The largest Latin American low fare passenger carrier,
GOL Linhas Aereas Inteligentes S.A.
), announced that it will enhance its current loyalty program by
commissioning a new mileage accrual model for domestic and
Instead of the distance travelled, the new model will take the
price of the ticket in account to calculate the mileage accrued
for a passenger. However, the new model does not have any
provision to accrue miles for promotional fares unlike the
earlier one, which accrues miles up to 100% of fixed fares and
125% of flexible fares depending upon the length of flight.
On the flip side, the company will continue to take distance
travelled as a gauge to calculate accrued miles on international
routes. Currently, a passenger accrues 5,000 miles on flights to
the U.S., and while flying to Central and Latin America miles
accrued by the passenger will be 3,000 and 1,000, respectively.
The new model, which will be implemented on Oct 13, 2013, will
benefit GOL SMILES customers, particularly the one within the
Gold and Silver categories. SMILES Diamond clients will receive
100% bonus on miles collected while Gold and Silver clients will
get 50% and 25% bonus on miles collected.
Notably, GOL's SMILES program is aimed at increasing customer
loyalty and offering a cost effective flight. At the end of last
year the company has 9.03 million customers under the
During the second quarter of 2013, GOL reported a loss of 76
cents, which was way below the Zacks Consensus Estimate of 28
cents. The poor performance of the company has spilled over into
the third quarter as the company reported soft operating
performance in July, particularly in the domestic front.
However, the company achieved a key milestone as the low cost
carrier attained its immediate goal of expanding its code share
agreement with premier U.S. passenger carrier,
Delta Airline Inc.
Loyalty program enhancements are consistent practises of
passenger carriers to hold on to their frequent customers by
increasing the attractiveness of its products. We believe the new
change will encourage the premium customers to travel more and
redeem free tickets, which in turn will improve the current
subdued traffic situations.
GOL currently carries a Zacks Rank #3 (Hold). Other stocks
worth mentioning within this sector are
Hawaiian Holding Inc.
Republic Airways Holdings Inc.
). HA currently carries a Zacks Rank #1 (Strong Buy) while RJET
holds a Zacks Rank #2 (Buy).
DELTA AIR LINES (DAL): Free Stock Analysis
GOL LINHAS-ADR (GOL): Free Stock Analysis
HAWAIIAN HLDGS (HA): Free Stock Analysis
REPUBLIC AIRWAY (RJET): Free Stock Analysis
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