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Customer loyalty, retention rank top for airlines

Manama, December 2, 2009

Up to 86 per cent of the airlines view customer loyalty and retention as having the most positive impact on their business, according to a recent survey.

Sabre Airline Solutions, a leading provider of integrated solutions and services for airlines and airports, conducted a survey of 90 airlines across the globe and found that fuel cost instability and revenue management are among the top challenges for carriers over the next 18 months.

However, it is customer loyalty and retention efforts that are viewed by an overwhelming majority (86 per cent) as having the most positive impact on their business. Nearly 50 per cent of those surveyed said that customer experience was the primary issue related to customer loyalty and retention.

In past years, airlines were most concerned with skyrocketing fuel prices. Today, carriers around the world are making dramatic business-model changes to survive not only fuel costs but a multitude of challenges. This could result in a positive change that brings about the ultimate travel experience for consumers.

Maintaining or developing customer loyalty is part of the problem airlines face today, since charging additional fees and ancillary services is viewed by many carriers as one of the top tactics to increase revenues, said the survey.

However, one of the lessons learned is that airlines ought not forget the customer.

"The importance of customer loyalty and retention was distinctly higher in this year's survey compared to a similar study we did two years ago," said Maher Koubaa, Sabre regional vice president for the Middle East and Africa.

"That's not surprising as airlines grapple with the challenge of introducing additional fees to generate much-needed new revenue, in a way that doesn't erode an airline's brand or negatively impact customer loyalty. The airline that finds that magic balance will become a model for the rest of the industry,” he added.

"We've seen some winners and losers in this area, particularly as customers are less loyal to brands and more apt to switching preferences now than ever before.”

Other key Sabre survey findings for the Middle East and Africa region:

• Revenue management and yield was rated by 50 percent of survey respondents as the biggest challenge in managing airline profits over the next 18 months.
• Concerns over rising fuel cost has now evolved into 48 per cent of those surveyed saying fuel price instability is one of the biggest challenge facing their business.
• Managing revenues (57 per cent), distribution mix (14 per cent) and ancillary revenue (14 per cent) are the top three tactics survey respondents plan to use to increase revenues.
• Staff and crew optimization is the primary tactic airlines use to reduce cost.
• As in the rest of the world, customer loyalty was rated by 78 per cent as having a positive impact on the airline’s revenue.

“Those trends confirm the fact that, although the Middle East region did continue to witness an increase in demand and traffic, yield has suffered substantially,” said Koubaa. “This is partly due to some over capacity occurring in the region.

“In the next year or two, we'll see more experimentation and a greater focus on the customer as airlines sharpen their ability to service customer needs using new technologies available to them," he said.

“With Sabre’s service and application portfolio, we will continue to work with our current and future regional carriers to achieve those goals,” Koubaa concluded. – TradeArabia News Service




Tags: Survey | Manama | Airlines | Sabre Solutions | Customer loyalty | retention |

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