GLO Video Interview at ATM 2023 with Dr Nejib Ben-Khedher, Head of Emirates Skywards on Innovation and Future Plans

Interview with GLO Video Interview at ATM 2023 with Dr Nejib Ben-Khedher,?

Head of Emirates Skywards on Innovation and Future Plans?

1:35: On Emirates' Skywards current program

3:00: On program’s miles ‘adjustments’ rather than ‘devaluations’

4:56: On Top 5 markets for Emirates and uniqueness of 20+mn ‘non-frequent flyer’ members

6:40: On ‘frequent flying programs’ vs. ‘lifestyle programs’

8:17: On ‘airline-retail ecosystem’, Skywards Mall, Skywards Everyday and synergies with Dubai Duty-Free.?

11:30: On aspirational rewards – spending on flight vs. retail items and ‘Cash+Miles’

13:50: On Emirates' power of a single brand and strategy towards choosing partners and alliances

16:58: On Skywards Subscriptions and program’s future plans?

20:25: On personalization and how Skywards personalises customer marketing

23:30: On the use of new technologies and big data

26:10: On sustainability and willingness of customers to participate in the airline’s sustainability quest.?

29:20: What loyalty or CX feature would you invent if you had a magic wand?

30:55: If you could give advice to your younger self – what would it be??

33:05: How would you spend 1 million miles? On ‘money can't buy but miles can buy’ experiences.?

Anastasia Levashova, GLO: Dr Najib, it's a pleasure to interview you here at Arabian Travel Market in Dubai in 2023. Emirates is undoubtedly one of the leaders in the loyalty programmes globally, and one of the leaders in the Middle East. Can you please quickly touch upon the history, Emirates journey and where it is now??

Dr Nejib Ben-Khedher, Emirates: Thank you so much for inviting me to speak about the Emirates program here at the ATM. This year it is a very exciting and well-attended event, which clearly speaks to the recovery of travel. We are happy to see this happen and have face-to-face discussions as well.

Emirates Skywards started around 2000 as a loyalty program supporting Emirates and today it is a loyalty program of both Emirates and Flydubai as well, our sister company. It’s a 23-year-old program and today we are 30 million members strong. Actually, today we hit a 32-million-member milestone, with members all over the world and more than 96% of members actually outside our home base UAE, which makes it very different from other programmes, for example in the US or some other larger programmes as well. We're probably in the top 10, and some say, top 5 programmes in terms of number of members globally. In 2016 we took on the transformation of the programme to propel it into the data and digital age.?

Anastasia Levashova, GLO: Technology and sustainability are definitely 2 big topics on the top of the loyalty agenda now. But first I wanted to touch upon 2023 and your vision for 2024. 2023 was a fantastic recovery year with what some experts call ‘revenge travel’, with a lot of customers willing to travel and to spend more. At the same time, airlines had to cut some of the extensions of loyalty programs that they've done for the miles before and started to be more conscious of the costs and profitability. How does Emirates square that???What's your magic formula for solving this problem?

Dr Nejib Ben-Khedher, Emirates: If there is a magic formula. We need to be pragmatic as a business in general. In terms of recovery, if I look at it from a sales perspective, we're adding about 300’000-350’000 members a month to the programme. So, it continues to be massive addition and a clear testament to the recovery itself for the airline as people fly on us and see the value in joining the Skywards programme as well.?

Now, as you mentioned, we've been really on the side of the customer during the pandemic, we've extended status, we've extended the expiry of miles, but comes a time where we really need to go back to business as I mentioned. People focus so much on this so-called devaluation of the programmes. The reality, as I would call it, is ‘adjustment’ and I'll explain why it's not the devaluation even though it's perceived as such, but it’s more of an adjustment from a standpoint. From our standpoint, we haven't touched the number of miles for rewards for about 10 years, and we haven't touched the upgrades for about 6 years. In the meantime, you've seen that the airfares have gone up tremendously. We as a programme, if you can think about it, we buy the seats from the Emirates airline and compete with commercial passengers for reward seats if you will. So, we had to adjust the economics of the programme in terms of the number of miles that are required to be aligned with wherever the fares are going.?

So why do I say, ‘It's not the devaluation’? It's because we've done this, first of all, to ensure that we continue to have enough resources for our members and in particular, our premium members. If you look at what we've done with our premium members (Silver, Gold and Platinum members), we've actually increased the number of miles they earn on flights as well, again, in alignment with the fact that they're paying higher fares as we go. So, for our premium members, it's about neutral. And by the way, we only increased the number of miles required for business and first-class rewards that are obviously so sought after by our members and we haven't touched the economy one.?

So, if you think about the economy piece, it takes you fewer round trips when you are a Silver, Gold or Platinum member to actually get a so-called ‘free trip’. So, it's perceived as a devaluation, but the reality is, it’s more of an ‘adjustment’ in alignment with what's happening on the commercial side. And for our premium members, we have protected some of the value proposition.

Anastasia Levashova, GLO: I want to come back to your point that Emirates is unique in the sense that while it's a ‘home airline’, e.g. airline of one of the Emirates in the UAE, and typically the ‘home airline’ will have the majority of the citizens of that country as the customers and loyal members. Emirates is unique because out of the 32 million, almost 20 million are in the smaller markets outside of the UK, USA, UAE, Australia and India, which are your top 5 markets. These customers don't travel that frequently. How do you manage to keep them active as customers as they are members of Emirates Skywards and happy to come back to Emirates again and again?

Dr. Nejib Ben-Khedher, Emirates: You're right Anastasia. You mentioned and you have numbers right with 20 million outside of the top 5 markets. There is a long tail of countries, more than 160 countries, where we have members - basically around the world. In terms of infrequent travelling, I would even add to that number some of our US, and UK base as well, because some of these travellers will fly with us once a year or once every other year. So, we have a large base of people, and we are one of the, if not, the largest international carrier in the world, and mostly flying people, East-to-West and North-to-South, stopping over Dubai, with a large number of infrequent travellers.?

For us it is important to create an ecosystem with partners that allow our members to continue to engage with us - maybe not directly through active flying but directly through active engagement with our partners as well. We want to be on top of minds of these members whenever they think about travelling internationally. We know that they're going to be using other carriers maybe locally or domestically. But we want them the minute they are thinking about international travel.?

We do that by having both airline partners who are going to complement and extend our reach domestically or within the sub-regions, or by lifestyle partners with whom our members are going to interact nearly on a daily basis, for example, retail or financial partners so that we stay on top of mind. Sometimes people talk about ‘frequent flyer programmes’ versus ‘loyalty programmes’ or ‘lifestyle loyalty’. We truly are a lifestyle loyalty programme, because our frequent fliers represent less than 2% of our total membership base. We have to find a way to engage people on a daily basis, and if not, then on a frequent basis, so that we're on the top of minds when they're thinking about flying with us.??So, to close on this ‘Loyalty vs. FFP’ debate, we moved away in 2016 from being an FFP and catering to that small fragment of members into becoming more of a lifestyle loyalty program, engaging with a broader base of members. I define loyalty as when somebody, in the USA, gets our MasterCard, a co-branded credit card, that we have with Barclays, as a sign of loyalty. Why would they choose us even though they're flying with us once a year, maybe twice a year, maybe once every other year? But they choose that credit card – it is a sign of loyalty to me even though they're not frequent fliers, per se.

Anastasia Levashova, GLO: And this leads us actually to one interesting trend, which emerged probably just 4-5 years ago, the kind of ‘retail ecosystem’ or ‘convergence’ between the airlines and retailers, and the ability to spend miles across retail. Of course, COVID dramatically speeded up partnerships between airlines and retail partners. Skywards was one of the first airlines to offer this through Skywards Mall. How do you see the loyalty programme, loyalty retail or Flying Mall proposition developing 5 years from now?

Dr Nejib Ben-Khedher, Emirates: Yes, it's very interesting. We jumped on the bandwagon in 2016-2017 when we engaged with Dubai Mall, for example, a destination mall for a lot of our residents here but also a lot of the visitors come and visit as well. We became de-facto the loyalty currency of Dubai Mall and at the time we focused mostly on the earning proposition, basically ‘Earn more, Travel better’. We expanded the number of partners we have on the ‘Earn side’ and on the ‘Burn side’ we focused mostly on reward travel, which is the most aspirational reward that people are looking for. They see the retail reward as more of a common commodity when we see travel as more aspirational. We wanted ‘Earn more, Travel better’ – you earn with our financial partners when going to the Dubai Mall on any transaction above 100 dirhams.?

We launched Skywards Everyday in 2019 - a platform where we have a number of smaller retail partners, who don't have their own loyalty programme and use us as a currency so you can engage with them and earn with them as well.?

You've mentioned Skywards Mall - it has been launched on the e-commerce side with fashion brands, such as Bloomingdale's or Harvey Nichols in the UK. We have launched it in the USA, the UK, and the UAE, and soon we'll be launching it in Australia and India as well.?

Now, what we've seen right now because of the high demand for travel and reward seats, and there's pressure on the reward seats availability, we wanted to provide members with a way for them also to redeem on ‘non-flight’ as well and we're looking at adding redemption options on retail, as well, which we going to expand.?

By the way, one of the biggest rewards, but I would put it under the travel category, even though it's retail, is Dubai Duty-Free, which is a very attractive proposition that we have for our members and a lot of them use their miles whenever they're stopping over in Dubai or they're flying from Dubai, or coming actually to Dubai to shop by in DDF and use their miles as a form of cash or a form of payment.?

Anastasia Levashova, GLO: I'm sure that a lot of airports globally are trying to emulate the model and success of the Dubai Airport and DDF. How do you expect the ‘retail/airline’ proposition to develop in the future? Will it come back still to the core aspirational travel? Because previously always co-branded credit cards and everyday spending of the people were typically tailored towards something exciting and emotional, like reward travel ticket. Do you think it will go back to this more traditional way or it will stay with retail 50/50?

Dr Nejib Ben-Khedher, Emirates: Today we have around 50/50 earn on travel & flights vs. financial & retail partners. However, the ‘burn’ or rewards continue to be 85% on flight rewards and the rest on everything else. For example, we've launched Skywards Hotels, which is a platform where you could use your miles on hotels. Skymiles Mall will become a redemption partner sometime soon as well. We have Skywards Everyday as well. This allows people to use their miles for other forms of ‘burn’, but I believe that the perceived value of redemption on flights will continue to be the most attractive part. We need to balance it out working with our colleagues in revenue optimization to be able to have access to those seats because that's what members are looking for.?

Let me just add one thing, that is in-between retail and flight rewards there is ‘Cash+Miles’ on flights. It has become an attractive proposition also for our customers because they have access to any flight, any cabin, any day. That is somewhere in between the daily use of your miles and the reward, which you are using for flights. We've seen people use on average 10,000 miles to get to a redemption of about $100 on their flights, which is considerable given the fares that we have.?

Anastasia Levashova, GLO: It's quite exciting to see how the loyalty programmes and carriers are becoming more and more flexible and adapting to customer needs, which leads me to the next question. Emirates is one of the few airlines globally that is not part of any main airline alliance (Sky Team, Star Alliance or One World). You have an extremely strong brand and I understand the continuous effort to keep the strengths of the brand. How do you see the benefit of this? Do you see the future possibility or any advantage of joining one of the alliances or widening your partnership network? Or do you still believe in the power of one brand?

Dr. Nejib Ben-Khedher, Emirates: You’ve seen us throughout the years and we've been very consistent and out of the alliances. I don't want to poke at alliances, as they have their pros and cons but we have somewhat poked into an alliance since we have nearly a friend and partner in nearly every Alliance.??In One World you know you know our relationship with Qantas has been going on for a long time, both on the airline side and also on the loyalty programme side. Now we are very excited about Air Canada and United Airlines in the US as well. So, we have partners, we have relationships as ‘pick and choose’. We look at airlines that have the same mindset, that can obviously match our brand aspirations. From Skywards’ perspective, we have now 18 airline partners around the world – JAL, Qantas, Air Canada, and United but also others as well in Asia or Latin America with GOL, for example. It’s important for us to extend our reach by working with these airlines providing our members with the possibility to earn and burn some miles. One of the biggest ones that we have in the UK is EasyJet, which provides not just the UK but Europe as well. It provides people with a way to redeem on EasyJet for domestic or for a short-haul flight as well. These partnerships enhance the program, but we're very picky to protect our brand and to ensure that our members get the right experience. It's not just about ‘Earn & Burn’, but it's also about the experience for some of our premium members, access to the lounge, etc. We look at these as comprehensively as possible in terms of building those partnerships.

Anastasia Levashova, GLO: Emirates was one of the first airlines globally to implement the Emirates Skywards subscription model, which effectively allows customers to pick the appropriate level of miles they want to own for that year ahead. Now you already have some results for this programme. Do you think this model works? And can you give us a bit more of the numbers??

Dr Nejib Ben-Khedher, Emirates: I would love to and thanks for mentioning this. Plus, we're very excited about the programme and very proud for having launched something that was first in the industry as well. This was launched just before the pandemic. So unfortunately, the pandemic hit, and therefore there was no reason for people to truly subscribe, but now we are seeing this program ramping up.?

I'll give you a couple of stats as of now as we're still growing the programme. Basically, we have three levels of subscription, but 60% of the people have chosen the premium level at $999 and the reason is that you get an accelerator -20% Bonus tier miles. So, it allows you to accelerate or at least retain your tier and it shows again that members really care about the status and benefits they're getting. It's a very rich programme for our members, whether it is access to the lounge or excess baggage, etc. So, we've seen 60% of the people take on the premium package, the most expensive and within this subscription we've seen 40% of the people who have taken this subscription are our Gold members, 20% are Silver, 20% are Platinum and the rest are Blue members. There's something for everybody and this is exactly how we wanted to construct it. For some members, it's all about that extra access to the lounge and some other benefits that they don't have at Blue status. It’s kind of an ‘a-la-carte’ type thing where they have a number of accesses that they can have. For Gold members, it is much more about a 20% discount on a reward seat or the 20% acceleration in terms of tier miles. So, everyone has found something in there that is of benefit to them, and we're very happy.??It was for us a trial to see if one of the packages is going to take off, but at the end we thought, okay, these packages are constructed well enough for us to keep them and there's something for everybody in them now.?

The next level for us is to enhance this beyond just providing Skywards benefits working with partners, and again, focusing more on what you talked about earlier, which is this emotional aspect of loyalty and providing experiences on top of these transactional type benefits that you're getting. That's our next focus in terms of what we're doing with the programme and hopefully, we're going to keep a lag between us and our competitors in terms of enhancing the programme as we go learning from what we've seen and adjusting as we go.

Anastasia Levashova, GLO: It sounds very interesting and I can see this as the basis for a more personalised experience for customers. The whole topic of more personalised experience or personalization, e.g. targeted product offering, became more and more popular. It's nice and we all like to receive an email or advertising, which actually fits our needs. But how do you balance this need for personalization with customer privacy, and data privacy, where is this magic formula?

Dr Nejib Ben-Khedher, Emirates: So, just to revert to your point, because earlier you made a very good point around the subscription programme and trend towards personalization because our intent was truly to get to ‘a-la carte’ type programme when we started it. Because the benefits mean different things to different people. Traditionally programmes have been structured in a way where you give the bulk of benefits to the Gold members. But the reality is that some members actually prefer certain benefits vs. the others. So for us, it was an attempt to create a bit more personalization or relevance to people whenever they're choosing those subscriptions.?

When technology will allow us, since we're talking a little bit about technology, we will get to something a bit more granular in terms of the offering to our members that would be a bit more personalised. You are very right about this whole idea of personalization and the fact that it could be intrusive if we do too much of it. For me, the definition is pretty simple - and it is one about relevance and is exactly what you said. It's about understanding your customer, their behaviour and being able to talk to them and it's not just about offers.?

For example, our first attempt at personalization was around statements - whenever we send you your monthly statement (which we used to have very little engagement when we were sending it), or open rates on the emails. We found a way now to customise those statements knowing who you are. We are basically talking about different parts of the programme and the programme is becoming richer and richer and more and more complex. It's important for us to get the right messages that are put in there so we can see it's not about the offers. It's much more about how we talk to you - the tone, and the content that we send you in the email so that we entice you to open that email and know, explore and engage more with the programme. So that's really what is our attempt about.?

In general, my personal view is that especially with the younger generation - they will trust you with their data. Look what you are doing on social media and exposing a lot of that data and even personal life. But they will trust you if they see benefits coming back to them. As long as we are making sure that we're providing you benefits, I think we're going to get trusted more and more and people are going to provide richer profiles for us to go use and then in exchange, we'll be able to cater to them even with a more relevance.

Anastasia Levashova, GLO: With the latest new trends in technology and new solutions available??- Big Data, Artificial intelligence and now ChatGPT, are changing the way customers plan their trips to France or to Thailand already now. Do you see Emirates' new technologies and evolving solutions purely as tools or do you think that they will alter the whole customer proposition?

Dr Nejib Ben-Khedher, Emirates: I think the jury is still out. It's fascinating what's happening on OpenAI in a number of areas, not just in the text, but also videos and reach media as well. We're watching this very closely and we've been in discussions with the likes of Microsoft, etc, to see how we can embed some of these tools to help with productivity. It just happened that in the last 18 months, I was also Interim CIO and I've been working on the technology side as well. We engaged with them to see how we can use these technologies either to help coders for example, in terms of generating quality code, or in terms of embedding these tools in analytics, for example, tools like Power bi, or even in office tools as well.?

So for us, it's work internally leveraging some of this while ensuring that our data is protected. We're going to look at this, At the same time from a customer-facing perspective we're looking at what's possible in terms of engaging with customers and allowing them to provide services in a very natural way, inspire them around travel or explain to them going away from FAQs on the programme to actually people asking natural questions and being helped.?

As I mentioned, the programme gets more complex and richer in terms of what's provided to our members - not everybody is aware of everything. We want to allow people to ask questions: “What can I do for 10,000 miles?” Natural chatting questions. You mention Emirates being a forward-thinking brand and part of it is us embracing new technology, whether it's AI or other technologies as well.?

Anastasia Levashova, GLO: Moving on to this year's main theme of ATM - Sustainability. ATM made a pledge this year to try to reach net zero by 2030. For a long time, hospitality and travel, in general, were not perceived by some eco-activists as sustainability friendly. At the same time, airlines and the whole travel segment did tremendous progress towards a more clean and sustainable future. Do you think fundamentally the customers are willing to take an active role in helping airlines to reach sustainability? How we can involve loyalty programmes customers in the programmes to help the whole industry target a sustainable future?

Dr. Nejib Ben-Khedher, Emirates: Yes, you're right, the airlines are doing a lot and we need to communicate more about that as well because the perception outside is that we're not doing enough. I think we've just tested SAF (sustainable aviation fuel) on one of the engines on the Boeing-777. We are experimenting and there's a whole supply chain that needs to work to support something like that.?

We've done a lot on single-use plastic onboard, and we have a lot of material that we recycle, etc. But I think we need to communicate more so people understand. With COP28 coming to the UAE, there's a big focus on making that happen. We will be definitely communicating whether during the event itself or even before. If you walk around our stand,??you will see a demonstration of these efforts as well.?

From a loyalty programme perspective, we're also looking at what we can do because more and more members, especially the younger generations, actually are very attuned to these environmental issues, and therefore we need to do something from a programme perspective. One small thing we've done as we moved away from plastic cards to totally digital cards except for our Platinum members, who would love to see their status printed somewhere. We moved on four years ago, before the pandemic, to just totally digital cars, and carbon offsets within some programmes we have worked with.?

We need to make sure that we're true to it and we're not just doing something for the sake of checking the box, but that it has actually environmental impact as well. So I think it's in everybody's conscious, especially the younger generation are very demanding. For example, earlier I talked about data and what their view on privacy is and how they can trust you if you do the right thing for example on sustainability. Ultimately, this is going to be on the top of their mind and we need to do something from an airline or social mobility perspective to support that.

Anastasia Levashova, GLO: As the tradition at GLO interviews we would like to know more about the leaders in the industry and have 3 personal questions. If you had a magic wand, what feature of a loyalty program or customer experience would you invent??

Dr Nejib Ben-Khedher, Emirates: I'd like to answer this question by not being cameras but actually being cameras in a broader ecosystem with our partners as well. It's for me that we've done a lot from a member perspective to make your experience a seamless one, but more and more, we work with others as well. Your journey is not just the online part of it. You know, we love that that part is really an exciting journey for you but we also work with you know, even in terms of rewards as well you can get a reward on an on a seat. And then we you know, you can get a scours hotels as I mentioned as part of it. You can you could rent a car you could do, how can I make the experience seamless and to and working with partners as well? different technologies, passing different information, data privacy, all of these things need to be taken into account so that for us to pass the right information, where my platinum member can actually enjoy an end-to-end experience, door-to-door in a very seamless way. So if we can make that happen, and there is no break in the experience, I think that would be that'd be great. And technology is going to be a big enabler to make that happen.

Anastasia Levashova, GLO: In your position, if you had the ability or chance to give advice to your younger self, knowing everything you now know about airlines and loyalty programmes, what that advice would be?

Dr. Nejib Ben-Khedher, Emirates: Well, first of all, I would have advised myself to start the loyalty earlier than I have done because I have only been in loyalty for the past six years and I've discovered really, for somebody who's a somewhat of a geek around everything, data and digital and who actually loves this whole customer experience piece.?

If you look at the triangle of Data-Digital-Customer, then loyalty is the best place especially loyalty in this day and age is the best place to be - I really wish that I started this journey much, much earlier than I've done today. The younger Najib would have probably enjoyed this and his professional life even better. I would just tell them to focus on the customer. It is very difficult to earn the trust. It's very easy to lose the trust. Focus on that, on that. For me, trust is earned when customers have some issues or anxiety around the problem - how do we, as a loyalty programme, try to solve it and make that solution happen? You earn that trust and you win it for a long time and you build that emotional connection when you do the right thing for customers when they are in times. We have a tendency to talk about transactions, frequent fliers, how many times they've flown, and how much commercial, but in the end, as a loyalty programme, it's about the emotional link. And the emotional link truly happens mostly in these moments of truth, where you need to prove to the customers that you care about them, especially your premium customers, and that you've taken care of them in times of anxiety. So the focus on the customer and everything else will fall in place.

Anastasia Levashova, GLO: If you had the 1 million miles, let's say Emirates Skywards miles, where would you spend them?

Dr Nejib Ben-Khedher, Emirates: I don't have 1 Million Miles, but when I was working in the USA I was Executive platinum on American Airlines and my card said 3 million miles. So I did earn at some point in my life 3 million miles on another carrier in the US.?

But just to tell you - we launched Skywards Exclusives, which is exclusively about experiences that we curate mostly around our sponsorship events where we provide VIP experiences to our members. And you can use your miles for that. So just lately, we have launched this experience with Dilmah Tea. Dilmah Tea has been with us for a very long time and is served on board. Now we have this experience where you can go to the tea fields, and you can spend the whole week with two people and you can just experience the tea process and be taught about tea. This is in Sri Lanka, obviously. We opened this experience for bidding just it's an auction, and you can use miles for this. We had several packages that were offered and one of the highest packages was bought at 500,000 miles - so that’s a close one. We right now have an auction going on for Manchester City and Manchester United game the FA finals, the Emirates FA final. And that right now is around 200,000 Miles and people are bidding. There are a few - we actually had one of the F1 events for a VIP experience as well. I have to say I think experience has continued to be, again something that attracts and people are so. I call them ‘money can't buy but miles can buy’ experiences. And that's what it is. And I would spend a million miles probably to get one of these experiences.?

Anastasia Levashova, GLO: Thank you so much. It's been a pleasure to do the interview and we wish all the best for Emirates and Skywards to keep your leading position in the field. We will always be glad to have you again.?

Dr Nejib Ben-Khedher, Emirates: Thanks so much and hopefully we'll have more to speak about at the next ATM. Thank you.