United Airlines is teaming up with gasoline behemoth BP on an industry-leading loyalty program.
It didn't take Luc Bondar long to start shaking things up at United Airlines. Since taking the helm of their loyalty division a few months ago, he has formulated and launched an innovative new program that could be a boon for both entities.
An alumnus of Aimia and Carlson Marketing, Bondar is no stranger to the inner workings of the loyalty world. His time at Aimia, in particular, likely provided unique insight into the mechanics of airline loyalty programs.
But this is something different. Beyond providing members with a new redemption option, this partnership between United Airlines and BP looks to re-shape at least one small part of the customer journey. If its true that some 30% of rewards go unredeemed (estimates vary widely) then United may have found a way to increase redemption (because points are now redeemable for gasoline) and decrease breakage (which is estimated to be in the tens of Bilions of dollars in the airline industry).
Here's how it works. United said it will begin offering both United MileagePlus members and BP Driver Rewards members the option of earning and using miles on fuel purchases at participating BP retail locations in the United States.
According to their release, "when BP Driver Rewards members and MileagePlus members sign up for this new program, they will immediately earn 200 bonus award miles after joining and making their first fuel purchase with a linked debit or credit card."
The program also is structured to allow registered members to be able to use 60 award miles per gallon to save 50 cents per gallon when using a linked debit or credit card for a gas purchase. Yes, there is the perfunctory fine print that members will want to note, namely, "there is a limit of 20 gallons per fuel purchase for members who opt to use award miles to get the 50 cent discount per gallon on fuel purchases." That seems a very reasonable restriction but one, nevertheless, that consumers will want to be aware of.
According to Bondar, president of MileagePlus Holdings and vice president of Loyalty at United Airlines: "We want our members to have a variety of ways to earn and use miles, and they will be able to conveniently do so for fuel purchases with BP."
From the outside, this new program seems to hit all the right customer loyalty buttons. And while the verdict is very much still out on its ultimate effectiveness, the very fact of this venture portends an interesting and dynamic future for United and for BP.