A dynamic approach to frequent flyer program

Abstract

The frequent flyer algorithms adopted are static in nature, that is the points awarded to a frequent flyer is proportional only to the miles traveled. In static approach, there is neither an incentive for the frequent flyer to travel more (increase profitability) nor does it ensure customer satisfaction. In this paper, we propose a dynamic approach that considers time varying factors such as competition from rival airliners, number of travels made so far, load factor etc and prove that it can not only improve profitability but at the same time ensure customer satisfaction. © 2014 Springer International Publishing Switzerland.