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Hello and welcome to today’s episode of Let’s Talk Loyalty and Loyalty TV. Today’s guest joins us from United, which is now the largest airline in the world as measured by available seat miles. United are using the tagline, good leads the way. And this strategy is clearly working both for the airline and for its loyalty business.
According to its latest quarterly earnings report, in June of 2023, United achieved its highest month ever for newly enrolled members of the MileagePlus program, with over 800,000 new members joining. Joining us today to share how they achieved some of these superb results is Luc Bondar, COO and President of MileagePlus. I hope you enjoy our conversation.
So, Luc Bondar, welcome to Let’s Talk Loyalty and Loyalty TV.
Luc: Thanks, Paula. It’s great to be here.
Paula: I tell you, it’s been a long time coming, Luc. I first became aware of the extraordinary achievements, I think, of MileagePlus back in 2020, which I know was probably quite a traumatic time for you. But certainly one to look back on with incredible admiration. So we’re here to talk about that along with a lot of other exciting things that you’re doing in United, specifically, of course, leading MileagePlus.
So, as you know, we’ve got a global audience of loyalty marketing professionals who really love to hear I suppose, first and foremost, what do you admire as a loyalty industry professional? What program would you showcase and put on a pedestal as one we can look to for inspiration?
Luc: I’ll start by saying, Paula, thanks for having me on today. It’s an honor to be on here, and I think what you’re doing is terrific, and it’s great to create this forum and platform for professionals in our space. So thanks for that.
Personally, I am a huge advocate of Marriott Bonvoy. I think that is just, obviously I have an affiliation with the travel space broadly and have throughout my career. But Bonvoy I think is particularly interesting because it represents sort of, a modern transformation of a much more traditional model.
Obviously when Marriott Rewards and Starwood came together, there was a lot of noise about what would the result be. You had this sort of program in Starwood that had this insane fan base. And it was, you know, I thought of as being hugely innovative and interesting at the time when that sort of first came to be.
And then you had more mainstream traditional program with the old Marriott Rewards program. Bonvoy, I think brings together the best of everything that each party brought to it. But perhaps what I think is most powerful about that program, put aside its design. And I think, you know, the way they’ve structured it and the way it operates on a day to day basis. I think it’s become a central pillar for the Marriott brand. It’s become glue that sort of connects the dots between all the brands in their portfolio. It’s the glue that connects the customer experience across all of those different brands. And the organization has reshaped how they go to market around Bonvoy as the center of their customer experience.
And that I think just creates tons of opportunity and upside in terms of ways that value can be both understood and then delivered in the business. And so, you know, for all those reasons, I think the team at Bonvoy does a tremendous job. I think it’s a great program and I think they’re leading the way in many respects.
It would be remiss of me not to highlight as well as someone who has worked in and around the loyalty space throughout my career that, you know, I have a ton of respect and interest as well in what Amazon have done with the Prime you know, that’s another very different subscription based. And it’s a program that they’ve just layered kind of different benefits and services on in order to create this amazing sort of differentiated experience from a guest, to an Amazon customer, to a Prime customer. And it makes it a no brainer to be a member of that program. And that program in turn gives Amazon insane value in terms of the data that they’re generating through that program, that business. So really interested in that as well. But Bonvoy is my number one outside of MileagePlus, of course.
Paula: Of course. Well, we’re going to absolutely celebrate MileagePlus today. But first of all, Marriott Bonvoy, of course, something that we, of course, also have on a pedestal. We’re hoping to have them on Loyalty TV and Let’s Talk Loyalty at some stage in the near future. So, of course, open invitation to make sure that we get to share their story as we’re about to share yours.
And I guess the piece I love about Amazon Prime as well, Luc, you’re absolutely right. It’s the one that I think they used the word. I think when they developed that proposition, you probably heard it yourself, but they wanted to build a proposition that was so powerful that it would be irresponsible not to join.
So I just think when you know, start with that end in mind and that level of ambition, that’s something that I think consumers find utterly compelling. And it’s one I have absolutely seen changing my behavior. You know, I mean, I’m starting to buy groceries on Amazon. There’s water coming to me like every time I think of something I need, I just instantly buy it on Amazon. So totally drinking the Kool Aid on that one.
Luc: I think if I could react to that comment, Paula, cause I agree a hundred percent, and I think a lot of the time that’s, we have a similar dialogue inside United and MileagePlus to really think about the experience that we can deliver and the value that we can create for our customers, for our program members.
Sort of framing the best way to experience United and also I’d say the best way to experience some of our partners is as a MileagePlus member. And so creating to your point sort of that, you know, an irresponsible kind of rational rationale for joining the program. We’re not irresponsible, rational and irresponsible act if you’re not joining the program. Because there is such clarity around the value and the experience as a member, which I think is a job for communications, but it’s also a huge job for design to make sure that it flows right through the experience.
Paula: Yeah. Yeah. I always like to pick up on the words people use Luc. So thank you for that. And I think clarity is something that as loyalty professionals, we perhaps lose sight of as we continue to build and innovate. So I think it’s an important principle to make sure that there is that level of attention to almost simplicity because consumers at the end of the day are busy people and for our program to become compelling to them. They’ve got to understand it. And I know that’s a key part of what you’re doing with MileagePlus.
So let’s get into how we got to today. First and foremost, I know you’ve got a background both on the agency side and on the technology side, Luc. So tell us a bit about your loyalty career to date.
Luc: So I’ve, you know, loyalty has been central to my career for, I think almost 27 years now. You know, while I was going through university, I was working in sporting goods retail in Australia and I recall kind of, the CMO of that business approaching me and asking me what I knew about relationship marketing at the time. This is pre loyalty is sort of a standard naming convention and you know, I sort of, in the spirit of faking it until you make it, I said, well, you know, give me 24 hours and I’ll come back to you.
And the next day we sat down and we talked about kind of how loyalty programs were evolving in retail. You know, this is going back into sort of the into the eighties and early nineties. And so it was a really interesting time, obviously that these programs were just emerging.
Fast forward, you know, I ended up working with a company for many years called Carlson Marketing. I worked for them first in the UK for a couple of years. And then in Australia and then in the US. And that business spanned a range of different industries that are provided sort of full scale soup to nuts loyalty services for, from strategy through to every aspect of execution. And throughout that career path that I had, which was working sort of on accounts and then account development and then strategy and corporate development.
It was, there were always these central threads of retail, travel and banking and payments. And so all industries that have scale, all industries predicated on sort of understanding customers and how to deliver a different product and experience to different customers based on their value.
And so loyalty was very obvious fit for all 3 of those, and so I had the good fortune of getting to learn a lot about this space and this industry and really how to think about loyalty as a commercial model, not just as a marketing platform or program. And that’s always been, I think, a central thread to sort of my operating thesis, it’s like, how does this program, this platform, this business create value? How does it create value for the customer? How does it create value for the brand? How does it create value for partners? And so that’s always been sort of this central thread. So through marketing and services a little bit of time and advertising for a few years.
And then coming back into it when United eventually, when I got the call from United to say, yeah, are you interested in joining? It felt like it had been sort of everything leading up to the point of this opportunity to come in and lead 1 of the world’s largest. And I think best loading programs and loading businesses. That set us up to do all the things we’ve done over the last six years as well.
Paula: Incredible. Yeah. It’s a wonderful context. And I think for any marketer actually to end up brand side and to have the opportunity to put into place, you know, the kind of things that I know from my side, working sometimes externally you really know and feel and instinctively have a sense of what you want to do with the loyalty program.
And from what we’ve talked about before, I really do think that it sounds like you’ve, you know, brought in first and foremost, a mindset about loyalty and that whole idea that absolutely, I think you alluded to with Marriott Bonvoy is that loyalty can lead an organization. And as you said, create value on all sides. So a wonderful experience to get in and lead a program, which I know it’s published has over 100 million members. I believe one of the top three loyalty programs in the world.
So again, for us, it’s super exciting to be hearing about what you’re doing, what you have done. So tell us what did you do when you started, Luc? You know, you come in, you’ve got this extraordinary opportunity. Like, where do you start with so much opportunity?
Luc: I think, you know, I mentioned before this sort of mindset about thinking about these programs as a business. And so really one of the first steps was to understand kind of performance and how had this business been tracking? Where was it growing? Where was it creating the most value? And where were there opportunities to really expand that? And one of the areas that emerged pretty quickly was this focus, this concentration on our premier population. And as you know, sort of Pareto principle, top 20%, etcetera. And so there’s a huge amount of emphasis on that group to the detriment of how we thought about the broader program population.
And you mentioned before, you know, we have well over a hundred million members in the program. And so we have this huge base and yet the vast majority of energy and attention was going into the top group, the top group in terms of their flying frequency, of course and it wasn’t necessarily paying the right level of attention to how to think about value and how values created.
So when we step back to look at sort of the breadth of the program, acouple of things emerge from that. One was that we had a huge opportunity to better engage the wider audience, the wider population inside our program. And there was some fundamental steps that we identified as being sort of mission critical to achieve that outcome.
Two, was that we saw, and I’ll talk to that in a minute, two was that we saw an opportunity to better align the value that we were providing to our customers with the value that we were getting and the mechanisms that we had in place to help understand and assess that and then design the program and the experience to deliver value to our customers was out of sync with reality.
Paula: Okay, interesting.
Luc: We had a premier program that wasn’t structured to accurately reflect the value that we were receiving from customers. And so we weren’t necessarily giving the right value back to the right customers in the right way. So, we, there were sort of 2 key areas that we took a hard look at and then I’d say that the 3rd, and this was sort of mission critical for us was to look at all of our partnerships.
These programs are obviously critically important for the parent organization in our case, United Airlines. And we think of United as our single biggest partner and the most important partner that we have. And obviously we wouldn’t exist without United. And so we have to have a really strong relationship there, but we also have these other super important partnerships: partnerships in travel, partnerships in payments, partnerships in retail that create a deeper level of engagement with our members as they go about travel and as they go about their day to day activity.
And so really understanding which of those partnerships we’re working well, which of those had an opportunity to improve was also the other area of critical focus. So what do we do to broaden the scale and appeal of the program? How do we better align value with the right members in the right way?
And then what did we, what were we doing to ensure that our partnerships were all optimized, both for our partners, for our members, and ultimately for the program overall. So that were the three areas in all of those. We can go in any of those directions. In all of those areas, we made some really pointed decisions and changes to the program that have had some pretty profound effects.
Paula: Wow. We love profound effects. So, what are you most proud of, Luc? Tell us some of the, I suppose, decisions and changes that you did put into practice because I think what I’ve learned, you know, from talking with people like you with, you know, so much opportunity, part of the challenge is knowing what not to do because the wishlist of what you can do is so long and so varied and so exciting. So tell us, you know, of all the breadth of possibilities, what did you put in place?
Luc: So, some big changes that we made in the first, couple of years, you know, when I came in you know, maybe 1 of the largest and most profound in terms of the impact that it’s had with member enrollment, member growth, kind of engagement right across our program population, um, is something that sounds relatively simple.
But it’s really interesting having made that change. I’ve had loyalty program practitioners around the world come up to me at events and conferences. And you know, when I’m sort of out in the world to ask the question, how did you get that done? Like, how did you convince your CFO? And that was to go from a program where we expired miles after a month of inactivity with our members to making our miles evergreen. And when we made that change, we came out with a very strong statement to say, you know, your miles will now last forever.
And, you know, that, that was a huge shift and, you know, it was born a little bit out of personal experience. I had an experience with a program that I’d been a member of for many years and I’d moved countries and I had fallen into that sort of inactivity status and I had lost a huge balance program.
Paula: Oh, no.
Luc: And I sort of, I’d had that very personal experience. So I knew what it was like firsthand. But then I, we spent time surveying and engaging right across our member base to sort of understand which aspects of the programs were most powerful, which were most frustrating.
And the number one pain point for our members at large was miles expiry. And so we sat down as a team and obviously the you know, if I go back to my past life reunited, you know, there were, it was almost a sort of a market practice to build around breakage management, breakage optimization. And the notion that we were giving out value to members and planning that there’ll be members not using them and optimizing against that seem counterintuitive to the spirit of what we’re trying to achieve, building a program with values going to the member and we want the member to redeem that value, we want to see them experiencing it.
So we spent a lot of time with our finance organization, finance leadership. In fact, it went all the way to, you know, our then president, now CEO, Scott Kirby, to have sort of a really robust discussion around what would happen to breakage. You know, what were the expected effects of this and how would it change our program? And the net was that it was a business case decision at the end of the day. And it was when we mapped it out and we forecast, what we would see in terms of member engagement, member participation, the subsequent impact on lifetime value, the subsequent impact on enterprise value that’s generated, it became a really easy choice. It was the right thing to do. And I think that’s the spirit of what we try to do at United and at MileagePlus. It’s just what is, what’s the right thing to do for our customers? Because if we do the right thing for our customers, inevitably, it’s going to be the right thing for our business.
And so we took the time to thoughtfully build that business case convinced the CFO and ultimately now our CEO that this was the right thing to do. We made that call. We went out with a pretty bold statement around it and what we’ve seen is that’s played out in enrollment, engagement, participation, activity amongst the broad population. So, for our general members, that’s really helped give them the opportunity to engage and stay active and in the program sort of on the long kind of look forward. We’ve done a lot around redemption, and I’m sure we’re going to talk about that a little bit later. So to make sure the every mile that’s being earned more valuable for every member. So we’ll tap into that in a bit.
The second thing I want to talk to that I’m proud of is what we did for our premier program. We were the 1st Major US carrier to move away from a distance based program status. And I’m sure there are many listeners today or viewers who have done a mileage run somewhere in their life. I’ve certainly flown from country A to country B to get a pizza and turn around and come home in order to hit that level of status in prior year.
And, you know, for two reasons, I think that’s challenging. One, distance used to be a good proxy for value when sort of in the early days of these programs and as Premier and elite status was introduced, but with the rise of low cost carriers, with the rise of increasing segmentation in the cabin, it meant that customers could fly a long way and relatively cheap fares, get into those top levels of status and get sort of a lot of value back putting minimal value in. And that imbalance creates all kinds of other knock on effects and challenges for the program. So, again, in the spirit of thinking about this as a P&L and as a business and optimizing kind of the balance of value that we have, we made the decision to shift to a revenue based elite qualification model or premier qualification model in the case of MileagePlus. And that’s been a pretty fundamental shift. Now, we announced that in 2019.
And then with the program taking effect in 2022, very different years. And so this is the first year that we’re back at those same published threshold levels for spend now we still require flying, so we still have a minimum of 4 flight segments to get into any level of status. But we have different levels of spend, depending on the level of flying that a customer does. So, you know, a minimum of 4 flights and a higher volume of spend versus sort of a lot more flights and a lower level of spend will get into the same levels of status. And so what we’ve seen though, is that helps us build a very commercially balanced relationship with United, with the airline as well. So, because our interests are very aligned. So it’s been, yeah, so that’s probably the second area.
And then the third that I’m really proud of some of those early stage changes that we made you know, I mentioned before my favorite program, we have a tremendous strategic partnership with Marriott. And we work worldwide to really elevate the customer journey. We have a joint relationship between our loyalty programs that creates tremendous sort of reciprocal opportunity and benefit for members in both programs to connect their accounts. And we also do a lot outside of that to find ways to elevate the customer experience for customers that fly United and stay Marriott. So excited for everything we’ve done with that partnership.
And then, you know, in the US we have very important relationships in the credit card space. MileagePlus has credit card relationships around the world in over 20 different markets. But in the US, our card partnerships are front and center, the mission critical for our business. And we completely restructured the relationship that JPMorgan Chase, which has led to a whole new series of card products. We have a family of cards, one for every type of traveler. Depending on, you know, whether from fee free all the way to a sort of more expensive annual fee that comes with club access and all associated different benefits, sort of a cut, you know, the full spectrum of cards for all of our different customer segments and a very different way of thinking about how we bring those cards out into market and put them sort of to our customers in ways that drive their customers interest and sort of acquisition results significantly. And so for us, that’s been just a tremendous growth story and great success. So really proud of everything we’ve done across all of those areas.
Paula: Amazing. I guess the one I want to pick up on was the first one that you mentioned actually there, Luc, you know, you know, this whole idea of eliminating expiry dates and, you know, creating a business case is, you know, first of all, a complex endeavor, given the amount of assumptions, obviously, that you would have had to put in that and without a precedent and without anyone to look to. I think, with anyone who’s listening today, at least they can say, well, look, United’s done it, you know, if MileagePlus is still at it, they don’t even need to see the business case necessarily front and center, but at least to know that the decision made sense for you.
So I just, I suppose, want to applaud the bravery of the senior leadership team to trust, you know, the expectations that were set. Because as I said, they’re all literally at that stage, if you’re creating something so innovative and clearly, you know, so directly related to the pain points, like, I think that’s wonderful that you, I suppose, had that added perspective from the customer to say, it’s, you know, it’s the thing that’s upsetting people.
And if you’ve lost a huge balance yourself, I mean, I’ve never had that experience, but you know, that’s the kind of thing that creates disloyalty. And of course, you know, people go out and they talk on social media. So what you did was incredible. And of course, something you couldn’t take back. You can’t announce something like that and then change your mind. So it’s a big one.
Luc: We were really, yeah, for sure. We were very intentional with the language that we used when we announced it. We, yeah, forever was an important word in the press release and all the media that we publish around this, the messaging to customers to make it very clear that this wasn’t a, you know, well, let’s just try this and see what happens approach, but rather this was a commitment to customers that we were making.
And I think that, that last point is really key and this is central to the business case, then it holds now and it informs everything that we do as we look forward, and that is to have clarity around the value of customer relationships to really understand, you know, what that looks like, not just through the lens of sort of, well, you know, what’s the incrementality that we’re going to generate through this program and the lift we’re going to see. But to understand, what does it mean for us to have a relationship where the customer, you know has a brand relationship with us, has a high net promoter score as a relationship where they’re willing to share more and new data with us as it emerges, whether that’s contact information or they’re sharing transaction data with us in the world we’re living in today.
Especially the value of 1st party data asset brands building direct relationship with customers where the customer is willingly and opted in and with clarity around how that data is going to be used, sharing that information. That creates all kinds of new growth opportunities for businesses today. And so I’d say for anyone thinking about how they frame that business case and that value story, don’t just focus on kind of the immediate and direct effect of the incrementality case. But also think about sort of the lifetime value impact, view lifetime value, not just through the transactional lens, but also through that order sort of affiliated or adjacent sources of value that come with data and with permission and with consent and with a deeper relationship. There’s value against all of those and increasingly, you know, there are opportunities to sort of explicitly demonstrate that.
Paula: A hundred percent. Yeah. And again, there’s so much in that Luc, but there’s so much I want to get through in all of the different topics in terms of what you’ve done. The one, as I said, at the very outset that impressed me the most was I guess that perhaps some of the darkest times for the whole airline industry, as we all know, 2020 brought you know, existential crisis, dare I say for all airlines.
And I know United innovated in terms of, I suppose, looking to MileagePlus to identify ways to support the airline in a way that had never been done before. And it’s our mutual friend, Evert de Boer, who, you know, explained to me, you know, in simple language, I suppose the financial instrument that United created.
And there’s just some numbers I saw published at the time, which I’ll quote for anyone in the audience who hasn’t heard. And I’ll ask you to explain it, Luc, because you’ll obviously explain it much better having led that particular innovation. I think offline as the best 16 weeks of work you’ve ever done in terms of the return on investment. But yes, I know MileagePlus was identified as a powerful you know, way of recurring revenue for the airline that previously had been perhaps underappreciated, certainly externally, perhaps not internally, but the power and value of the MileagePlus program to United as an airline was something that allowed you to raise capital at a time when nothing else, I guess, would have been affordable for you.
Luc: Yeah, no, look, absolutely. Paula. I’m happy to talk about it. And, you know, of all the things that we’ve done over the last six years, you know, I think delivered great value to customers and we’ve innovated in a whole lot of different areas of the program. But in terms of the impact of kind of any single thing, this was was transformational for us at a time when we were under just incredible duress.
So if I can rewind everyone to mid February 2020 so this is prior to borders closing, you know, like we were monitoring, you know, right from January, kind of everything going on. We were looking at what was happening in China. We were looking at emergency in Italy. And sort of the, as the cases were taking shape and COVID was emerging kind of as a new word in everyone’s lexicon. I sat down with our CEO to have a discussion around our current cash position as an airline, and without going into all the detail.
We were burning a, just a, by the time we hit March, we were burning a huge number daily in terms of cash burn measured in sort of, you know, many tens of millions every day. And we were also in a position where demand was falling off the cliff. And we were still flying and serving all these markets. We had to fuel them. We had to staff them. We had to pay airports, etcetera. So we had all this cash going out. We had no cash coming in and customers were seeking refunds and we were sitting on X cash. We had, you know, a call from customers for refunds that was roughly the same. And so we were, and we were not unique as an airline in this case, you know, we were all facing a liquidity crunch that essentially, you know, it was, it had every major airline around the world asking the question, can I continue to operate?
Paula: Correct. Yeah.
Luc: Do I, do we have to close the doors? And that would be I mean, as horrible and as awful as traumatic as everything related to covert was, you know, airlines keep the world moving. And so for airlines to cease operations is really, you know, it’s essentially not a, it’s not an option and so you have to find a way through that.
And so I sat down with Scott and we talked about sort of what those options were and historically the approach for airlines to use the loyalty business to rapidly raise funds is a sort of a pre sale pre purchase of miles with a credit card partner. And there are plenty of examples previously of airlines, you know, essentially pre selling a billion dollars worth of miles to their credit card partners or their other partners.
And, you know, bringing the cash in now, and then obviously, you know, sort of, sort of foregoing that cashflow in the future as a result. But, and that generally comes with a new set of commercial terms and it may not be as attractive for the business. And but that, that had been the historic model. And so that was available to us as an option. But it wasn’t one that I was excited about because it was going to trash my P& L for a long time.
And not only that, it was also, it just, it didn’t, it didn’t feel like the right approach at the time. So, I sat down with there’s another guy I work with at United who now runs United Ventures. And he was leading IR and Corp Dev at the time, and we spent about a week, every night brainstorming like ideas and thoughts and what could we do and trying and testing different concepts. And through all of this was this nagging kind of, I thought this sort of consideration that we sit today on this incredibly stable and resilient cash flow business, and that’s through the form of all of our partnerships.
MileagePlus is essentially a diversified business. We have all of the cash flows that come through our airline partnerships and our travel partnerships, and they are more cyclical in nature, you know, as the economy is moving down. They move up and down. And then we have all of the cash flows associated with our financial partnerships, our credit card relationships here in the US and around the world. And our retail partnerships and our everyday spend partnerships, which look more like day to day consumer spending. So travel and consumer spending.
And the consumer spending portion of our business. While it certainly moves as the economic cycle moves, it moves less than the travel cycle moves. And we were able to look back at history and analyze and assess what had happened in this diversified business in the face of major economic impacts that had hit travel and hit aviation and hit sort of consumer spending writ large global financial crisis, 9-11, sort of all these incidents had a huge impact and we’re able to understand what happened to this cash flow, what happened to this cash flow? And what that revealed was the resilience and stability of the consumer spending side of our business. So that was sort of, you know, insight number one.
Two was could we then structure and package this in a way that would allow us to collateralize the cash flows. So that we could land against them. And to your point, that’s essentially what we did. We spent 16 weeks. I didn’t, I’m actually in my home office as I come to you. And I’m sitting in the same chair that I didn’t leave for about 18 hours a day for 16 weeks straight. We worked with some bank partners who are tremendous, some, a whole lot of lawyers and a number of internal team members put together an offering that essentially package the, all of the operation of MileagePlus and the intellectual property of MileagePlus as a bankruptcy, remote, separate business, only owned by the airline that even in the event of an airline extreme pressure financially on the airline would operate as a going concern and would be protected in the event of any bankruptcy, such that the cash flows associated with that business would also be protected and they would be available to fund any financing and any loans that we made. So, short story is we packaged up, we took it to market, sort of a two week roadshow and we raised 7 billion dollars off the back of it.
And so that then became the find and replace deck that was used by, you know, many of our competitors in the market to say, yeah, we have the same business model. So let’s replace brand, you know, United with our brand and their numbers with our numbers, package it, take it to market. And because we’d sort of broken ground. You know, they were able, the market was already now familiar with the model. They were able to raise, you know, increasingly more value against the same offering because we’d already sort of sold and educated the market on the premise. And so those bonds that are still out there today, you know, performing well, um, that’s become a really valuable source of sort of financing for us, a line of credit.
And at the time that was pre any government lending you know, it raised 7 billion cash at the time we needed it the most.
Paula: Correct. Yeah.
Luc: And it sort of got us over that hurdle. And then we were able to sort of get some government financing and, you know, we’re able to then package up some other aspects of the business, all of which saw us through the pandemic and bring us out the other side.
But I think what that did first and foremost is it highlighted to the world. The premise that had been made for a long time, and that is that these airline loyalty programs in particular, or travel loyalty programs have tremendous intrinsic value. But how we expose them to the market in a way that the market can understand and can invest in while the airline can still maintain control the program as a principal asset. You know, I think this was it is why ever I think is so interested in the approach.
It was the 1st time that this had really been done at scale in a way that was tremendous for the investor. Tremendous for the parent or the owner of the program and tremendous for the program. Like everyone won in that model and in all the other models where there’s tried to be separation and yeah, there’ve been other challenges around that. And typically there’s winners and losers and this model, there were no losers. We all, you know, it was a rising tide that sort of everyone was able to benefit from.
Paula: Thank you, Luc, for sharing that story. Truly world class, you know, I have the figures again, just looking back in terms of, I know there was a Harvard Business review article written exactly about this innovation. And I think I said to you last time we met, this show is all about innovation and, you know, God forbid we ever need, you know, such extreme measures in the future, but nonetheless.
As you’ve said, you’ve broken new ground, you’ve created a model, a new product, and just the figures I came across again, because it did, as you say, expose externally the value of loyalty programs that certainly people outside of the industry, I guess haven’t appreciated.
So I saw figures from July, 2020 saying that MileagePlus as a business was worth 22 billion valued at and United as an airline at the time, again, extreme circumstances was valued at 10 billion. So I think when the loyalty program started to be visibly more valuable than their parents parent companies, it definitely changed, I suppose, the level of respect that our industry and our discipline absolutely has. So super exciting to hear all of that, Luc.
Luc: Can I make one point there, Paula? Because I think that you’re right on and, you know, this was very it was valuable for our industry to get that credit and that recognition. But I think there’s always been this underlying thread in this space around like, what’s the true value of the loyalty business relative to the value of the parent. And you get metrics like that where you have this sort of perceived inversion.
And I think the truth is the loyalty business is what it is because of its relationship with the parent. It’s a symbiotic relationship. So this idea that you can separate and spin out and create this completely independent value is challenging.
So finding ways to create separation and segmentation while still having ownership and control in a way that allows the market to understand and appreciate and invest in this value while ensuring that the sort of symbiosis between program and parent is maintained is I think is the art. And I think it’s 1 of the aspects of the financial that we created. Yeah, that achieves those outcomes. And I think that’s why it’s so interesting because it sort of delivers on the promise while keeping all of the pieces intact.
Paula: Totally. Totally. Well, listen, we’re coming up on time, Luc. So I guess you know, open final question to you, you know, what is, what does the future hold for MileagePlus? Where are you excited? What are you looking to do? What can you share?
Luc: So it’s made, this has gone quickly for sure. So I look, I’m, I think the future is incredibly bright for the loyalty industry as a whole and I think something I mentioned before that goes to the core of that is the value of the data assets that we all sit on top of.
You know, for MileagePlus we have a level of insight around our travelers that reaches sort of far beyond what sort of many businesses know about their own customers and we’re able to take that and use that in really interesting ways that is that I think goes beyond just delivering a better experience to customers when they’re traveling or delivering more value to them when they’re interacting with our various program partners.
We are one of the world’s largest programs. As you pointed out, we have sort of ubiquity of earn. You can earn miles in, you know thousands across thousands of retailers, you can earn miles, you know, in real time across, you know, sort of a myriad of applications. And in terms of redemption, the same, you know, any way you can sort of use mile, any way you can pay with cash at United, you can now use miles.vWe have real time redemption in retail and dining and sort of travel and a broad array of areas.
And that’s where historically a lot of loyalty attention and innovation has gone. We’re now shifting to say we sit on this amazing first party data asset. What more can we do with that? You know, how can we use that to, to be better marketers, to drive more value, to each of our program partners to drive efficiency and effectiveness across everything we do in the marketing space.
So I think that’s where, you know, in the program itself, you’ll see kind of more ubiquity of earn more utility of our currencies you’ll see kind of more involvement across different aspects of the travel journey, not just sort of in the planning and the day of travel, but also right across the journey itself through different partnerships.
But where I think as a business, this gets really interesting is the opportunity to build on these data assets and to use these great new sources of value. So more to come there. Excited for everything that’s ahead of us on that front.
Paula: Well, all I can say is I hope we can stay in touch, Luc, because there are some extraordinary things I know that are going on there, and I want to stay up to date and keep our audience up to date on everything you’re doing with MileagePlus.
It’s a credit to you super innovative and exciting, and I want to thank you for your time today. Is there anything else you wanted to mention from your side before we wrap up?
Luc: I just say, you know, I’m, firstly, thank you for having me on the show today. It’s a real pleasure to be here and I am a big fan of the notion of paying it forward. I’ve learned a lot throughout my career from some amazing people along the way. And so it’s a real honor to get an opportunity to come on here and sort of share some of that. My stories and what we’ve lived through and where we’re going, because I think there are certainly lessons there that are really helpful for everyone across the board.
Maybe it would be remiss of me not to say, and just as a plug you know, I’m super proud of everything that we’re doing at United with the largest carrier across the Atlantic with the largest carrier now across the Pacific with the biggest airline flying us to Australia, which makes me particularly proud.
And, you know, as we build sort of an amazing network and a Star Alliance continues to grow, you know, as we build out kind of the United network and therefore kind of the MileagePlus program grows, I’m both humbled and proud of everything that we’re able to achieve and deliver for our customers.
and also excited for everything that we’re able to do as a business and the value that we’re able to generate for all of our partners. Cause yeah, I just think we were in that. Sort of rare where we’re big enough and we have the scale and we have all the foundational pieces that we can test and try new things. And through doing that, I think we break ground for others along the way. So, you know, we’re going to continue to push, to do the right thing for our customers, do the right thing for our partners and continue to build a great program that we’re very proud of. So thanks again for having us on and appreciate the opportunity.
Paula: Wonderful. Super inspiring. I have to say, I can’t wait to see what you guys continue to do. So Luc Bondar, COO and President of MileagePlus, thank you so much from Let’s Talk Loyalty and Loyalty TV.
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