AirAsia’s Loyalty Program Attracts the Attention of BIG Investors

AirAsia Loyalty ProgramLoyalty programs can be among a brand’s most valuable commodities. While many continue to chase after the never-ending pursuit of new customers, some even at the expense of existing customers, other brands recognize the immense long-term benefits of retaining lifetime customer loyalty. Many investors would likely jump at the chance to acquire a stake in a successful loyalty program, which may reveal the logic behind AirAsia’s reported move to sell off a portion of its loyalty program.

Private equity investors are reportedly undergoing discussions with AirAsia and Malaysia’s Tune Money, the joint owners of AirAsia BIG, which could result in approximately 30% of the program being sold for 100 million dollars. Should the deal go through, experts note that that would place the total value of the loyalty program at nearly $330 million.

The talks, thus far, have been confidential but many believe that a deal could be finalized in as early as a few months. Even the possibility of a deal is becoming of major interest to many brands and loyalty managers because it underscores the potentially tangible value of this loyalty program. Other airlines have also been involved in similar deals.

As more major players in the loyalty program space realize how valuable these programs actually are, more are moving to acquire a share of the action. Recently, AirAsia Loyalty ProgramAffinity Equity Partners, an Asian private equity firm, purchased a minority share of Virgin Australia’s frequent-flyer loyalty program. What’s more, it was purchased at such an exorbitant price, it suggested that the loyalty program was actually worth over a third of the sum total of the entire airline. 

This certainly explains the current interest in AirAsia Big as its value is assumed to be rather significant as well.

"Our AirAsia BIG loyalty program has tremendous potential for growth - leaps and bounds beyond where it is today," said Aireen Omar, AirAsia's Chief Executive Officer. "The program has over 13 million members and is growing at a rate of 150,000 new members a month."

This popularity of AirAsia BIG is also reflective of the success of the airline itself. Since 2001, AirAsia has grown from two planes to over 180. It now carries passengers all across Southeast Asia and India.

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