Air Berlin sells off Topbonus loyalty program

Air Berlin has joined the relatively small pool of airlines which no longer directly operate their own loyalty program. The carrier sold their Topbonus program to Etihad, a 29% shareholder in the German airline. The move is expected to push Air Berlin to a profit for the first time since 2007.

Loyalty programs are, in many cases, the only consistently profitable portion of an airline operation. The loyalty programs also have many more avenues over which they can expand and generate additional partnerships and profits. And Etihad sees these opportunities quite well. CEO James Hogan, at the announcement in Berlin, noted, "the loyalty-program sector is a faster growing and higher margin business than the airline industry." Etihad aims to build a global loyalty management platform which can cover multiple airlines. Currently Air Berlin, Etihad and Air Seychelles are covered by Etihad’s stake but others could be folded in to the operation in the future based on the way it is being set up.

Etihad has been on the leading edge of loyalty program technology and partnerships in recent years. The carrier has more than 170 partners, a very large number for a program with fewer than 2 million enrolled members. And Etihad has been pushing to improve the fungibility of points through programs like PointsPay, a partnership which allows members to spend points like cash using a credit card funded by their points balances. It would not be particularly surprising to see programs like PointsPay extend to the Topbonus program in the not-so-distant future.

For Air Berlin losing direct control over their loyalty program is probably not all that huge a deal, though they do have to ensure that they continue to meet the rules of oneworld with respect to policies and participation. It is, however, a one-time windfall financially. If the carrier cannot keep operational profits flowing they won’t be able to generate the large cash infusion again, at least not from Topbonus.

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by Seth Miller 5 months ago4 months ago

6 Comments

Seth, this was a one time balance sheet transaction to allow EY to infuse cas into the company without expanding its stake. Don’t read too much into it… EYs own programme is run by a third party service provider (ICLP?) which is the reason behind the 170 partners and innovative products like pointspay (which is run by loylogic, BTW).

It usually doesn’t end up being a good thing for airline elite customers and even the airline to have an independent company running the loyalty program – divergent interests come into play.