The Intersection of Co-Brand Credit Card Strategy and Holiday Packaging Providers

The selection of a holiday (vacation) packaging technology provider is a critical decision that can significantly impact an airline's overall strategy and customer experience. One often overlooked aspect in this decision-making process is the airline's co-brand credit card strategy. By aligning these two elements, airlines can unlock numerous benefits that enhance customer loyalty, increase revenue, and provide a seamless travel experience.?

Setting the scene: The Growing Importance of Co-Brand Credit Cards?

Co-brand credit cards have become a significant revenue driver for airlines. For example, Delta Airlines disclosed that their co-branded card contributed $6.8 billion in 2023 revenue, with expectations to grow to nearly 20% of total revenue by 2030. These programs are not only lucrative but also play a crucial role in fostering customer loyalty. Airlines benefit from revenue sharing arrangements with card issuers, which are often in their favour. The increased usage of these cards translates to higher transaction fees and interest charges, directly boosting the airline's top line as the bank purchases more frequent flyer miles.?

The growth of airline co-brand credit card revenues reminds us of the earlier days of the low cost carrier (LCC) business model. LCCs initially generated around 15-25% of their total revenue from ancillary fees. These fees included charges for services such as checked baggage, seat selection, and in-flight refreshments. Over time, this percentage has grown significantly, highlighting how airline business models tend to diversify away from the core transportation of passengers from point A to point B to capture value derived from activities beyond the flight itself.?

Just as LCCs have turned over every rock to drive additional ancillary revenue, expect more airlines to realign every element of their commercial strategy toward growing the value of their co-brand card portfolios.?

Understanding the Connection Between Co-Brand Credit Card Strategy and Holiday Packaging Solutions?

Many airlines may not immediately see the connection between their co-brand credit card strategy and their holiday packaging solution. However, integrating these two elements can create a powerful synergy that enhances the overall customer experience and drives significant revenue growth. Here are some practical ways to understand this connection:?

• Seamless Booking Experience: A fully integrated solution allows customers to book flights, hotels, and car rentals in one seamless transaction using their co-brand credit card. This convenience can lead to higher customer satisfaction and repeat business.?
• Enhanced Data Analytics: Combining data from co-brand credit card transactions and holiday package bookings provides airlines with a comprehensive view of customer behaviour. This data can be used to create targeted marketing campaigns and personalised offers that drive higher engagement.?
• Increasing Card Usage: By seamlessly integrating the airline's co-brand credit card into the holiday packaging service, customers are encouraged to use their cards more frequently.??
• Brand Consistency: Ensuring that the holiday packaging service aligns with the airline's brand values and customer expectations reinforces brand loyalty and trust.?

Unlocking these benefits requires a holiday packaging technology provider which offers a user-friendly experience, can customise the implementation across many degrees of freedom, and has commercial interests which align closely with the airline.?

In the following sections, we will delve deeper into the benefits of connecting co-brand card strategies with holiday packaging solutions, including enhancing customer loyalty, better data analytics, increasing revenue, maintaining brand consistency, and greater customisation and control over the customer journey. We will also explain how using a fully integrated technology partner is superior to defaulting into a white label relationship with an online travel agency (OTA).?

Enhancing Customer Loyalty through Seamless Integration and Personalised Offers?

A fully integrated technology partner for holiday packaging services allows airlines to offer a more cohesive and personalised experience to their customers. By integrating the co-brand credit card into the holiday package booking process, airlines can provide tailored offers and rewards that resonate with their customers' preferences and travel habits. This seamless integration not only enhances customer satisfaction but also fosters loyalty and co-brand card engagement.?

When an airline’s holiday packaging solution is managed in an OTA-powered white label silo, it is much more difficult to execute website-wide, consistent co-brand card strategies which include a holiday packaging element. This is not merely a practical matter. Many online travel agencies have their own loyalty and credit card programs, which raises the risk of commercial conflicts of interest.?

Better Data Analytics for Targeted Marketing?

One of the significant advantages of a fully integrated solution is the access to comprehensive data analytics. Airlines can leverage this data to gain insights into customer behaviour, spending patterns, and preferences. This information is invaluable for creating targeted marketing campaigns that promote the co-brand credit card and holiday packages. By understanding their customers better, airlines can craft personalised offers that drive higher engagement, conversion rates and basket value.?

When an airline sources its holiday packaging solution from a fully integrated provider, it has access to all the data to unlock these benefits. This is not always true when sourcing solutions from online travel agencies, and indeed may never be true. OTAs consider their data a competitive advantage and sharing it could diminish their market edge and/or reduce their ability to monetise it effectively. Furthermore, some OTAs believe sharing data with airlines could weaken their control over these valuable customer relationships.?

Increasing Revenue through Higher Card Usage?

When an airline's co-brand credit card is seamlessly integrated into the holiday packaging service, it encourages higher card usage. Customers are more likely to use their co-brand credit card for booking holiday packages if they receive additional rewards or benefits. This increased usage translates to higher revenue for the airline, as they earn more from transaction fees and interest charges. Additionally, the convenience of using a single card for all travel-related expenses can lead to increased customer satisfaction and loyalty.?

When airlines choose to use a fully integrated technology provider over an OTA-provided white label solution for their holiday package booking capabilities, it significantly impacts the OTA's ability to drive more volume for its own co-branded credit card. OTAs view these relationships as a strategic way to capture more air bookings, not because air bookings are highly profitable on their own, but because they unlock substantial value in other areas of their business. However, when airlines push their own co-brand cards, it limits the OTA's ability to leverage these partnerships fully, reducing the financial benefits that come from increased usage of their own co-branded credit card.?

Maintaining Brand Consistency?

An airline can leverage the flexibility provided by a fully integrated technology partner to implement a holiday package offering that aligns with the attributes of its core flight product. By ensuring that the holiday package service aligns with these core attributes, the airline can provide a consistent and reliable brand experience across all touchpoints.?

For example, Southwest Airlines is set to launch a new vacation package brand,?Getaways by Southwest?, in mid-2025.?This brand will feature an?industry-leading cancellation policy?that allows customers to cancel their vacation packages and use the travel credit for a different vacation or apply it to flight-only trips. This policy is designed to be very friendly and flexible, enhancing customer convenience and satisfaction.?

This new policy builds upon Southwest’s well-known?“no change fees”?approach to flights. This flexibility has been a significant selling point for Southwest, allowing passengers to adjust their travel plans without incurring additional costs. Because Southwest has chosen to use a fully integrated technology partner instead of an OTA to power its holiday packaging product, it will have the strategic freedom to make this powerful connection between product and brand.?

This kind of brand consistency engenders greater customer loyalty and is more likely to drive greater frequent flyer engagement, including more co-brand credit card holders.?

Conclusion?

Many airlines may not immediately recognise the significance of their holiday packaging solution in relation to their overall co-brand card strategy. However, there are powerful links between the two. Central to unlocking this value is making the right choice between using a fully integrated technology partner and an OTA to power the solution. By opting for a fully integrated technology partner, airlines can ensure a seamless and cohesive customer experience, which in turn enhances customer loyalty and drives long-term success.