Following the recent global Loyalty & Awards conference in Madrid, we had the opportunity to interview one of the events sponsors StatusMatch who is making headwinds as the first official medium that enables frequent travelers to exchange their current status at one airline for an equal or higher status at another airline.
Mark Ross-Smith, CEO and Co-founder tells us about history of frequent flyer programs and the ambitions he has for StatusMatch.
Tell us a bit about Status Match’s partnership with airlines.
StatusMatch runs white label customer acquisition platforms on behalf of airline brands. These customer acquisition platforms offer a “Status Match” to eligible new customers to the airlines we work with.
For example, if you have Gold status with Airline X, and we work with Airline Y – we would proactively help Airline Y to acquire Airline X Gold members and give that member an equivalent elite status with Airline Y.
"Status Match fraud can be as high as 60%, and for airlines, this can result in cost blowouts in other areas of the business which they want to avoid."
Status Matching has been around for about the past 35 years but in an unorganized manner, generally via emails and unstructured data flows.
What we’re doing in Status Match/customer acquisition is similar to when airlines moved from paper to electronic tickets.
The change meant airlines could process higher volumes of customers, at lower costs, and it ultimately revolutionized the industry.
We work with almost a dozen airlines, most of which have signed on in the past 12 months.
Some of the larger brands we’ve worked with are Emirates, Lufthansa and Air Canada.
How do your airline status match programs differentiate from the likes of hotel, car rental and cruise line programs?
On the surface, status match campaigns for airline, hotel, car rental and cruise line programs look and feel similar for the customer.
Under the hood, there is a bunch of technological stuff happening like validation of status, KYC, security tools and payments.
We’ve engineered a process whereby the experience for the traveler is super-simple and applying for a status match takes no more than 60 seconds.
For airlines, having security checks and validation is critical, as there are negative economic impacts to them if the wrong type of customers is being allowed through the process.
Status Match fraud can be as high as 60%, and for airlines, this can result in cost blowouts in other areas of the business which they want to avoid.
Ultimately the idea of status matching is the same across the travel ecosystem – you want new high-value customers who have a proven ability to spend with your competitors.
You offer these customers a status match in hope they shift some of that business to your brand.
You’ve been part of frequent flyer community FlyerTalk for a long time. What feedback have you taken from the site when it came to creating Status Match?
I’ve been a FlyerTalk member since 2003 and have a couple thousand posts to my name. In the early days, I attended the “Flyertalk DOs” and met some incredible people who knew all the travel hacks.
I still have some good friends from almost 20-years ago who are regulars on FlyerTalk. There’s a wonderful community of genuine people who have a common interest in premium travel experiences.
Coming from a travel geek background and knowing a lot of other frequent flyers eventually transitioning into me running the loyalty program at Malaysia Airlines, where I ran their first status match offer in 2018.
"The demand from travelers for status matches has significantly increased over the past few months as many travelers come to terms that their 2022 status won’t be extended for free as it was in 2020 and 2021 due to Covid."
I think the combination of being a real frequent flyer, plus having run an airline loyalty program, plus the FlyerTalk type knowledge thrust me into a unique position where it was a logical step to create a product that was at the intersection of these 3 life experiences.
StatusMatch also works with FlyerTalk directly on paid and organic marketing campaigns to help spread the word of status match offers, so the relationship with forums like FT has evolved over the years to where now there is a commercial relationship.
How many status matches have you made at this point?
A lot. We’ve had around 2M visitors on our sites over the past year, and globally there are approx. 50M elite status members across airline, hotel, car rental and cruise lines.
The demand from travelers for status matches has significantly increased over the past few months as many travelers come to terms that their 2022 status won’t be extended for free as it was in 2020 and 2021 due to Covid.
I expect the demand for status matching, and the interest level from airlines/hotels and travelers will continue to skyrocket over the coming 6-9 months as travelers start seeing their elite status accounts being downgraded after the past few years of free status extensions.
Nobody wants to lose status, and status matching is one way to extend the benefits out for another year.
Which status matches have you seen as the biggest surprise (specifically for airlines)?
Brands are primarily focused on targeted outcomes from status matches. Airline X might want new customers from India, or Sri Lanka, but not from Singapore.
Airline Z might want new customers from a country they’re launching a new route into, and Airline Y might be looking to offer a status lifeline to customers in countries where the home airline has major financial difficulties (e.g. We saw many airlines targeting former Alitalia MilleMiglia elites).
In Canada, we partnered with Destination Canada (Government Tourism Board) and Air Canada, to offer high-value American travelers a status match with Air Canada’s Aeroplan program as a method to encourage travelers to choose Air Canada and travel to Canada.
This was effectively a tourism campaign with a highly appealing loyalty element, fully managed by our company.
The way airlines, hotels and travel brands are looking at status matching in 2022 is vastly different to the lens they viewed it from in 2012.
Today, we have the technology and tools to target specific travelers that brands want to attract.
Wrap that in a beautiful customer experience website app, and we have a powerful marketing tool that airlines are using to target, acquire and grow their most profitable customer database through highly-targeted status match opportunities.
Tell us how you partnered with Frontier and what a status match would mean with such an airline.
Frontier were our first status match clients and we’ve been thrilled with the response and strong uptake by travelers.
Frontier has always been ahead of the game on loyalty-related initiatives – from earning elite status from credit card spending and their elite program is miles ahead of the competition.
In my view, Frontier has always embraced the new. New innovations, new technology and generally doing things a little differently.
I think travelers recognize this and are attracted to their brand because of this boldness to stand out and be unique. Our next generation status match platform was an ideal fit for Frontier.
"Elite status loyalty holders represent 30+% of airline ticket sales and 80% of high-yield ticket sales."
We ran the world’s first paid status match campaign with Frontier in 2020, and again in 2021. It was the first time that new customers had speed and transparency into their status match process.
In fact, one customer had their status match application approved and were upgraded within 60 seconds of applying – which is probably the world’s fastest status match.
What this great customer experience translates into is higher engagement, more bookings, more co-brand credit cards, more miles earned, more revenue for the airline, a high-volume of customers for the airline, and basically every other good metric goes up. It’s a fantastic relationship we have with Frontier.
Customers expect brands to have their act together, and our partnership with Frontier Airlines means that we look after the backend process and management of logistics, technology, validation, scale etc. – while Frontier focuses on what they do best, running an airline!
Do you believe we will see a push from first tier to second tier and low-cost carriers in terms of status-match?
Travelers with elite status don’t want to lose it. But at the same time, airlines can’t continue to gift out free elite status candy forever. There are strong economics showing why NOT downgrading customers is bad for business.
Even though a traveler might not be as frequently flying today as they were in 2019 doesn’t mean they don’t want to keep their Gold or Platinum status. Travelers are looking to keep elite status via any method possible. This might mean a transition to a low-cost airline such as Frontier or Spirit.
The very worst thing that could happen to the industry is that travelers disengage with loyalty programs altogether, and instead start buying based on price.
Elite status loyalty holders represent 30%+ of airline ticket sales and 80% of high-yield ticket sales. Losing this highly valuable group of travelers to ‘best price of the day’ would be a disaster for any airline CFO.
Therefore, keeping travelers in the loyalty game (via status matching) not only makes commercial sense, but also helps protect top-line airline revenues from the very customers they need.
You were telling me that you were thinking about being able to create frequent flyer programs for start-up carriers like Norse Atlantic, Breeze Airways and Play Airlines? What do you think of Northern Pacific’s new crypto-oriented milage program which is already in effect on Ravn flights, or the likes of Fides loyalty from Moov Airways?
To be clear – I have no idea how to start or run an airline! I can’t imagine how difficult it would be to manage the operational aspects of getting something as complex as an airline off the ground.
With that in mind, the past two years of the pandemic have taught us that there are only 3 types of airlines in the world.
- Operationally Excellent: These airlines (think Singapore Airlines, Emirates etc.) have built up a brand over decades of consistently delivering operational excellence, a fantastic product, great service, a robust network, and you would fly with these airlines because they’re a solid experience.
- Quasi Gov/State Owned Airlines: This group of airlines don’t really need to run at a profit because the Government will step in and bail them out. Since 2020 we’ve seen many more airlines fall into this group and while there’s nothing wrong with Government money, it means they’re NOT in one of the other two categories.
- Loyalty/Marketing companies: The loyalty programs owned by airlines are often worth more than the entire airline group. Since 2020, when larger airlines used their loyalty program as security against loans, we’ve seen just how profitable and valuable these loyalty programs are. Even loyalty programs at airlines that are traditionally money-pits had loyalty businesses that were worth billions. These airlines are really loyalty programs that have an airline operational division, and not the other way around like we are led to believe.
With these three groups of airlines in mind – where do the new start-up airlines fit?
Where are their loyalty propositions? IATA Chairman Willie Walsh point blank asked this question at a CAPA conference in 2021 to a few of these start-up airlines. None of the start-up airlines provided an answer and instead talked to network/fleet….
So, while I have no idea how to run an airline, I do know that loyalty businesses have saved much of the global aviation industry, and I would think that nailing loyalty would be a priority for any new airline in today’s world.
Crypto rewards are still in its early stages. Let’s remember that airlines, hotels and banks have been educating travelers for the past 40 years that airline miles are the best value awards available. Convincing travelers that another type of reward is better is an uphill battle.
What are some other future aspirations you have?
StatusMatch is all about focusing on delivering value to the top 5% of air travelers globally. There is a lot of opportunity in selling high-margin products and services to these customers.
Traditionally, airlines have tried to sell stuff to these customers via booking flows and email upsells. I think there is a much larger revenue opportunity to monetize this audience in new ways that airlines have not yet explored.
"Around 25 million elite status holders globally in the travel industry are due to be downgraded. This represents half of everyone with elite status and while not all these travelers are flying and active – they are still significantly more active and valuable than those without elite status."
Ultimately, we’re playing in the acquisition and retention space, which isn’t just about airlines but also relates to financial institutions, revenue management and part of the airline ecosystem that service high-value customers.
The future of StatusMatch is very bright and as a business we will unlock new opportunities for airlines over the coming years through our loyalty-first innovative approach.
Why is now such a critical time for loyalty programs?
Over the next 3-9 months, the airline industry is going to see the largest share-shift in customer spend in the history of commercial aviation. This will happen because airlines are due to downgrade millions of elite status loyalty holders that have had their status extended during the pandemic.
As these elite travelers lose their status, they’ll be looking for a new airline to status match with.
They don’t want to lose elite status and will be seeking ways to hold on to their Gold or Platinum for another year or two. Now multiply this by 50% of the most frequent travelers globally.
Around 25 million elite status holders globally in the travel industry are due to be downgraded.
This represents half of everyone with elite status and while not all these travelers are flying and active – they are still significantly more active and valuable than those without elite status.
Airlines that proactively go out there to replenish the elites they’re losing will come out winners. Airlines that sit back and wait will take top-line revenue hits and see yields drop.
If there is one thing we’ve learned in the past 3 years, it’s that loyalty programs have massive influence on what airline people fly with and how much they spend.