33

THE EFFECT OF FREQUENT FLYER PROGRAMS ON CUSTOMER LOYALTY

Associate. Prof. Dr. Osman Eralp olakolu
Adnan Menderes University, School of Tourism and Hotel Management
Aydn, Turkey.
ocolak@adu.edu.tr


Assist. Prof. Dr. Sava ARTUER
Gaziosmanpaa University, Zile Dinerler School of Tourism and Hotel Management
Tokat , Turkey.
artugersavas@yahoo.com


ABSTRACT
This paper aims to present whether there is effect of the frequent flyer programs (FFPs) applied by
the airways companies that want to build loyal customers over the loyalty of their customers. At the end
of the study, it was observed that rewards given under the program were quite important to the
members of the FFPs. Members consider the intangible rewards more important than the tangible
benefits. On the other hand, customer loyalty levels of the members toward the airway companies are on
the medium level. Moreover, a medium level relationship (r=0.446) was observed between the customer
loyalty and FFP. In addition, as a result of the regression analysis; it was found that FFPs have an influence
over the customer loyalty and especially on the behavioral loyalty compared to the attitudinal loyalty.

Keywords: Customer loyalty, loyalty programs, FFPs, airway business management.


1. INTRODUCTION
The customer loyalty, undoubtedly, has an essential
importance for the business managements. Majority of the
companies apply loyalty programs to build the customer
loyalty. Many marketing specialists recently have been
concerned more with the loyalty programs in their
researches. Most of these studies focused on how these
loyalty programs affect the financial and marketing
performances of companies and the customer loyalty
(Lacey and Sneath, 2006).
Today, business managements from many sectors
have built their own customer loyalty programs so as to
create and increase the level of customer loyalty. The
application of this program to the airway companies occurs
under the name of frequent flyer program(FFP). Airway
companies are targeting customers to become more loyal
to them by attracting more customers by means of the
developed FFP system.
This study investigates whether the FFPs applied by
the airway companies has an effect over the customer
loyalty, or not?
2. CONCEPTUAL BACKGROUND
2.1. Customer loyalty
The term of loyalty has been existed for centuries. In
the ancient ages, rulers had been taken advantage of



34
loyalty to control and improve their power over the people.
In the era of Roman Empire, the powerful generals asserted
loyalty to ensure their army gain political power and
sometimes to get rid of the emperors (Kumar and Shah,
2004). However, during the 21
st
century, loyalty seems as
an activity used by the companies to constitute customer
loyalty as part of efforts to save their market share.
Customer loyalty is being considered as a valuable gain in
the competitive markets (Srivastava et al, 2000).
There is no common consensus about the loyalty
conception in the literature. There are several definitions
about the concept of loyalty by the various academics.
Some definitions of the customer loyalty can be found
below:
Customer loyalty; a promise given sincerely for the
purchasing the same product or the service in the future by
the consumer who already preferred the mentioned
product or the service (Oliver, 1999). According to Lee and
Cunningham (2001), customer loyalty is a tendency to be a
customer of current suppliers depending on their previous
experiences and expectations for the future. However, due
to another definition, customer loyalty is exhibiting
behavior toward product categories, brands, shops and
services by consumers (Uncles et al, 2003).

2.2. Aspects of customer loyalty
In the marketing literature, authors usually separate
the customer loyalty concept into three categories. Those
are behavioral aspect (loyalty), attitudinal aspect (loyalty)
and combination of both mentioned aspects (mixture).
Those aspects are also considered as tools which measure
the customer loyalty. For the companies that desire to
create and maintain real and long term customer loyalty
should take into account both dimension of the loyalty and
adopt an approach which combines these two dimensions.
Behavioral loyalty:
Behavioral loyalty is the tendency of a customers
repurchasing frequency or shopping regularly from the
same brand (Han and Back, 2008). Moreover, according to
Chirico and Lo Presti (2008), behavioral loyalty is the
customers wish to maintain his/her relationship with the
business in the short-term.
Traditionally, customer loyalty is defined as a
behavioral measurement. This measurement includes
amount of a purchasing, probability of the repurchasing of
the product, repurchasing behavior and purchasing
frequency. These measurements shed lights over the
consideration of the behavioral loyalty for the marketing
professionals (Kumar and Shah, 2004).
In regard to Tepeci (1999), the behavioral loyalty
which means re-occurring purchasing behavior does not
end up with a psychological commitment toward a brand.
For instance, a customer may prefer a hotel just because it
is in a very close proximity. However, when a new hotel
which supplies better benefits was introduced right across
the street, this customer may change his/her hotel
preference (Bowen and Chen, 2001). In another example,
the statement of the contracted customers of the X courier
company that operates with reasonable prices is that in
case the introduction of a new and cheaper courier
company into the market the customers might prefer the
new one. This statement proves that the repeating
purchasing of the customers attached to the company in
terms of behavioral loyalty does not mean a commitment
(Batmaz, 2008). Therefore, repeated purchases do not
guarantee the loyalty all the time (Bowen and Chen, 2001).
Attitudinal loyalty:
Attitudinal loyalty is that a customers repurchasing
of the product and recommending it to the others
(Kandampully and Suhartanto, 2000). Attitudinal loyalty is
an approach that using attitudinal data to express the
psychological and sentimental loyalty which build up the
loyalty concept (Deermen, 2006:78). Besides, due to
Ganesh et al (2000), attitudinal loyalty is described as
customers tendency including his/her commitment and
advertisement from mouth-to-mouth for a specific brand.
According to the Bowen and Chen (2001), in the
attitudinal loyalty aspect, a loyalty feeling builds up inside
the customer toward a specific product, a brand or a
company in an emotional and a psychological meaning.
Kuusik (2007) defines the sentimentally loyal customers as
a customer group who shops from a specific company, and
commit to continue to buy from the same company in the
future, and recommend the company to the others.
In the attitudinal measurement, for a customer who
even does not make shopping from the company, it is
possible to be referred as loyal customer. That is,
customers emotional loyalty could continue and he/she



35
may recommend the company to the others. For example,
the customer him/herself may be away from the company
therefore he/she is not able make shopping from there, but
the customer could recommend this business to the other
people around and convey positive messages about the
company. All of these conditions prove the existence of the
behavioral loyalty (at and Koolu, 2008). This dimension
of the attitudinal loyalty is extremely important to the
businesses managements. Because, companies could make
free and more efficient advertisement owing to the
customers attached to the company with attitudinal loyalty.
Multi-dimensional (compounded) aspects:
In the literature, it was highlighted that behavioral
and attitudinal aspects are not enough to measure the
customer loyalty on their own. Therefore, authors suggest
an approach including a mixture of aspects which is a
combination of the behavioral and the attitudinal loyalties.
The importance of this approach was emphasized while
measuring the real loyalty of the customers (Selvi, 2007:39).
For the existence of the real customer loyalty, a
customer must carry following behavior patterns
(Deermen, 2006:79):
Presenting a regular repurchasing behavior.
Purchasing not only a single product and
service of the company, but also other ones
over the time (cross-sales).
Recommending the company to the others.
Not to be influenced by the competitors
marketing efforts.
In summary, it is not enough to repurchase of the
companys products for the existence of the real customer
loyalty. Besides, the consumer must not be influenced by
the other competitors appealing deals and must
recommend the company to the others. Put it in another
way, the customer loyalty is occurrence of an emotional
and psychological tie between the company and consumer.

2.3. FFPs
The frequent flyer program was established in the
American Airlines company in 1981 for the first time. Today,
it is a program that is being applied by many airway
companies (Klophaus, 2005). The program used in the
American Airways promoted several types of rewards to the
people using the same airway company all the times. The
basic purpose of the program was to encourage the people
to use the same airway company when they travel and to
travel more often (Strom, 1999).
FFPs may seem that they were thought for every
passenger; however they actually targeted the business
travelers who fly very often. The rewards offered under the
frequent flyer program are different than the ones
distributed by the other sectors. Bonuses of the FFPs have
multiple reward aspects. They might be benefited into two
different ways. Firstly they could be used for the free
flights, hotel accommodations, car rentals and financial
assistance. Secondly, these rewards can be used to receive
exclusive services by the passengers. For instance, faster
check-in process at the airport, admitting the luggage under
the special security till they get loaded to the plane,
superior reservation service, selecting your own seat
(Martin et al, 2008; European Competition Authorities,
2005; Strom, 1999).
In the FFPs, members can earn scores for their each
flight. The members are awarded these scores based on the
length of the fight. As the flight range increases, they earn
bigger scores. The purposes of the FFPs are to make the
customers loyal toward the company and to prevent the
customers flying with the competitor airway companies.
FFPs dynamise many sectors such as hotels, car rental
companies, banks and fuel stations. Airway companies go
cooperation with all of these mentioned sectors. Moreover,
airway businesses pioneered to those sectors to establish
their own loyalty programs (Martin et al, 2008; European
Competition Authorities, 2005; Strom, 1999).

3. METHODOLOGY
Figure 1 illustrates the behavioral and attitudinal
loyalties which constitute the customer loyalty and the
conceptual model of the research including the FFPs. The
hypothesis H
1
, H
2
and H
3
developed under the model
conception were given right after the Figure 1.






FFPS
CUSTOMER LOYALTY
BEHAVIORAL
LOYALTY
ATTITUDINAL
LOYALTY
H1

H2
H3



36


Figure1. Research Model (Conceptual Model)
H1: FFPs have an influence on the customer loyalty.
H2: FFPs have an influence on the behavioral loyalty.
H3: FFPs have an influence on the attitudinal loyalty.

3.1. Scales used in the study and their ingredients
In the study, an inquiry technique was employed to
collect data. The inquiry consisting three sections was
applied in April 2010. The first section is composed of
demographic (gender, age, education, occupation, income)
and travel & membership (reason for travel, frequency of
travel, duration of the membership, membership card)
specifications of the members of the FFPs. In the second
section of the inquiry, there are notations to measure the
importance level of reward given under the coverage of
frequent flyer program. The third section is including 13
questions which were asked to measure the customer
loyalty.
In the second section of the inquiry, the questions
regarding the importance of the given reward under the
frequent flyer program were acquired from the web sites of
the airway companies. Evaluations of the participants for
the each notation of this section were separated into
degrees due to the 5-grade-likert scale as not at all
important, slightly important, moderately important,
very important and extremely important.
In the third section, the questions meant to measure
the store loyalty were constituted from the questions
prepared by the Bridson et al (2008) based on several scales
beginning with customer loyalty scale and the other scales
used by Nadiri et al (2008) and Zeithaml et al (1996).
Customer loyalty is composed of the two aspects namely
behavioral and attitudinal loyalty. While measuring the
customer loyalty, based on the studies over the different
majors, usually the level is being determined according to
the behavioral aspect.
In the literature, it was underlined that behavioral
and attitudinal aspect were not enough alone. Therefore,
authors suggest a combination of behavioral and attitudinal
aspects. The importance of this approach was highlighted
while measuring the real loyalty. Thus, both behavioral and
attitudinal aspects of the customer loyalty were measured
in this study. Answers of the participants in this section
were graded as strongly disagree, disagree, neither
agree nor disagree, agree and strongly agree due to
the 5 level Likert scale.

3.2. Validity and reliability of the scales
Before the fore application of the inquiry, to
establish the structural existence and validity of all the
scales, we consulted several specialists in this subject about
the content of the questions and about the clear
understanding of the notations to prepare the inquiry for
the fore application.
To determine the reliability level of the scales used in
the investigation, some fore applications were
implemented before the main application of the inquiry. In
this way, a fore application was performed over the 62
members of the FFPs. 8 out of the 62 inquiries were
discarded because of the missing or uncompleted data.
Totally 54 inquiries were taken into consideration so as to
analysis of the scales for their reliability.
Cronbach Alfa () coefficient was used to evaluate
the reliability of the scales in this investigation. As a result
of fore application, reliability coefficients were calculated
= 0.62 and = 0.91 for the behavioral and attitudinal loyalty
respectively. The reliability coefficient for the combination
of the loyalties was = 0.89.

3.3. Sampling
The members of the FFPs in Turkey are making up
the universe of this investigation. The application of the
inquiry was performed at the zmir International Adnan
Menderes and the Samsun aramba Airports. Simple
Random Sampling Method was used to represent the
character of the universe. To determine the number of the
sampling, the model which is developed by Ryan (1995) was
utilized (Translated from Ryan, 1995 by Yayl and ztrk,
2006). Bearable error rate was set as 5%, according to this,
the Z value was taken 1.96 and the minimum number of
sampling for the investigation was calculated as 384. In this
view, 530 members of the frequent flyer program were
administered for the inquiry. Because of the missing or



37
uncompleted data, 27 out of the 530 inquiry were
disregarded. Thus, wholly 503 inquiries were taken into
consideration under the inquiry and then we proceeded to
analyze of the data.

3.4. Analysis of the data
Demographic characteristics, travel and membership
specifications of the frequent flyer program members were
analyzed by taking their frequency and the percentage
distribution. Moreover, standard deviation and arithmetic
means of the opinions of the members who benefit from
the bonus and services offered under the frequent flyer
program were represented. The relationship between the
FFPs and the customer loyalty (behavioral and attitudinal
loyalty) were determined by means of the simple
correlation method. The Pearson correlation coefficient
between each variable was calculated. On the other hand,
to explain the relationship between the frequent flayer
programs and the customer loyalty with a mathematical
model, a single-variable linear regression analysis was
implemented.

4. STUDY FINDINGS
In the Table 1, demographic characteristics of the
participants such as gender, age, education, occupation and
income were analyzed in terms of percentage and
frequency. It can be observed that of the participants are
male passengers, 88% of the participants are in the 21-50
age group, of them has university degree, of the
participants are freelancers and private sector employees
and finally of the group has an income level less than
5000 TL/month.

Table 1: Findings Relevant to the Demographic Characteristics of the Participants

Demographic Characteristics frequency percentage

Gender
Male 320 63.6
Female 183 36.4
Age
20 and less 20 4.0
21-30 144 28.6
31-40 175 34.8
41-50 122 24.3
51 and up 42 8.3
Education
Primary School 13 2.6
High School 79 15.7
Associate 47 9.3
Undergraduate 245 48.7
Graduate 119 23.7
Occupation
Official servant 90 17.9
Private servant 159 31.6
Freelancer 133 26.4
Businessman 52 10.3
Retired 22 4.4
Student 47 9.4
Income (Monthly)



38
1000 TL and less 65 12.9
1001-2000 123 24.5
2001-3000 115 22.9
3001-4000 71 14.1
4001-5000 42 8.3
5000+ 87 17.3

The Table 2 represents some findings about the
participants such as reason for travel, flight frequency and
membership duration regarding the FFPs. From the given
data, it is possible to see that business and touristic travels
come to the forefront and rate of the participants who flies
10 or more annually were distributed regularly. Moreover,
it is possible make deductions from the distribution of the
membership durations that the interest of the customers
has been increasing permanently.


Tabl e 2: Findings Relevant to the Travel and Membership Characteristics of the Participants

Variables frequency percentage
Reason for Travel
Business 263 52.3
Touristic 155 30.8
Education 57 11.3
Visit 28 5.6
Flight Frequency (Annual)
1-10 times 271 53.9
11-20 125 24.9
21-30 40 8.0
31-40 20 4.0
41-50 16 3.2
51 and up 31 6.0
Duration of Membership
Less than 1 year 132 26.2
1-2 155 30.8
3-4 107 21.3
5 years and up 109 21.7


In the Table 3, there are findings about the
importance of the reward offered under the program,
shown by the members of the FFPs. The importance of the
each reward in the Table is above 3, which means that the
participants give importance to the rewards at the middle
level and above.









39
Table 3: Descriptive Statistics of the importance of Rewards

Notations average standard deviation
Free ticket/Free flight 4.23 1.03
Rental Car Discounts 3.05 1.38
Hotel Discounts 3.28 1.30
Supermarket Discounts 3.17 1.29
Express check-in (registry) 3.98 1.13
Miles reward from the program partners 3.81 1.13
Membership Upgrade 3.43 1.16
Benefit from the special promotions 3.56 1.09
Meal selection 3.22 1.21
(CIP) privilege 3.54 1.27
Extra luggage 3.79 1.15
Reservation priority 3.99 1.00
Guaranteed Reservation 4.08 1.00
Exclusive consulting and reservation line 3.60 1.18


According to the Table 3, the most important reward
for the program members is Free ticket/flight. The other
important rewards are; guaranteed reservation,
reservation priority, express check-in respectively. Due
to the participants consideration, the rewards with less
importance compared to the other ones are; rental car
discounts and supermarket discounts.
Performers separate the rewards offered under
the loyalty programs into two categories; hard rewards and
soft rewards. The hard rewards are usually tangible rewards
such as discounts and gifts. However, the soft rewards are
based on intangible benefits. They are including the services
offered to the customers. There is no tangible value in the
mentality of the soft rewards. On the other hand, hard
rewards carry tangible value (Bridson et al, 2008). Table 3
shows that frequent flyer program members usually prefers
soft rewards (reservation priority, guaranteed reservation,
express check-in) more than the hard rewards. In this
context, it can be said that intangible rewards are more
important to the participants.


Table 4: Descriptive statistics and reliability

Constructs Items mean cm.

B.L. bl1 I am a regular customer of the airway company which I am currently using. 3.46 3.63 0.89

bl2 In case I would use an airway in future again, I would think of this airway
company which is my very first choice. 3.63
bl3 In the future, I am thinking about flying more often with the airway
company which I am using currently. 3.57
bl4 I have flown several times with airway company which I am using
currently. 3.85
bl5 I use my regular airway company in almost all of my flights. 3.61



40
A.L. al1 I would encourage my family, friends and colleagues to fly with airway
company which I use regularly. 3.46 3.36 0.94
al2 I would try to convince my family, friends and colleagues to fly with the
airway company which I use regularly. 3.27
al3 I would suggest the airway company which I am currently using. 3.49
al4 I would tell positive things about the airway company which I am using
currently. 3.61
al5 When people ask for a recommendation, I would suggest the airway
company which I am using currently. 3.60
al6 Even I may not fly with this company, I would recommend it to the other
people. 3.40
al7 Even it is hard to reach the airway company which I am currently using,
I would still continue to fly with this company. 3.02
al8 If the airway company which I am currently using was closed, I would
hard time to find an equivalent airway company. 3.04

B.L.: Behavioral Loyalty, A.L.: Attitudinal Loyalty, cm.: Construct mean, : Cronbach Alpha

Due to the Table 4, it can be observed that the
behavioral and the attitudinal loyalty of the frequent flyer
program members toward the airway company, are on
either the average level or just above it. None the less, the
fact that the behavioral loyalty of the members is higher
than the attitudinal loyalty is another point made by this
study.
Table 5 exhibits the correlation analysis results to
reveal the relationship between frequent flayer program
and the customer loyalty.



Table 5: Correlation Matrix for the Relation between the Frequent Flyer Program
and Customer Loyalty

Variables Key Values
FFP -
Behavioral Loyalty r = 0.470, p-value= p<0.001
Attitudinal Loyalty r = 0.401, p-value= p<0.001
Customer Loyalty r = 0.446, p-value= p<0.001


According to the findings in Table 5, an important
relationship was found between the frequent flayer
program and customer loyalty and its subdimensions
(behavioral and attitudinal aspects) with the 0.001
significance level. In other words, the Pearson Correlation
Coefficient (r) among the all factors is meaningful (p<0.001).
There is positive (linear) and middle level relationship
between the FFP and customer loyalty (0.40< r <0.60). A
correlation r = 0.470 was found between the FFP and the
behavioral loyalty, and the correlation between the FFP and
attitudinal loyalty was r = 0.401. In general, there is a
positive and middle level relationship r = 0.446 between
FFP and the customer loyalty.




41
Table 6: Support for the hypothesis

Hypothesis Key Values Result

H1: FFPs affect the customer loyalty. R=0,221, p-value= p<0,001 supported
H2: FFPs affect the behavioral loyalty. R=0,161, p-value= p<0,001 supported
H3: FFPs affect the attitudinal loyalty. R=0,199, p-value= p<0,001 supported

Table 6 exhibits the regression analysis results to test
the hypothesis in the research. When the values in the
Table 6 is investigated, it can be understood that FFPs have
an important influence over behavioral loyalty, attitudinal
loyalty and general customer loyalty (p<0.001).

5. DISCUSSION AND CONCLUSIONS
Loyalty programs are the leading one among the
important methods applied by the companies to constitute
customer loyalty. They are based on a reward system
following the specific purchasing. Their design purpose is to
keep the customer in hand. With introduction of the
application of the loyalty programs at the businesses,
customer loyalty increases, customer database could be
developed, sales of product and service increases,
customers could be retained, reputation of the products
and company progresses.
In this investigation, it was revealed that the bonuses
and services offered under the coverage of this program
were actually important for the members. The important
rewards to the program members are free plane ticket,
guaranteed reservation, priority in reservation and
express check-in correspondingly. The least important
reward to the members is rental car discounts. The
members are more interested in intangible rewards.
Beside the fact that behavioral loyalty of the
members is higher than the attitudinal loyalty, the
members express both behavioral and attitudinal loyalty to
the airway company.
In the study, it was shown that there is an average
level relationship between FFP and customer loyalty and its
subdimensions (behavioral and attitudinal loyalty) with the
0.001 significance level. The correlation coefficient between
customer loyalty and FFP is calculated as r = 0.446. In other
words, as the airway companies apply the FFPs, loyalty of
the members increases proportionally with the correlation
coefficient r = 0.446. Moreover, it is possible say that 22.1%
of the changes on the behavioral loyalty, 16.1% of the
changes on the attitudinal loyalty and 19.9% of the changes
on the customer loyalty depend on the FFP.
There is no much study was found about the effects
of FFPs over the customer loyalty in the literature.
However, there are some empirical studies showing that
FFPs have a significant effect over the preference of the
airway company (Suziki et al, 2003; Whyte, 2003; Chin,
2002; Proussaloglou and Koppelman, 1995; Toh and Hu
1988).
Chin (2002), in his study including 192 members of
the FFP in Singapore, has presented that FFPs importance
when making decision about the airway company. Similarly,
Toh and Hu (1988) have shown that the programs were
important to 67% of the members of the FFPs in their study.
Whyte (2003) conducted a study including 171 members of
the FFPs. 62% of the participants stated that the FFP
increased their loyalty to the company.
In this study, the simple linear regression analysis
model of the relationship between FFP and customer
loyalty (behavioral and attitudinal) was found meaningful.
In addition, it was revealed that FFPs have significant effect
on customer loyalty, and these programs affect the
behavioral loyalty more that the attitudinal loyalty.
This investigation carried out over the FFP members
using the airways in Turkey. To make comparison, it can be
suggested that the similar application of this study could be
implemented in different countries. Moreover, beside the
bonuses and service used in the FFPs, the other factors
affecting the customer loyalty can be investigated in a
different case study.



42

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