Norwegian Reward – the frequent flyer programme from Norwegian

28 May 2016 by BusinessTraveller
Norwegian Rewards Brede-470
Norwegian has experienced rapid growth from the UK in recent years, both in the frequency of its flights to and from Scandanavia, and its development of its Gatwick base to fly long-haul to the US. You can read about the most recent Norwegian news here. Norwegian also has big plans for its frequent flyer programme Norwegian Reward, so to hear more about it Business Traveller spoke to Brede Huser, head of Norwegian Reward and Norwegian’s Chief Commercial Officer Thomas Ramdahl. We also asked some more general questions at the end about Norwegian’s current business model and its intentions at Gatwick. When did Norwegian Reward start? BH: It launched in 2007, but for the first four years was a small IT project, basically. Then we started the next phase in 2011 when we included external partners and started hiring people to build a platform where we could expand. Today we have four million members as of February 2016 and we will reach five million by the end of the year. Half a million of those are in the UK, also as of February. The majority are active in the UK since they are basically new members in the last three or four years. We are working on ways to activate members and try to keep them active. Brede Huser

Brede Huser, head of Norwegian Reward

Please explain the programme. BH: We have two aspects to the programme. One is that you earn cashpoints, which is our currency which can be used for full and partial payments on every ticket, you don’t have to find available rewards seats. You also earn what we call Rewards. You earn a reward if you book six flights with us in a year, and these can be the lowest priced flights. The rewards take different forms, and you choose one of them. So that could be free seat selection for 12 months or free luggage or free fast track, or a cashpoints boost. Those rewards are all new from last December. Well into hundreds of thousands of our customers have done this. We started counting flights for this last July so we are coming up to the first year of the rewards programme. It sounds like it is expensive for you. TR: One of the good things that you can achieve cashpoints through partners that member can only redeem on the airline. Over 50 per cent of cashpoints earned are from external partners, which means that 50 per cent is financed by those external partners, and the only way of redeeming them is by using the cashpoints towards airline tickets. So basically people are buying airline tickets with cashpoints financed by external partners. Thomas Ramdahl

Thomas Ramdahl, Chief Commercial Officer

You don’t have many partners outside Scandinavia at the moment. BH: Norwegian Reward is very well developed in Norway where we have partners in every category and we have utility companies – cable, electricity and so on, allowing people to earn from daily spending. In the UK we only have travel-orientated partners but we have lots more in the pipeline and we will build up partners in other sectors, starting with utilities which will help you earn cashpoints doing your everyday business. And those cashpoints have to be redeemed with the airline. And because it’s so easy to redeem, with full or partial redemptions on all tickets, there’s no demand from members for redeeming in other places. You can earn cashpoints at the Bloc Hotel in Gatwick, which is relevant because it’s our Gatwick base, and also at No 1 Traveller lounges. In Scandinavia we have a corporate side to the loyalty programme. In the UK we have no focused on it, as yet. We will do it at some point but we haven’t set a date. So you will expand the programme in the UK? BH:Yes. We have hired partner account managers to recruit utility partners. Airport parking is coming and other kinds of airport transportation are coming, and then we will start to work on more day to day spending such as utilities and shopping. That way people can earn points when they travel, so we can do a deal with a partner in Spain and they can earn cashpoints when they go shopping on holiday. Will you issue frequent flyer cards? BH: No. We will have virtual cards. So how will you recognise your best customers? BH: We try and take care of our most frequent customers. So if you fly 24 legs, 12 return flights, you get a free trip where we pay everything including taxes and even the connecting flight if necessary. That sounds expensive. BH: Well 3,600 people qualified, but it was good to reward them, and many of them did not travel alone so they paid for those partners and a lot of people paid to upgrade to premium. Let’s open it out a little from Norwegian Reward. What percentage of your passengers from the UK are business travellers? TR: It depends on how you define it. A lot of our business passengers buy a low-cost ticket, so we don’t know the percentage. If we had to guess it would be around 10 per cent, I think, but it depends on the route, looking at our frequency into Scandinavia it’s higher, because we fly five times a day to Stockholm and Copenhagen and three times to Oslo so you will see a slightly higher percentage of business traffic there than some of the long haul routes. We have a sales team in London now and they are targeting small and medium size corporates trying to get them on board, but you need frequency to attract business customers, and that’s not done overnight. Gatwick is a slightly constrained airport in terms of runway slots. There aren’t that many available slots at the moment. We fly daily to New York. We started at three a week. As soon as we added the daily service we were much more visible in the GDS and the travel trade started to fill up our premium cabin. We see business traffic to the west coast, where we are five times a week to Los Angeles, and then there is Boston which is four times a week. These routes are served with B787-8 and B787-9 aircraft, and when we receive new Dreamliners you will see an increase in frequency on our existing routes as well as new routes. New York will be double daily from next year, and we will be daily on Boston and Los Angeles and San Francisco. Are you confident you can fill your premium class cabin? TR: Yes. The demand is there. The different in price between our premium and business class is so huge. We also offer lounges – so at JFK we fly into Terminal 1 and [for departures] we are using the Korean Air Lounge. At Los Angeles it’s the Oneworld lounge, and is included in the premium class ticket price. At Gatwick we use the No 1 Traveller lounge. From a passengers’ point of view, what’s the advantages of Gatwick? TR: Gatwick is much easier and faster than Heathrow. You don’t have to stand in line at security in fast track. It’s not as fancy as Terminal 5. And BA has added a New York service from Gatwick this summer. But what about connecting traffic? If you look at our own network, I would say between 30 and 40 percent of our traffic is connecting and coming from either Scandinavia or Spain - Barcelona and Madrid, where we have a double daily service. Those connecting passengers are through tickets and with luggage through-checked. And Gatwick has Gatwick Connect where you can collect your luggage, but it means Gatwick acting as an OTA (online travel agent). Will you be able to continue to expand at Gatwick? TR: Today we have ways of getting slots at Gatwick. In the future, we may have to buy them from other airlines. Hopefully airlines may move out of Gatwick to Luton or Stansted, for instance, which will free some up. The way we have achieved is applying, taking what we can get and then rearranging our flights to make it work. We can grow with two aircraft each year. We have four carried million passengers through Gatwick last year. Why not have your own lounge? TR: It’s a possibility but at the moment we are not looking and we use No. 1 Lounge. If flying economy you can buy lounge access via Norwegian Reward and get cashpoints and a cheaper price. Average load factor on the long-haul network is plus 90 per cent throughout the year. It’s not a secret that we are filling the aircraft. Reliability? TR: I don’t think we have cancelled many flights. We have serious delays because we don’t cancel them. The thing we do also is we do a lot of wet leases when there’s an issue with an aircraft. It’s a start up issue. Not having a long-haul fleet to start with, has in the past caused us to wet lease other aircraft – Boeing, Airbus to cover the flights. So we use Hi Fly on Europe, for instance, but that was quite a long time ago, the last time it happened. There is always recovery in the programme, so if you have a seven day week you will have one day recovery throughout the network. Tom Otley
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