014

United 185_optMobile rewards are becoming an alternative form of payment for frequent fliers who use their devices for in-store purchases at major retailers and earning miles for each dollar spent.

The mobile environment enables airlines to pursue co-branded opportunities and partnerships with retail and online stores so that loyalty program members have more avenues to earn and burn. The transformation of rewards that can be tracked and redeemed from a mobile device into a traveling form of currency points to how airline-related retailers are responding to consumer demands for more rewards flexibility.

“Mobile devices present unique opportunities for us to reach our customers and offer them benefits that make their travel and other activities easier and more convenient,” said Karen May, spokeswoman and public relations manager for Chicago-based United Airlines, an industry leader in mobile rewards programs.

“Last month, we began offering our MileagePlus X mobile app to a test group of members, enabling them to use their mobile devices to earn miles when making purchases at certain stores.”

MileagePlus X
United’s MileagePlus X app allows consumers to use their mobile devices for in-store purchases at major retailers such as Lowe’s, Gap, Sears and AMC Theaters and get additional miles for each dollar spent.

The airline invited MileagePlus members using iOS and Android devices to test the new app this holiday season. United plans to roll out MileagePlus X to all members soon, and will be expanding retail options.

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United: A leader in mobile rewards.

Rewards have always been an alternative form of payment. The mobile environment makes them available in real time, both for earning and for redemption. So now that rewards members can store and track their rewards on mobile devices, in their mobile wallets, using them for payment becomes an easier transaction.

The convenience level is even greater when airlines establish relationships and partnerships with other travel brands and providers, online retailers and travel retailers.

“Airlines and all other industries are shifting to mobile commerce in response to an entire marketplace that’s becoming more mobile and mobile-friendly,” said Vanessa Horwell, founder and chief client services officer for ThinkInk, Miami.

“This shift means that airlines will have to extend their mobile capabilities beyond the brand, provide the flexibility and utility that consumers want, and support a wider variety of mobile transactions, travel planning, booking, ticketing, upgrading, baggage-tracking, in-flight services and ancillary revenue, among others.

“The airline industry basically established loyalty programs back in the 1980s, and mobile commerce – however it’s carried out – will help define the growth and future of the loyalty industry in coming years,” she said.

United’s MileagePlux X app, which allow users to conveniently pay for in-store purchases and collect up to 24 miles per dollar spent, marks a turning point of sorts for airlines. In the past, airline loyalty programs and rewards were typically offered by or through credit card and travel companies.

Users of the MileagePlus X app have the ability to find participating stores and discover the amount of miles they can receive at more than 50,000 locations. Consumers can also browse merchants’ catalogs or search for specific retailers.

To complete a transaction with MileagePlus X, guests enter the total amount of their purchase into the app, which will create a digital merchant gift card. The store’s cashier then scans the barcode to complete the purchase, and the guest sees award miles instantly show up in the member account.

Guests may also see any additional miles earned purchasing the gift card with a Chase MileagePlus Credit Card. MileagePlus X will offer more payment features in the future, such as the ability to use miles for in-store purchases.

“The MileagePlus X loyalty app is the only direct airline offered program that I’m aware of,” said Djamel Agaoua, CEO of Paris-based MobPartner. “All other related programs are offered by and through credit card and travel companies.”

In terms of mobile commerce, the rewards ramp-up is a way for airlines to combat in-store showrooming while driving purchases and adding value to the bricks-and-mortar store experience.

United’s testing of the app is the latest step in an aggressive mobile strategy.

In October, the carrier announced it would outfit more than 200 United Express regional jets with Wi-Fi for flights to begin later this year. Its moves have included the launch of passport scanning for passengers and their integration with Uber for destination pickups.

Airlines that follow United’s example will benefit in terms of an increase in revenue, trust and brand loyalty with their customers.

“I think airlines are just getting into the market,” MobPartner’s Mr. Agaoua said. “It’s a natural evolution for their respective businesses.”

Embracing mobile
Airlines are not alone among transportation industry players that are working hard to embrace the new mobile environment. Moves include support for mobile rewards, digital wallets, geolocation opportunities, real-time marketing and other initiatives.

Consumers and technology are both moving in those directions.

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United’s mobile app.

Airlines do have their work cut out making up lost ground in mobile innovation compared with advances by the hotel sector and even traditional retailers.

“The real challenge is making sure that the various technologies and platforms work together seamlessly and smoothly,” Ms. Horwell said. “Because a stellar customer experience – regardless of where it occurs – remains at the heart of loyalty to a brand.”

Final Take
Michael Barris is staff reporter on Mobile Commerce Daily, New York.

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